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Subject:  Re: 2003 Q2 Conference Call Notes Date:  8/11/2003  9:02 PM
Author:  kh Number:  30 of 35


I believe the price increase was pretty much across all menu items. The annual report says only that menu prices were raised 3.1 % in two-thirds of the restaurants in the third quarter of 2002, and 3.1% in the remaining one-third of the stores in the fourth quarter.

If the increase was across the board, I agree that it probably disappointed all customers—at least those who were paying attention—to some degree.

Burns did say the revised menu will include price reductions on items that had crossed “barriers” with customers. Apparently, there were items that stood out above the others as having price points that customers were particularly sensitive about.

The analyst who suggested to push the "to go" business seems to me to be on the right track. Even Burns admits that there is somewhat of a perception problem about the ambiance of the place. Food "to go" seems like an answer.

He said he thought that with just so many advertising dollars to go around, it's better to focus on the core dine-in customers. He did say they were going to mention the To Go business prominently some place on the menu. That way, at least the dine-in customers will be made aware of carryout.

I really don't get this one: The Company is seeing some evidence of saturation in Nashville, Knoxville, and Indianapolis. Burns thinks this is a temporary phenomenon but did not elaborate. How can a saturation problem be temporary? Are they planning to close some stores in saturated areas? ?

Good question. It didn't make sense to me, either.

I only recall one brief mention of store closings, and that was a store in Murfreesboro, TN. When a new store opened up nearby, the old store was considered for closure, but left open. Sales dropped off initially at the old store, and the new store got off to a slow start, but both stores have turned around and are now doing well. Perhaps that's what he meant by “temporary” saturation—where both the new store and the old store struggle at first but eventually come around. I'm not sure.


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