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Chuy's Holdings (NASDAQ:CHUY)
Q1 2018 Earnings Conference Call
May. 8, 2018 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone, and welcome to the Chuy's Holdings Inc. first-quarter 2018 earnings conference call. Today's call is being recorded. At this time, all participants have been placed in a listen-only mode, and the lines will be opened for your questions following the presentation.

On today's call, we have Steve Hislop, president and chief executive officer, and Jon Howie, vice president and chief financial officer of Chuy's Holdings Inc. At this time, I'll turn the conference over to Mr. Howie. Please go ahead, sir.

Jon Howie -- Chief Financial Officer

Thank you, operator, and good afternoon. By now, everyone should have access to our first-quarter 2018 earnings release. It can also be found on our website at www.chuys.com in the Investors section.Before we begin our review of formal remarks, I need to remind everyone that part of our discussions today will include forward-looking statements. These forward-looking statements are not guarantees 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.With that out of way, I'd like to turn the call over to Steve.

Steve Hislop -- President and Chief Executive Officer

Thank you, Jon, and thank you to everyone for joining us on the call today. Let me start with an overview of our first-quarter results, then discuss the progress on our strategic initiatives for the year. Afterward, Jon will review our first-quarter financial results in greater detail.At a higher level, revenues for the first quarter of 2018 grew 8% compared to last year. The increase was led by sales from new unit growth, partially offset by partially offset by a 1.5% decrease in comparable restaurant sales on a fiscal basis.Net income for the first quarter was $3.2 million, or $0.19 per diluted share.

Our first-quarter results reflected the challenges of multiple weather interruptions and a negative impact from the timing of Easter and the loss of the week after Christmas, which is our highest-volume and the most profitable week of the year. We were also impacted by ongoing industry labor pressures. Despite these challenges, our results were largely in line with our expectations and we are reaffirming our earnings per share guidance for the year.We remain focused on our core fundamentals of taking care of our guests, whether it's our hand-roll tortillas, our daily made homemade sauces, made from scratch food or hand-squeezed lime juice for our signature margaritas, our primary goal is to provide exceptional service standards for our guests in a unique and up beaten atmosphere.To improve upon our profitability going forward, we've laid out several initiatives on our last call, and I'd like to provide some updates on that. Let's start with our marketing effort.

We are in the final stages of selecting a full-time marketing firm to help us bring our local store marketing and social media campaigns to a new level. We are excited about the prospect of improving our brand awareness and value messaging in both current and new markets. On the technology front, our partnership with Olo to create a robust online ordering system is progressing well. We are currently expecting to test the system in the second quarter and plan on completing systemwide roll-out by early in the third quarter.

Early feedback has been tremendously positive and we look forward to using our online ordering platform as a stepping stone for the introduction of new loyalty program in the future. Turning to catering, our test in Nashville, Dallas, and Houston markets continue to perform well and we are now considering additional markets or possible expansion during the next year. Lastly, with regard to our labor initiatives, we are in the last stages of integrating our new labor-management tool with our POS system and expect to complete this integration in the second quarter. On the development front, we opened two Chuy's restaurant during the first quarter, one in Doral Florida and one in Orland Park, Illinois.

Subsequent to the end of the first quarter, we've opened additional restaurants in Lakewood, Colorado, and New Tampa, Florida. While it's early, we're pleased with the performance of these new restaurants as our operators and development team continue to do an excellent job of instilling the Chuy's culture in our new units. For 2018, we expect to open between eight and 12 units.In summary, we continue to believe in the broad appeal of the Chuy's concept. Our strong unit economics and flexible real estate strategy, our strong balance sheet also enables us to return excess capital to our shareholders, most recently through our share repurchase during the first quarter.

All in all, we believe we have a long runway for expanding the Chuy's brand in 2018 and beyond. With that, I'd like to turn the call over to our CFO, Jon Howie, for a more detailed review of our first-quarter results.

Jon Howie -- Chief Financial Officer

Thanks, Steve. Revenues increased 8% year over year to $93.9 million for the first quarter ended April 1, 2018, driven primarily by $9.4 million in incremental revenue from an additional 135 operating weeks produced by 13 new restaurants opened during and subsequent to the first quarter of last year. This increase was partially offset by the $1.4 million headwind related to our one-week calendar shift due to the 53rd week in fiscal 2017 as well as non-comparable restaurants that are not included in the incremental revenue above. We had a total of approximately 1,187 operating weeks during the first quarter of 2018.On a fiscal-calendar basis, comparable restaurant sales decreased 1.5% for the 13-week period ended April 1, 2018, compared to the 13-week period ended March 26, 2017.

On a calendar basis, which we believe is more reflective of the year-over-year change in business, comparable restaurant sales decreased 0.6% for the 13-week period ended April 1, 2018, compared to the 13-week period ended April 2, 2017. We estimate that comparable sales were negatively impacted by unfavorable weather conditions of about 130 basis points by the shift of Easter to the first quarter of this year by about 20 basis points and by strategic cannibalization of about 20 basis points.Average weekly customers declined 2.4%, partially offset by 1.8% increase in average check. Effective pricing during the quarter was approximately 1.8%. There were 74 restaurants in our comparable base at the end of the first quarter of 2018.

Turning to a discussion on selected expense line items, the cost to sell as a percentage of revenue remained flat at 25.1%. Looking forward to the rest of 2018, we continue to expect inflation for the year to be in that 1% to 2% range similar to 2017 with the higher inflation rate in the first half of the year and lower in the last part of the year. Labor cost as a percentage of restaurant revenue increased approximately 150 basis points to 35.7%. The increase was attributable to hourly labor rate inflation of approximately 2.8%, new store labor and efficiencies and higher hourly rates in new markets.

For 2018, we continue to expect labor inflation to be approximately 3%.Restaurant operating costs as a percentage of revenue increased 30 basis points to 14.2%, primarily due to higher utility cost and higher repairs and maintenance cost. Occupancy cost as a percentage of revenue increased 60 basis points to 7.6%, primarily due to the higher rental expense at certain newly opened restaurants as we continue to expand into larger markets and higher rents on extended lease terms of certain existing restaurants.General and administrative expenses increased approximately $0.6 million to $5.5 million in the first quarter, driven primarily by higher management salaries and benefits to support our store growth as well as increases in our professional fees now that we are required to have our system of internal controls audited. As a percentage of revenue, G&A increased approximately 20 basis points year over year to 5.8%.In summary, net income for the first quarter of 2018 was $3.2 million, or $0.19 per diluted share, compared to $4.6 million, or $0.27 per diluted share, in the year-ago period. During the first quarter, the company repurchased 64,757 shares of common stock for $1.6 million.

We ended the quarter with $8.4 million of cash on the balance sheet and we currently have no debt. Lastly, let me go through our outlook for 2018, which has largely remained unchanged from what we disclosed on our last call. We continue to expect 2018 diluted earnings per share of $1.12 to $1.16. This compares to our 2017 adjusted earnings per share of $0.89, excluding the benefit of the extra week.Our guidance is based on the following assumptions.

We expect comparable restaurant sales growth of approximately 1% on a 52-week fiscal basis at the lower end of our previous range of 1% to 1.5%. We expect restaurant pre-opening expenses of approximately $3.7 million to $5.5 million. We expect G&A expenses between $21 million and $21.8 million. As a result of the enactment of the tax act, our effective tax rate is expected to be between 13% and 14% with the savings from this reduction in rate we intend to invest approximately $1.5 million, or approximately 40 basis points, during 2018 international-level marketing and off-premise initiatives, including to-go packaging, online ordering, and catering.

We expect annual weighted average diluted shares outstanding of 17.1 million to 17.2 million shares. And we expect to open eight to 12 new Chuy's restaurants this year. Lastly, our capital expenditures net of tenant improvement allowances are projected to be between $30 million and $40 million. With that, I'll turn the call back over to Steve to wrap up.

Steve Hislop -- President and Chief Executive Officer

Thanks, Jon. The broad appeal of Chuy's concept provides us with many opportunities to bring high quality, made from scratch food offerings and handcrafted cocktails to both new and returning guests. While external environments remain challenging, we're confident that the initiatives we've laid out will benefit us in the long run. Of course, our focus on the core fundamentals will not be possible without the hard work and dedication of our employees, and we would like to thank them again for all of their efforts and making our brand unique.With that, we are happy to answer any questions. Thank you.

Questions and Answers:

Operator

The question-and-answer session will be conducted electronically. We will take our first question from David Tarantino with Baird. Please go ahead.

David Tarantino -- Robert W. Baird -- Analyst

Hi. Good afternoon. A couple of questions on the recent same-store sales trends. I think, based on what you shared when you reported Q4 results, it seems like trends may have picked up in the latter month of the quarter.

And I was just wondering if you could go confirm that and then talk about what you're seeing so far in the second quarter? And then I have a couple of follow-ups.

Steve Hislop -- President and Chief Executive Officer

Yeah. David, thank you for the question. Yeah, it did pick up later in the quarter and it's continuing into the fourth period as well. So it's definitely picked up a little bit.

Jon Howie -- Chief Financial Officer

Take away the noise of the weather.

David Tarantino -- Robert W. Baird -- Analyst

And Steve, would you be willing to share what you're seeing quarter to date on comps?

Steve Hislop -- President and Chief Executive Officer

It's roughly in that 1.5% range right there. And again, we had a little bit of noise with some weather of about 40 basis points in the fourth period also.

David Tarantino -- Robert W. Baird -- Analyst

OK.

Steve Hislop -- President and Chief Executive Officer

Which includes that number, yeah.

David Tarantino -- Robert W. Baird -- Analyst

And does that include the benefit that you have from Easter in the quarter to the period?

Jon Howie -- Chief Financial Officer

Yeah.

Steve Hislop -- President and Chief Executive Officer

Yes. Yes, it does.

Jon Howie -- Chief Financial Officer

Yeah, the negative 40 basis points that he was talking about also includes the positive on the Easter.

Steve Hislop -- President and Chief Executive Officer

Absolutely.

David Tarantino -- Robert W. Baird -- Analyst

Got it. OK. Thank you for that. And then, I guess given that the trends have picked up here recently, I wanted to ask why you decided to trim the full-year comp guidance to the low end of the range versus keep the prior range? I just wanted to sort of understand what happened in your mind that changed that outlook?

Steve Hislop -- President and Chief Executive Officer

First quarter, down in the first quarter.

Jon Howie -- Chief Financial Officer

Well, yeah, I guess that we were expecting a little bit more to come back in the first quarter, but we're down 1.5% on a fiscal basis, because, again, David, those are fiscal numbers, which are going to be about 30 basis points below our normal kind of operational comp number.

David Tarantino -- Robert W. Baird -- Analyst

Understood. OK. So, just to be clear, the change in the outlook for the year is more of a function of the backward-looking results as opposed to changing your view on the forward-looking?

Steve Hislop -- President and Chief Executive Officer

Right.

Jon Howie -- Chief Financial Officer

Yes. Yeah, absolutely.

Steve Hislop -- President and Chief Executive Officer

So, I mean, just to give you an update on that. So if you saw the difference between the fiscal and the calendar, we are about 90 basis points negative on the fiscal. We're going to be flat in the second quarter on that difference, and then we'll be down about 90 basis points again in the third quarter and then up about 40 or 50 basis points in the fourth quarter, which will result, based upon the weighting of those quarters, down about 30 basis points from our fiscal. I mean, from our comp to our fiscal.

Jon Howie -- Chief Financial Officer

Yeah.

David Tarantino -- Robert W. Baird -- Analyst

OK, great. That's helpful. And then, Jon, can you maybe just talk about what you're seeing underneath the surface on new unit productivity. I guess, the way we calculate it, it looks a little soft in Q1.

So, I was wondering if you could just comment on the class of openings from 2017 and what you've opened so far this year and how those are performing relative to your internal target?

Jon Howie -- Chief Financial Officer

Yeah. I mean, like we talked about last year, we had a few stores that maybe opened a little soft in Chicago but we're very, very excited about the store that we opened here in 2018 in Orland Park but if you look at those stores as a whole, and I'm assuming you're kind of talking about maybe the incremental sales that calculates out to be about 69,700 for the quarter. If you look at that on a TTM basis, we're actually up on a TTM basis on the previous year. So we're up about 1%.

So, on a TTM basis, that's calculating now to be about a weekly average of about 77,000, so, again, right on that mark, but we opened these stores in the current year late in the quarter, where we opened up some of those stores like, one of the big stores we opened was Cedar Park last year, and that was opened right there at the first of the quarter. So that made a big change in that as well as what we were talking about in the shift. That shift is reflected in that lower number here in the first quarter as well compared to last year.

David Tarantino -- Robert W. Baird -- Analyst

Great. That's helpful. Thank you very much.

Operator

We will take our next question from Will Slabaugh with Stephens Inc. Please go ahead.

Will Slabaugh -- Stephens -- Analyst

Yeah. Thank you. Want to ask you guys about the new markets in particular. Can you talk about the early experience with putting a little bit more marketing behind some of the newer markets? I know you talked about that as being one of your initiatives and probably more to come but just curious if you think you're getting an appropriate return as of yet or what the early read there might be?

Steve Hislop -- President and Chief Executive Officer

Yeah. I think so. We've done it in three openings currently. We did it in the third opening of the Chicago stores.

Again, as I mentioned to you on the last call, we need to get some penetration in that market to know who we are. So, obviously we want to do some more radio and we used iHeartRadio and we specifically highlighted on the Orland Park, and we're really excited. I mean, that one's popped for us and so that will end up helping all the market and continue the awareness over there.We also did a little bit down in New Tampa and New Tampa jumped out of the boat very nicely for us and we also did something in Doral which is down in the Miami area and we're pretty pleased with that store also. And then, Orland Park as we've already mentioned but then we also did another one in Denver.

All of those had a little bit of testimonial radio.And then also we did a little bit of the money that we talked about spending, we also did some residential and professional mailers that were not, we don't discount anything. If anything, I'd give away an app. And so we did that in all of those markets also. And I think that was all pretty good results.

We're very pleased with the start but it was obviously early like I said in my prepared statement but we're very pleased with our 18 stores openings so far the first four.

Will Slabaugh -- Stephens -- Analyst

Got it. And a question about value, you mentioned that's something that you're going to be trying to communicate a little bit more, I guess, explicitly. Do you feel like in any of your markets right now you're getting the credit you deserve from the guests regarding the everyday value already on your menu and how do you view that opportunity to better tell the story? Is that through maybe a more explicit platform on your menu? Is it in-store messaging or otherwise?

Steve Hislop -- President and Chief Executive Officer

I think it's going to be, and that's why again we're really excited about this marketing firm coming on with us that will make the decision probably at the end of this next couple of periods. The thing is, we'll do it on social media and digital media and so forth right off the bat and it might be some just generic things in local store marketing in the markets but again what we've done I think over the last three years is really talk about our defining differences, not that we've ignored our value but I don't think we've got it out there hard enough. So we need to keep the defining differences out there and why we're different, but we need to get a [Inaudible] value message that all this discounting that everybody's doing, you can eat inside my menu all day for $20, you don't need a discount for that and so that's definitely something that we're going to work hard with not only our own marketing department but our partner as we get going in that.

Will Slabaugh -- Stephens -- Analyst

Got it. Thank you.

Operator

We will take our next question from Chris O'Cull with Stifel. Please go ahead.

Jonathan Conley -- Stifel Financial Corp. -- Analyst

Hi, guys. This is Jon Conley on for Chris. I was just hoping you could share a little bit more color around off-premise. What percentage of it was at this quarter? And do you see any pickup from catering or what are the markets do you plan on expanding catering to?

Steve Hislop -- President and Chief Executive Officer

Sure. Sure. So, those sales for the quarter was up about 11.68%, that was up over 12%, 12.66%, and that trend is improving in the fourth period or beginning of the second quarter. We're pretty pleased, as I mentioned on my call if you remember during the Christmas time, I think we had about $200,000 in sales in those markets.

I expected a pretty decent drop and there wasn't one. We ended up doing about $180,000 in the first quarter, out of those three stores and three vans, again, one in Nashville, one in Houston, and one in Dallas. Yes, we'll be looking throughout the year as we move forward and we'll possibly be looking at one in the Chicago area. And now that I have the three stores there that will also help us with awareness because we'll have the van in the market.

I'll look at the D.C. market and possibly the Cincinnati, Dayton market. Those would be the first three.

Jonathan Conley -- Stifel Financial Corp. -- Analyst

OK, great. Thank you for that. And then --

Steve Hislop -- President and Chief Executive Officer

You're welcome.

Jonathan Conley -- Stifel Financial Corp. -- Analyst

Also, it looks like your commodity inflation was a little bit lower than we anticipated. It sounds like you guys had originally said 2% to 3% in the first half of the year but the cost of sales was approximately flat. Did you guys see any commodities that were lower than expectations?

Steve Hislop -- President and Chief Executive Officer

Well, what we saw was, it came back a little bit at the end but we were still up over 2%. The reason why it's flat is even though we have effective pricing in there at 1.8%, what I think when we actually did the mix of stores for that, we've opened a lot of stores since that mix in the Tier 4, that's driving that down a little bit. So, effectively through the Tier 4 menu, I think we maybe have a little more price than that 1.8% that's keeping that flat but we were up over 2% in the first quarter.

Jonathan Conley -- Stifel Financial Corp. -- Analyst

OK, great. Thank you.

Operator

We will go next to Jeff Farmer with Wells Fargo. Please go ahead.

Jeff Farmer -- Wells Fargo Securities -- Analyst

Thanks. I think you mentioned that you saw a 20-basis-point cannibalization headwind in the first quarter. Where do you expect that headwind to trend to over the next few quarters?

Steve Hislop -- President and Chief Executive Officer

It should flatten out, Jeff. We're starting to see that flatten out significantly in Round Rock as we speak. Right now, 183, which is the closest to that is still seeing a little bit, not as drastic as it was but we should see that disappear here during the next two to three quarters.

Jon Howie -- Chief Financial Officer

Yeah.

Jeff Farmer -- Wells Fargo Securities -- Analyst

OK. And then, you just touched on it off-premise. Yeah, I think off-premise has been 10% to 12% of the mix in recent quarters. When it comes to introducing online ordering across the system in the next few months, where are you comfortable with that off-premise number trending to as a percent of sales? How high will you let that go theoretically?

Steve Hislop -- President and Chief Executive Officer

Well, Jeff, I think we'll let it go as high as we can comfortably operate within our four walls. And just to give you a range, that ranges in our restaurants from anywhere from 5% up to 22%, 22% at some of our busiest restaurants. So, I think it has room to grow there. We're expecting our ticket average to grow once we get the online ordering.

Obviously, it's not going to start right off the bat, because we need to advertise that as soon as we get it up and running but from what I've researched, we can expect that ticket average to grow once we get that online and once we start advertising that.

I think it's a great question because there is a time that will eventually affect the four walls if we let it get too high. And then, we have a good majority of our stores and definitely down in Texas market that is in the high teens. So we have some room to get comfortable with something that I'll watch from an operator perspective to make sure we can handle any and all the things that we're doing with not only that but without patios and so forth.

Jeff Farmer -- Wells Fargo Securities -- Analyst

OK. Then the last question is really more on the segment than your business but casual dining is obviously seeing nice inflection here in March and April, much better same-store sales than we had seen in prior months. I'm just curious if you guys have any comment on the drivers of that inflection and whether or not you expect this again improve same-store sales performance the industry is seeing to persist in coming months?

Steve Hislop -- President and Chief Executive Officer

My crystal ball on that, like I've been saying, I think we've noticed it a little bit at the end of last year and we've seen a little bit of, we've always said we're cautiously optimistic as we're moving forward here in Miami and even in the recent trends even to take out the noise of the weather.I think, at the end of the day, I think there have been the taxes and I think they get some money in their pocket that they were expecting or didn't understand, so I think that's helpful. I think people are getting numb to Trump and even when he's on Twitter all the time. So I think the viewership of all those things and getting things back to normal, everybody panicking is lessening. And besides all the other reasons and excuses we've used over the last year, I'm drying up a little bit, I think that's mostly it.

Jeff Farmer -- Wells Fargo Securities -- Analyst

OK. Thank you, guys.

Operator

We will take our next question from Andy Barish with Jefferies. Please go ahead.

Andy Barish -- Jefferies -- Analyst

Hey, guys. On the labor line, I assume the progression should look better as you go through the year. I'm just wondering the impact of not having that big Christmas week in the 1Q on the de-leverage you saw, and then when you get the full integration with POS, what are kind of the goals in terms of some of the labor-management opportunities there?

Steve Hislop -- President and Chief Executive Officer

Yeah. Andy, as far as obviously losing that, we have already said it's not only our highest volume week, it's our best most profitable week we have of the whole year. Along with that and then losing roughly over $1.1 million in just the weather-related issues, that definitely hurt us on the labor percent. So, yeah, you should expect in the second and third quarters to be obviously better than that number as we move forward.

And then, obviously, we'll have the fourth quarter, which is a lower indexing quarter for us, so you might see it pop up a little bit from the third quarter, but, yeah, this one had a whole bunch of things going against us in this first quarter.As far as the labor scheduling, the key for us there, believe it or not, with all the labor losses getting rid of the early punches and the late punches, and that's what we're going to be able to do with this system that we have in and whether it's a 15 minute early punch but that adds up a lot. And I think that the second thing we do with it, Andy, is it's called problem projections as far as scheduling projections. And I don't think we have a ton of that when we look at that even though it's a little bit more of a manual process. I think the biggest savings you're going to see with us is the known hours that we have by the sales hour and that's in there and the biggest one is the time clock reinforcement.

And to interject, Andy, when I'm looking at that big week, and what the impact was for the quarter on the store-level margin. That was about 60 basis points, 70 basis points for the quarter. So it had an impact definitely on our overall margin.

Andy Barish -- Jefferies -- Analyst

Thank you.

Operator

We will take our next question from Brian Vaccaro with Raymond James. Please go ahead.

Brian Vaccaro -- Raymond James -- Analyst

Thanks and good evening. Just a couple of follow-ups. Jon, just a quick one, you just mentioned the extra week 60 to 70 basis points that shift in the high-volume week. That was for the overall store margin, just wanted to confirm that?

Steve Hislop -- President and Chief Executive Officer

Yes, sir.

Brian Vaccaro -- Raymond James -- Analyst

OK. And back to the Q1 comps, could you provide some more perspective on what you saw from a daypart perspective, any change in those trends versus recent quarters that are worth noting and also any regional variations that might be worth highlighting?

Steve Hislop -- President and Chief Executive Officer

Now, it's fairly consistent with Q4. Lunch was a little lighter than dinner as we saw in Q4 from a lunch-to-dinner perspective. And from a regional perspective, it was pretty consistent with Q4 as well.

Brian Vaccaro -- Raymond James -- Analyst

OK. And then, on the labor line, touched on that already but thinking about the weight of new unit inefficiencies, do you expect those to dissipate, and if so, can you help us sort of quantify that as we move through the year on the labor line specifically?

Jon Howie -- Chief Financial Officer

Actually kind of what Steve was talking about previously, you're going to see that. I mean, we've got a lot of noise in that. I guess, if you call me up, we can talk a little later about that, but what we're seeing on Q3, remember that if and when you're comparing to Q3 last year, I think we're talking about a 3% inflation rate but you could see that flat to last year, given the inefficiency we had on the hurricane and things like that, so there's a lot of noise in last year's numbers --

Brian Vaccaro -- Raymond James -- Analyst

Hurricanes.

Jon Howie -- Chief Financial Officer

Hurricanes. There's a lot of noise in last year's numbers that hopefully will flush out this year and help us out a little bit in the labor line but you're looking at from an inflation perspective probably 30 basis points to 40 basis points on the year. And then, year over year, you're still looking at probably another 30 basis points or 40 basis points on inefficiencies of these new stores.

Brian Vaccaro -- Raymond James -- Analyst

OK. That's helpful. Thank you.

Operator

We will go next to Andrew Strelzik with BMO Capital Markets. Please go ahead.

Andrew Strelzik -- BMO Capital Markets -- Analyst

Hey, thanks for taking the question and good afternoon. The range of openings for the year that you're looking for is still relatively wide, I guess almost halfway through the year now. Just wondering, is the variance really that wide? At this point, what does that depend on and at what point do you think you'll have better visibility on where that's headed?

Steve Hislop -- President and Chief Executive Officer

We have visibility over that around when we report the next earnings. Right now, as I've always said, what we want to do is, I need to be upping customer counts. That's our No. 1 focus as a group in our company.

Right now, take away the noise, we've seen some positive sales and the trend we're liking, but we still haven't cracked, I'm still down a couple tenths in traffic. So that's our No. 1 thing and that's the biggest decision maker for me. So that's what we're looking for and I want to see it sustained.

So that's our biggest decision maker. If it's sustained and we get above it, you might see us a little bit more than the mid-range or the higher end but if it stays on that side, we're going to knuckle under and figure out how to make sure we're up in sales, specifically in customer accounts.

Jon Howie -- Chief Financial Officer

Andrew, it's Howie. We have two or three stores right there. Right at the end of the year early next year that can flip either way. So, even if we do open those in this year, it'll probably be later in the year to get to that guidance.

Andrew Strelzik -- BMO Capital Markets -- Analyst

That's helpful. And then, I was just wondering lastly, the 40 basis points that you're guiding to investments in marketing and off-premise, how much of that actually showed up in the quarter? And in the markets where you're increasing the advertising, roughly how much was that up on a year-over-year basis? Thank you.

Jon Howie -- Chief Financial Officer

Yeah. So, basically, we haven't seen the part related to the operating expenses yet. That will be in the last half of the year when we actually implement the to-go, because that's mainly in the to-go packaging, although there's a piece of it that's happening with the catering. As far as the advertising, as you can see in that line item, we're already kind of spending that.

So that will be consistent kind of through the year. And as we get that new firm on board, we'll kind of reallocate those expenses to them.

Steve Hislop -- President and Chief Executive Officer

Yeah. And the number we're having there is around $1 million to $1.1 million as far as our marketing fund.

Andrew Strelzik -- BMO Capital Markets -- Analyst

Great. Thank you very much.

Operator

We will take our next question from Nick Setyan with Wedbush Securities. Please go ahead.

Nick Setyan -- Wedbush Securities -- Analyst

Thank you. As we kind of think about 2019, are we going to enter any new markets in 2019 or is it all going to be backfill?

Steve Hislop -- President and Chief Executive Officer

It will be pretty much all backfill. All backfill, yeah.

Nick Setyan -- Wedbush Securities -- Analyst

And then, Jon, the 1.8 price was a little bit above what I thought the price would be in the quarter. Is that 1.8 kind of the right way to think about it going forward? Are there going to be any incremental maybe upticks or downticks as the year progresses?

Steve Hislop -- President and Chief Executive Officer

That is kind of what our pricing was, Nick. Like I said, we were opening stores in our Tier 4 markets, which may give a little benefit on that, if you will, since those are higher menu prices and given now the size of our overall store base but that is kind of the effect of pricing that we have in it.

Nick Setyan -- Wedbush Securities -- Analyst

And then, the mix, it's been pretty much exactly flat for a while, I mean, as we opened some new stores, etc. in new markets, I mean, I guess is that maybe the presentation, the menu, is that the price points that kind of makes that consistent year over year for the most part?

Jon Howie -- Chief Financial Officer

Yeah. Right.

Steve Hislop -- President and Chief Executive Officer

Yeah. I think most of the things on our menu, they're all from a cost-of-sale standpoint fairly consistent as well as pricing there is really no high and low prices that can fluctuate that mix. I mean, if you remember, the only time that we really had a significant mix lift was when we introduced the larger drinks, which was at a higher price point. And then, it was negative the following year as we were rolling over that.

And really that's the only time that we really had a mix difference. Our menu is totally customizable and people who eat at our restaurant get accustomed to ordering the same thing over and over if you can believe that, and that mix stays somewhat consistent. We have the LTOs to really drive that otherwise.

Jon Howie -- Chief Financial Officer

And as we go outside of markets, I think as we went more north we had to teach people and we do it rather quickly on what rellenos are and so forth, and we do it at the tables. And if we go to a market and we go to a table of 12 and also there are tacos on it, we ended up making some food and showing them the breadth of our menu really, really quickly. So, if they get into try things, they're not accustomed to. So that's why we get back to a similar mix, so we do that often in all of our stores.

Nick Setyan -- Wedbush Securities -- Analyst

And then, just lastly, what was the impact from the non-comp stores entering the comp base this quarter, Jon?

Jon Howie -- Chief Financial Officer

It's about 20 basis points.

Nick Setyan -- Wedbush Securities -- Analyst

Got it. Thank you.

Operator

At this time, there are no further questions. I will now turn the conference back over to management for any closing comments.

Steve Hislop -- President and Chief Executive Officer

Thank you guys so much. Jon and I appreciate the continued interest in Chuy's and we will always be able to answer any and all questions. Again, thank you and have a good evening.

Operator

[Operator signoff]

Duration: 39 minutes

Call Participants:

Jon Howie -- Chief Financial Officer

Steve Hislop -- President and Chief Executive Officer

David Tarantino -- Robert W. Baird -- Analyst

Will Slabaugh -- Stephens -- Analyst

Jonathan Conley -- Stifel Financial Corp. -- Analyst

Jeff Farmer -- Wells Fargo Securities -- Analyst

Andy Barish -- Jefferies -- Analyst

Brian Vaccaro -- Raymond James -- Analyst

Andrew Strelzik -- BMO Capital Markets -- Analyst

Nick Setyan -- Wedbush Securities -- Analyst

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