管理層發言
Greetings, and welcome to The 1 Group Second Quarter 2026 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to Nicole Thaung, Chief Financial Officer. Please go ahead.
Thank you, operator, and hello, everyone. Before we begin our formal remarks, let me remind you that part of our discussion today will include forward-looking statements. These forward-looking statements are not guarantees of future performance, and you should not place 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. Please also note that these forward-looking statements reflect our opinion only as of the date of this call. We undertake no obligation to revise or publicly release any revisions of these forward-looking statements, considering new information or future events. We refer you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. During today's call, we will discuss certain non-GAAP financial measures which we believe can be useful in evaluating our performance. However, the presentation of these measures or other information should not be considered in isolation, as a substitute for results prepared in accordance with GAAP. For reconciliations of these measures, such as adjusted EBITDA, restaurant operating profit, comparable sales, and total food and beverage sales at company-owned, managed, licensed, and franchised units to GAAP measures, along with the reasons why we consider these measures useful, please see our earnings release issued today. With that, I would like to turn the call over to Manny Hilario.
Thank you, Nicole, and good afternoon, everyone. I appreciate you joining us. I want to start, as I always do, by thanking our team members. Every day, our teams across every brand and market work to create memorable experiences for our guests. Today, consistency is more important than ever, and I want to recognize their drive in providing operational excellence and upholding our commitment to Vibe Dining™ that defines who we are. With that, let me turn to an overview of our quarterly performance, walk through our progress on our strategic priorities, and then hand things over to Nicole for a closer look at the financials. We made significant progress in driving market share this quarter, with our segments reporting positive transactions for the quarter. We expanded restaurant level margin. We generated $33 million in operating cash flow in the first six months of 2026, nearly tripling the $11 million we generated over the same period last year. And we reduced year-to-date net capital expenditures by approximately 38% compared to the first half of 2025 and used our improved cash generation to pay down debt. This is the combination we set out to deliver: stronger returns, more disciplined capital deployment, and a cleaner balance sheet. Consolidated restaurant-level operating profit margin increased 110 basis points to 16.4% compared to 15.2% a year ago, reflecting the operational discipline we have embedded across the business. The STK segment demonstrated strong margin expansion of 130 basis points, improving to 17.4%. The Benihana segment also demonstrated solid growth, expanding 90 basis points to 18.9%, and remains our strongest margin segment. Turning to revenue. Total revenue was approximately $200 million, down 3.2% from a year ago. This decline was primarily anticipated and driven by our planned optimization of the growth concepts portfolio. The one variable outside of our control was the timing of the STK Downtown New York relocation, which was planned for the second quarter but delayed until July. This was a relocation of our original STK in Downtown New York City. Our comparable sales results are indicative of our core business strength. Consolidated comparable sales grew 0.9% for the quarter, with U.S. STK restaurants delivering 3.2% comparable sales growth and Benihana restaurants growing 0.8%. All segments posted positive transaction growth. Our comparable sales results were modestly affected by World Cup impacts as consumers shifted dining occasions to watch matches, particularly during evening and weekend dayparts when our restaurants are busiest. Benihana was also impacted by elevated temperatures in select markets, which affected traffic during the quarter. These represent temporary headwinds that have now passed and should not persist into the third quarter. Now, let me update you on our four strategic priorities. Our first strategic priority is accelerating comparable sales through disciplined execution. The improvement we saw in comparable sales, particularly at STK, reinforces that the strategy is working. We continue to grow our relative market share to positive traffic in all our segments. The barbell strategy that defines our brand continues to deliver strong results. During the week, our value programming leads the way. Our $3, $6, $9 happy hour remains one of our most consistent traffic drivers in the early evening and late night. While our weeknights date nights initiative is driving incremental traffic during historically slower periods and creating new opportunities across all brands. On weekends and around celebrations, our premium steak and seafood offerings continue to perform strongly. Guests are being deliberate when they trade up and when they look for value. Our model captures both ends of that spectrum. Our balanced approach is working. Mother's Day, Father's Day, and graduation season represent distinct moments where guests seek out our restaurants for premium offerings and a celebratory atmosphere. All three occasions performed strongly across the portfolio. Our Friends With Benefits loyalty program continues to gain momentum. We are adding many new organic members each week and newly enrolled guests show strong repeat participation. Loyalty members spend meaningfully more per visit than non-loyalty guests, and as the program grows, it represents an increasing share of our overall quarterly transactions. We strategically target our Friends With Benefits members around Mother's Day, Father's Day, and graduation season using personalized outreach to drive traffic during these occasions. We remain focused on growing membership, driving organic sign-ups, and increasing engagement to strengthen brand connection and repeat visits. We are also driving growth through seasonal innovation. This quarter, our culinary and beverage teams launched and emphasized premium offerings including new white-glove cuts and innovative top-shelf liquor cocktails. We also will be adding new dishes built around fiber and whole grains, including a new quinoa option, which supports the broader wellness and GLP-related diet trend we are seeing among our guests. We launch new food and beverage menus four times a year, keeping our offerings fresh, differentiating ourselves from competitors, and generating strong social media engagement. We expanded our off-premises business heading into the summer travel season with a particular focus on curbside operations. Burgers and sides drive strong takeout and delivery volume across all brands, and Benihana and RA's Fried Rice Burritos have performed well in that channel. While off-premises represents a smaller share of our business than dine-in, it delivers a strong margin profile and allows us to capture additional occasions when guests want the brand without committing to a full dine-in experience. Our second priority is capital-efficient growth. We are making meaningful progress on both our company-owned and franchise expansion initiatives. We opened two new company-owned restaurants: STK Downtown Phoenix in June, and the relocation of our Downtown New York City STK restaurant to Chelsea in July, each at a cost of $1 million or less after tenant improvements. In July, we also completed the conversion of our Kona Grill location in Riverton, Utah into a Benihana restaurant, following the same playbook we used in Scottsdale, Arizona last year. Our development pipeline remains focused and heavily weighted toward capital efficiency. We plan to open six to ten venues in 2026, prioritizing locations that require $1.5 million or less in net capital investments. The majority are asset-light, meaning that they require little to no upfront capital or investment from us. Additionally, we are prioritizing our existing lease pipeline over new commitments. That approach is deliberate, giving us the flexibility to navigate an uncertain consumer environment while still investing in the highest-return opportunities. Beyond our core domestic expansion, we are also advancing strategic partnerships. We signed a license agreement to bring RA to Canada at Niagara Falls, with an opening expected by year end. Our regional projects showcase how we are deploying this capitalized strategy across our portfolio. In Baltimore, we are advancing a single project site into two brands: an STK and a Kona Grill Bistro, a smaller-footprint Kona Grill model, both under construction as part of the Kona Grill Baltimore conversion. STK also recently signed a contract for two airport license locations at a major U.S. airport. Franchise Benihana and Benihana Express are expected to drive the bulk of our near-term openings. I am particularly excited about the long-term potential for the Benihana Express brand. As we previously reported, we purchased a Miami Benihana Express location from an exiting franchisee and have begun accelerating the growth of the concept. With this model, we can deliver a Benihana fix on the go. With cost of goods and labor margin benefits of approximately 20%–25% respectively, the 800 to 1,000 square foot box can deliver over 50% prime margin and annual revenues greater than $1 million. We anticipate the developed cost to be about $500 per square foot, resulting in substantial returns. We believe these economics will make the Benihana Express plan highly marketable to the franchise community; its flexible footprint is easy to build and deploy in many markets. We currently have a company-owned Benihana Express under construction in Denver and a licensed Benihana Express in the Fort Keys in development, all expected to open by year end. With a disciplined pipeline focused on high-return, capital-efficient opportunities, we are positioned to drive meaningful growth while maintaining financial flexibility. We remain confident in our ability to execute this strategy and create lasting shareholder value. Our third priority is portfolio optimization to improve returns. As previously discussed, we continue converting certain RA locations into higher-performing STK and Benihana restaurants. Through January 2026, we previously identified and tentatively closed six RA and Kona Grill restaurants for conversion. What remains is a healthy, profitable base expected to generate strong revenues and profitability. As of today, we have reopened two conversions. Each conversion is budgeted between $1 million and $1.5 million and expected to be EBITDA accretive. Scottsdale, our first conversion, continues to validate the thesis of increased revenues and a healthy ROI. Going forward, we will continue to assess the portfolio as leases expire, which typically occurs for one to two RA locations each year. Our fourth priority for 2026 is conserving cash and optimizing the balance sheet. The second quarter shows that discipline is taking hold. We ended the period with $70 million in cash and short-term credit card receivables, and $28.7 million of availability under our revolving facility. Our long-term loan facility currently carries no financial covenants. The clearest signal is in our cash generation. Operating cash flow for the first six months of 2026 reached $32 million, up from $11 million a year ago. We put that cash to work repaying over $4 million on the term loan facility and $2 million on the revolving facility. We are generating a significant amount of free cash flow and we expect to continue to do so in the foreseeable future. We also continue to evaluate opportunities to refinance our credit facility on more favorable terms as our leverage profile keeps improving. This is a trajectory that we outlined in our last call. We expect to generate free cash flow in 2026, and debt reduction remains a top priority alongside creating shareholder value. Before I turn it over to Nicole, I want to be clear about one thing. Everything I have outlined today is execution, not hope. These are initiatives within our direct control and they are delivering measurable results today, not commitments for tomorrow. With that, I will turn it over to Nicole.
Thank you, Manny. As a reminder, beginning this year, we are reporting financial information on a fiscal quarter basis using four 13-week quarters with the addition of a 53rd week when necessary. For 2026, our fiscal calendar began on 12/29/2025, and our second quarter contained 91 days, which is consistent with the prior-year quarter. Consolidated comparable sales are reported on the same number of days year over year. Let me start by discussing our second quarter financials in greater detail, before introducing our third-quarter outlook and updating our fiscal year 2026 guidance. Total consolidated GAAP revenues were $201 million, decreasing 3.3% from $207 million for the same quarter last year. Included in total revenues were company-owned restaurant net revenues of $197 million, which decreased 3.2% from $204 million for the prior-year quarter. The decrease was primarily attributable to the closed RA concept restaurants, partially offset by an increase in comparable restaurant sales and sales from new restaurants opened since July 2025. Comparable restaurant sales increased 0.9%, which included positive transaction growth in all segments. Management, license, franchise, and incentive fee revenues decreased slightly to $3.2 million from $3.5 million in the prior-year quarter. The decrease is primarily due to the exit of a management agreement in Scottsdale, Arizona during the second quarter of 2025. As previously noted, the managed location was replaced with a conversion of a former RA to a company-owned STK in the second half of 2025. Now turning to expenses. We continue to implement targeted cost management initiatives. Last year, we made strategic adjustments to our beef tenderloin sourcing that is still favorably impacting our cost of sales. We drove better labor through improved scheduling management, and we are still realizing the synergies from the Benihana acquisition. Company-owned restaurant cost of sales as a percentage of company-owned restaurant net revenue improved 170 basis points to 19.5% from 21.2%. This improvement was primarily due to integration synergies, supply chain initiatives, menu optimization, and increased menu pricing. This is not a one-quarter story. Cost of sales has now improved for six consecutive years, from 25.5% in 2021 to 19.5% today. Company-owned restaurant operating expenses as a percentage of company-owned restaurant net revenue increased 50 basis points to 64% from 63.5%, reflecting incremental marketing investment to drive traffic during the World Cup and additional repair and maintenance spend to expand air conditioning capacities at Benihana during the summer heat wave. Importantly, on a combined basis, including cost of sales, total owned operating expenses improved 110 basis points to 83.6% from 84.7%, meaning the progress we made on cost of sales more than offset these deliberate near-term investments. Restaurant operating profit was $32.4 million, or 16.4% of owned restaurant net revenue, improving by 110 basis points from 15.3% in the prior quarter. On a total reported basis, general and administrative costs increased $2.3 million to $14 million from $11.7 million in the same quarter prior year, driven by inflation on salaries, higher bonus expense, planned investment in information technology, including AI-related technologies, and increased travel expenses. We believe that fuel prices have directly impacted our travel costs. When adjusting for stock-based compensation of $1.1 million, adjusted general and administrative expenses were $12.9 million compared to $10.2 million in the second quarter of 2025. As a percentage of revenues, when adjusting for stock-based compensation, adjusted general and administrative costs were 6.4% compared to 4.9% in the prior year. Our updated full-year general and administrative expense guidance of approximately $50 million remains roughly $21 million below where pre-acquisition run-rate spending adjusted for inflation would otherwise be today. Depreciation and amortization expense was $11 million compared to $10.9 million in the prior-year quarter. This slight increase is attributed to new restaurants opened during the previous 12 months. Lease termination and restaurant closure expenses were $900 thousand, primarily related to the grill concept optimization and the relocation of the Downtown New York City STK restaurant. Preopening expenses were $2.9 million, primarily related to payroll, training, and other costs for STK Downtown Phoenix, which opened in June, the delay of the STK Chelsea opening, which opened in July, and preopening rent for restaurants under development including $1.1 million in noncash rent. Preopening expenses increased by $1.3 million compared to the prior-year period. Transition and integration expenses were $200 thousand, down from $3.9 million in the prior-year quarter, as we near completion of the integration of the Benihana and RA acquisition. Operating income was $6.6 million compared to operating income of $700 thousand in the second quarter of 2025, an increase of $5.9 million primarily due to improved restaurant operating profit and the reduction in transition and integration costs. For reconciliation, please refer to our press release issued earlier today. Interest expense was $9.6 million compared to $10.3 million in the prior-year quarter. Our weighted-average interest rate was 10.1% compared to 10.8% in the prior-year quarter. Benefit for income taxes was $700 thousand compared to a $700 thousand expense in the prior-year quarter. Net loss attributable to The 1 Group Hospitality Inc. was $2.1 million compared to a net loss of $10.1 million in the second quarter of 2025. Net loss available to common stockholders was $12 million compared to $18.2 million in the second quarter of 2025. Adjusted EBITDA attributable to The 1 Group Hospitality was $21.1 million compared to $23.4 million in the prior-year quarter, a decrease of 9.7% primarily due to increased investment in marketing during the quarter and the increase in general and administrative expenses, excluding stock-based compensation, as previously discussed. We finished the quarter with $17.1 million in cash and short-term credit card receivables. We have $28.7 million available under our revolving credit facility, subject to certain conditions. And as Manny said, our term loan does not currently require a financial covenant. I would like to provide some forward-looking commentary regarding our business. This commentary is subject to risks and uncertainties associated with forward-looking statements as discussed in our SEC filings. We remind our investors that the actual number and timing of new restaurant openings for any given period is subject to factors outside the company's control, including macroeconomic conditions, weather, factors under the control of landlords, contractors, licensees, and regulatory and licensing authorities. Based on the information available now, and the expectations as of today, we are issuing the following financial targets for the third quarter of 2026. Please note that due to seasonality, the third quarter historically represents 10% to 15% of the full-year contribution. Beginning with the top line, we project total GAAP revenue between $176 million and $180 million, which reflects our anticipation of consolidated comparable sales of 0% to 2%. Managed franchise and licensee revenues are expected to be approximately $3 million. Total company-owned operating expenses as a percentage of company-owned restaurant net revenue between 85% and 87%. Total general and administrative expenses, excluding stock-based compensation, of approximately $12.5 million. Adjusted EBITDA between $12 million and $15 million. And finally, preopening expenses between $1 million and $2 million. Based on our year-to-date results, information available now, and our expectations as of today, we are also updating the following financial targets for fiscal year 2026. We project total GAAP revenues between $805 million and $820 million, which reflects our anticipation of consolidated comparable sales of 1% to 2%. Managed franchise and license fee revenues are expected to be approximately $14 million. Total company-owned operating expenses as a percentage of company-owned restaurant net revenue of approximately 82%. Total general and administrative expenses, excluding stock-based compensation, approximately $50 million. Adjusted EBITDA between $95 million and $105 million. Restaurant preopening expenses between $6.5 million and $7.5 million. Interest expense net of interest income between $38 million and $39 million. An effective income tax rate of approximately 10% to 20%. Total capital expenditures net of allowances received from landlords of $30 million. And finally, we plan to open six to ten new venues. I will now turn the call back to Manny.
Thank you, Nicole. Before we take questions, I want to underscore our confidence in our business. Even against a mixed consumer backdrop, our results this quarter show that our strategy is working. We have expanded our market share through traffic growth in all segments. We generated substantially more cash than a year ago while investing less capital to do it. And we are very excited about the expansion of the Benihana Express brand. Backed by consistent execution, a stronger portfolio, and growing franchise capabilities, we are well positioned to build on this momentum into the second half of the year. We appreciate your ongoing support and look forward to updating you on our progress in coming quarters. As always, special thanks to our team members around the world who bring our mission to life each day — creating memorable guest experiences by running the best restaurants in every market and delivering outstanding service to every guest every time. Nicole and I look forward to your questions. Operator?
分析師問答
Thank you. We will now be conducting a question-and-answer session. You may press 2 if you would like to remove your question from the queue. The first question is from Joe Gomes from Noble Capital Markets. Please go ahead.
Good afternoon, Manny and Nicole.
Hi, Joe.
Hey, Joe.
I was wondering if you can give us a little more color on the impact of the New York City relocation on the quarter on the top line.
Yeah. I mean, I think the restaurant relocation, we were expecting revenues to be somewhere between $150,000 and $200,000 a week. We were expecting it to open at the beginning of the quarter in Q2, and it ended up opening in July. There were a lot of reasons for that, but the primary reason is it was very difficult to get the inspections done in the City of New York, particularly during the next run for the championship. We had a lot of challenges getting all the inspectors in and out of the restaurant to get the inspections done. The restaurant was built by the beginning of April and we were ready to go, but we could not get all the clearances necessary to get into business. Now the costs: because we had a full staff and a full team there, the only direct operating costs we offset would have been variable costs like food costs and some operating supplies. But since we lost the revenues, we had a lot of the fixed costs already loaded in.
Okay. Thank you on that. And maybe that kind of plays into my next question a little bit here. Even though owned operating expenses declined year over year to 83.6%, you guys had guided at the end of the first quarter to 81% to 82%. I just wanted a little more color on why they were above what you were guiding to.
Most of the expense differential was marketing expenses. Obviously, going into the World Cup, we never anticipated the success that the World Cup was going to have as a TV event, particularly around prime-time games. We had to spend more marketing dollars in the quarter than we had expected. So I would say the majority, if not all, the cost differential in the quarter was primarily due to marketing costs that we spent.
And then maybe, Manny, give us a little update here. You talked about, in certain locations, the summer heat. We just talked about the World Cup here. How's demand through July? Have you seen any changes given the economy out there? Are you having to continue that higher-than-expected marketing spend? Maybe just a little more color on what you have seen so far in the early days of the third quarter.
Yes. I want to reemphasize we were positive traffic in every single one of our segments — STK, Benihana, and the grills — all showed positive traffic in the quarter and coming into the third quarter. I think the momentum has continued. I think the World Cup not being on TV is actually a net positive for us right now. So I would say that we have seen a net positive on our trajectory because of what is going on with the World Cup. I think the World Cup being over is beneficial to us.
And then one last one here for me, and I will get back in queue. You talk a lot about Benihana Express. It sounds like that could be a real nice growth area for you. Maybe you could talk a little bit more about franchisee interest to date, and when we might see more announcements of some bigger franchisee agreements to open more than just one or two?
We acquired the restaurant back from the franchisee toward the end — actually the beginning of the second quarter — so we have really only been working on it directly for about three to three and a half months. We have done a lot of work in terms of branding and design elements. Because we need a prototype and a build-out, if you go to the website www.benihanaexpress.com, you can see exactly what we are doing with the brand. There is a lot of branding elements that we have worked on already. You can also look at the developments coming forward: we have three new sites for Benihana Express. We have one restaurant that is already a licensed location — our East La Mirada is actually a licensed location — and we have had interest in the last couple of weeks for additional ones. I think the pipeline is really coming through. Having a prototype and designs for future locations make a big difference in marketing the concept to potential franchisees. The economics are great. We know what the economics look like because we do have the Brickell location, so we know food cost and labor. Those are the two big items franchisees focus on. What excites us is the size of the footprint: 800 to 1,000 square feet. With favorable food cost and labor, it should provide incredible returns for franchisees. Again, the revenue model is already proven because the prototype is doing greater than $1 million in revenue. All the pieces are now together, and we will continue working on our sales process to bring in more franchisees.
Great. Thanks, Manny. I will get back in queue.
Thank you, Joe. The next question is from Anthony Lebiedzinski from Sidoti and Company. Please go ahead.
Thank you. Good afternoon, everyone, and thanks for taking the questions. First, wondering if you guys saw any notable regional differences across your operating areas, or was it more or less consistent in terms of traffic and same-store sales?
I think geography in the quarter was more associated with temperature. There were a significant number of markets in the second quarter that experienced high temperatures. The Midwest comes to mind, and maybe even the Northeast had a couple of weeks of extreme weather. So the big driver of geographical differences was weather. The World Cup also made a difference depending on game times. If games were on during prime time, like 7 PM on the West Coast, you could notice a dip in California markets. Other than that, it was basically weather and some TV scheduling on the games. I did not really see anything more directly tied to consumer trends. Our Las Vegas STK restaurant continues to do very well; velocity there is very impressive.
Gotcha. Thanks, Manny. When we look at EBITDA for the second quarter, you came in at roughly $21 million and the guidance was $24 to $26 million. Thinking about the delta, was that mostly the New York relocation happening later than planned, or was there anything else meaningful to call out?
I would break out the delta roughly: 40% is the New York location and 60% is marketing. So that is how I would attribute the variance.
Got it. And lastly for me, as far as beef costs, have you guys locked in anything beyond September, or how should we think about that?
We have already locked in a significant amount of beef through the rest of the year, so we do not foresee a negative impact for the remainder of the year. We were already pretty locked in through September, and we have arrangements for a significant amount of our restaurants from September until year end. I do not expect a negative impact on margins because of beef. As Nicole mentioned, our COGS continue to be in the 19.5% range, so we are very happy with our cost performance and expect to continue that for the remainder of the year.
Alright. Sounds good. Thank you, and best of luck.
Thank you, sir.
The next question is from James Sanderson from Northcoast Research. Please go ahead.
Hey, thanks for the question. I wanted to go back to the change in guidance. Compared to last quarter, your revenue guidance is down by about $35 million. Could you level set that for us and explain the key drivers of that change?
On revenue, the big driver is that we are going asset-light. The majority of our opening pipeline for the rest of this year is mostly license and franchise sites. Some of the conversions we had in place have been deferred until the end of the year. Frankly, our preference is to franchise some of those out. We are actively pursuing an asset-light strategy. The trade-off is less revenue from company-owned locations in exchange for royalties and less capital expenditure. You can see that in our guidance: we also reduced CapEx from $40 million down to $30 million. We are focusing more on free cash flow and using that cash to work on our debt position, while evaluating where it makes sense to do company-owned restaurants. So the revenue shift is primarily due to going asset-light and a change in same-store sales guidance for the overall year.
Alright. You also mentioned that going forward you have maybe one to two lease reviews per year from the grill locations. Is that the right way to look at the risk of closures — those renewal points each year?
We do not have any plans for additional grills in the portfolio right now. As we reviewed the portfolio internally, we see some markets where grills are exposed to certain venue dependencies, like movie theaters. Movies have been robust recently, and some of our grill locations are in markets tied to those venues. We are happy with the progress we made on portfolio rationalization of the grills.
And last question for me: you mentioned franchising Benihana Express and described strong economics. How have you sized this opportunity? How many locations could there be in the U.S., and do you plan to market the concept to investors or developers?
We view Benihana Express as a large opportunity. We can bring craveable Benihana food on the go in an 800 to 1,000 square foot retail box, which is abundant across the U.S. We have not put a formal cap on the number, but we think the opportunity is sizable. The Brickell location is doing about $1.2 million in revenue, demonstrating a robust top line in a small footprint. COGS and labor are efficient, allowing healthy returns for franchisees even with royalties. We have already designed two or three smaller-footprint locations and worked with potential partners on them. Everything we need — product, design, operational model — is defined. It is now a matter of bringing in the right franchisees. It is also easy to train because you do not need a teppanyaki chef; it is a more standard back-of-house operation, widening the pool of potential operators.
Could you remind me what the royalty rate is you would expect to generate on those stores?
Benihana franchisees historically were getting 6% to 7% in royalties and marketing contributions. The license deals we are discussing on the grills are targeting economics comparable to that, and those are the rates we would expect to generate on future Benihana Express deals.
One last quick one: you mentioned some strength in Las Vegas and momentum in July. Is it fair to say gas prices did not materially affect consumer demand from your perspective, despite earlier concerns?
We focus more on our initiatives. We don't have definitive intelligence to isolate the impact of gas prices specifically. The general consumer environment is challenging and you can see trade-downs across the industry, which is why our barbell approach works well: we provide value access points and premium upsell opportunities. We see impact in how consumers are discrete with spending, but traffic has been very good overall.
Thank you very much. I will pass it on.
There are no further questions at this time. I would like to turn the floor back over to Manny Hilario for closing comments.
All right. Well, again, I would like to thank everyone for being on this call. As always, I would like to thank our teammates for a great job in driving great experiences and traffic into restaurants. I look forward to seeing everybody in our restaurants. Everybody have a good afternoon.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.