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A 2024 earnings call. At this time, you have been placed in a listen-only mode. The lines will be open for your questions following the presentation. Please note that this call is being recorded. On the call today, we have Hajime Jimmy Uba, President and Chief Executive Officer; Jeff Uttz, Chief Financial Officer; and Benjamin Porten, SVP Investor Relations and System Development. I would now like to turn the call over to Mr. Porten.

Thank you, Operator. Good afternoon, everyone, and thank you all for joining. By now, everyone should have access to our fiscal fourth quarter 2024 earnings release. It can be found at www.kerasushi.com in the Investor Relations section. A copy of the earnings release has also been included in the 8-K resubmitted to the SEC. Before we begin our formal remarks, I need to remind everyone that part of our discussions today will include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance, and therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. Also, during today's call, we will discuss certain non-GAAP financial measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation nor as a substitute for results prepared in accordance with GAAP. Reconciliations to comparable GAAP measures are available in our earnings release. With that out of the way, I would like to turn the call over to Jimmy.

Thanks, Ben, and thank you to everyone for joining us today. I am pleased to report an end to the fiscal year that has meaningfully outperformed the expectations we shared during our last call and to share that our new fiscal year is off to a strong start. The service pressure beginning in April improved significantly over the course of the quarter, resulting in fourth-quarter comps of negative 3.1% as compared with the expectations shared during the prior annual score of negative single-digit comps. I am very pleased with that. In spite of the unexpected sales decline in the back half of the fiscal year, we were able to maintain positive full-year comps of 0.7% and full-year restaurant-level operating profit margins above 20%. This was made possible by the rapid response by our team members throughout the company to find new efficiencies and cost-saving opportunities. Total sales for the fiscal fourth quarter were $66 million, representing comparable sales performance of negative 3.1%. Our cost of goods sold as a percentage of sales was 28.5%, representing a 100 basis point improvement over the prior year. This improvement was made by improving the quality of ingredients while also lowering costs. Labor as a percentage of sales was 31.1%, representing an increase of 230 basis points as compared to the prior year due to wage inflation and sales. Restaurant-level operating profit margin for the fourth quarter was 20.9% as compared to the prior year of 24.4% due to sales leverage. On the development front, we opened one new unit in Lake Lug, New York during the fourth quarter for a total of 14 new unit openings during the fiscal year. As of the second quarter end, we have opened five new units in Beaverton, Oregon; Tacoma, Washington; Locove, Maryland; Cahill, New Jersey; and Bakersfield, California. We currently have six units under construction, but it is worth mentioning that some of these units have just broken ground. While we are satisfied with the progress of opening new restaurants so far in fiscal year 2025, we expect that the opening of the remaining nine restaurants, especially those that have not yet started construction, will be backloaded for Q3 and Q4. As many of you know, our unit in Washington state has been our strongest performer since its opening. We have always been excited about the massive potential of the Pacific Northwest. We finally opened our second unit in the Pacific Northwest in Beaverton, Oregon. I am extremely pleased to share that we are not disappointed. Following that, we opened our new unit in Tacoma, Washington. Tacoma has been a very strong performer since its opening. While it is still early days, I am very happy to see that the new units in the Pacific Northwest have exceeded our already high expectations, and I am very bullish about the long-term potential of this market. Turning to new initiatives, we completed the full rollout of our back-of-house streamlining efforts in early September, and results to date have delivered the expected improvement to labor costs. The porting of the reservation and self-seating system is proceeding as scheduled, representing further opportunities for labor efficiencies later in the year. We have also diversified our marketing efforts so that we have more levers to pull beyond the IT collaborations. We are going to be more discerning with our IT collaborations going forward, prioritizing the quality and the broad-based appeal of partnering brands over the number of campaigns. Leveraging our reputation to showcase our unbeatable quality and authenticity will be key to building our long-term brand equity as we grow into our national footprint, while also being more cost-efficient than rolling IT collaborations. During the fourth quarter, we took an impairment charge of $1.6 million. This charge is due to a challenging sales environment at our eventual Florida location. While we are required to take this impairment charge this quarter as per accounting rules, we will continue to operate this restaurant and will implement operational changes that we believe could improve results. The new fiscal year has started strong, and it is clear that we are in a very different place under the sun in the sky. The cost-saving efforts we began in preparation for the potential of longer-term macro headwinds have been fully implemented, and these initiatives will serve us well as we enter a fully normalized environment. Our new unit openings to date have exceeded expectations and confirmed that the Pacific Northwest is a huge untapped market for us. In addition to the success we are continuing to see in the Pacific Northwest, we are highly anticipating our upcoming openings in smaller markets that will serve as proofs of concept for our ability to thrive in the United States beyond the largest markets, indicating even greater whitespace opportunity. While the Bakersfield unit has only been open for a few days, the strength of its opening has us optimistic about our ability to thrive in smaller DMAs. Fiscal year 2025 is an opportunity to demonstrate the next level of operational efficiency potential, and I am incredibly grateful for the excellent work of our team members who have positioned us so well for the new fiscal year. I will turn it over to Jeff to discuss our financial results and liquidity.

Thank you, Jimmy. For the fourth quarter, total sales were $66 million as compared to $54.9 million in the prior year period. Comparable restaurant sales performance compared to the prior year period was negative 3.1%, with regional comps of positive 3.9% in our West Coast market and negative 8.9% in our Southwest market. Turning now to costs, food and beverage costs as a percentage of sales were 28.5% compared to 29.5% in the prior year quarter, largely due to pricing and supply chain initiatives. Labor and related costs as a percentage of sales were 31.1% as compared to 28.8% in the prior year quarter. This increase was largely due to sales deleverage and wage increases. Occupancy and related expenses as a percentage of sales were 7% compared to the prior year quarter's 6.6%. Depreciation and amortization expense as a percentage of sales increased to 4.6% compared to the prior year quarter's 3.8% due to sales deleverage and the accelerated depreciation of assets being replaced due to planned remodels. Other costs as a percentage of sales increased to 4% due mainly to utilities, delivery fees, software licenses, and operating supplies. General and administrative expenses as a percentage of sales increased to 20.3% compared to 13.2% in the prior year quarter due to a litigation expense. General administrative expenses as a percent of sales excluding litigation expense for the fourth quarter and the full fiscal year were 13.2% and 14.1% respectively, representing full-year leverage over fiscal 2023 of 90 basis points. Operating loss was $5.8 million compared to operating income of $2.2 million in the prior year quarter, largely driven by litigation expense as well as sales deleverage, higher labor costs, and incremental other costs associated with the greater number of unit openings and units under construction. Income tax expense was $19,000 compared to $167,000 in the prior year quarter. Net loss was $5.2 million or a negative $0.46 per share compared to net income of $2.9 million or $0.25 per share in the prior year quarter. Adjusted net income was $1 million or $0.09 per share compared to adjusted net income of $2.9 million or $0.25 per share in the prior year quarter. Restaurant-level operating profit as a percentage of sales was 20.9% compared to 24.4% in the prior year quarter. Adjusted EBITDA was $5.5 million compared to $6.3 million in the prior year quarter. Turning now to cash and liquidity, at the end of the fiscal fourth quarter, we had $51 million in cash and cash equivalents and no debt. Lastly, I would like to provide the following guidance for fiscal year 2025. We expect total sales to be between $275 million. We expect to open 14 units, maintaining an annual unit growth rate above 20% with average net capital expenditures per unit of approximately $2.5 million, and we expect general and administrative expenses as a percentage of sales to be approximately 13.5%. With that, I would like to turn it back over to Jimmy.

Thanks, Jeff. This concludes our prepared remarks. We are now happy to answer any questions you have. Operator, please open the line for questions. As a reminder, you are in the Q&A session. I may answer in Japanese before my response is translated into English.

Thank you. We will now be conducting the question and answer session. One moment, please, while we poll for questions. The first question we have is from John Tower of Citi. Please go ahead.

Great. Thanks for taking the questions. Good evening, guys. Maybe just to start, I am curious about the guidance for revenue and the new store openings greater than 20%. I think the sales growth would imply something lower than that. You are talking about the current quarter. You are pleased with the start to the fiscal year. I am just curious if you could help square that for us. Why the revenue growth looks relatively conservative versus the new store growth and how bullish you sound on the current state of same-store sales.

Thank you, John, for your question. Please allow me to speak in Japanese. English, my friend, right? So, John, as you said, it is true that we are being a little bit conservative. We are very pleased with the performance that we have seen to date as we have entered the fiscal year in September and October. Q1 is definitely outperforming Q4, and we are very happy to see that. But it is also true that we are still in mid-process in terms of recovery, and so we feel it is prudent not to be overly aggressive with our revenue guidance at the beginning of the year. The last thing we want to do is to have to do a repeat of a downward revenue guidance that we did last year, and so we felt that this was the most prudent approach. In terms of looking at the impact of the post-April sales deceleration, we are very proud of how we were able to manage the things that were under our control, namely our cost control efforts and the streamlining changes that we made to our back-of-house in particular. Those changes allowed us to maintain that restaurant-level operating margin above 20%. We are also very pleased that we were able to maintain a unit growth rate for fiscal above 20% for fiscal 2025 in spite of the fact that we trimmed some of the LOIs from our pipeline in an effort to minimize cannibalization and how we have been able to execute the things that are under our control. Unfortunately, the macro environment is something that is not under our control, nor is it something that we can predict. That is really the thinking behind our guidance at this point. Of course, should the environment continue to prove favorable, then we look forward to a revision.

Okay. So when thinking about the components of growth this year, I can back into slightly positive comp growth, and I am also trying to figure out the new store productivity implications. Are there anything is there anything to note? I mean, you hit on the idea of perhaps being in markets where you are not going to have as much cannibalization with the existing stores. But are you doing anything with the size of the stores, or are these kind of all on trend relative to what you have been opening the past couple of years?

As I say, John, in terms of we look at new stores, one of the things that you know we really focus on and we put a lot of credence in is cash on cash return. That allows us to be very allows us to look at a bunch of different sites. We are not dialed in particular cookie-cutter size. So we will build a smaller store if that is a great site that is available. We do not necessarily always dial into a particular AUB because if I can get a cash on cash return of forty or fifty percent on a smaller restaurant that may do a little bit lower AEV, we will do that all day. In terms of your comment about our comp assumption for fiscal 2025, you know, we do not give comp guidance. But to kind of reiterate what Jimmy said, as we came out of Q4, I think we kind of saw what everybody else did. You know, June was not great. Then towards the latter half of July and into August, things started to get better. But in our mind, it is not quite yet a trend. We did not want to get too far ahead of our skis and put an overly aggressive comp assumption in our model. But I can tell you that the comp assumption for next year is not a negative number. Without quantifying it for you.

Okay. Great. Thank you. I appreciate that. And then maybe just in terms of thinking about the digital initiatives, I know you hit on earlier. Oh, actually, I will stop pausing it. Going back to the labor initiatives that you did at the store level, those things should remain in place as volumes kind of return in the future. There is nothing that would suggest as volumes come back to stores you should anticipate having a need to add more labor in the back of the house to meet that demand.

Hi, John. The changes that we have made in terms of operational streamlining are structural, a combination of multiple make patients into a single one. An increase in sales would not require an increase in labor. While it is still very much early in the fiscal year, our belief is that full-year labor numbers as a percentage of sales should be better than fiscal 2024's. Of course, if the macro environment recovers as we hope, then there is further upside to the labor line. But even without that, we expect our labor to be an improvement year over year between the operational streamlining and whatever pricing that we take.

Great. And maybe my last one. Pricing in the fourth quarter, in the mix in the quarter as well, if you would not mind, and what the pricing is to start the year in 2025.

Yeah. So we are running about, for Q4, we are running about 4% price in the numbers we just released. Then as we think about the upcoming year, John, in terms of pricing, typically, we have always taken pricing in January. But we are thinking about taking pricing sooner than that this year simply because we have determined that if you take it a little bit earlier than January, you can really capture a lot during that December holiday period. Capture a lot of those sales. So you will probably see a price increase, which we have not quantified yet, coming up shortly before the end of the I mean, I am sorry, before the end of the calendar year.

Got it. Thank you for passing along. I appreciate taking the questions.

The next question we have is from Jeff Bernstein of Barclays. Please go ahead.

Hi. Good evening. Thanks for taking the question. This is product guide. Just a quick question on development. You have already opened five, and you know, you have alluded to a pretty decent pipeline with six under construction. Just wondering why there is not more upside to the fourteen. I know anecdotally, we have heard that maybe the approval and permitting process is a little bit better these days, but maybe not yet exactly where it needs to be. But just anything you can provide on just availability of quality site, the ability to get permits approvals, just are there any kinds of headwinds you are seeing there, that we need you to be a little bit more conservative on this unit?

So this hey. Hey, Pratik, product business bed, in terms of developing, there really are not any issues with permitting or construction that we are seeing. This is really more a reflection of us taking in know, taking seriously the site selection, strategic changes we have mentioned in the last earnings call, we did prune a number of LOIs. There is nothing wrong with the site per se. It was just not the right timing in terms of cannibalization headwinds, and so we decided to either cancel them or hold them for future years. Part of the middle of the year, pipeline got approved. That is really what it is. The reason that we have got us, you know, a fourteen instead of a range is just you know, looking at our lease timing, that is really what we are led to believe until we felt just make the most sense to give you guys what we are actually expected.

Got it. I appreciate that color. And then just turning to commodities. I know you have a very different basket than most in the industry. But you know, what is a good inflation level, that you are assuming in fiscal 2025? I know it is early, but things can change pretty easily. But just you know, what you are assuming in fiscal 2025 and just how easily you can kind of pivot in and out of different items on the menu if the need arises.

Yes. Our commodity basket, as you know, is pretty varied, right, things that we do buy. In terms of what we look at for next year, you know, there were so many moving parts. Some of that was vilified last night just to what is going on. You know, we do have the Fed tomorrow, so we got a lot going on. There is an assumption of low single-digit commodity inflation in the budget just, you know, comparable to what a CPI increase. Nothing super aggressive in terms of inflation assumption. But yeah. Because our basket is so diversified, we can pivot quickly that if for some reason we have a problem getting a particular pitch, or product in, we can pivot to an LTO or something with a different product. The other thing that I have talked about too, which is great, is with our two Broadliners, they overlap each other. So one of our Broadliners happens to run out of a product, can go to the other one, and most likely, they will have it. There we do have redundancy in our supply chain process and because of that, very rarely do we run out of. The process has been very streamlined over the last year to two years.

That is great. And if I can just sneak one last one in. Just on the labor line, Jeff, you know, you have spoken to all these efficiencies that are going to yield some dividends, and it looks like you are going to lap a b one two two eight as well later on in the year. Although it does not look like your concept really saw much of an impact, but just what is a more normalized rate of inflation on the labor line going forward? And once kind of, like, all these prior year nuances are lapsed? Like, is there something, like, around mid-single digits that we should expect?

Like, historically, labor inflation on an annual basis has been about low single digits. For fiscal 2024, but it was closer to mid-single digits. With the operational improvements that we put into place, we are confident that we are able to exit fiscal 2025 with a full year of labor line that is superior to fiscal 2024's and obviously if the macro environment approves and we get further sales leverage, then that is additional opportunity there.

Thank you so much. I will pass it on, guys. Appreciate it.

The next question we have is from Brian Mullen of Piper Sandler. Please go ahead.

Hi. This is Allison Arceremen for Brian Mullen. Thank you for taking the question. In regards to the 20.9 restaurant level margin this year, I am curious how you are thinking about the range for next year and what some of the headwinds and tailwinds might be that we should consider?

In terms of restaurant-level operating profit margin, we have never provided guidance. But one thing that we said very consistently is that one of our primary goals is to maintain our restaurant-level operating profit margin above 20% on a full-year basis. We are very pleased to see that in spite of the headwinds that we saw in terms of sales deleverage beginning in April, we were able to maintain restaurant-level operating profit margins above 20%. We absolutely expect to do that again in fiscal 2025, hopefully, without the headwinds that we saw beginning in April.

Thank you.

The next question we have is from Jeremy Hamblin of Craig Hallum Capital Group. Please go ahead.

Thanks for taking the questions and congrats on the improved results. Wanted to dig in a little bit on the other operating costs line item which has been a bit more challenging to control here in recent years. Just get a sense, you know, we know some of that is due to utilities inflation has been higher, insurance inflation has been higher, but wanted to get a sense for what you are seeing here at the start of this fiscal year related to that line item. I know embedded within that is some of the delivery cost fees, and just understand how you know, how that you know, the DoorDash deal is kind of progressing.

Yeah. Let me hit the operating supplies, and then let Jimmy and Ben talk about the DoorDash deal. In terms of the operating supplies, you are right, Jeremy. I mean, utilities are up. Software licenses, everything has gone up. When you call a plumber into the restaurant to check something, it is just more than it was in prior years. One thing to remember as we think about the year upcoming in terms of the cadence of that line is that while a lot of it is variable, there are some fixed costs in there. So if you know, Q1 is, in terms of sales, is our seasonality-wise, our lowest quarter. So when you look at some of those fixed costs that are in other costs, you will see a trend in that direction. What we are seeing as the year started is pretty similar to what we have seen in past years. We are continuing to push and work as much as we can to renegotiate contracts and widen our vendor list so people that come in. We do use EcoTrac, which is a great software that the facilities department uses. Order to work with multiple vendors when something goes down in the restaurant in order to find the vendor that not only has the best response time, so we are not down, but also has the best pricing. We are looking at all of those things to try and do what we can. Unfortunately, things like utilities are a little bit out of our control. But we are looking line by line by line in other costs. One of the things that are under our control to do what we can to continue to chip away at that cost line.

I am in North Shore right now. I saved it. Jeff really covered ninety-nine percent of what there is to discuss in terms of other costs. For the delivery costs, that is a reflection of a promotional campaign where we subsidize part of the delivery fees for first-time orders on DoorDash. It is not a typical fee. I would not expect it to be a recurring fee.

Can you quantify what the impact of that promotion was on that line item?

I do not have that number on me, but not huge.

Got it. Could you provide a bit more color on some of the upcoming technology initiatives just in terms of the timing of when you would expect some impact on those? It sounds like you are expecting your labor line, which I think was 31.9% of sales to be a little bit better this year. I am sure that is not kind of a straight-line shot, but can you help us just understand the context of timing on those initiatives and how you expect that to play out to get to that target?

Yeah. I am more than happy to discuss. The biggest opportunity in terms of fiscal 2025 is the new reservation and self-seating system. I have been working in lockstep with Japan to bring to port that system translated into, you know, just English, but how to make it appropriate for American use. It is going very much on track, and we expect our first store implementation in early spring. Fiscal 2025 is definitely the biggest opportunity. There is maybe a maximum of fifty basis points to be saved with its implementation. That being said, Jimmy's earlier comments in terms of our expectations about being able to produce labor as a percentage of sales in fiscal 2025 that is lower than last year do not contemplate the upside represented by the reservation system. So should that happen, that will be gravy for us on the labor line and restaurant-level operating profit margin line as well.

Great. Helpful color. Last thing, just a little bit more color on the $4.7 million litigation expense. Any more details you can share on that?

It is just, Jeremy, the typical wage and hour claims that restaurant companies unfortunately have to deal with from time to time. We are not really at liberty to get into the details of it, but it is your run-of-the-mill. I do not know a restaurant company that has not had to deal with these types of claims over the last seven to ten years. So it is wage and hour, though.

Thanks for the color. Best wishes.

Thanks, Jeremy.

The next question we have is from Sharon

Hi. Good afternoon. Thanks for taking the question. I guess and I apologize. My phone is a little bit muffled, but it sounds like trends have improved more in the November quarter and certainly improved as the August quarter progressed. I guess as you do, like, the postmortem on kind of what happened in April through August. Do you really think it was the promotional tie-in? Do you think it was fast-tracked? I mean, what is your best insight now on kind of what caused that slump?

But if again, they are at a Stephanie, right. In terms of our thinking on the sales deceleration starting in April through August, I think we are pretty much aligned with the rest of the industry in that initially, we thought a lot of it was coming from sticker shock. Implementation of AB 1228, our thinking changed once it became clear. It was a wider macro factor, which has been corroborated by the earnings calls of our peers. Then to your comment on IT collaborations, that certainly could have played a role as well. Our August benefited from one piece, which was a very successful campaign, ran from August to September. As we entered October, we have been working with Pikmin, which is a Nintendo property, also we are very pleased with the results there. November, you know, we just entered, and so it does not really make too much sense to comment on the first five days, but we are hopeful that these trends continue, but just given the opacity we felt it was appropriate to be prudent with our revenue guidance going back to Jimmy's earlier comments.

Right. That is really helpful. I guess one other question. Ben, you just talked about the reservation self-seating system coming in next year, and maybe being able to get fifty bips from that. Are these savings, and I know you continue to get more and more efficiencies, more and more savings, ultimately, how do we think about that kind of in harvesting to the bottom line versus reinvesting in the business to continue to deepen the competitive moat?

Three Right. Yeah. In terms of the opportunities presented by the implementation of the reservation system and, you know, really any future technologies, our expectation is that this will certainly help us get back to the labor levels that we saw in fiscal 2023. We think that is an appropriate level for us to be at, and so that will probably be the first thing that you see.

Great. Last question. Hey, Jeff. Could we get the traffic in the quarter?

Yeah. I have that number. It was minus it was negative 2.4. So 0.7 price traffic down 2.4 for a countdown of minus 3.1.

The next question we have is from Todd Brooks of Benchmark Company. Please go ahead.

Hey. Thanks for squeezing me in. Wanted to explore the regional spread in the same-store sales performance that you highlighted, and I know a lot of investors kind of focus on this number as a proof of portability of the concept. But is that weakness in the kind of southwestern market? Is that more of the two-year stack that you were lapping tougher same-store sales, or is there an element that Texas got hit by barrel during the quarter, and that was an artificial drag on that region versus the West Coast region?

Southeast or not. For so the biggest thing that we really want to emphasize in terms of comps is that it is not the looking at the regional comps, it is not necessarily an indication of our performance or our popularity or the demand that we see in those markets, but really just an artifact of the way that we have grown over the last ten years. Our company has about forty-five units. About half of those are in California, we have got over ten in Texas. Outside of those markets, they are pretty much all single-unit markets, which have recently gone into multi-unit markets. Obviously, that has a very meaningful impact on comps, and it has nothing to do with demand. It just has to do with the fact that it is the first infill. Looking to the southeast in particular, there was one infill in Dallas and one infill in Houston, which impacted a store each in those markets, which has largely been not impacted by prior infills, and so that was a headwind there. Just to give you some additional thinking on the way that we have approached cannibalization since the last earnings call, we have been very proactive in terms of our pipeline. Starting in fiscal 2026, that is when you will really start to see a greater number of new market units being included, which obviously do not play into cannibalization whatsoever. In terms of fiscal 2025 with lease lead times, it is pretty limited. Your options are pretty limited in terms of adding new places, and so our approach for fiscal 2025 is really removing places, which were in existing markets were would have been first infills. Looking at the early success of Bakersfield, that is a meaningfully smaller DMA than we typically enter. We are doing great there. So it really opens up a lot of options in terms of what we would consider in terms of new markets. Our ability to manage our infill strategy against comps that is really going to come into full gear fiscal 2026, which we are very excited about.

That is great. Just one follow-up if I may. Now follow-up with an additional question. Ben, you talked about a lower frequency perhaps of the IP collaborations. Can you walk us through maybe some detail behind it? Is it the fewer events is a shorter duration of event? Just how do you see this evolving? Are you tying yourself to a specific number of collabs per year anymore, or it is when the right partner comes along you guys would work that into kind of your calendar of what you are looking to do? Thanks.

Yeah. So that is an interesting way of putting it, but that is pretty similar to our thinking as well where before the thinking was always wanted to have an IP collaboration. That is what Jimmy was referring to with the rolling collabs in his prepared remarks, but every branded property collaboration is expensive, and not every single one is worth the associated cost. The thinking now is really let's go for the ones that we think are really going to be big hits. Before we had six guaranteed, that is no longer the case. We are really just going after those that we think will really move the needle from a comp perspective.

New marketing VP.

Of course, we are not just reducing the number of collaborations with nothing to replace. We have a huge advertising pipeline, our new VP of marketing, which I think we have mentioned on every call since we hired him. He is doing a really great job, and if you are listening, we are very pleased. September and October, we have been seeing pretty strong results. The IP campaigns are part of it, but another big part would be the new advertising efforts that we put into place, especially the food-focused ones. We are excited to see the performance in upcoming months where we do not have IT collaboration so that we can see just how successful these campaigns are without that additional variable. Just as some additional context, when we are not doing a brand collaboration, that does not mean we are not going to be giving out the big trip on prizes. They just will not be branded.

Understood. Finally, just in the revenue guidance, which you talked about a lot of the reasons for the maybe the conservancy to start the year. Is this a part of it as well as we are kind of weaning ourselves to programs that make sense versus six programs a year and that is you want to leave yourself a little bit of room there as kind of the new advertising mix kicks up?

So in terms of revenue guidance, we have always in past years when we have given guidance, it does not contemplate the impact of IP collaborations. Basically, whenever we have a collaboration, that is an opportunity for upside. That is the same thinking here. It does not contemplate IP collaborations.

Okay. Got it. Thank you. Something else. Yep. I just have go ahead.

Got it. Say that on those additional marketing campaigns, assuming we are talking about that will be in between the IT collaborations. What is really great about those, and Ben alluded to the Sue, is that they come with a fraction of the cost of the IT collaboration, and they can be just as impactful on the top line. So a lot of that will flow down to the bottom line also kind of ties into a question we were asked by another analyst earlier about other costs. Because with these IP collaborations flow into other costs. So as we continue to put marketing campaigns in that are just as good for the top line, that do not impact that other cost line that flows straight to net income. So we are really looking forward to having some of those mixed in with the IP collaborations as well.

That is very helpful. Thanks, Jeff.

The next question we have is from Jim Sander of Northcoast Research. Please go ahead.

Hey. Thanks for the question, wanted to follow-up a little bit more detail on G&A spending. I think you reported a slight improvement over the prior year. So going forward, maybe you can walk us through what type of line item leverage you would expect and how that can flow through to the bottom line.

The biggest leverage will be on our support center salary. Really, that is the biggest line item in G&A. The entire team in our support center has done a great job and determined how do we do things more efficiently and how do we do things better without adding people. That is where we are going to continue to see the leverage in our guidance of about thirteen and a half percent for next year. Would represent sixty basis points and we came down from fifteen point eight percent two years ago to fifteen percent last year to fourteen point one percent this year and we get in thirteenth next year. That is much better than I anticipated when joining the company. It is because of the efforts of everyone in the support center to just look at how we do things and use technology and software rather than having to add people every time we open ten restaurants. We are going to continue that cadence throughout next year.

Okay. So just can I add a phone fee? Please give me a comment. Of course. This is Jimmy. To add on to Jeff's comment, over the last year, the two years, two preceding years, we have had a lot of infills. Unfortunately, the way the point of discussing in terms of installs has been cannibalization for the last in the last call. But really, the other side is synergy. Now that we have these in sold markets, we can have area managers handle more restaurants. For fiscal 2025, even though we are adding fourteen units, we do not expect to add any area managers. So salary savings travel savings with greater density, our facilities teams do not have to travel as far. We have proprietary equipment teams that deal with all of our patented technology that will get leverage there. There are a lot of regional G&A costs that are an opportunity for fiscal 2025 and beyond as well.

Alright, Steph. Thank you for that. I also just wanted to follow-up and make sure I understood the feedback about same-store sales and traffic for the quarter. I think you said four percent price, negative two four on traffic, so that would imply a little bit of a worse negative mix in the quarter. Any feedback on what is driving that?

Actually, it will not work. Really happy with where the mix came out. If you go back a year, you go back two years, our negative mix had been in the high single digits. So really where we are looking at it now is we are really happy because we are only carrying out it compared to last year. So I think that the change is really negligible. It is not anything that can necessarily be identified last year. We think people were not having maybe a drink or maybe they were not adding an additional attachment. But let's come back this year. We are happy with where the mix landed for Q4.

Okay. Okay. Last question for me. Just wanted a brief update on DoorDash. If you can provide maybe what the mix for delivery sales was in the quarter. If your pricing is set on marketplace equal to in-store pricing?

Yes. So our mix is 3.2% of overall sales. Our pricing is the same as it is in the restaurant. We added DoorDash in March. Just to give you some context on how we have grown. Our mix in Q1 which would have been September through November of calendar 2023. The off-premises mix at that point was 2%. It has grown meaningfully with the addition of DoorDash.

Alright. Thank you very much.

Thank you. Thanks, Jim.