Q4 2023 Chuy's Holdings Inc Earnings Call

Participants

Jon Howie; Vice President and Chief Financial Officer; Chuy's Holdings, Inc.

Steve Hislop; President, Chief Executive Officer and Chairman of the Board; Chuy's Holdings, Inc.

David Tarantino; Analyst; Baird & Co. Incorporated

Andy Barish; Analyst; Jefferies LLC

Brian Vaccaro; Analyst; Raymond James & Associates, Inc.

Ashling Gruminger

Nick Setyan; Analyst; Wedbush Securities Inc.

Chris O'Cull; Analyst; Stifel, Nicolaus & Company, Incorporated

Todd Brooks; Analyst; The Benchmark Company, LLC

Andrew Wolf; Analyst; C.L. King & Associates Inc.

Presentation

Operator

good day, everyone, and welcome to Chewy's holding Fourth Quarter 2023 earnings conference call.
Today's call is being recorded. At this time, all participants have been placed in a listen only mode. The lines will be open to questions. Following the prepared remarks from today's call, we have Steve Hislop, President and Chief Executive Officer, and Jon Howie as President and Chief Financial Officer of Tumi Holdings Inc.
At this time, I will now turn the conference over to Mr. Howie. Please go ahead, sir.

Jon Howie

Thank you, operator, and good afternoon by now. Everyone should have access to our fourth quarter 2023 earnings release. If not, it can be found on our website at Truist.com in the Investors section.
Before we begin our formal remarks, I need to remind everyone that part of our discussions today will include forward-looking statements. These forward-looking statements are not a guarantee of future performance and therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.
Looking ahead, we plan to release our first quarter 2024 on Thursday, May ninth at 2024 after the market close.
With that out of the way, I'd like to turn the call over to Therese President and CEO. Steve?

Steve Hislop

Thank you, John. Good afternoon, everyone, and thank you for joining us on the call today. I am proud of what she has accomplished during 2023. We grew revenues almost 9.3%, driven by comparable restaurant sales of approximately 3.3%. Our team's ability to effectively execute on our four-wall operations resulted in a 200 basis point expansion, our restaurant-level margins to over 20%, representing our best result in over a decade, excluding the COVID impact in 2021 and among the best in the industry. And finally, we returned approximately $28.9 million to our shareholders through share repurchases, enabled by our ongoing strength of our operating model. As we look ahead, we will continue to do what we do best to provide our guests with fresh, made-from-scratch food and drinks at an incredible value despite weather issues across a country that has impacted the restaurant industry in January. We believe the initiatives we put in place to drive long-term sustainable top line growth and profitability has positioned us well to weather these near-term challenges.
With that let me provide some update on our growth drivers starting with menu innovation. As we mentioned on our last call, we introduced our first barbell approach to the CKO. platform during the fourth quarter, and we were very pleased with how well received by our guests. In fact, this was our second most successful choose knockout campaign to date following the success we were thrilled to introduce to our guests the next CKO. iteration in late January with shrimp and crab enchiladas with lobster business off as a higher price CKO. menu item along with module nachos and the cheesy burrito. Again, early feedback continues to be positive as our sales are resonating well with both new and returning guests along side our exciting CKO. offering recently added several new menu items to our permanent menu, including reintroducing the appetizer plate and adding the burrito bowls. If you recall, burrito bowls were part of our CKO. platform during the second and third quarter of 2023. And this menu addition is a reflection of how well our burrito both performed last year and the high demand from our guests to bring them back to a permanent menu. Chewy's knockouts is now is not the only platform that we create to introduce our guest to exciting new menu innovations, but also a tool to help us optimize our regular menu to further drive traffic to our restaurants.
We also delivered another strong off-premise performance during the quarter mixing at approximately 31% with our delivery channel continuing to perform well at it and mixing at approximately 12% a 160 basis point increase from last year.
In terms of catering, we continue to roll out the Easy Care platform to our restaurants and are on track to complete this rollout by the end of the first quarter our channel. Our catering channel is currently missing at approximately 4.8% for the quarter. Going forward, we continue to believe our off-premise channel will be at least 25% of our sales with catering catering contributing between 4% and 6% of total sales. While the fourth quarter is typically our highest mixing quarter for catering, we are encouraged by the growth we continue to see in the channel and believe we can achieve our long-term care and targets over the next 24 months.
In terms of marketing initiatives, we believe our current approach to marketing has been effective in communicating our defining differences from our made-from-scratch food and drinks offered at an incredible value through our unique scale offerings and the unique overall experience at every Chili's restaurants to that. And we will continue to put heavy emphasis on digital media and optimize our campaigns through the use of Google, TikTok, Instagram and Facebook including organic influencer content, YouTube, video advertising and promotional advertising with DoorDash and Uber. In addition, we will include some spot on progress with programmatic connected TV targeting live sports events during March Madness.
Lastly, let me update you on our development plan. During the fourth quarter, we successfully opened one new restaurant in Terrell, Texas, bringing our total restaurant count to 101 as of the end of fiscal 2023 with four new restaurants opening opened during this year.
As we look into 2024, we continue to have a robust pipeline with a goal to open between six to eight new restaurants focused primarily in core markets where our concept is already proven with high AUVs and brand awareness. We expect to open two restaurants in the first half of the year, including our first location of the year in new Brownsville, Texas, which opened this week.
With that, I will now turn the call over to our CFO, John how, discuss our fourth quarter results in greater detail.

Jon Howie

Steve revenues for the fourth quarter increased 11.8% to $116.3 million compared to $104.1 million in the same quarter last year. As a reminder, our fourth quarter of 2023 included 14 weeks compared to 13 weeks in fiscal 2022, with the extra operating week contributing about $8.7 million of revenue. In addition to the extra operating week, the increase was driven by growth in our comparable restaurant sales as well as additional 62 operating weeks from new restaurants opened subsequent to the fourth quarter of 2022. In total, we had approximately 1,403 operating weeks during the fourth quarter of 2023 and off-premise sales were approximately 31% of total revenue as compared to 29% a year ago. Comparable restaurant sales in the fourth quarter increased 0.3% versus last year on a 13-week comparable basis, primarily driven by a 3.4% increase in average check, partially offset by a 3.1% decrease in average weekly customers. Effective pricing for the quarter was approximately 3%.
Turning to expenses, cost of sales as a percentage of revenue decreased 240 basis points to 25.1%, driven by overall commodity deflation of approximately 8% compared to last year. As well as leverage on our menu prices taken subsequent to the fourth quarter of last year.
Looking into 2024, we currently expect commodity inflation in the low single digits for the year. Labor cost as a percentage of revenue increased 30 basis points to 30.8%, primarily due to hourly labor inflation of approximately 4% at comparable restaurants as well as incremental improvement in our hourly labor staffing levels. This was partially offset by menu price increase taken subsequent to the fourth quarter last year, we are currently expecting labor inflation of mid-single digits for fiscal 2024. Operating costs as a percentage of revenue increased 10 basis points to 16.7%, driven by higher delivery service charges from an increase in delivery sales, an increase in restaurant repair and maintenance and higher insurance costs, partially offset by lower utility costs as compared to last year.
General and administrative expenses increased to $8.1 million in the fourth quarter from $6.5 million in the same period last year, driven mainly by higher performance-based bonuses and management salaries as a percentage of revenue, G&A increased to 6.9% from 6.2% during the same period last year.
In summary, net income for the fourth quarter of 2023 was $5.5 million or $0.31 per diluted share compared to $2.5 million or $0.14 per diluted share in the same period last year. During the fourth quarter of 2023, we incurred $3.1 million or $0.14 per diluted share in impairment, closed restaurant and other costs compared to $3.2 million or $0.14 per diluted share in the same period last year. Taking that into account, adjusted net income for the fourth quarter of 2023 was $7.9 million or $0.45 per diluted share, compared to $5 million or $0.27 per diluted share in the same period last year.
Moving to our liquidity and balance sheet. As of the end of the quarter, we had $67.8 million in cash and cash equivalents, no debt outstanding and $25 million available under our revolving credit facility. We also purchased 167,535 shares of our common stock during the quarter for a total of approximately $5.9 million. For the full year of 2023, we purchased a total of 789,963 shares of our common stock for a total of approximately $28.9 million. As of December 31, 2023, we had $21.1 million remaining under our $50 million repurchase program, which will expire on December 31st, 2024.
With that, we will now provide you with the following outlook for 2024. We are currently expecting adjusted EPS of $1.82 to $1.87 for 2024 as compared to adjusted EPS of $1.87 after adjusting out the 53rd week of 2023. This is based in part on the following annual assumptions. G&A expenses of $30 million to $31 million, six to eight new restaurants net capital expenditures of approximately $41 million to $46 million, Restaurant preopening expenses of approximately $2.7 million to $3.2 million, effective annual tax rate of approximately 13% to 14% and annual weighted diluted shares outstanding of about $17.4 million. With that, I'll turn the call back over to Steve.

Steve Hislop

Thanks, John. We believe our results demonstrate that our focus on our four-wall operational excellence and excellence continuing to resonate well with our guests, combined with thoughtful capital allocation and excellent pipeline of unit growth, we are well positioned to capitalize on our positive momentum in the long-term growth opportunities ahead of us with a goal to maximize shareholder value in 2024 and beyond.
In closing, I'd like to thank every chews team member for their hard work and dedication to earning the dollar every single day without whom none of these accomplishments would have been possible.
With that we're happy to answer any questions. Operator, please open the line for questions.

Question and Answer Session

Operator

Thank you, sir. At this time we will be conducting a question and answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and then two. If you would like to move your question from the queue For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star first question that we have comes from David Tarantino from Baird. But please go ahead, sir.

David Tarantino

Hi, good afternoon. Ever got a couple of questions. I'll start was the question on kind of what you're seeing from from a comp perspective in the first quarter? I know, Steve, you mentioned some challenges, and I know we've seen that elsewhere. But if you could maybe give us an update on on how you're running in the first quarter? And then I have a follow-up related to that.

Steve Hislop

Yes, it I've obviously a period of one. We're up against an enormous match up, but we also had a little bit whether that probably cost us about a 4% of sales, but we've started off the year in a real tough situation in that 6% to 7% down approximately right around there and us not not like it's better than that and rolling into the second period.

David Tarantino

Got it. And then I guess the real question I had is just on the guidance for the year came in a bit below what we were expecting. I just wanted to maybe unpack some of the factors that are weighing on the earnings performance for this year? And then in particular, John, if you could maybe give some perspective on on what sales or same-store sales assumption is embedded in your earnings guidance.

Jon Howie

Here, like Steve said, I mean, the first period was rather challenging around that 7% and the second period were about half to three-fourth of that. So when you're looking at the sales down, we've got a lot to make up to get up to flat. So right now based on that and kind of what we're expecting, especially the rollover Hoover that we've been talking about that comprised about 350 basis points last year of total sales. And so we're going to we're going to start rolling over that full implementation by the end of this quarter. And so we're looking at kind of flat to up 1% for the year in total same store sales. Now obviously with our pricing in that of approximately 3%, just shy of 3%, we're going to have, you know, about 2% negative traffic in that 1% to 2% negative traffic into that.
So with that being said, some of the changes, if I go through and get a walk-forward from the EPS this year to next year. The big items in that is obviously $0.10 on that extra week. That immediately takes it down from about [$1.97] to about [$1.87], right? We won't have that extra week in this year. Also, we were getting fully staffed by the end of last year as far as our staffing is concerned. And so that's now rolled that extra cost is rolling over into the current year. And so we'll have not only inflation of 4% to 5% in labor, but now fully staffed. So that's going to attribute to the, you know, anywhere from probably 30 to 60 basis points of lost margin there. And then if you flow through kind of the changes look in the 53 impact that we talked about of the new store openings. We're trying to ramp up this new store openings versus four last year. So your added cost and openings and pre-opening cost as well as the inefficiency is going to be a larger portion of that as well as the decrease in investment balance, we were getting a sizable amount in interest income as well. So we expect that to be down about $0.06 or $0.07 in and of itself with the decreased balance and the new store openings is probably another $0.06 to $0.07. So those are the big big items.

David Tarantino

Yes, that's very helpful. Thanks.
Okay.

Operator

Thank you.
So the next question we have comes from Andy Barish of Jefferies. Please go ahead.

Andy Barish

Hey, good evening. Guys.
John, can you address just the occupancy costs, that number really stepped down from kind of what's been for a while? Is that it's sort of getting out of and some releasing some leases now and things like that from cleaning up the system over the last few years.

Jon Howie

Are you talking the fourth quarter ends?

Andy Barish

Yes.
Yes.

Jon Howie

Well, that is a lot of that entity is the extra week in Q3 that's totally leveraging that occupancy forecast with.

Andy Barish

No, no fundamental change yet still somewhere in that 6.5%, 7% range going forward?

Jon Howie

Yes.

Andy Barish

Okay.
And then on just secondly, any update, I mean, it hasn't been a lot of data points, but obviously, the the development strategy has been fine-tuned and honed with these sites.
Is there anything we should be thinking about, you know, as you kind of think about sort of first tier volumes with these stores in your core markets and then I think on New Braunfels is still the Austin area.
So you don't have and haven't thought about it in a while, but any impact or sales transfer that you're expending expecting from Austin openings? I think you have one more maybe this year as well.

Steve Hislop

Yes, Andy, when we look at that, we looked at and with the east side to make sure and kind of look at it, that would look at anything that has under 5% cannibalization and actually any ones that we did in the last couple of years has been much better than that on the expectation of new bonds will is on South, let's say, halfway between here and San Antonio as we go down south. So we don't extend that to in between our Selma store, which is in San Antonio and San Marcus store. It's about 18 miles from either one of them. So it's going to be very very minimal, and we're pretty excited about it. And we're real excited. Obviously, what we think we're going to do there, obviously, is when you're looking at about where we're going to be opening stores and definitely this year and over the next three to four years in our opening, as we mentioned in my roughly five states that we have good AUVs, strong strong AUVs that are that are a lot higher than our system wide AUV, which is currently at [$4.5 million]. You'll probably see a pickup of [$10 million to $15 million] in the five states will I mean 10% to 15% in the states that we're looking at. So we feel real comfortable about our growth over the next three to four to five years. It is good to hear.

Andy Barish

And then one one final, just on easy cater and catering, is that primarily the lunch daypart? That's kind of where I've seen easy cater, but I may I may be not fully aware of how you're using it.

Jon Howie

Yes, I think that that's right, Andy. We expect a larger percentage that come in from lunch. As we as you know, we've got about 72 stores on that right now. We're hoping to get the rest of them by the end of Q1 on just to give you an indication. Last year, we did about $2.5 million in that platform, just shy of under [$1,000] a week per store. And so we're looking to get that up and running in the first quarter?

Steve Hislop

Yes.
And we're excited about that actually as people are continuing to go back to their offices.

Andy Barish

Great. Thanks, guys.

Steve Hislop

Thanks, Andy.

Operator

Thank you.
So the next question we have comes from Brian MacArthur from Raymond James. Please go ahead.

Brian Vaccaro

Thanks and good evening, guys. Just on the quarter to date and it might be a tough ask, but as you parse through the weather impact, do you think you've seen a change in your underlying demand trends or any changes in behavior or order patterns that you've noted in recent months compared to the prior couple of quarters?

Jon Howie

Not really, Brian. I mean, we continue to see kind of lower attachment rates in the bar area. We are seeing a little higher attachments in the US, the appetizers, and that's really due to what we're doing during the the happy hour timeframe with our chips and dips kind of program, we are seeing that come back a little bit, but that is a discounted program. And so the dollars are slightly better, but the attachment rates are definitely better

Steve Hislop

And we're still seeing a similar mix over the last even through COVID and back to even gotten pre-COVID with, you know, a 40-60 mix at lunch to dinner.

Jon Howie

And those are staying very, very consistent and really that to go, as we said earlier, the off-premises still staying fairly consistent from a percentage.

Brian Vaccaro

Okay. And John, I think you made a comment on on February you said a decline of around [half of the down seven] in January. So just wanted to make sure I understood that we get the receivables down [mid threes].

Steve Hislop

Yes, yes, yes.

Jon Howie

Yes.

Steve Hislop

And that's again, the key number there for us is rolling over that the implementation of October.

Brian Vaccaro

Right, right.
Understood.
Okay.
And then, John, on margins, I wanted to just ask on the commodity side of the deflation that you saw in the fourth quarter I think was much more significant than you kind of had expected. Could you just provide some color on what drove that favorability?

Jon Howie

Yes, a lot of it was I can continuing just second here, and it's continuing in. I pull it up here.
Yes, the big items, if I look at it was continuing chicken and produce were the big items and dairy and cheese, those things came down a lot more than we were expecting.

Brian Vaccaro

Okay. And I think you said low single digits for the year in 2024. Is there any any year on year lumpiness or differentials we should be mindful of thinking about the quarters or relatively stable through the year?

Jon Howie

Yes, we're looking at that. I mean, I would say it's relatively flat going to be flat in the first quarter and then starkly growing with our highest quarter, probably in the fourth, third and fourth quarters.

Brian Vaccaro

Okay.
Thank you.
I'll pass it along.

Steve Hislop

Thank you.

Operator

Thank you, sir. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one Now next question comes from [Ashling Gruminger].

Ashling Gruminger

Hi.
Good afternoon.

Operator

Please go ahead, sir.

Ashling Gruminger

Hi, good afternoon, guys. You mentioned on the last earnings call that you were going to increase ad spend during the 4Q time period. I'm just wondering if you saw an increase in traffic or any other measurable points from the ad spend that would influence your influence your decision on how much you're going to spend going into 2024?

Steve Hislop

Yes, e didn't so much increase has been ad spend. We just reallocated it a little bit from our normal cash spend on percentage wise on marketing is roughly in that 1.45%, 1.5% range, and we're anticipating that throughout 2024. But we did reallocated a lot. And as you know, as I mentioned in the call, mostly B of our social with Google. I'm new to programmatic TV and Yelp and so forth and what I mentioned earlier, but it will be just a reallocation for what we really were excited about in 2023 and do more of that and less of the things we weren't excited about. But we'll still stand those major channels and the spend will be very consistent from a year ago, and that's great.

Ashling Gruminger

You mentioned I know at ICR that you were confident in your ability to return to 10% unit growth in 2025. Just what have you seen? Or is your real estate team done so far this year to support this goal and just the confidence in reaching that?

Steve Hislop

Yes, we're very confident as far as what we're doing on the ground with our with our master broker system. And so we got there by probably our pipeline is as good with sites over the next couple of years. That it's ever been. So we're pretty pretty excited about that. So thing we're not excited about is the cost. They they've they're up 35% to 40%. They have moderated but they have not come started coming down yet. Also the developers aren't doing any more of the site costs, which is $1 million on top of that development cost. So that's the thing that we're working hardest without with our people on also on a daily basis going in and make sure we're value engineering and everything we're doing inside our four walls and going there. But that's the disappointment that thing when you're looking at your cash on cash, are you going to be looking at that [dollars and 40%] increase?

Ashling Gruminger

Thank you.
That's very helpful.
I'll pass it back.

Steve Hislop

Thank you.

Operator

Thank you, ma'am. The next question we have comes from Nick Setyan from Wedbush Securities. Please go ahead.

Nick Setyan

Hey, thanks, gents. So just kind of the margin, I guess trajectory, given the sort of the comp context you gave us, it sounds like [COGS] 10, 20 bps of leverage, maybe slightly more a labor, maybe 70 to 80 bps of deleverage and operating deleverage as well. Is that kind of the right right way to think about the various buckets?

Jon Howie

Yes, I think the only thing I would add is we're looking at probably flat from the cost of sales standpoint as far as being kind of the low single digits, which are with our, which we're thinking 2% to 3%. And so basically your pricing would cover that. So probably not much leverage there. But the other items that you said as far as operating expenses deleverage and the labor deleverage. And yes.

Nick Setyan

Okay. And then [18], I mean, understanding sort of the period one period, two challenges we do have to kind of come forward with [lift] and maybe just walk us through some of the other comp drivers for the rest of the year?

Steve Hislop

Yes.
The comp driver for us is, again what I've already mentioned, the marketing. And if I read all of the one thing that we're pushing on, everything that we have out there is our value within our menu. I mean, I know you've been out there saying a lot of our competitive set are going back to the 2019 ways of doing all their promotions and their price offs. And and obviously, they haven't done that for three years. So when they pop back in the market in the third and fourth quarter of last year, you know, people are trying that out. We don't we don't think we need to do that, obviously because you can eat in our menu all day long for $20. So we're pretty excited about really pushing our value message again.
And then also the increases in what we're doing with our CKL.s and keeping things new and fresh. And as I mentioned earlier, that we had done a little bit of you know, we added a few different items back on the menu, whether it be the burrito bowls and so forth. And the key the key for all everything that we do is what hurdles and what we approach. And what we want to do right now is this is when we want to tuck inside our four walls and execute execute every single day, every single shift every single hour. And that's the thing that we believe one buys out there.
Looking for a silver bullet, we believe that's what's really going to drive demand into our restaurants short and long term.

Jon Howie

And on that, Nick, I might add we look at the sentiment scores that we get from some black box and you don't necessarily compare it with others, but we compare it with ourselves and make sure those are increasing. We've seen a significant betterment of those those sentiment scores over the last six months. So I think, you know, those will turn into two sales as we continue to increase in the cinema scores towards the back half of the year.

Nick Setyan

Perfect. Thank you very much.
Thanks, Nick.

Operator

In queue. The next question we have comes from Chris O'Cull from Stifel. Please go ahead.

Chris O'Cull

Thanks for taking the question, guys, and good afternoon.
Hey, Steve.
Just given the recent traffic performance, I'm just curious if the Company debated whether to spend more on advertising this year and maybe even use more paid media in markets where you have good density and it could help maybe improve top of mind awareness?

Steve Hislop

Yes, Chris, we're looking at that currently, and that's always going to vary on nimble on that approach within our marketing budget, and we'll look at that continuing and as you know, the one thing about a lot of digital is you can pivot on a dime. So we're constantly looking at that and we'll continue to look at that as we're going on right now.

Chris O'Cull

Would you consider things like broadcast make TV in certain markets and certain ones run right now?

Steve Hislop

Yes. You heard me talk about programmatic TV currently are right now, we're doing a lot on ESPN and a lot of stuff around sports, especially as we were mentioning to you on the call about looking at it more. So in as we get into March Madness and so forth. But we'll definitely look and probably more on the programmatic side of it, probably not major media.
Okay.

Chris O'Cull

And then, John, can you describe the visibility you have into that low single digit commodity inflation for this year?

Jon Howie

sure. So I mean, the biggest component would be from our beef beef. We've got locked in through the third quarter of this year. As far as that he to beef, those are at, you know, increased prices as well as our ground beef. We only have locked in through the Q one, we expect when we start buying that after Q1, that will be elevated compared to the prices of this year. And so those are the two big drivers as well as you know, some of it maybe the chicken coming back a little bit as well since we had it. And we since it was down so much last year.

Chris O'Cull

Okay.
Great. Thanks, guys.

Steve Hislop

Thanks, Chris.

Operator

Thank you. Ladies and gentlemen, just a final reminder, if you would like to ask a question, please press star and then one Now next question we have comes from Todd group, Todd Burke of The Benchmark Company.

Todd Brooks

Please go ahead and thanks for squeezing me. And I only have a couple left here on one. I was just wondering, can we get an update on the stores that were kind of mothballed during the start of the pandemic? How many of those are you still kind of carrying and the costs that we saw for them, just the underperforming discontinued performance in the quarter, is that against those stores fully or are you looking at anything in the base that you impaired? And do we need to think about any closures against the openings planned for this year?

Jon Howie

Well, I mean, as you know, the impairment is a fundamental kind of exercise from an accounting standpoint. So that particular impairment was one of our stores in Denver area. We don't plan on closing any one anytime soon on but of but that is a challenge store. So we'll continue to look at that store as far as the ones that we mothballed, we've gotten rid of most of them. I think we're still working on of three of them, and we're pretty close to getting getting those out a year. And so again, that will just go back to I think there's like three of them that are currently on subleases that there's a little differential in the sublease. But other than that, we almost have mall done.

Todd Brooks

Great. And then, Steve, just a question on and then we're working our way back to the 10% unit growth in the past, you've talked about that being related to what you're seeing in kind of traffic trends and the strength of your customer with what you're seeing now, is this is this the right time to accelerate from kind of the six to eight this year? Or do you need to see a pickup in the consumer or just with the challenges in getting the real estate you mined in new markets and the fact that you're doing infills, are you comfortable with the 10% growth in '25?

Steve Hislop

Yes, I'm more comfortable for this year and that six to eight range because as I mentioned to you before, our I mentioned earlier, is just the initial cost of getting into these. And while we're retooling our building and even again, it's at 40%, it's huge and then put the site site costs on top of that. So that's the big we'll see some and you know, reasonable, and that's happened throughout 2024 on that, that it makes sense from a capital side to get to that 10% growth. But right now for this year, I'm comfortable in that six to eight range.
Okay, great.

Todd Brooks

Thank you both.

Steve Hislop

Thanks, Todd.

Operator

Yes, thank you, sir. The last question we have comes from Andrew Wolf from CL King & Associates. Please go ahead.

Andrew Wolf

Okay, thank you. I just have a couple of follow-ups versus on developments. I mean, recently, you've talked about targeting a 30% cash-on-cash return. But you're still in I mean, you called out how expensive it is to build the buildings. And at the end, you've kind of talked about as you know, buying the land and doing an eventual sale and leasebacks. But could you just unpack for me is one is that 30% cash-on-cash returns, which is a strong return still realistic? Or is it or is that going to change? And if you're going to keep it, is it predicated on doing an eventual sale and leaseback just based on market rates to build build out a restaurant?

Jon Howie

Well, there's a lot to unpack there. So yes, I mean, our ultimate target is 30% cash on cash return with the cost. The way they are. And that's why we're trying to do a lot of value engineering that we spoke of. We've actually hired two additional architects to kind of go through our whole current building and our prototype and all the layers that we have in it and suggest different ways to build at different ways to design it, different layers and different alternative materials on the layers that we have in the restaurants as well as even looking at the equipment package that we have and totally. So we're doing a soup to nuts. If you will of kind of value engineering right now. Now initially, we're getting some fairly good results. Obviously, we don't have one of the new ones in the ground, but some of the plans coming back, we're liking. But currently, I would say those targeted cash on cash returns are more in the way of about 25% versus 30%. But our ultimate target is 30% and does it really we look at the purchase and when we're doing the pro forma. So if that makes sense and if we can do a purchase, I'm looking at that sales leaseback and seeing what we get back from the sales leaseback to to actually boost those returns on cash on cash return. But all that goes into the decision of whether to buy or to lease and then ultimately this value engineering. Currently to date, we have about seven properties that we own. There's about two or three other properties that we're looking at right now to buy and that development in the current year, we do not have any properties that we have purchased. They will fall into 2025 but hopefully I answered all your questions there. We have

Andrew Wolf

very much, really appreciate the detail.
And we are.
Yes.
Can I just ask another follow up just on the ovaries comparisons so it sounds like it's 350 bps this quarter as a headwind. And I guess you got another quarter or two of that and then it must ease in the fourth quarter, which is sort of the other way of asking how much was it, how much was the Uber Eats a headwind in the quarter you just reported in Q4 last year's fourth quarter.

Jon Howie

Great. Well, yes, if you look at it, so basically, Uber Eats was about 2.1% of our sales in the fourth quarter of 2022 when we implemented it. And that grew kept growing in the first quarter, about 2.8% of sales until eventually for all of 2023, it was about 3.5%. So you're looking at, you know, three three, 300 to 400 basis points of that were rolling over, which is a little challenging.

Andrew Wolf

Okay. Got it. All right.
Thank you.

Operator

Thank you, sir. Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back to speakers for closing remarks. Please go ahead, sir.

Steve Hislop

Thank you. Thank you so much, John, and I appreciate your continued interest in Chuy's and are available to answer any and all questions again. Thank you and have a good evening.

Operator

Thank you. Ladies and gentlemen, that does conclude today's conference. Thank you for joining us. You may now disconnect your lines.