BJ's Restaurants (BJRI) Q1 2023 Earnings Call Transcript

Logo of jester cap with thought bubble.

Image source: The Motley Fool.

BJ's Restaurants (NASDAQ: BJRI)
Q1 2023 Earnings Call
Apr 27, 2023, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello and welcome to BJ's Restaurants, Inc. Q1 2023 earnings release and conference call. All participants will be in listen-only mode. [Operator instructions] After today's presentation, there will be an opportunity to ask questions.

[Operator instructions] Please note this event is being recorded. I'd like to turn the conference over to Greg Levin, chief executive officer and president. Please go ahead.

Greg Levin -- Chief Executive Officer and President

Thank you, operator. Good afternoon, everyone, and welcome to BJ's Restaurants fiscal 2023 first quarter investor conference call and webcast. I'm Greg Levin, BJ's chief executive officer and president. And joining me on the call today is Tom Houdek, our chief financial officer.

We also have Greg Lynds, our chief development officer on hand for Q&A. After the market closed today, we released our financial results for the first quarter of 2023, and you can view the full text of our earnings release on our website at www.bjsrestaurants.com. Our agenda today will start with Rana Schirmer, our director of SEC reporting, providing our standard cautionary disclosure with respect to forward-looking statements. I will then provide an update on our business and current initiatives, and then Tom Houdek will provide some commentary on the quarter and the current environment.

10 stocks we like better than BJ's Restaurants
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and BJ's Restaurants wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of April 24, 2023

After that, we will open it up to questions. So, Rana, please go ahead.

Rana Schirmer -- Director of Securities and Exchange Commission Reporting

Thanks, Greg. Our comments on the conference call today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements of the company to be materially different from any future results, performance, or achievements expressed or implied by forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements.

Our forward-looking statements speak only as of today's date, April 27, 2023. We undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events, or otherwise unless required to do so by the securities laws. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements contained in the company's filings with the Securities and Exchange Commission. Greg?

Greg Levin -- Chief Executive Officer and President

Thank you, Rona. BJ's delivered record first quarter revenue, growing more than 14% compared to a year ago. Our Q1 results demonstrate the affinity guests have for the BJ's concept. We are unmatched in the industry given our polished casual positioning, broad varied menu, with AUVs of more than 6 million and growing, and our focus on delivering gold standard operational service and gracious hospitality to our guests each and every day.

Given these factors and our unwavering commitment to taking care of our guests, our first quarter comparable restaurant sales and guest traffic continued to beat the industry as measured by Blackbox. Our first quarter comparable restaurant sales increased 9% with our average weekly sales for the quarter rising above 121,000. We also made meaningful progress on our restaurant-level margins, reaching 12.6% compared to 9.8% last year despite continued inflationary pressures. Our ability to grow our top line and leverage the incremental sales is a testament to our restaurant management teams who are executing well against our sales driving and productivity initiatives while delivering gold standard service to our guests.

The best way for us to continue improving our margins is by driving top-line sales. Every additional sales dollar earned leverages the fixed elements of our restaurants cost structure and flows through to profit at a higher rate. To that end, we continue to focus on a variety of initiatives aimed at increasing top-line sales. All of these sales initiatives must begin with a focus on the guest and how we can improve the guest dining experience at BJ's.

We know from our consumer research that guests come to BJ's for an experiential dining experience that is rooted in our brewhouse theater environment with a best-in-class bar statement. Familiar foods made brewhouse fabulous served by our talented team members whose mission is to deliver gold standard service and hospitality every day. To that point, we continue to execute against our remodel plan so that we maintain our competitive differentiation around our high energy, polished casual positioning, and brewhouse theater environment. As you may recall, our remodel program includes a variety of potential improvements including additional seating capacity and updated bar statement, new lighting, artwork, booths, and tables to name just a few items.

The new bar statement is amazing and includes a much lighter, more contemporary bar featuring a new 130-inch television that screams brewhouse theater to all guests. As we noted last quarter, we plan to remodel at least 30 restaurants this year, or approximately 15% of our base. To date, we have completed nearly half of the 2023 planned remodels in addition to the nine we completed last year, which all are driving incremental comp sales for these restaurants. Our culinary and menu strategy is rooted in the familiar items made brewhouse fabulous based on our guest research.

Last year, we began testing a smaller yet broad menu focused on these core familiar-made brewhouse fabulous items. Based on the success of this test, we plan on introducing this new menu in July. This new menu will have approximately 10% fewer items, allowing us to improve daily execution while reducing inventory and prep hours in our kitchen. It will also allow us to introduce future menu innovation while keeping our overall menu tight.

Additionally, later this year, we are planning another test with removal of additional items while continuing to provide the guest variety BJ's is known for. From a menu pricing strategy, our goal is to maintain a good, better, best pricing strategy that allows for guests to receive excellent value across all price points and have the option to indulge with more premium items if they so choose. To that point, we have maintained our Daily Brewhouse Specials, lunch menu, and Happy Hour prices to provide value options for all guests while maintaining a higher price strategy with our craveable and differentiated proteins, including slow roast items like our double bone-in pork chop and prime rib and our fresh Atlantic salmon for guests looking for a more premium experience. The execution of our sales driving initiatives is not possible without the commitment and passion of our talented team members.

Over the last couple of years, we have added a lot of new faces to the BJ's family. Therefore, beginning next month, we are implementing a series of sales driving and optimization initiatives to enhance our dining room and kitchen execution, including updated gracious hospitality procedures and improved kitchen systems and prep procedures. These initiatives will uplift our already strong net promoter scores, drive sales, and optimize our efficiencies in our restaurants so that we can better leverage our increasing sales and continue taking care of our guests. In addition to our sales driving initiatives, we continue to execute against our cost savings programs to drive margin expansion.

As we previously discussed, last year, we launched a cross-functional initiative to identify at least 25 million affordable cost savings opportunities that will benefit our restaurant operating margins while maintaining our quality standards. Given the progress to date and the number of opportunities still being explored, we are confident that we will achieve our 25-million goal. Importantly, we won't stop there as we continue to vet additional opportunities to ensure we maximize savings across our business, while of course still providing great quality and value to our guests. While driving top-line sales and improving margins are top of our priority list this year, we continue to complement these initiatives with new restaurant openings.

As we said many times, we believe there's an opportunity to double the number of BJ's locations in the U.S. However, we will continue to execute our expansion strategy at a rate that provides high-quality sites and execution for growth's sake. Our new restaurants continue to provide solid results as the BJ's restaurant concept remains in strong demand by guests across many regions throughout the U.S. To date, we have opened two new restaurants and expect to open three more restaurants this year for a total of five new restaurants in fiscal 2023.

Our first new restaurant this year opened in Orland Park, Illinois, which is our first restaurant in Illinois after building many successful restaurants in the Midwest, including Ohio, Indiana, and Michigan. We are very pleased with the strong sales performance of our new restaurant openings. In fact, our restaurant class from 2022 and 2023 to date has maintained average weekly sales approximately 20% higher than our other restaurants. And our two new restaurants opened this year are averaging approximately 150,000 in weekly sales.

In summary, we are focused on a comprehensive set of initiatives aimed at significantly increasing our average weekly sales, growing our restaurant margins, and continuing our national expansion, driving toward a goal of growing BJ's sales to 2 billion and beyond while delivering meaningful earnings growth and shareholder returns. In the meantime, we are incredibly and increasingly confident that guests' affinity for our brand and concept, coupled with the trajectory of our business, and our current growth and margin-enhancing initiatives will enable us to achieve attractive near and mid-term overall growth and margin objectives. Now, let me turn it over to Tom to provide a more detailed update from the quarter and current trends. Tom?

Tom Houdek -- Chief Financial Officer

Thanks, Greg. And good afternoon, everyone. I will provide details of the quarter and some forward-looking views. Please remember, this commentary is subject to the risks and uncertainties associated with forward-looking statements as discussed in our filings with the SEC.

In the first quarter, total sales grew 14% to $341.3 million. Because of the 53rd week in 2022, our Q1 period ends on April 4 this year as compared to March 29 last year. On a comparable restaurant basis, sales increased by 9% over the same weeks as last year, calculated by shifting the 2022 period by one week to end on April 5. Without this shift and using our fiscal Q1 2022 weeks as the comparable restaurant base, our first quarter comparable restaurant sales rose 10.7%.

The comparable sales improvement, in conjunction with improving operating efficiencies and further progress on our cost savings initiatives, contributed to BJ's first quarter margin improvement. Our restaurant level cash flow margins were 12.6%, an improvement of 280 basis points compared to the prior year. Adjusted EBITDA was $25 million and 7.3% of sales in the first quarter which beat the prior year by $11.9 million, with a margin that was 290 basis points higher. We reported net income of $3.5 million and diluted net income per share of $0.15 on a GAAP basis for the quarter, each of which were more than double year-ago levels.

Our net income includes a $1.8 million income tax benefit, which includes the usual FICA tip credit and applying our estimated annual effective tax rate as compared to a $10.2 million income tax benefit from the same quarter a year ago. From a weekly sales perspective, we averaged more than 121,000 per week per restaurant in the first quarter, or more than 12,000 higher than Q1 of 2022. We maintained our off-premise weekly sales average in the low 20,000s while generating dine-in sales of more than 100,000. California was our strongest market with comparable sales of 12% in the quarter, and it was encouraging to see similar strength across all markets in California, including the Bay Area.

Notably, we also drove outsize growth in our late-night and lunch day parts demonstrating the guests are returning to more normal consumption patterns. Moving to expenses. Our cost of sales was 26.6% in the quarter which was 70 basis points favorable compared to Q1 of 2022 and 50 basis points favorable to Q4 of 2022 after removing the gift card breakage benefit to Q4 revenue as described in our fourth quarter earnings release. Inflation in the low to mid-single digits on a year-over-year and quarter-over-quarter basis was in line and even modestly favorable to our expectations.

The inflation figure would have been approximately 2 percentage points higher if not for the cost savings benefits from the changes we implemented to date across our food basket as part of the cost savings initiatives. Taking into account our January pricing round, we carried pricing in the mid-7% area in Q1. To date, we have seen no gets pushed back to our menu pricing rounds. Labor and benefits expenses were 37.6% of sales in the first quarter which was 130 basis points favorable compared to the first quarter of last year.

We made further strides improving our labor efficiency in the quarter which was driven in part by increasing labor retention in our restaurants which was at its best level in more than two years. Our overtime and training hours improved as well, which, as a percentage of sales, were 20 basis points better than Q1 of 2022 and within 30 basis points from pre-pandemic levels in Q1 of 2019. Occupancy and operating expenses were 23.2% of sales in the quarter, which was 80 basis points favorable compared to the first quarter of last year as we leveraged higher sales. We continue to identify O&O savings opportunities as part of our cost savings initiatives with savings beginning to materialize in areas such as new leftover packaging containers, and renegotiating and optimizing certain maintenance programs.

Additionally, in the quarter, we made the decision to invest in reinstituting third-party janitorial services as opposed to using our own team members. This move helps ensure guests consistently experience our restaurants and a like new first-class condition. G&A was $19.7 million in the first quarter, which was slightly less than our original estimates. Turning to the balance sheet.

We ended the quarter with a debt balance of $60 million and net debt of about $31 million. We are very pleased with the strength of our balance sheet and will remain consistent in our approach of prioritizing growth-driving investments by return profile, including building new restaurants, improving our existing restaurants, and funding sales-driving initiatives. Looking to the second quarter of 2023, the industry has experienced some choppiness in comparable sales as the timing of Easter and spring breaks shifted. However, we are entering what is typically our strongest sales quarter propelled by Mother's Day, Father's Day, and graduation celebrations.

We tend to see our average weekly sales per restaurant grow modestly from the first quarter into the second quarter. Factoring in recent and historical trends, we expect to grow our average weekly restaurant sales in the second quarter by 4% to 5% over the 118,900 per week we generated in the same quarter last year. Factoring in our sales expectations and cost trends, I expect restaurant level cash flow margins to be in the low to mid-13% area in Q2 as we grow sales through strategic initiatives, make additional progress on our cost savings initiatives, and benefit from menu pricing. Including in the margin expectations is our plan to increase our marketing spend as a percentage of sales by 70 basis points from 1.4% in Q1 to 2.1% in Q2 due to an awareness-driving marketing media campaign in certain key markets in the second quarter.

We expect marketing spend as a percentage of sales to return to the high 1% in the third and fourth quarters, which is more consistent with 2022 levels. We continue to target restaurant-level margins in the low to mid-teens on a run rate basis as we exit the year. With G&A spent to date, we are trending toward the lower end of the $80 million to $82 million range we provided for the year. Also, we expect a tax benefit in the second quarter similar to the first quarter, which will again include the usual FICA tip credit and applying our estimated annual effective tax rate.

We continue to expect capex spend in the $90 million to $95 million range this year, which includes the five restaurants we intend to open in 2023 and more than 30 restaurant remodels. Two of our new restaurants are now open and the remaining three are under construction with expected opening dates in the second half. One of which will be a relocation. As previously discussed, we made the decision to close two underperforming restaurants, one of which was a small format legacy restaurant with one closing in Q1 and the other closing early in Q2.

We also continue to push ahead with various remodels depending on the specific restaurant, which range from 150,000 to 750,000 per restaurant. We expect to spend approximately 450,000 per location on average this year. We have now completed 14 remodels to date and remain very encouraged by the extra traffic we have been able to generate with the remodels and the resulting return on investment. On average restaurants are adding more than 1,500 per week in sales following the lower-cost remodels where we add three extra booths and enhance the lighting, artwork, and other upgrades and adding multiple thousands of weekly sales after more costly remodels with broader scopes including updating the bar statement, along with many other upgrades.

In summary, we know the best way to grow margins and profit is to grow sales. Recent sales trends have been encouraging and we remain and committed to being sales drivers first and foremost. We intend to continue building sales into 2023 with demand for experiential dining remaining strong, especially at BJ's. At the same time, we have elevated productivity and cost savings through our margin improvement initiative with momentum continuing to build.

We have a clear path to sales and margin growth, and our long-term strategy remains intact. Thank you for your time today, and we'll now open the call to your questions. Operator?

Questions & Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator instructions] At this time, we will pause momentarily to assemble our roster. Today's first question comes from Alexander Slagle with Jefferies.

Please go ahead.

Alexander Slagle -- Jefferies -- Analyst

Hey, thanks. Congrats on the quarter. It looks like you've been seeing some really strong non-comp sales trends in the recent couple quarters, I guess, with the new stores performing really well and trying to think about if we should expect those trends to continue that positive gap. And as you talked about the 4% to 5% average weekly sales growth in 2Q, should we be thinking about a 2% to 3% same-store sales metric underlying that?

Greg Levin -- Chief Executive Officer and President

Alex, I think the 4% to 5% is probably the reasonable comp sales in there. And this is a little bit of a reversal of Q1 in a way because it's an interesting question where in Q2, we actually end fiscal Q2 ends the week of July 4. And that's a low weekly sales average for us. So, in a way, again, much like Q1, and it evens out from there, more or less.

But we end up replacing a fairly high weekly sales into Q1 and put a low weekly sales into Q2. It's one of the reasons that we try to give a little bit more color around what last year's comp sales was of 180,900. And the way to think about building your model would be 4% to 5% off of that number.

Alexander Slagle -- Jefferies -- Analyst

OK, that makes sense. So, the average weekly sales growth beyond that probably shouldn't be too significant beyond the comp for the balance of the year.

Tom Houdek -- Chief Financial Officer

That's right, Alex. And in the second quarter, the weekly sales average growth will be right around the comp growth. We have seen about -- it could be 100 basis points extra that we're getting from the extra weekly sales from our non-comp restaurants. But because of the shift that Greg mentioned, it gets it about in line for Q2.

So, that 4% to 5% should be both weekly sales growth, as well as comp growth in Q2.

Alexander Slagle -- Jefferies -- Analyst

Great. And the expectations for the holidays and events coming up, Mother's Day and Graduations Day. I recall them being pretty strong last year. Is there anything different in terms of staffing or other year-over-year differences to consider as we roll over those?

Greg Levin -- Chief Executive Officer and President

No. I think we're obviously well-staffed. I believe based on everything we're seeing in our business that will be more efficient, and more effective taking care of our guests this year than last year because of the maturity in our team members and being staffed up. I think at the same time, from a macro standpoint, there was a certain amount of excitement for guests to get back out and celebrate after two years of challenges around COVID.

So, I think from what we can control and execute, I think we'll do better. We continue to want to monitor what I would call the macro side of it.

Alexander Slagle -- Jefferies -- Analyst

OK. I'm not sure if you mentioned any changes in guest habits or anything with mix or appetizers, drinks, things like that, that you noticed over the last couple of months. But maybe just to remind us if there were any changes you noted.

Greg Levin -- Chief Executive Officer and President

Yes. I think in Tom's comment, he mentioned that we're seeing some really strong sales coming in late-night and lunch. And I think some of that has to do with obviously the BJ's concept. We've got great lunch specials.

We updated our lunch specials this year in the first quarter, introduced some new items that are becoming best sellers for us. We have seen I think general party sizes start to normalize a little bit, still a little bit better than where it -- versus 2019, let's call it. And our incidents are up versus kind of the 2019 time frame. But as we looked at versus 2022 last year, we have seen a little bit of a slowdown in alcohol incidents.

I think we mentioned that on the Q4 call. That's one area that we continue to watch. But generally, everything else seems very consistent in our business. I don't know if Tom has anything else to add.

Tom Houdek -- Chief Financial Officer

Yeah. I think we covered it. And just to be clear on the outperformance we've seen in lunch and late night, those day parts do have slightly lower check. So, we think of the incidence levels that Greg mentioned, that's a cause of it, we do have these day parts.

And that's one great thing about BJ's, we drive sales in our restaurants starting at lunch all the way through late night. So, these areas that have been down more from pre-COVID levels are recovering. But when the traffic comes back, it's a little headwind on the check side. So, that's the dynamics at play there.

Alexander Slagle -- Jefferies -- Analyst

Got it. Thank you.

Tom Houdek -- Chief Financial Officer

Thanks, Alex.

Operator

The next question comes from Jeffrey Bernstein with Barclays. Please go ahead.

Jeffrey Bernstein -- Barclays Capital -- Analyst

Great, thank you very much. Two questions. One, just on the menu pricing. I think you said for the first quarter in its entirety, you were running in the mid-7% range.

I believe you mentioned there was no resistance. I'm wondering if you could just walk us through maybe what was taken in the first quarter and maybe what your current outlook is for what you would take for the rest of the year or what the pricing would be if you didn't take anything for the rest of the year that does seem to be some concern that new pricing is going to be harder to pierce through with what seems like food at home now full and below food away from home after a nice 18-month period where restaurants had some perhaps protection. So, just trying to get your sense on the pricing outlook and your confidence in what you plan on taking as we look to the rest of the year. Thank you.

And then I have one follow-up.

Greg Levin -- Chief Executive Officer and President

Yeah, Jeff. We're looking at somewhere in that 7% to 8% for the rest of this year where we sit right now. We don't plan at this current time, any additional menu pricing with our June, I guess it'd be our June 29 menu. We'll determine after that there's usually an October menu.

And probably in October menu, we'll take pricing as we start to think about that pricing trying to cover inflationary costs going into 2024. At the same time, we continue to try and be, I guess as I mentioned in the call, strategic in the way we're trying to look at our pricing items that are more unique and differentiated where consumers that are coming out and looking at things like a prime rib that maybe you can't make at home that provide much more of an experiential dining, we feel that there could be room for pricing on those areas. But at the same time, we want to continue to balance it with that barbell approach which is around the lunch specials, our daily brew house specials, and so forth to make sure that again, there's kind of a good, better, best pricing. But where we sit right now kind of in the 7, I think we're a little bit higher than that right now.

That's kind of how we're going to roll through this year even as some pricing will roll off in June, probably bringing us down into the low 7s at that time or so.

Tom Houdek -- Chief Financial Officer

And, Jeff, one piece to add on this, too, when we take our pricing, there's the post audit that we do looking through both the incidence rates, if we see any shifts down or looking at trading relationships and we've seen very consistent ordering before and after the pricing rounds. So, as we made the comments in the prepared remarks that we haven't seen any impact on the price rounds, it had been accepted. That's really what's driving it. It's really no incident shift after pricing rounds, as well as no trade downs, not trading from something that's higher cost in the lower cost, we're seeing very consistent ordering patterns before and after.

Jeffrey Bernstein -- Barclays Capital -- Analyst

That's very encouraging. My other question was just on the dollars you're spending. I know, in 2023, you seemed to be focused more on the remodels with 30 or more units whereas the new units -- Greg and I have been talking about quality over quantity, and it's very understandable with the seemingly five units this year. Presumably, you'd like to do more, but you want to find quality.

But the couple you already opened this year with 150,000, average weekly sales. And that's very impressive. I'm just wondering, what are the greatest issues you're finding in terms of finding sites more so than the five? I think investors would love to see a reacceleration in the unit growth, which you guys used to deliver. So, I'm just wondering what maybe are the challenges you're finding to find more than five sites in a particular year, whether it's real estate, or the investment cost or anything along those lines will be helpful.

Thank you.

Greg Levin -- Chief Executive Officer and President

Yeah, great question, Jeff. It's actually what you ended there with. One is the site cost to build. As much as we're at a 1:1 right now with the new restaurants doing 150 times, obviously, 50 weeks gets you about $7.5 million.

And we mentioned this on another call. Myself, our board of directors, our executive team, really don't want to be spending $7.5 million to build a restaurant. And we continue to look for ways to bring that down, but still maintain the elements of the brewhouse theater, which are so important to differentiate our concept. So, Greg Lynds, who is here, is working with his team to work on ways to bring that down and work through a couple of different prototypes.

So, that's number one. Number two is as the people get better, but we want to make sure as we continue to build restaurants, we have the right quality of individuals to run these restaurants that are doing 7 million as we just talked about. And those are the two governors to growth. I don't think this puts any change in our view of where we can go.

And ultimately, we want to get back to growing our new restaurants at a 5% plus clip, which will get you 10-plus new restaurants. We're continuing to line up the new restaurant growth for next year and what that pipeline is going to look like, I don't think we're going to get to the 5% next year, meaning 10-plus. Some of its again building out the infrastructure and doing the right way for quality over quantity. But that is our target.

And I fully believe we'll get back to that target here shortly.

Jeffrey Bernstein -- Barclays Capital -- Analyst

Thank you.

Greg Levin -- Chief Executive Officer and President

You're welcome. Thank you.

Operator

The next question comes from David Tarantino with Baird. Please go ahead.

David Tarantino -- Robert W. Baird -- Analyst

Hi, good afternoon. First question is just I was wondering if you could help to break down the composition of the comp a bit better for Q1. Can you talk -- I know you gave us a pricing, that 7%, but was there a mix impact or is traffic essentially the plug there?

Tom Houdek -- Chief Financial Officer

Sure, David. When we said that the lunch and late-night increase, that did weigh on check a little bit. So, think of traffic was low single-digit positive, but then yeah, then check was up in that 6% to 7% range.

David Tarantino -- Robert W. Baird -- Analyst

Got it. And then what is your guidance for the second quarter assume on those metrics? It sounds like you might be running a bit higher pricing. So, I wanted to understand kind of what the underlying traffic assumption is for the second quarter.

Greg Levin -- Chief Executive Officer and President

Yeah. It's more in the kind of flattish to negative low single digits based on where the average check is trending.

David Tarantino -- Robert W. Baird -- Analyst

OK, so maybe you could clarify what the pricing is. I thought you said it was a little higher than--

Greg Levin -- Chief Executive Officer and President

I think the way to think about it, David, if we talk about the fact that we're going to try and grow average weekly sales in the 4% to 5% range and pricing being in that kind of upper single digits, we've talked about trying to be somewhere between 7% to 8% for the entire year. It starts to -- depending on where you look at it and how you piece it together, it looks like kind of low single-digits negative traffic. So, the difference there would be, we're not getting the full 7% or 8% on our menu pricing. It's down, as Tom just mentioned, somewhere in the 100 to 200 bps.

So, that's why the difference is going to be traffic of zero to negative two-ish let's call it negative three-ish.

David Tarantino -- Robert W. Baird -- Analyst

Got it. OK. And then is that I guess, is that how you're running right now? You mentioned some choppiness at the start of the quarter and optimism about what's to come. So, is the message here that the traffic needs to improve? Or is that how you're running right now quarter to date?

Greg Levin -- Chief Executive Officer and President

Yeah. It's been all over the place, I would say more recent trends, as we get away from Easter, have been closer to the kind of mid-single-digit comps I would say.

David Tarantino -- Robert W. Baird -- Analyst

Got it. OK, great. And then the last question I had is just in general -- I know, you've given us a lot of detail on the price increases, not affecting kind of mix impacts or what consumers are buying. But I'm wondering if you could maybe opine on whether you think there's any traffic degradation related to the price increases, either for you or the industry.

I know, you're not alone in having to take pricing. But I wonder just as you lean in on pricing, to protect margins, are you seeing any sort of information or traffic data that would suggest there's a pullback?

Greg Levin -- Chief Executive Officer and President

It's interesting, David, because when we look at last year, I'm using last year and kind of going into this year, there was really no change in our traffic as we took different pricing last year. Last year, I think we ended up more in the mid-sixes or so for the full year. So, I don't necessarily think six and seven on top because it's how it blends at different times. And we didn't really see much change in there.

This year, it was harder to tell because of the January going over against Omicron and then seeing how things have kind of like settled in right now. What I would tell you which kind of plays into our numbers overall, is we're continuing to see better growth in the dining room, which makes sense even here in into the April time frame. And we're seeing more of this flattening out of the delivery. And I said delivery and takeout, meaning total off-premise.

So, that number is kind of flattening, even though there's pricing there. And that becomes, for lack of a better term, maybe a little bit negative on the traffic where you're seeing better in the dining room. And it's a little bit to be expected as our dining rooms get better and more efficient. That's where we're seeing consumers go.

I don't know how much of that though, is really pricing or when we've taken pricing, seeing a real change in our business.

David Tarantino -- Robert W. Baird -- Analyst

Got it. Great, thank you.

Tom Houdek -- Chief Financial Officer

I'll add on that as well. The one metric we also watch after the pricing rounds is just how we're trending versus Black Box. So, we get weekly both sales and traffic data from Black Box. And through last year through this year, we've been beating the industry and that margin hasn't changed.

And we track it right after we take pricing. And usually, it's not that visit that'll impact it'll impact the next visit. So, we watch it in the coming weeks and months. And it's been very consistent with our trends versus the industry and how much we're ahead.

So, it's not impacting us any more than the industry. It seems like it's being accepted.

Greg Levin -- Chief Executive Officer and President

And my last comment on this one and I know this. So, it becomes a little bit more challenging because it's a little bit more qualitative than quantitative. But it's the reason that on our drive and optimize conferences coming up, we are spending time on really making sure we're taking care of our guests within our restaurants. At the end of the day, we have to deliver that gold standard execution.

We have to deliver gracious hospitality. So, our guests know that if they are spending more, they are getting a better dining experience at BJ's and are willing to pay for it. And that's key for us going forward. It's one of the things that we will always invest back into our people and make sure that they're taking care of our guests every day.

David Tarantino -- Robert W. Baird -- Analyst

That's very helpful. Thank you.

Greg Levin -- Chief Executive Officer and President

You're welcome.

Operator

The next question comes from Nick Setyan with Wedbush Securities. Please go ahead.

Nick Setyan -- Wedbush Securities -- Analyst

Thank you. I do want to focus on margins a little bit more here. COGS in Q1, obviously, in the sort of 26.6 range. We took a little bit more pricing here in early Q2.

It sounds like inflation's running a little bit better than what we thought even a couple of months ago. I mean, how are we thinking about the cadence of COGs this year? And can we exit Q4 under 26%?

Tom Houdek -- Chief Financial Officer

Sure, Nick. Yes. Very, very possible there. So, going into the year, we did have some inflation.

So, we're not modeling in deflation right now. But the percentage of increases has been modestly under what we were expecting, even a short time ago. The back half of the year, it really depends on what happens with beef. That's a big input into our business.

So, if we have some inflation baked in there, and that was part of the full year forecast, but that's really the determinate if it's little higher, a little lower. But, yeah, we certainly expect it to, given some pricing and how that flows through, it could certainly be in the 25s.

Nick Setyan -- Wedbush Securities -- Analyst

Is there anything in terms of mix shifts or anything else that we should think about that might derail sort of the sequential downtick in COGs from Q1 to Q2 to Q3 to Q4?

Greg Levin -- Chief Executive Officer and President

Nick, I think, as Tom said, it's really going to be around beef. One of the things that we've seen in our business, really coming out of COVID, I'd almost argue maybe a little bit into COVID is consumers like their kind of indulgent comfort foods. And at times, there are things that are a little bit more unique than what they can make at their home easily. And we've seen over the years, especially coming out of COVID, just things like ribeye and our tri-tip, really start to come up our chain of commodities versus maybe people thinking of BJ's from 15, 20 years ago, where it was kind of a pizza and beer joint.

That very menu has really moved that mix around a lot on us. And because we use a fresh product in regards to ribeye and prime rib, as well as our tri-tip, it's not locked in for the full year. So, we continue to watch that. We've got some initiatives against that in regards to how we can be more efficient and continue to manage that.

But I think it's the real wildcard out there, as Tom said.

Nick Setyan -- Wedbush Securities -- Analyst

And just relative to sort of $25 million cost takeout number, where are we now relative to that 25 million?

Greg Levin -- Chief Executive Officer and President

We're probably in the middle innings of it. We put through some things like we've talked about before, such as the wings, a couple of ways that we've changed the cutting of our fresh salmon, that have come through on the commodities. Right now, I think where our big effort is going after the operating occupancy line. That's an area that just has shifted on us, as well as the rest of the casual dining industry.

Some of it's the off-premise. Some of it was those challenges with off-premise in regards to takeout packages and other costs, that now we can competitively bid and get those in. As Tom mentioned, we've got takeout packaging coming in later this year. That'll give us some savings there.

We're looking at some, also -- I think, actually leftover packaging is coming in this year, looking at some changes in takeout packaging, that's actually higher quality to go after. We've got to offset that with some changes in janitorial. We're starting to see a good momentum on there in regards to labor. And then we'll see another round here as we go through it with the new menu coming in, in June or basically July, but less menu items that allows us to readjust our staffing labor lines, as well as adjusting our prep, as well as other efficiencies in there.

So, there's really another level that's going to start to come here in Q3. Unfortunately, Q3 is a little bit lower weekly sales average. So, some of it will get masked by that. I think going into Q4, you will start to see that real benefit coming from the efficiencies driven from the little bit smaller menu and then on top of that, the other efficiencies around the cost savings.

Nick Setyan -- Wedbush Securities -- Analyst

Great. Thank you very much.

Greg Levin -- Chief Executive Officer and President

You're welcome.

Operator

The next question is from Andrew Wolf with C. L. King. Please go ahead.

Andrew Wolf -- C.L. King and Associates -- Analyst

Good morning. I wanted to focus on labor with regards to wage rate inflation, which I think you said was about running -- I think last quarter, you said it was 7%. And have you seen any changes in that rate is or is it kind of too soon in the economic slowdown for there -- to be relief on the labor side?

Tom Houdek -- Chief Financial Officer

Hi, Andrew. Sure. The year-over-year number did decelerate a little bit more. It's more in the mid-5 % range now for Q1.

If you look sequentially, more of the quarter over quarter, it was more in the mid-1 % range. So, it continues to -- it's still inflation, it's still we're paying more per hour. But it's nothing like the increases we were seeing a year or two ago.

Greg Levin -- Chief Executive Officer and President

Andrew, I think the other comment on that, as well as Q1 is generally going to be similar the highest inflation periods because the minimum wage increases to start to hit on January 1. So, to Tom's point, we're not necessarily seeing what we've seen a year ago. And we'll see how that continues through the year. The other side and Tom mentioned this in his formal remarks, is our retention levels are the best they've been in a couple of years.

And that really helps us. They're not as good as they were back in 2019. And that's where we need to get back to, that's really important for us to make sure that we're bringing on the right people at BJ's. We're onboarding them correctly.

And then through them, basically reducing turnover. That drives efficiencies within our restaurant and helps manage the overtime, helps manage the training costs. And ultimately, that is a buttress against inflation, and that's a big initiative of ours.

Andrew Wolf -- C.L. King and Associates -- Analyst

OK, excellent color. I was actually going to ask about the metrics. Getting back to I think the last question to follow on, on the $25 million cost savings goal. Now, it looks like the run rate in COGS is around $8 million just based on the color you gave in here earlier.

So, is it fair to think that -- and based on the commentary you just gave as well, that more of that is going to be skewed to labor and packaging and some of the other costs in the P&L to get from whatever you're running at now back to the full realized amount.

Tom Houdek -- Chief Financial Officer

We'll be looking still across the board. If I think of everything that's being vetted right now, there's still plenty in the food cost line as well. So, it really still is a full-court press against if you want to put it into three buckets, the labor, the food cost, and the O&O, the operating expenses. So, it's great that we found some of these great wins on the food cost side, but there's other items being tested right now that still have some decent impact.

But there's certainly -- I mean, we did highlight a number of things that will be helping on the labor front as well. So, yeah, it won't be -- I wouldn't say it's more skewed in one area versus another.

Greg Levin -- Chief Executive Officer and President

Andrew, the best thing that's happening, I don't know if it's the best thing, but I think that's happening really well is we are getting back to what I would call kind of just normal operating cadence. And what that means as well -- and I think it's a little bit to Tom's point on the commodity side, we have the luxury now or the ability now to go out and bid certain products that you just couldn't do last year. Some of it worked out better for us. So, for examples, we talked about it wings, we couldn't go out and bid our wings last year.

So, we had to figure out something better. And that really helped us. But now that we can bid certain things, maybe we don't need to look at it differently, we could just get better pricing that we couldn't get a year ago, as suppliers are coming back online. So, I think to the point, as we look for our $25 million and the reason we're pretty bullish that we'll get above that is there's areas that we couldn't go after last year.

Some of them, by the way, are takeout packaging that we talked about or to-go packaging, but you're also seeing it on the commodities line and everything which I think will continue to help benefit us, as well as the rest of the industry.

Andrew Wolf -- C.L. King and Associates -- Analyst

OK, thanks for that color. I will leave it there.

Greg Levin -- Chief Executive Officer and President

Thank you.

Operator

The next question is from Joshua Long with Stephens Inc. Please go ahead.

Joshua Long -- Stephens Inc. -- Analyst

Great. Thank you for taking my question. Want to see if we can circle back to the commodity conversation and how much of your basket is locked right now. I appreciate the comments around beef, and how that can kind of shape up or drive the trend for what happens in the second half of the year.

But what kind of visibility do you have on the remainder of your basket here over the next quarter or two?

Tom Houdek -- Chief Financial Officer

Sure, Josh. About a third is locked in annual contracts right now. So, it's a little less than we would have been kind of in the pre-COVID way that we would approach across the board here. But there's areas of our business, like wings, for example, where it was a kind of a processed product before, and we would lock it in for the year.

We could have locked wing prices in for the raw product for the whole year. But it was very favorable to not do that, to float to market. There's other areas of our business that just strategically -- or we think of the premium that was being charged a lot. It just made more sense.

And the direction of where the commodity markets were headed, it just made more sense to float. So, a little bit less than usual, but not by any wide margin.

Joshua Long -- Stephens Inc. -- Analyst

Great, that's helpful. And then on your comments around ticking marketing backup, especially as we go through the back half of the year. Can you talk about what channels have been working particularly well for you, and just how you're thinking about that messaging as we get into a more normalized environment? I mean, there's obviously conversations around, potentially a softening macro. And just remind us, is it going to be awareness brand building? Is it going to be a little bit of more targeted price points, but what's working in the current environment from a messaging and awareness perspective for the BJ's brand?

Greg Levin -- Chief Executive Officer and President

Yeah. Great question, Josh. Right now, it's a little bit more brand-building. The reason it's a little bit higher, this quarter, has really more to do with the fact that we did new creative.

And so, we've got to expense that creative, it's going to get expensive in Q2. To some degree, the amount of a see what are you going to call media spend, or being on TV or doing digital TV, linear versus connected, etc., is somewhat similar with last year. But it's really the more creative that's coming through from the expense side of things. As we look at our business, we want to build the brand.

Even though with our brand building, we do have usually some tag line. It might not necessarily be price specific, but it might be more limited time offering. So, right now, our tag line is around our confetti. Pizookie is one of those drivers for us that is unique and differentiated.

And we'll continue to use that both from a connected and linear TV as well as social and digital.

Joshua Long -- Stephens Inc. -- Analyst

Great, thank you.

Greg Levin -- Chief Executive Officer and President

You're welcome.

Operator

The next question is from Sharon Zackfia with William Blair. Please go ahead.

Sharon Zackfia -- William Blair and Company -- Analyst

Hi, good afternoon. I was hoping to talk some more about the menu rationalization. Can you talk about whether -- I believe it's been in test, whether you've seen any kind of lost sales or consumer pushback and kind of the order of magnitude of margin benefit that provides? And then second question, just the loss on disposal of assets running a couple of million dollars a quarter, the last few quarters. Is that related to the remodels? And is that something which you kind of expect for the foreseeable future?

Greg Levin -- Chief Executive Officer and President

Tom, want to handle that?

Tom Houdek -- Chief Financial Officer

Let me, I'll handle the second question first. So, this quarter, the majority of that expense was related to these glass dividers that we put up in our restaurants during the COVID era. It was a high-quality glass that we put up as dividers to really give folks the ability to come to the restaurants where we can expand capacity at the time. But with where we are today and it does break down on the sight lines to our TVs, so we're going through and removing those dividers.

So, there's some write-down associated with those. But yeah, otherwise, for the remodels we did write off -- we did have a plan coming into the year. So, you saw an increased amount that was of the expense in Q4. So, the majority of the remodels should have been captured in the Q4 window.

Greg Levin -- Chief Executive Officer and President

Hey, Sharon --

Sharon Zackfia -- William Blair and Company -- Analyst

And the menu rationalization. Yeah, thanks.

Greg Levin -- Chief Executive Officer and President

Yeah. First of all, great question on the menu rationalization because it is something we've been testing for a while. And you're right in the sense that it's very difficult to rationalize the menu and grow sales. It takes a little bit of time.

And it's probably one of the reasons we've been testing this for a while and have gone through different iterations to get it to where we believe we've got it right. And I will tell you as we work through this -- and I'm going to get you in a little bit of a sausage making, I guess, for lack of a better term. Certain things didn't work for us in this. We took off some certain appetizers, and we saw our what I would call our add-on sales go down.

So, we've had to add those back and continue to work through some of that where we feel that the changes should be more or less net neutral within our business. We try to look at reach and frequency. There are a couple of just interesting ones that we took off. This one was our internal debate you're going to laugh.

We took off the side wedge salad. And guess what? People that want a wedge salad will not switch to a house salad or to a side Caesar salad. So, all of a sudden, we lost side salads. And we went ahead as we go through and do this testing, and therefore when it rolls out in the July time frame, it will still have a side wedge salad.

So, bottom line is we've gone through and we've worked with a lot and tried to make sure that we know it the best we can. That being said, every restaurant is a little bit different. But we feel comfortable in the fact that we've taken the right amount of testing that we've, for lack of a better term, measured twice and we'll be cutting once in regards to this menu. And hopefully, there's another round that we can take off some other items as we continue to create new more craveable items for BJ's.

Sharon Zackfia -- William Blair and Company -- Analyst

And Greg, I know you mentioned you're taking off 10% of the menu items. I mean, what percent of ingredients or things that come in the back door are going away?

Greg Levin -- Chief Executive Officer and President

I want to say it's like 21 SKUs. I don't have -- sorry, I think I mentioned on one of the other calls, it's a decent amount in SKUs. It's a decent amount of changes in the way we're doing some prep to your point there. Some of the single source items that weren't high sellers that will come through, it will have us adjust our prep hours on that going forward.

But there are more SKUs that are disappearing in our menu items, I believe.

Sharon Zackfia -- William Blair and Company -- Analyst

OK, thank you.

Greg Levin -- Chief Executive Officer and President

You're welcome.

Operator

The next question is from Todd Brooks with Benchmark Company. Please go ahead.

Todd Brooks -- The Benchmark Company -- Analyst

Hey, thanks for taking the questions here. Just wondering if we could -- and I don't know which way is easier to snapshot the difference of where you are from a staffing standpoint year over year going into your seasonally strongest quarter, Greg. But can we either dimensionalize maybe what we think we lost in Q2 last year from having -- I think 25% of the workforce at that point have been hired in the last three months. And we were coming off of limited menus and getting back to full menus and some restricted hours.

Do you have a sense of maybe what it costs you last year or if you want to talk about, from the prospective standpoint, how excited are you to be going into this seasonally strong period with staffing, where you want retention improving, so you're getting bodies that have stayed in the role longer and gotten more efficient?

Greg Levin -- Chief Executive Officer and President

Yeah. I think it's easier to talk prospectively. And we are as an organization excited, I think, going into this year's graduation, Mother's Day, and Father's Day seasons, not only fully staffed from a body standpoint, but it's really about the staff getting their sea legs under them and getting used to doing the volumes we've done at BJ's. I think we've learned a lot.

Obviously last year, we learned a lot. Believe it or not, it's going to sound again, a little different, that is even like around Veterans Day weekend, some of the Veterans Day specials, there's a lot of volume that comes into our restaurants and our team members did a great job handling it. So, we're excited to be fully staffed so that we can give better execution to our guests. They got even a better dining experience at BJ's.

And I think overall, it should be a strong period for us. At the same time, though, as we did talk, I guess I'm tempered a little bit with there was a lot of buildup of people wanting to come out last year. And it's one of the reasons I think we see it in maybe alcohol incidents kind of slowing down a little bit. So, I temper it a little bit with that.

But I think we're excited to be fully staffed. We're excited to be executing at the level that we're executing at and therefore we're excited to be able to take care of even more guests that want to come to BJ's.

Todd Brooks -- The Benchmark Company -- Analyst

If you look at something like Valentine's Day in Q1, do you see evidence that the demand was tempered on that occasion because that probably be the most recent [Inaudible]

Greg Levin -- Chief Executive Officer and President

We had a really good Valentine's Day. It was executed well by our team. They did a tremendous Valentine's Day and they did a great overall Valentine's Day weekend. So, you can feel it in our restaurants.

I get my hat's off to Chris Pinsak and our vice president operations team that are really doing a great job of making sure our teams are delivering on the gold standard and gracious hospitality. You just see it today versus a year ago. We see our restaurant managers out on the floor. We see our team members taking care of our guests.

And I hadn't really thought about Valentine's Day I guess maybe because we're so much into April. But I think your point is a good one in the sense that we really had a strong Valentine's Day and we executed well against it in regards to our operational cadence.

Todd Brooks -- The Benchmark Company -- Analyst

OK, great. And then just two quick ones to wrap up. One when you were talking about capital allocation, the one piece that you didn't mention was share repurchase. Obviously, the stock and the group have been weak here based on kind of the reality of the results that you put up.

I think you can almost argue that the highest and best use of some capital may be share repurchase at these levels. Where does that fit into the overall plan given the other claims on capex that you have?

Greg Levin -- Chief Executive Officer and President

I think as we continue to grow our business, share repurchase, and other capital allocations to benefit shareholders is an important part of the BJ's story. I think even if we were saying we were growing our business at five-plus percent in regards to new restaurants, we would have extra cash in our business, assuming we move our margins the right way, which we fully expect to be able to use that cash to buy back shares. And as we continue to look and execute against our plan, I think share repurchases will be part of our business going forward.

Todd Brooks -- The Benchmark Company -- Analyst

OK. And then a final one, you guys talked on the last call about an AI scheduling tool. I think it was being tested in 20 restaurants. Is there any update you can give us on maybe labor efficiencies that the tool is providing in that controlled group of restaurants? And is it something where you want to proceed through the rest of the chain? And maybe what the cost save opportunity might be? Thanks.

Tom Houdek -- Chief Financial Officer

Sure. We're still very encouraged by what we're seeing. We're testing still on those 20 restaurants. And I would say on average weeks, it's a good tool to get the sales forecast right, so we can schedule more accurately, as well as prep more accurately.

Some of these weeks, if you go into like the Easters and it still needs some training there. But we're encouraged. We're still testing. But, yeah, this is something that I think is something we're certainly excited about and thinking about how it could benefit us.

Todd Brooks -- The Benchmark Company -- Analyst

OK, great. Thanks to you both.

Greg Levin -- Chief Executive Officer and President

Thank you.

Operator

Today's last question comes from Jon Tower with Citi. Please go ahead.

Jon Tower -- Citi -- Analyst

Great, hey. Most of my questions have been answered. So, I guess two quick ones. Any impact of weather in the quarter or quarter to date that you want to call out because I know California obviously had some fairly big swings, rest of the country got some benefits to start the first quarter.

But anything noteworthy to call out?

Tom Houdek -- Chief Financial Officer

Hey, Jon. We did see some impact in California, especially earlier in the quarter, especially when you think of the rain that came through. So, it was a headwind, certainly, for some of those days and weeks. But like I said, California was our best-performing market.

So, nothing that held us back. But it was a modest headwind.

Jon Tower -- Citi -- Analyst

OK. And then just a real quick flip into the menu reduction that you're talking about. It sounds like there's going to be some labor savings and prep improvement. You didn't mention anything about table turns in -- I'm assuming that's part of the equation here, but just want to verify that that's the case.

It's part of the work here is getting faster table turns.

Greg Levin -- Chief Executive Officer and President

Jon, it should be a byproduct. If we're able to be more effective in our kitchen and get menu items out sooner and quicker to our guests, then essentially, our tables would turn faster. But we have other opportunities there. We have mobile pay in our restaurants.

In fact, people that use mobile pay end up with I want to say about a seven-minute to 10-minute quicker table turns and people that traditionally pay the way they currently are. So, we're continuing to work through some of those other aspects to be faster. We're making some changes to our server handheld tablets, where they can actually take the payment there to speed up the process. The interesting thing about this, and I'm going to go a little bit longer, is we did a lot of testing with our innovation team in regards to how we can be faster in our restaurants.

We've even set up in a test in a restaurant to kind of do a quick service for our guests where they can order right when they walk in and then get seated. And guests come to BJ's, as I said, for that kind of experiential dining experience. And even the ones that kind of ordered at the counter during our test, they end up ordering another beer. They ended up ordering a Pizookie dessert at the end.

And they still spent basically about an hour at BJ's. So, we know the reason that a consumer comes to BJ's, they made their decision based at their house not necessarily driving down the street going, "Is it QSR or is it BJ's?" Now that being said, we want to be as efficient as we can with our table turns and give the guests that want to be faster -- gives the ability to be faster. So, we'll continue to work on that. But at the same time, we understand that we are there for an experiential dining for our guests, and therefore, we want to make sure that we're doing everything we can to make sure that they have a great experience.

Jon Tower -- Citi -- Analyst

Got it. Thanks for taking the questions. Have a good day.

Greg Levin -- Chief Executive Officer and President

My pleasure.

Operator

Thank you. Ladies and gentlemen, this concludes our question-and-answer session and the call has now concluded. Thank you for attending today's presentation. You may now disconnect.

Greg Levin -- Chief Executive Officer and President

Thank you, everyone.

Tom Houdek -- Chief Financial Officer

Thanks.

Duration: 0 minutes

Call participants:

Greg Levin -- Chief Executive Officer and President

Rana Schirmer -- Director of Securities and Exchange Commission Reporting

Tom Houdek -- Chief Financial Officer

Alexander Slagle -- Jefferies -- Analyst

Jeffrey Bernstein -- Barclays Capital -- Analyst

David Tarantino -- Robert W. Baird -- Analyst

Nick Setyan -- Wedbush Securities -- Analyst

Andrew Wolf -- C.L. King and Associates -- Analyst

Joshua Long -- Stephens Inc. -- Analyst

Sharon Zackfia -- William Blair and Company -- Analyst

Todd Brooks -- The Benchmark Company -- Analyst

Jon Tower -- Citi -- Analyst

More BJRI analysis

All earnings call transcripts

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.