BROS - NYSE

Thank you for standing by and welcome to the Dutch Brothers Inc. Fourth Quarter And Fiscal Year 2023 Earnings Conference Call and Webcast. This conference call and webcast are being recorded today Wednesday, February 21, 2024 at 4:30 PM Eastern Time and will be available for replay shortly after just concluded. Following the company's presentation, we will open up the lines for questions and instructions for queuing up will be provided at that time. I would now like to turn the call over to Paddy Warren, Dutch Brothers' Director, Investor Relations and Corporate Development. Please go ahead sir.

Good afternoon and welcome. I'm joined by Christine Barone, CEO and President; Charley Jemley, CFO. We issued our earnings press release for the fourth quarter and year ended December 31, 2023 after the market closed today. The earnings press release along with supplemental information deck has been posted to our Investor Relations website at investors.dutchbros.com. Please be aware that all statements in our prepared remarks and in responses to your questions, other than those of historical fact are forward-looking statements and are subject to risks, uncertainties and assumptions that may cause actual results to differ materially. They are qualified by the cautionary statements in our earnings press release and the risk factors in our latest SEC filings, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q. We assume no obligation to update any forward-looking statements. We will also reference non-GAAP financial measures on today's call. As a reminder, non-GAAP measures are neither substitute for, nor superior to measures that are prepared under GAAP. Please review the reconciliation of non-GAAP measures to comparable GAAP results in our earnings press release. With that, I would now like to turn the call over to Christine.

Thank you, Paddy. Good afternoon, everyone. We had an exceptional 2023 and we entered 2024 with great momentum. Revenue grew 31% year-over-year and adjusted EBITDA grew an outstanding 76% from 2022. We opened 159 shops of which 146 were company operated. In Q4, we opened 37 new shops, marking our 10th consecutive quarter of 30 or more new shop openings and demonstrating the more remarkable consistency of our growth story. We ended 2023 with our highest AUVs on record, $1.97 million and we delivered 2.8% system same shop sales growth for the year. These outstanding results were underpinned by excellent flow-through, driving a substantial expansion of our margins. Dutch Bros is a time-tested, people driven company that continues to deliver consistent high quality growth. This growth is underpinned by excellent four-wall economics and is enabled by our shop teams who remain focused on our key tenants; speed, quality and service. Earlier in 2023, we began laying the groundwork with key initiatives to list traffic, which we shared with you during our Q1 call in May. In Q4, we saw the impact of these efforts culminated with 5% same shop sales growth, 100-basis-point acceleration from Q3. These results were driven by sequential improvement in customer traffic with particular strength in the day and afternoon dayparts. Furthermore, we achieve record best rewards penetration in Q4 with over 65% of transactions attributable to awards members. Keep in mind that 35% of our shops have been open less than two years, which makes the 65% penetration number even more impressive. With such a successful 2023 as our backdrop, we are optimistic for us next phase of growth. I will now spend a few minutes discussing our key priorities. We began any discussion of Dutch Bros with our fundamental differentiator, our people. We aim to deliver unparalleled employee engagement and by extension customer connection, recruiting, developing and retaining outstanding people remains our primary focus and one of our greatest strengths. I am proud to say that last month we were named the top QSR brand in Nation's Restaurant News and Technomics America's Favorite Chain survey in part because of our high marks for service. Once again, the culture we infuse into each shop and the skills and abilities of our brew-vistas [ph] to make drinks and create relationships are evident. We believe these are the keys to building brand affinity and fueling our growth. Dutch Bros was also the highest scoring consumer brand among Gen-

Thanks, Cristine. As Christine's comments shared 2023 finished on a particularly high note. Key operating metrics were excellent all around including unit openings revenue and adjusted EBITDA growth and same shop sales all of which exceeded our expectations. For the financial year 2023, revenue grew 31% to $966 million. We achieved over $1.4 billion in system-wide sales or 24% growth. System AUVs reached $1.97 million the highest on record. System same shop sales were 2.8% in line with our guidance of low single digits. Company-operated shop contribution reached $242 million growing an impressive 54%. Company-operated shop contribution margin was 28.2% expanding 360 basis points year-over-year. Adjusted EBITDA margin was 16.6% expanding 430 basis points year-over-year. In the fourth quarter, the company operated shops segment delivered outstanding performance, generating $227 million in Company-operated shop sales and $60 million and shop contribution. Year-over-year net sales increased 30% and company-operated shop contribution grew approximately 21%. As a percentage of company-operated sales, company-operated shop contribution was 26.5% when making a comparison of these results to the prior year, recall that in Q4 of 2022, our sales and margins were positively impacted by approximately $7.4 million or greater in the revenue line related primarily to the 2021 launch of our Dutch rewards program. Please make reference to our supplemental investor materials where we demonstrate the changes in Company Shop margins. Outside the negative impact on a comparable basis of 2022 breakage income, company shop margins increased as a result of pricing, sales leverage and beneficial pre-opening costs partly offset by slightly elevated ingredient costs and other operating expenses. As I mentioned, we achieved 360 basis points in margin expansion in 2023. Shifting to SG&A. For the quarter, SG&A was approximately $57 million which includes about $10 million in stock based compensation. We anticipate in 2024 ongoing stock based compensation will be approximately 30% to 40% of 2023 levels, as equity compensation awards associated with the IPO fully vested in January 2024. With the exclusion of stock-based compensation and other nonrecurring expenses, adjusted SG&A was approximately $44 million 17.4% of revenue compared to 18.9% in Q4 last year. While we're adding organizational capacity to support scaling the business, we're also making a concerted effort to stage those investments and over time. For the year, adjusted SG&A was 16.6%, an improvement of 190 basis points compared to 2022. Regarding our balance sheet and liquidity. As of December 31, we had approximately $683 million in total liquidity compared to approximately $700 million at the end of Q3. We believe our liquidity position is sufficiently robust to support our currently contemplated growth plans as we scale towards 4,000 plus shops. As of December 31, that liquidity was comprised of the following; $134 million in cash and equivalents, $349 million undrawn revolver, $200 million in undrawn delay draw term loans. Yesterday, prior to the expiration of the end of February, we drew a portion of our delayed draw term loans totaling $150 million. We intend to utilize these funds for general corporate purpose. This is including but not limited to building new shops. Meanwhile this cash will be invested in short-term interest-bearing securities until we can fully deployed. Moving on to 2024 guidance. In early January, we shared our expectation to open 150 to 165 new shops. We expect low single digits system. Same shop sales growth in 2020 for revenue is expected to be within the range of $1.19 billion to $1.205 billion. Midpoint in this range would reflect 24% growth over 2023 and 62% growth on a two-year basis. Adjusted SG&A is expected to be between 15.3% and 15.8% of total revenue at the midpoint of the revenue range. This would represent continued leverage of approximately 75 to 125 basis points as compared to 2023. Stock-based comp inflation, which is excluded from adjusted SG&A, is expected to be $12 million to $17 million for the year, down from $39 million in 2023. Adjusted EBITDA is expected to be in the range of $185 million to $195 million or approximately 15.9% of total revenue at the midpoint of these ranges. For context, the midpoint of the adjusted EBITDA range represents approximately 19% year-over-year growth and notably, 108% growth on a two year basis. I'd like to highlight a few key assumptions underlying this guidance. First, we continue to make investments in our people. In Q3 2023, we announced an investment in higher pay nationwide for our shop managers. Further, on April 1, California wages will rise to $20 per hour minimum, representing an increase of approximately 25% year-over-year. Collectively, we would expect a 50 to 100-basis points headwind on adjusted EBITDA margins from these pay changes. Second, we are planning to make P&L investments and increased technology at the shop level to support scheduling throughput and mobile order initiatives. Collectively, we would expect 75 to 125 basis points headwind on adjusted EBITDA margins from these investments combined with the expected adjusted SG&A leverage I just mentioned, we would expect these actions to collectively represent 50 to 100 basis points overall margin pressure year-over-year. Furthermore, we intend to embark on a large-scale organizational change in 2024. To support this move, we would anticipate incurring between $24 million and $31 million in cost, which we deem as non-recurring I would anticipate will be almost entirely excluded from adjusted EBITDA. Capital expenditures are expected to be in the range of $280 million to $320 million, up from $227 million in 2023. This year-over-year increase will be driven primarily by a higher percentage of ground leases 2024 as compared to 2023 last year, we began are proving more future sites using build-to-suit leases to shift our capital back to more normative levels. We would expect any capital expenditure benefit to take hold more firmly beginning with the class of 2025. In 2023, we spent approximately $18 million on our roasting facility. We expect to spend approximately $10 million in 2024 and we anticipate that this facility will open in the middle of this year. We also expect to spend between $6 million and $10 million in capital expenditures related to the Arizona office expansion. Thank you and now we will take your questions. Operator, please open the lines.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Andrew Charles with TD Cowen. Please proceed with your question.

Great. Thank you. Christine, as you implement the new enhancements in development in 2025 like more build-to-suit and focusing more on white space than in billing disputes. You can increase the number of store openings above the roughly 150 per year in 2023 and guide of the 2024 or should we expect a perhaps truncated 2025 opening class to better observed the enhancements we're making.

Thanks for your question, Andrew. I think if we look forward we're really not talking about guidance today for 2025. We feel good about where our pipeline is and about the guidance that we provided for shops for 2024 and feel like we have a robust pipeline to support our future.

Great. And then as soon as but the digital ordering op tests, you know what are you looking to observed during that time? And how you kind of maybe this is finish off way how you kind of mapping this out to not cause congestion distress? You are very productive at restaurant?

Absolutely. So as you know what really drives our brand as our service and so having that connection between the broistas and the customers who have -- we passed on mobile and digital ordering, we're really looking to continue to have that same experience between our broistas and our and our customers. That's really what we're looking for as we test this. We're thinking through operations and to what does this do to line speed. On how are we slotting and drinks that are ordered all of those different things that we operationally test this. As you know we also have drive-throughs shops that are setup with a walk-up window. So looking at how people will come up and pickup their drinks from a walk-up window also has a very drive-through lanes. And a number of our newer shops we have escaped lanes on. And so we can even, we can test things like delivering a drink to a car that can pullout of the Escape plan as they pick up their mobile order.

Thank you.

Our next question comes from Jeffrey Bernstein with Barclays. Please proceed with your question.

Great. Thank you very much. Question just on loan growth outlook on 10-Q with the remainder of 2024, we did see strong momentum at some point. If you could just talk about the components you're assuming for the 2024 comp guidance, I think it's a low single-digit how much pricing we should assume for the traffic assumption and any color you can provide on the first quarter? I know it's been choppy as you mentioned the weather to start. Just trying to get a sense for the first quarter is tracking relative to obviously the fourth quarter and what your guidance for full year 2024?

Hi Jeff, we will have pricing rollover from 2023 in the low-single digits. We have not yet refined how we'll price in 2024. And we mentioned in the California wage impact. In those comments, we would expect our sales transfer from new units in dollar terms to be similar but as a percentage of our comp base to begin to decline, versus this year's levels of 203 basis points and then we're looking at a low-single digit comp number. So the balance of that is pretty nominal on the traffic side from a growth perspective book.

And I would share and add to that. That is we ended Q4 with that 5% same-store sales. We were rolling off 300 basis points of I guess between Q3 and Q4. So that sequential lift and same shop sales between the two quarters, we would really encourage customer reaction standpoint.

Got it. And just to clarify Christine, I know you mentioned obviously speed of service within your operations important. Then you also talked about category innovation which is obviously important to her to encourage more trial and increase frequency and the balance for two of those were already three new expenses. They were kind of run counter to one another. How do you think about them more broadly?

Yeah. I think as we think about category and innovation, it really has to be something that's impactful for something that's either driving a new day part or a new occasion for a customer of winning new customers. And then thinking through, what types of -- what types of things are really within their routines that we are already have is the putting sprinkles on top of some things really within our existing routines and doesn't drive really layer of extra complexity whereas other thing Mike to really balancing all of those different things as we think about innovation and adding, but speed of service is really an incredibly important to us as we think through any new innovation anything that we introduced to the shops were always thinking through how will this impact speed quality or service for our customers.

Understood. Thank you.

Thank you.

Our next question comes from Chris O'Cull with Stifel. Please proceed with your question.

Thanks. I had a follow-up question regarding related to mobile ordering in terms of the question, but I'm curious if you guys can just offer any touchstones around that what the size of the mobile ordering opportunity might be, or how you're thinking about the contribution? And then secondly, Christine, I wanted to ask a question about paid advertising. It just seems like paid advertising could be an important tool in the company's Arsenal when it comes to transaction growth. It looked like advertising expense last year at least through the third quarter was relatively flat year-over-year despite, obviously, a lot of sales growth. Just wondering if you expect paid advertising to increase meaningfully year-over-year? And then the company considered budgeting this line is maybe a percentage of sales going forward?

Yes. So I'll take the first question on mobile order and size of the opportunity. So if we look at this on the number one, I think that our customers ask for is an app enhancement is mobile ordering. So, that would point to a center that our customers really, really want this enhancement in our in our app. We also look across the industry and understand how important this type of technology is for customers across the industry. We don't believe that it will be material to our 2024 numbers. However, we do think it's really a big opportunity. We do believe also that it's something that has the potential to bring in new customers and has the potential to introduce new occasions. So if you're in a hurry, and you remember that we had a really long line one day. You can -- you do that if you mobile order, you can adjust your timing and help you get to wherever you are on time on. From an advertising perspective, we would agree with you that we really do believe advertising is an opportunity for us especially as well reaching scale in some of our new markets where we have low brand awareness. As we went into Q4, we did some testing and top of the funnel on advertising, especially in markets like Texas where we know we have a really awesome brand awareness opportunity in front of us.

Thank you.

Our next question comes from Sara Senatore Bank of America. Please proceed with your question.

Hey, thank you. I was wondering -- two questions actually. The first is just if you could maybe decompose that traffic improvement sequential improvement you saw I think you've done in previous quarters you know obviously you had some easier comparisons on traffic. But then kind of understanding how much of that you saw was advertising versus digital versus that any kind of LTOs just as a sort of underlying comp driver question?

Yes. I'll start with the underlying comp driver question and turn it over to Charley for the specific. So we looked at customer behavior in the fourth quarter. We really saw strength in both the midday and afternoon dayparts. We saw growth of us especially our proprietary menu items. So things like Dutch freeze and Rebel. We also saw continued strength in the cold beverage platforms and an increase in mix in cold beverage. We felt like our LTOs really resonated with our customers over the quarter as well. So I think it's a lot of different drivers that really helped to drive an excellent Q4.

Yes. Qualitatively the decomposition of our same-store sales as you know, we reported five, plus five. Our pricing rollover is approximately 5%. Our sales transfer estimate is right in our range of 200 to 300 basis points. And then the balance of that really is the traffic, underlying traffic, which is growing and we note sequentially grew. And so back to Christine comments we really think some of the activities that we activated in Q4 really did help us move from the traffic position in Q3 sequentially to a better performance in Q4.

I think as we noted we also saw really strong performance in the rewards program. So that 65% penetration in transactions. And again, just noting we have so many new shops in the base to have that continue to stay at that nice steady rate is really encouraging to us.

Got it. Thank you. Very helpful. And then just to follow up to that is, how are you thinking or feeling about your ability to use the data you are accruing about your customers and your transactions through loyalty or through digital ordering? Presumably, they're helping to inform what you do across the board, but where are you or whether you want to put it in innings or some kind of other measurement, like just sort of how much progress you're making in sort of the analytics piece of this?

Yeah. I think we're kind of in the second inning moving into the third is what I would say, and feeling really good. So, one, we continue to test different types of offers through the rewards program, so understanding what level of points, what types of promotions work. We also added in a number of giveaway things like Bestie bracelets and the shoe charms that I mentioned, so looking at that. And then all of that is giving us data on how do our customers react to the types of things we're doing. Then we combine this with looking at, how are new customers coming in the brand, so bringing in some external research as well, and looking at that all together to really map out a calendar for the year. That drives the new customers, drives new occasions. And so we feel we're feeling good about the path that we're on in the way that we're able to use data.

Terrific. Thank you so much.

Our next question comes from David Tarantino with Robert W. Baird. Please proceed with your question.

Hi. Hi. Good afternoon. My question, Charlie, is on the new unit productivity. And I was just wondering if you could maybe give us an update on what you're seeing on that front for the most recent class of openings as you completed the most recent fiscal year? And then I wanted to understand a bit more about what you're assuming in the guidance for this year on new stores specifically, because I guess by our math, it looks a little lower than what it was in 2023, but I might have that math wrong. So could you help us out on that front? Thanks.

Okay. Hi, David. So we did have a great year, 31% revenue growth, even levered up 76% same shop sales plus 5%. And our system AUVs notably reached a record high in 2023 of 1.97 million. So we do believe we have opportunities in new markets to both refine that strategy and to build customer awareness. As we mentioned, we've refined the real estate strategy and we're reflecting those learnings on impact and sequence and how we go into new markets. Customers, we know, they love us in new markets once they've tried us and we see the differential really is an awareness between our new and existing markets. But not a difference in satisfaction of visit. We have an opportunity to build those AUVs in new markets with a combination of top of the funnel, which Christine just mentioned, how we're testing that and how we do community building. We're very focused on that. We're very pleased with the early results. But we recognize brand building does take place and building sales over time with new sales later, like mobile order that we just announced. So we do share those system wide AUVs, those company operated AUVs every quarter, reflects how the system is evolving. And we realize that pretty much all ships are going to rise with that tide of how we drive traffic, focus on awareness, focus on brand building. And really, we're going to continue that into next year and try to achieve similar or better results in 2024 in terms of these new market openings.

Understood. I guess maybe I'll ask it a different way. Does the guidance for 2024 include, and when you think about the average weekly sales or average volumes for the 2024 class, are you assuming something similar to what you realized in 2023, at least directionally? Could you comment on that?

Approximately similar. Understand that we will do more sites in existing markets like California. We will do less relative sites in Texas. And as we go through this year and we note that we're opening Florida this week and that's going to be a new market for us. So we would assume a similar result. It will come out in partly how new markets like Florida do. And we're very optimistic about that.

Yeah, David, I think it is as we look at how were we are continuing to update our real estate models as we grow adding in the new data from each of the new shops are open to looking at that performance and again continuing to refine that real estate strategy. So you know assuming -- assuming a similar level the volume but we're continuing to look at ways to enhance both unit and voice.

Great. Thank you very much.

Our next question comes from John Ivankoe with JPMorgan. Please proceed with your question.

Hi. Thank you. The question for the topic I guess is on category innovation and building sales layers. And certainly, that leads me to think about your morning business particularly habitual morning business and how Bros. under indexes relative to some peers. So I wanted to talk about the opportunity that you may have to increase in frequency particularly in them morning and Christine especially given some of your background at a previous employer around executing of food programs that in fact could drive beverage sales if Bros. has any closer to kind of considering piloting some food in some markets especially as we have Mobile Order & Pay finally discussed as an incremental initiative. Thank you.

Thanks for the question, John. So no we are excited about Protein Milk that we launched in Q1. And you think that that actually does serve the unique needs set for folks who are trying to get that all in one protein as they start their morning or continue their afternoon. As we look at innovation going forward in building those sales layers for now we're really, really focused on mobile order and we think that this can be something that is really strong for us and we test this getting this just right and doing it in a way that works for Dutch Bros is going to be incredibly important to us. And I do recognize -- I think we do recognize as we look at where we might have opportunities that the morning day part is one of those areas. So continuing to think through like what worked for others and what would be uniquely Dutch Bros and what can work for us.

Thank you.

Thank you.

Our next question comes from Jeff Farmer with Gordon Haskett. Please proceed with your question.

Thank you. I'm just curious how your Florida development strategy in 2024 and moving into 2025 has been impacted or influenced by everything you've learned with what happened with your Texas development strategy over the last couple of years? So basically lessons from Texas that you're applying the Florida?

Yeah. So a couple of things up to one. I think starting with how do we enter the market we've actually had our mobile data growth unit in Florida and for the last little bit. So building kind of that excitement and awareness as we go into the market. We've gotten some really nice take-up on from the activities that we've done with that we are planning on opening our first shopped in Orlando at the end of at the end of the week. We're also with -- as we look at approving sites through our pipeline we have kicked every single year given the amount of shops for openings were including that in our new models as we go out. And so each time that we will open new shops like an updated as we look at including sites and going into the new market. So we also are not feeling I think we're really looking at that infill strategy and we're finding that a little bit. So we believe that the ultimate outcome is exactly the same as we would have ended up, on our -- on our way to 4000 plus shops. But we do believe that we can tweak that a little bit as we as we go into these new markets like Florida.

That's helpful. Thank you for that. And unrelated a little bit of a pivot here. Just moving back to the potential California price increase that would come in spring of 2024, are you guys looking to protect dollar profit? Are you looking to protect margin on where you take sort of a wait-and-see attitude to at some of the peers do? How are you guys thinking about that bigger picture?

I think in general we'll look at profitability not percentage margin and we are aware of what others are doing. We also want to time anything we do with the, you know, with the media event in the market not lag too much into that that. So we'll take some price. We know that and we're a value evaluating that right now. We're ready when that happens.

Thank you.

Our next question comes from Andy Barish with Jefferies. Please proceed with your question.

Thanks. Good evening. I'm just wanted to kind of work up some of the margin puts and takes you gave us to the -- to sort of the restaurant level shop level of profitability. Charley, and I just wanted to make sure well the Chris mentioned on California as well as the manager and pay increases standing in 4Q. Is that combined expected to be about 50 basis point to 100 basis point impact on the labor line for 2024? And is that kind of the you know the primary mover in shop level margins or do you anticipate kind of any other lines that we should be paying attention to there?

So in terms of the forward guide you're correct. It's the combination of those two wage events that are the largest driver of any margin contractions. We are making some other P&L investments. We will support what we need and Mobile Order & Pay towards the end of the year and other technology things that we're going to be ready to go and make sure our point-of-sale system in our operations are ready for some investment there. And then we get to offset that by continuing to get SG&A leverage service. So that the net margin contraction we're expecting it into an adjusted EBITDA level is what we mentioned there which is about 50 basis points to 100 basis points in aggregate.

Got you. Helpful. And then Christine there was some early back in the previous regime discussion on operational efficiency opportunities through TAP systems. And I know a lot of other things have moved to the forefront. But where do you -- where do you envision that at this point on you know in terms of from revisiting that that potential initiative down the road?

Yes. What I would share on that as throughput is still really important to us. We know that our long lines can be an inhibitor sometimes to our customers visiting us more frequently. Specifically, as we look at TAPs we have rolled out to over 100 shops now on the TAP system. And so we are encouraged by the results that we're continuing to see with the Tap system. We are also planning on investing in the TAP system to put it into a majority. We have our new shops as we roll out new shops as well.

Great. Thank you very much.

Thank you.

Our next question comes from Nick Setyan with Wedbush Securities. Please proceed with your question.

Thank you, and congrats on a great Q4. My question is, you mentioned sort of a margin impact from the labor investments. Does that before any pricing actions or does that actually contemplate the pricing actions within that guidance?

Yes, it does contemplate some pricing within the guidance. We did take price a little bit of price in January related to some of the minimum wage movers and legislated markets already. And then it does contemplate a level that will take through the through the year, the California situation and others as well. So that's and that's really the net impact.

Got it. And so, going into the call I had about 4% in Q1 and Q2 in terms of pricing. Is that correct, 4% in Q1 and Q2 in terms of menu pricing?

Roughly low single digit rollover is our -- is in the '24 come in from '23. If you look at our price move and I think it's also very important to note that we had been bolstering our margins throughout '23 to help us to prepare to take off on what's coming at us in '24.

Okay, so low single-digit percentage in Q1 and Q4.

That's the rollover. So that's the rollover that's in place already from 2023 pricing. And then there's additional pricing that we're clearly signaling that we're going to take in 2024.

And then we did take some pricing in Q1 in January in line with some wage increases in some of the western states including Arizona, California, Colorado and Washington.

Okay. Fair enough. And then you know you mentioned entering 2024 with a lot of comp momentum, any sort of incremental clarity around what quarter-to-date trends look like relative to Q4?

No. I mean what we what we shared in our prepared remarks is kind of where we are is I think like everyone else, we saw some impacts of weather, but outside of the weather will really pleased with what we saw in January.

Got it. And then just on the COGS line sequentially a little bit of an uptick on the COGS line. Charlie, how are we thinking about sort of COGS in 2024? Could we actually see some leverage there?

So direct ingredient costs have moderated, but we also know that sugar is continuing to rise and that's a that's part of our basket and that our distribution costs are still pretty sticky given energy costs and wages involved in that given or a small drop business. So we think COGS is a pretty benign impact in '24, we're not expecting a lot of benefit there.

Fair enough. Thank you very much.

There are no further questions at this time. I'd now like to turn the floor back over to Christine Barone for closing comments.

Thank you for your questions. As we conclude, I wanted to highlight our recently completed Dutch Bros gift pack. Each year, our shops, customers, franchisees and foundation work together to donate to local organizations working to end hunger in our communities. This year, we adjusted the gift pack back and pivoted from one day of giving to a campaign that allowed us to make a $1 donation for Dutch loved feature drink full from February 1st through the 18th. This campaign not only drove traffic and also gave our customers an opportunity to give each time they came to our window and it was a huge success. I look forward to announcing our results soon and I'm grateful for the opportunity to truly live up to our mission of making a massive difference one cup at a time. In closing we are pleased with our strong results in Q4 and believe we are in a position of strength entering into 2024. I want to thank all of our teams to create this exceptional performance by connecting with our customers and communities every single day. Thank you.