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Ruth's Hospitality Group Inc (RUTH)
Q2 2020 Earnings Call
Jul 31, 2020, 8:30 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Ruth's Hospitality Group 2020 Second Quarter Earnings Conference Call. [Operator Instructions]
I would now like to turn the conference over to Arne Haak, Chief Financial Officer. Please go ahead, sir.
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Thank you, and good morning, everyone. Joining me today on the call is Cheryl Henry, our President and Chief Executive Officer. Before we begin, I'd like to remind you that part of our discussion today will include forward-looking statements. These statements are not guarantees of our future performance, and therefore, undue reliance should not be placed upon them. We would also encourage you to refer to the Investor Relations section of our website at rhgi.com as well as the SEC's website at sec.gov for copies of today's earnings press release and our recent filings with the SEC for a more detailed discussion of the risks that could impact our future operating and financial results.
For those of you interested in our 10-Q filing, we expect this document to be filed next week. During this call, we will refer to adjusted earnings per share. This non-GAAP measurement was calculated by excluding certain items. We believe that this measure represents a useful internal measure of performance. You can find a reconciliation of adjusted earnings per share in our press release for today's call.
I would now like to turn the call over to the company's Chief Executive Officer, Cheryl Henry.
Cheryl Henry -- President and Chief Executive Officer, Director
Thank you, Arne. Good morning, and thank you for joining us for our second quarter 2020 earnings call. We appreciate your time today and hope that everyone is staying safe and healthy. First and foremost, as we continue to face this evolving COVID-19 crisis together, I am proud of our team. Their resiliency, their focus and their determination to emerge stronger from this pandemic is truly amazing. In this challenging environment, we have continued to elevate our safety standards while maintaining the art of hospitality that makes the Ruth's Chris dining experience so special. The strength of our business continues to be grounded in the health and safety of our customers and our team members and a focus on operational excellence, all of which are the foundation of our brands and long-term success.
As you are aware, the second quarter began with a highly uncertain environment as all of our restaurants faced mandatory dining room closures. Our teams quickly transitioned to takeout and delivery only in more than 2/3 of our company locations. This included the addition of multiple third-party delivery partners and the launching of online ordering and payment for company restaurants. We also streamlined our menu choices and refined our to-go packaging to provide quality and reheating capabilities for guests who want to experience the sizzle at home.
In May, as local guidelines permitted, we began to reopen our dining rooms. And by the end of June, 88% of our company-owned restaurants were open. 59 restaurants were operating with open dining rooms and 12 in takeout and/or delivery mode only. At the same time, 92% of our franchise locations were open. It has been a great feeling to welcome guests and many of our team members back into our restaurants, and our operating teams have been equally thrilled to be able to provide the memorable dining experience that we are known for. Their hard work has paid off as we have seen a meaningful improvement in sales throughout the quarter, including a tripling of our average weekly sales from April to June. This sales momentum comes from the strong demand we are seeing in restaurants, which have been able to open their dining rooms, albeit, with capacity restrictions.
Since May, restaurants with open dining rooms have consistently averaged 75% to 80% of prior years sales. During June, we were able to operate 24 restaurants with open dining rooms for the entire month. The performance of this group of restaurants provides an early but meaningful insight into our near term performance. These 24 restaurants had strong positive restaurant operating margins, which were consistent with the solid margin levels we had during June of 2019, despite sales that were approximately 20% below last year. In fact, 16 of the 24 restaurants had better margins than in June of 2019. While our sales momentum in California took a step backwards in July as government officials reclosed indoor dining throughout the state, our overall sales trends remain on track and are slightly better than the trends we experienced in June.
Again, our team responded with tremendous speed and innovation and have now created some beautiful outdoor dining venues where none existed before. While there may be starts and stops as we all work together to combat this virus, it remains very clear to us that our customers have a solid desire for dining at Ruth's Chris when we are able to open our dining rooms. In this current environment, our focus is to ensure our guests feel safe and comfortable during their dining experience, including offering our dinner and wine menus via QR codes, personal side options and limiting the number of different people who are providing service to each table. We have strategically repurposed some private dining areas for main dining room use, and we continue to work to provide additional capacity with appropriate distancing, both inside and outside of our restaurants.
As the situation evolves, we will continue to provide our broad set of fine dining options, full-service dining rooms, outdoor seating, dining in our bars where possible, as well as continuing our off-premise offerings to meet the needs of our guests. Finally, I'd like to spend a few minutes updating you on our financial position. We were fortunate in that our balance sheet and financial footing were solid before the start of the COVID-19 crisis. We quickly took several actions to enhance our liquidity, including exercising the accordion on our credit facility and drawing down the remaining availability. During the second quarter, we further solidified our position through the issuance of roughly $50 million in equity, of which $10 million was used to pay down debt.
The cash we raised has provided the company with a liquidity position to manage the future uncertainty we may face. We have made significant decisions around reducing growth capital expenditures, suspending our dividend and share repurchase as well as making permanent reductions in our operating and corporate expenses, all of which have contributed to reinforcing our financial position. Now before I turn the call over to Arne, I want to reiterate how amazing it is to witness the dedication and resiliency of our team members our franchise partners and our community. We will continue to build on the foundation we created over the past 55 years.
This means keeping Ruth's Chris as a place where you can relax and be indulged in a welcoming and safe, comfortably elegant environment, treating every guest with the touch of personal hospitality that they deserve and delivering the best steakhouse experience anywhere. With our commitment to operational excellence and our focus on our communities, we will get through this together and continue to drive our long-term success.
With that, I would like to turn the call over to Arne to discuss our liquidity further and review our second quarter results in more detail.
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Thank you, Cheryl. For the second quarter ended June 28, 2020, we reported a net loss of $17.6 million or $0.59 per diluted share. The net loss in the second quarter of 2020 included $330,000 in onetime severance payments, $488,000 in gains related to lease modifications, a $4.3 million impairment loss related to inventory and long-lived assets and $175,000 income tax expense related to the impact of discrete income tax items. Excluding these adjustments, our non-GAAP diluted loss per common share was $0.48. Total company-owned restaurant sales for the second quarter were $27 million, which compares to $104 million in 2019.
The decrease in sales was due to the local and state in dining room restrictions and restaurant closures, which are a result of COVID-19. Comparable restaurant sales per units, both opened and closed, decreased 74% during the quarter, and as Cheryl noted, improved considerably as the quarter progressed. By month, comparable restaurant sales decreased 87% in April, decreased 80% in May and decreased 54% during June. Average weekly sales for the same period were $19,200, $30,500 and $60,000, respectively. Over the last several weeks, many states have begun to retighten their diner restrictions. As of July 27, the company's restaurants are operating in several different modes. 88% of the 81 company-managed restaurants are open. 52 restaurants are operating with open dining rooms with capacity restrictions.
15 company-owned restaurants are operating with outdoor seating only and four restaurants are operating with takeout and delivery only. 94% of the company's 72 franchise-known restaurants are open and four remain closed. This includes 66 franchised restaurants with open dining rooms with capacity restrictions and two franchise restaurants that are operating with takeout and delivery only. Franchise income in the quarter was down 78% year-over-year as our franchisees were only required to remit royalties for sales when their dining rooms were opened. Now turning to our expenses.
Food and beverage costs as a percentage of restaurant sales were 29.8%, which reflects a new more focused menu and deep inflation of 5.5%. The restaurant operating expenses were down 49% due to the low sales levels we experienced. As we reopen our dining rooms, we remain sharply focused on regaining sales average on our labor and other operating expenses. Our sales, marketing and G&A costs for the second quarter were down 34% year-over-year as reductions in marketing and G&A were offset by higher professional fees and severance costs. We also continue to work diligently on evaluating our real estate portfolio. In the second quarter, we permanently closed five company-owned locations and terminated leases at two of the seven new units we were planning to open. We continue to actively negotiate with our landlords.
There are at least five additional locations that could potentially be closed if the pace of recovery slows or if we are unable to secure sufficient landlord concessions. The income tax rate in the second quarter of 2020 increased to 28.7% versus 16.1% in 2019. The increase in our tax rate was due to the expectation that the company will have a pre-tax loss in 2020 versus pre-tax income in 2019. As a result, our income tax credits increase our tax rate because they add to the tax benefit. When we have pre-tax income, these tax credits will reduce our tax rate. At the end of the second quarter, the company's cash balance was $96.1 million, which included approximately $6 million in rent from the second quarter. The company's average weekly cash burn rate during the second quarter was $1.2 million per week, which included approximately $3 million in rent payments during the entire quarter.
This level of cash burn was significantly lower than our previous outlook due to higher sale levels and the timing of lease modifications and rent payments. As we move through the third quarter, we now expect our cash burn rate, excluding closing costs and out-of-period rent payments, to be approximately $1 million per week. Due to the continued uncertainty surrounding the duration of the impact of COVID-19, we are not providing any additional guidance at this time.
With that, operator, I'd now like to turn the call back to open up the line for any questions that people may have.
Questions and Answers:
Operator
[Operator Instructions] Our first question is from Andy Barish with Jefferies. Please proceed with your question.
Andy Barish -- Jefferies -- Analyst
Good morning, guys. Good to hear from you. Just a quick update on the cash burn, if you will, Arne. I think you've mentioned negative $50 million was kind of maybe getting close to enterprise breakeven? And you saw better than that in July. Is there something that's changed? I don't imagine it's the cost side. Is it because we're in the seasonally low average unit volume period? Or any color on that would be helpful.
Arne G. Haak -- Executive Vice President and Chief Financial Officer
No, that's right, Andy. I think the guidance that we had shared on our last call was really around kind of two assumptions. One is an annual sales level. And you're absolutely right, we are seasonally in our weakest quarter of the year, which is the third quarter. And the second one is kind of an assumption that you have. Your restaurants are open. And I think we've seen that in June. The restaurants that were open all had positive cash flow, both at the restaurant and at the enterprise level. And so it's very consistent with what we've seen. We've even kind of mapped it out as sales decline versus cash burn and margin and everything is kind of on track. I think as we get into the fourth quarter is where as we get into seasonally stronger is where the cash burn should abate.
Andy Barish -- Jefferies -- Analyst
And just one other for me on the closures. Anything any color or details you want to add on that? Are they will they help the cash burn, I assume? Are they AUV margin beneficial, i.e. they were on a normalized basis, lower volume, lower margin stores?
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Broadly speaking, yes. There's a kind of a couple of different flavors. There's really a handful that were kind of underperformers. And then you have some that are they had kind of lease expirations that were kind of at the end of their term anyway, and there wasn't too much of a price to rebuild kind of the sales in those restaurants only to eventually close it a couple of years from now. So yes, incrementally, they should help.
Andy Barish -- Jefferies -- Analyst
Okay, thank you.
Operator
Our next question is from James Rutherford with Stephens. Please proceed with your question.
James Rutherford -- Stephens -- Analyst
Hey, good morning and thanks for taking the questions. The first one I have is on the margin front. Those units that were opened for the full month of June had unit level margins similar to 2019 levels. That seemed very strong. And it surprised me, just given that sales were still down about 20% year-over-year. I'm just curious, does this speak to your ability to achieve higher margins on lower sales levels going forward? Or is this sort of a transitory effect that might dissipate as capacity limitations are lifted in your staffing returns to normal levels of those restaurants?
Cheryl Henry -- President and Chief Executive Officer, Director
Yes, great question. And so first, let me just give complete credit to the teams in the restaurants. They a lot of these folks have been with us for years and years came out of 2008 with us. And when it comes to being able to adjust their business, at this point, they're really experts. So I think some of this has been us taking a good look at where are the opportunities. And so I would say it's a mix. I think there are some things that we've done inside the restaurant inside the four walls that will carry on through this around staffing and the structure of our staffing in the restaurants. But again, I give a great deal of credit to the restaurants to be able to understand how to manage in a down sales environment. And so yes, you're correct. Sales were running about down 19% for that group, and they were able to hang on to pretty impressive and excessive 20% well in excess of 20% margin. So I congratulate them on that.
James Rutherford -- Stephens -- Analyst
Okay. That's great. And then on the reopening cadence. I think there was 10, that you mentioned, company-owned units that are still closed today. What are the things you're looking for before you're able to reopen those units?
Cheryl Henry -- President and Chief Executive Officer, Director
Some of that is there's a few different categories. Some are discussions. We mentioned that we have potentially five more of that kind of fall in our review process of closures. So based on where we are with the landlords and then the validity of the marketplace over the next couple of years. Others are based on the jurisdiction and the limitations that are placed on it. So we're reviewing them on a daily basis. We obviously want our dining rooms open, and we want our teams back in those dining rooms. But I think as we look at the viability and understanding the financials within the four walls of those locations, we'll continue to monitor it.
James Rutherford -- Stephens -- Analyst
Perfect. Okay. And then just one last quick model question. For those units that were open in June, running at a negative 19% comp. It implies, I think, average weekly sales is around $75, 000. Correct me if I'm wrong on that. But how does that $75, 000 split between dine and off premise, please?
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Sure, James. Over 80%, probably like about the mid-80% of those sales come from the dine-in experience. We even during the month, they're still a little bit high. They're anywhere, kind of, between I don't know, depending on the restaurant, 10% to 15% are still kind of off-premises. But you definitely see the off-premises sales drop when the territories open up for in-dining restaurant. So but it's still there, and there's certainly still some people that I think feel more comfortable eating off-premises.
James Rutherford -- Stephens -- Analyst
Okay, thank you very much.
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Thank you.
Operator
Our next question is from Brian Vaccaro with Raymond James. Please proceed with your question.
Brian Vaccaro -- Raymond James -- Analyst
Thanks and good morning. Starting out with comps, I just wanted to clarify, the reported comps now that they include the impact of closed units. So you said quarter-to-date is down 47%, but that's really sort of 42%, 43%, if you were to exclude the impact of closed units?
Cheryl Henry -- President and Chief Executive Officer, Director
Yes.
Arne G. Haak -- Executive Vice President and Chief Financial Officer
That's right, Brian.
Brian Vaccaro -- Raymond James -- Analyst
Okay. All right. Just wanted to clarify that. And could you comment a little further on the regional sales trends that you're seeing more recently? And I guess, specifically on the two largest company-owned markets, California and Florida?
Cheryl Henry -- President and Chief Executive Officer, Director
Sure. So yes. Florida has been we're obviously tracking it as the situation environment changes in Florida. But Florida has really held up as far as the performance of those restaurants from opening through where we currently are in the period. California has changed just in the sense that dining rooms have completely been closed. And so, as the team has transitioned, as I mentioned, fairly rapidly and built these beautiful outdoor spaces, I think we're seeing some slowing, just based on that transition and capacity around having outdoor dining room space. So I think the impact is more into the California market than what we're seeing in Florida.
Brian Vaccaro -- Raymond James -- Analyst
Okay. But you're continuing to see, sort of, some sequential improvement in the overall comp? And would you attribute that to certain markets that might be reopening dining rooms, like, up in the Northeast or maybe Illinois, etc., that are more than offsetting that California deceleration?
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Yes, Brian.
Brian Vaccaro -- Raymond James -- Analyst
Or is there something else you'd highlight?
Arne G. Haak -- Executive Vice President and Chief Financial Officer
No, there's the Northeast has started to open up, and that has helped as well. They were among the last group of restaurants. I think, as you look at it, what's really been impressive to us is there is a demand. It's steady. Even the restaurants that have opened up the longest, they've been open about 10 weeks. It's not cabin fever. It sustained this 75% to 80%. California, as a state, opens up their dining rooms. California, for the two, three weeks, was open, had very good sales. There's demand there. They have kind of stepped back. But in the meantime, the mid-Atlantic and the Northeast have opened up. I think the biggest question mark, I guess, as we look forward is: One, getting everyone comfortable with eating inside again in California? And then two, probably our third biggest region is Hawaii and what happens there with tourism. We've opened up on a lot, but some of the outer islands are in those kind of closure numbers as well because they're obviously very much based on tourism.
Brian Vaccaro -- Raymond James -- Analyst
And I'm curious, as you've reopened dining rooms, just what you're seeing in terms of sales mix and what that might say about broader consumer behavior? Any color on Ruth's Classics, alcohol mix or other aspects you might point out?
Cheryl Henry -- President and Chief Executive Officer, Director
Sure. Yes, so we look at we've been looking at consumer behavior around, kind of, timing and how quickly the dining room sell and then where they're going around the menu. We put in a fairly streamlined menu and some of the mix, I think, is attributed to whether we can be open in bars as well. So I'll just put that out there. I think Classics has held steady. We haven't seen a major increase. So I think we look at that to understand is that a consumer that driven strictly by value. And certainly, Ruth's Classics is that, but it's held steady as far as the mix. Alcohol mix is a little bit there's the impact of having a bigger piece of sale being to-go. So there's a bit of a shift from alcohol sales in the to-go business, but not as significant inside the restaurant.
Brian Vaccaro -- Raymond James -- Analyst
Okay. Okay. And Arne, what were sorry if I missed it earlier, but what were franchise comps in the quarter? And what was the split domestic versus international?
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Brian, I don't have that right in front of me. Let me get back to you with that.
Brian Vaccaro -- Raymond James -- Analyst
Okay. And sure. No problem. And then the last one, just on the closures, the 10 company stores. I think I saw some media reports but maybe two have closed. I think maybe King of Prussia and one of the Hawaii units in July. I just wanted to confirm that was accurate.
Cheryl Henry -- President and Chief Executive Officer, Director
Yes. Brian, we've actually closed five.
Brian Vaccaro -- Raymond James -- Analyst
So those two were in the 5?
Cheryl Henry -- President and Chief Executive Officer, Director
Correct.
Brian Vaccaro -- Raymond James -- Analyst
Got it. Okay, perfect. Thank you very much.
Cheryl Henry -- President and Chief Executive Officer, Director
Thank you, Brian.
Operator
Our next question is from Nicole Miller with Piper Sandler. Please proceed with your question.
Nicole Miller -- Piper Sandler -- Analyst
Thank you and good morning. I think, in the prepared commentary, Cheryl, you said there were a dozen or so, maybe it was 16 restaurants with better margins. I want to dig into that a little bit more. So why is that? And what parts are temporary and what might be permanent?
Cheryl Henry -- President and Chief Executive Officer, Director
Yes. I'll speak overall, and I'll let Arne go into a little more detail and break out the categories. I think it's really the largest piece is a reflection around structurally looking at labor and understanding at 19% down sales volume, how do you ensure the guest experience maintains. And by the way, we've done the work around, is this anything we've done impacting the guest experience, and we're finding that our guest SAT scores are actually in line or even better in this environment than we had previously. So I think the takeaway there is that we can make some of these changes, some for safety and health reasons, as far as the number of people that are touching tables, and others to understand what's truly required at that level of sales. And that's probably where we've seen some of the significant opportunities around the margins. And Arne, if you have anything to add, please, please do.
Arne G. Haak -- Executive Vice President and Chief Financial Officer
No, Nicole. I think Cheryl gave a lot of credit to our operators, and we see it across the P&L. Food costs were good. There were labor efficiencies and even on the other operating costs, there were efficiencies. And I think everybody if you think about it, they kind of sat on the sidelines for six weeks, they're ready to go. And they're focused. And I think we're all encouraged by, one, the demand; and two, the ability to work on the margins. It's one month. So hopefully, this is sustainable. But I think it's very encouraging.
Nicole Miller -- Piper Sandler -- Analyst
Okay. Fair. And then while Ruth is clearly a destination, what are the communities like around you. Retail restaurants open collectively, if that's the case, is that better? Or are there maybe permanent closures of peers or competition around you and you're taking share?
Cheryl Henry -- President and Chief Executive Officer, Director
Yes. And it's a great question, Nicole. And it really differs by market. And so there really isn't a specific trend that we can say some of it is driven by other closures in the marketplace because the offset to that is there are a lot of things that are closed around us, too. So even I'd point out, Orlando is clearly driven by tourism and convention, but yet holding its own within that same range of sales that we're talking about. So I don't I think it's early to say for sure where the drivers or takeaways are in each market, but it's something we're looking at.
Nicole Miller -- Piper Sandler -- Analyst
Thank you. Have a great day.
Cheryl Henry -- President and Chief Executive Officer, Director
Thanks.
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Thanks for the call.
Operator
Our next question is from Todd Brooks with CL King & Associates. Please proceed with your question.
Todd Brooks -- CL King and Associates -- Analyst
Okay. Arne on apologies, everybody. Good morning. When you were talking about, kind of, the spread of outdoor dining as an adjunct to the dine-in experience, how widespread is that across the chain right now? Is it really just California-focused, given the recent dining closures? Or are you doing this more broadly across the base?
Cheryl Henry -- President and Chief Executive Officer, Director
Yes, great question. So we have looked for every opportunity. As you know, some markets started with outdoor only and then moved to having indoor dining rooms. So it's mandated in California right now and New Jersey and a couple of other locations. But we have actually looked at it across the system. So I would guess, I would say in preparatory phase, will there be others? We have plans the team has done a fantastic job of going location by location and putting plans in place. Some of those have already been expanded, so they add to the interior capacity. Some outdoor patties that we had have been reworked from a floor plan standpoint and others have added capacity, even though maybe not mandated at this point.
Todd Brooks -- CL King and Associates -- Analyst
Okay. Great. And going to the class of 24 stores that were opened for the entire month of June, my assumption, and correct me if I'm wrong, is you're probably operating under capacity restrictions, I would guess, in the 50% range, yet your same-store sales were only down 19%. Can we talk about how you achieved that in a 50% capacity restriction, whether it's shoulder periods, private dining rooms, outdoor, just the drivers of getting to that type of same-store sales performance?
Cheryl Henry -- President and Chief Executive Officer, Director
Yes. So a little bit of all of the above. And I would say the capacity is ranged from 25% to 50% when we first opened in May in that class. And then some were actually rolled back from 50% to 25%. But yes, so as we looked at it going in several options, including outdoor dining spaces and expanding where we could using private dining spaces and really reworking the entire floor plans at the restaurants to ensure the safety standards are being met, but at the same time, allowing for a different approach to seeding. So to your point, including shoulder times that maybe started a little early. And as you can imagine, guests were certainly interested in understanding when we were first venturing into dining room that if they wanted to come as early as 4:30, that restaurants are open and available for them. So there was a demand in those areas and then some later at night as well. So it's a mix of all of that.
Todd Brooks -- CL King and Associates -- Analyst
Okay. Great. And my final question. I know when you look at your customer mix, 1/3 is, kind of, that just-because customer, 1/3 is typically that business customer. Can we talk about both those segments? One, the business customer, any sign of that customer returning? And two, the just-because customer, any sense or is it too early to know their frequency of visit? I know that used to be a customer that would use the restaurant often in a, kind of, a non post-COVID environment?
Cheryl Henry -- President and Chief Executive Officer, Director
So this is a bit early to determine. I will tell you, anecdotally, we're seeing the same types of celebrations. In fact, going back to your earlier question, when you asked about we have done a great deal of work of understanding party size and then matching that against our layout of seating. And so we're seeing the 2-tops, a lot of 2-tops. So a lot of celebrations around anniversaries, birthdays, date nights out. So that has actually helped from a capacity standpoint because previously, we had put in the appropriate seating to manage the demand for 2-tops. So we added them into our restaurants, and that allows us to accommodate that. And then the business guest, we certainly have, and as I mentioned, transitions, our private dining room more to main dining to allow for further capacity. We're starting to see some of that business, the calls and requests coming in. The requests are a bit further out, but we're starting to see that pick up slightly as we move through the summer.
Todd Brooks -- CL King and Associates -- Analyst
Okay, great, thank you very much.
Operator
[Operator Instructions] Our next question is from Andy Barish with Jefferies. Please proceed with your question.
Andy Barish -- Jefferies -- Analyst
Hey guys, just a quick follow-up on, sort of, extraordinary or onetime costs, maybe, that ran through the 2Q with bonus payments or things like that, and is any of that continuing into the 3Q here?
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Andy, there still will be, I think, as we go through and continue to reevaluate, kind of, the real estate in the portfolio. That's probably the biggest uncertainty. That will also be in the third quarter as well, some onetime costs around Michael O'Donnell's transition and retirement. Those are the kind of the two big things right now.
Andy Barish -- Jefferies -- Analyst
Okay. And as long as I have, can you give us kind of a quick update, broadly speaking, just in terms of the buckets of, kind of, landlord negotiations and what's happened there?
Cheryl Henry -- President and Chief Executive Officer, Director
Yes. I'll say it broadly. I think we've seen, as others have probably reported, a mix. I think there we have been in business for 55 years. We have some long-term partnerships. And I'd say that has worked well for us. We had kind of an initial wave of landlords that partnered well, understood the environment. We understand the environment they're working in. And we were able to negotiate and get some abatements and other concessions around the leases. I think there's as we mentioned, there are some that we're still talking to, and those are areas where the markets are potentially the most difficult and trying to understand what that looks like and restructure the partnership for the long-term. And others that I think as we look over the next couple of months, we'll find an approach for the short-term as well as the long-term with them as well.
Andy Barish -- Jefferies -- Analyst
Thank you very much.
Cheryl Henry -- President and Chief Executive Officer, Director
Thank you, Andy.
Operator
We have reached the end of the question-and-answer session. And I will now turn the call over to Cheryl Henry for closing remarks.
Cheryl Henry -- President and Chief Executive Officer, Director
Thank you.
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Cheryl. Before you start, let me just give Brian his numbers on the franchise, so everyone can have them. So Brian, and I apologize for stepping into your closing, Cheryl. Franchise comp for the second quarter was, for everyone down was down 63.9%, and it's very similar between domestic and international, down 64% domestic and down 63% international. So very consistent experience happening in our franchise markets, both domestic and internationally. So there you go, Cheryl. Thanks.
Cheryl Henry -- President and Chief Executive Officer, Director
Thanks, Arne. And thank you all for joining us on the call this morning. I look forward to speaking with you again soon. Have a great day.
Operator
[Operator Closing Remarks]
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Thanks.
Duration: 36 minutes
Call participants:
Arne G. Haak -- Executive Vice President and Chief Financial Officer
Cheryl Henry -- President and Chief Executive Officer, Director
Andy Barish -- Jefferies -- Analyst
James Rutherford -- Stephens -- Analyst
Brian Vaccaro -- Raymond James -- Analyst
Nicole Miller -- Piper Sandler -- Analyst
Todd Brooks -- CL King and Associates -- Analyst
