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Chuy's Holdings Inc (CHUY 1.81%)
Q2 2020 Earnings Call
Aug 6, 2020, 5:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, everyone, and welcome to the Chuy's Holdings Second Quarter 2020 Earnings Conference Call. Today's call is being recorded. [Operator Instructions]
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, Incorporated.
At this time, I'll turn the conference over to Mr. Howie. Please go ahead.
Jon Howie -- Vice President and Chief Financial Officer
Thank you, operator, and good afternoon. By now, everyone should have access to our second quarter 2020 earnings release. If not, it can 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 guaranteeing 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 the way, I'd like to turn the call over to Steve.
Steve Hislop -- President and Chief Executive Officer
Thank you, Jon. Good afternoon, everyone, and thank you for joining us on the second quarter earnings call today. I hope everyone is safe -- staying safe and healthy. I'm encouraged with the incredible progress we made during the second quarter. Our results are a testament to our team's hard work in transforming our business and the relentless dedication in serving our loyal guests during this challenging COVID environment. For that, I'd like to thank everyone of our team members, and I couldn't be positive [Phonetic] to be working alongside this incredible group of people.
If you recall, we took several steps at the onset of COVID-19 to ensure that we will emerge a stronger brand when this pandemic subsides. We transformed our restaurants into an efficient off-premise model with enhanced take-out and curbside pickup procedures as well as a delivery service through DoorDash, our national delivery partner. In conjunction with our new operating model, we streamlined our menu offering to feature a reduced number of entrees, as well as adding convenient family meal and beverage kits. We also had to make the hard decision to furlough some of our managers and employees and reduced our remaining team size.
Starting in May, we began the process of reopening our dining rooms in accordance with the state and local mandates, and by the end of June, we had opened all of the dining rooms in our 92 stores that are currently open. We were also pleased to have rehired a majority of our furloughed hourly employees by the end of the second quarter. As of today, our restaurants are staffed, and we have returned everyone's salary to its normal level. It is understatement to say that we're all eager to welcome our guests back in our restaurants, but our number one goal will continue to be the safety and well-being of both our employees and guests. All in all, our efforts have generated second quarter results that we are proud of, with average weekly sales per restaurant improving sequentially throughout the second quarter from 38,800 in April with no indoor dining to 70,500 in June with all dining rooms open.
Moreover, even with the reopening of our dining rooms, our off-premise sales remain strong and continue to perform at a rate more than double its pre-COVID-19 levels. Despite recent rollback reopenings of our dining rooms from increased COVID-19 cases in various states, including Texas and Florida, we are very pleased to see our sales volumes remained solid thus far in the third quarter.
In addition to our improved top-line performance, we also made great strides in enhancing our operational efficiencies. Through better cost of sales and labor cost management, we were able to improve our restaurant level operating margin in the second quarter by 620 basis points. In fact, in the June period, we were able to generate higher year-over-year free cash flow despite lower sales. While we expect that our restaurant operating costs will increase when the dining room capacity restrictions are further loosened, we are confident that we can build upon our recent operational efficiency to positively impact our business over the long run.
With our dining rooms now open, although at various limited capacities based on state and local mandates, we will begin to resume our marketing effort in the fourth quarter with key messages on value, convenience and safety. Value has always been a hallmark of the Chuy's brand, and combined with the convenience of our contactless pickup and delivery channels as well as the safety procedures we put in place in our dining rooms, our guests can continue to enjoy our freshly prepared favorable Mexican inspired offerings either in the safe environment of our dining rooms or in the comfort of their homes.
With that, I will turn the call to our CFO, Jon Howie, to discuss our second quarter results in greater detail.
Jon Howie -- Vice President and Chief Financial Officer
Thanks, Steve. Revenues for the second quarter ended June 28, 2020 decreased to $65.7 million compared to $113.1 million in the same quarter last year. The decrease was primarily driven by a traffic decline due to COVID-19, including the loss of 117 operating weeks from temporary closures of nine restaurants. In total, we had approximately 1,196 operating weeks during the second quarter of 2020.
As Steve mentioned, we transitioned our restaurant operation to off-premise only at the end of the first quarter, and reopened or dining rooms to varying degrees of capacity during the second quarter. For the second quarter, our off-premise sales were approximately 60% of total revenue. Comparable restaurant sales decreased 39% during the second quarter and included 42.8% decrease in average weekly customers, partially offset by 3.8% increase in average check. Please note that we've laid out our sales improvement cadence for the second quarter by period in today's earnings release.
Turning to expenses. Cost of sales as a percentage of revenue decreased 230 basis points to 23.5%, primarily as a result of switching to a limited menu and eliminating our complementary buffet style chips and salsa, Nacho Car. All in all, commodity deflation for the second quarter was approximately 1%. Looking ahead, we are currently seeing inflation in cost of sales increasing approximately 100 basis points during July as compared to Q2, and expect this to continue through Q2 and -- or Q3 and Q4.
Labor cost as a percentage of revenue decreased approximately 790 basis points to 26.4% as a result of furloughing a substantial number of our hourly employees and store management personnel when the company transitioned to an off-premise only operating model. Hourly labor rate inflation on our comparable stores during the quarter was approximately 3.1%. As Steve alluded to earlier, in conjunction with our sales improvement and dining room reopening, we have since rehired a number of our furloughed employees and are now staffed for our current volumes. With that in mind, we expect our labor cost as a percentage of sales to increase approximately 500 to 600 basis points during the third and fourth quarter from current quarter levels as we continue to expand the capacity of our dining rooms.
Operating cost as a percentage of revenue increased 220 basis points to 16.3% compared to last year's quarter, primarily due to increases in delivery service charges and to-go supplies as a result of the growth in off-premise business, as well as the sales deleverage of fixed restaurant operating expenses.
Marketing expense as a percentage of revenue decreased 80 basis points to 0.6%, driven by the suspension of our national level marketing initiatives in response to COVID-19 pandemic, while relying on a more cost effective local store marketing effort. However, as Steve mentioned earlier, we are planning to resume our marketing efforts during the fourth quarter and would expect a more normalized spend of around 1% to 1.5% of sales.
Occupancy costs as a percentage of revenue increased 360 basis points to 10.8%, primarily as a result of sales deleverage of fixed occupancy expenses. General and administrative expenses decreased to $4.8 million in the second quarter from $5.9 million in the same period last year, primarily driven by a decrease in management salaries and bonuses and the temporary pay reductions, partially offset by higher IT and professional services costs and the suspension of quick pay vendor rebates.
In summary, net income for the second quarter of 2020 was $4.5 million or $0.26 per diluted share compared to net income of $6.2 million or $0.37 per diluted share in the same period last year. During the second quarter of 2020, we received a one-time insurance settlement of $1 million recorded closed restaurant costs of $1.8 million and received a favorable tax adjustment related to the CARES Act of $1.1 million. Taking all that into account, adjusted net income for the second quarter of 2020 was $4 million or $0.23 per diluted share compared to $7 million or $0.42 per diluted share in the same period last year.
Finally, I'd like to quickly touch on our liquidity and strength of our balance sheet. As we mentioned on our last call, we've taken steps to ensure that our business is well funded for the long-term. During the second quarter, we issued approximately 3 million shares of common stock, resulting in net proceeds of $48.2 million to the company. A portion of the proceeds was used to repay the $25 million outstanding balance of our revolving credit facility. As of the end of the second quarter, we had $67.2 million in cash and cash equivalents and $25 million available under our revolving credit facility and no outstanding debt. All in all, we believe we are in great position financially to weather this challenging time.
With that, I'll turn the call back to Steve.
Steve Hislop -- President and Chief Executive Officer
Thanks, Jon. To summarize, we had a great quarter, and our sales momentum continued thus far into the third quarter despite the recent roll back in dining room reopenings in certain states. Our business operations are more efficient and our balance sheet is strong. While there continues to be a level of uncertainty surrounding COVID-19 in the near future, we believe our team is very resilient and will remain nimble to adapt to any challenges in the market condition.
Lastly, none of these accomplishments would have been possible without the hard work and dedication of all our Chuy's employees despite hard times that they've endured during this pandemic. Thanks for all you do.
With that, we're happy to answer any questions. Thank you.
Questions and Answers:
Operator
[Operator Instructions] Our first question is from James Rutherford from Stephens. Go ahead.
James Rutherford -- Stephens, Inc. -- Analyst
Hey. Thank you for taking the questions here. I wanted sort of on margin side, given how much stronger those were than expectations here, could you share what the restaurant level margins were in July if possible, given how you sort to be higher [Phonetic] some folks at that point. And then just what pieces of this more profitable operating model we should assume kind of carry forward into the 3Q and the 4Q given all the moving pieces within labor and cost of sales and so forth?
Jon Howie -- Vice President and Chief Financial Officer
Sure. Our operating margin in July, and of course, we don't have the final financial statements, are still around that 20% level at the restaurant operating level. However, when you're looking at projections for Q3 and Q4, like I said in my remarks, we're running at 26.4% in labor this quarter. I'm expecting that to increase to 500 to 600 basis points. So you're looking at between 31% and 33% during Q3 and Q4. Our operating expenses, it really depends on the crystal ball, right, of what our sales are. If our sales kind of remain consistent where they are or increase a little bit, with the comeback of our dining rooms, our operating expenses are going to be a little higher. So, we're expecting kind of those in that 16% to 17% range going into Q3 and Q4.
And then, our cost of sales, like I said in my remarks, we ran a 20 -- I think it was a 23.4% this quarter, we're looking at 23.5%, we're looking for those to increase about 100 basis points -- well, they have increased 100 basis points in period seven, and we expect that to continue in Q3 and Q4.
James Rutherford -- Stephens, Inc. -- Analyst
Okay, excellent. And just continuing on that question, when do you all expect to start reintroducing the full menu? I know my local Chuy's is now certainly my favorite Tex Mex off again. So I'm pleased with that. But what's your view on the return of the broader menu throughout the course of 2020 and next year?
Steve Hislop -- President and Chief Executive Officer
Through there -- this is Steve. Through the remainder of the third quarter, you'll still see the limited menu where it is currently. You'll probably see us in the fourth quarter, have a handful of items pop back on to the menu in the fourth quarter with a reprint of what will be our existing menu in next year.
James Rutherford -- Stephens, Inc. -- Analyst
Excellent. Okay. [Speech Overlap]
Steve Hislop -- President and Chief Executive Officer
Thank you.
Operator
Our next question is from David Tarantino from Baird. Go ahead.
David Tarantino -- Robert W. Baird -- Analyst
Hi. Good afternoon, and congrats on delivering good results in a tough environment.
Steve Hislop -- President and Chief Executive Officer
Thanks, David.
David Tarantino -- Robert W. Baird -- Analyst
I have a question, Jon, about -- just about the kind of labor matrix specifically, if you look at that comment you just said, in the low-30% range, that's pretty surprisingly low in relation to your current sales trend. So, can you just elaborate on what's driving that? I mean, if I look at kind of recent years, it's been more and the mid-30%s, and now your sales are down roughly 25%, and now it's lower than that. So, I guess, what's inside of that is driving it, and what do you think is sustainable or not sustainable in that equation?
Jon Howie -- Vice President and Chief Financial Officer
Well, it's a great question, David. And I'll answer it this way. I mean, we've been working on our management part for quite some time, as you know. And when we went into the COVID situation, we basically brought all our managers down to four managers per store and reevaluated what we needed when we opened up the dining room. So, we have decreased the number of managers per store going forward. So that has helped tremendously. We've got some new tools that basically we had to put in place, and we're monitoring labor on a best practice standpoint as we have in the past. But better tools and better visibility into it has allowed us to even do that more effectively. And so, when we're said and done, and we get back to normal levels, we truly believe that we can have labor in that 31% to 30% level, so similar to what we were back when we went public, if you can look back at those statements.
Steve Hislop -- President and Chief Executive Officer
A few of the other things -- yeah, a few of the other things is obviously, we are currently in -- before COVID had about 60, 61 menu items on our menu. We've always been talking about the smart prep moving forward. But going into next year, you'll see it probably south of that number. Obviously we'll have a little bit different menu, really evaluated some of the items that we had on the menu. There is ease of operation that goes along with that and that's part of the answer for why Jon saying in that 31% to 33% [Phonetic] also with the increase in to-go right now. It's currently double what we weren't. It's in the 34% to 38% range right around there.
Right now, we hope to see that the low-20%s to mid-20%s once we come out and we have all the dining rooms open all the way through and the efficiencies of that to go is really good for us, and those a couple of other regions.
David Tarantino -- Robert W. Baird -- Analyst
Yeah. And then, Steve, how are you feeling about the reduction in number of managers in relation to [Speech Overlap]?
Steve Hislop -- President and Chief Executive Officer
Yeah, great question. But the key for us on that one is, number one, we've also had a reduction in hours that we're operating currently. Right now, during the week, we're closing at 8 o'clock Sunday through Thursday, Friday and Saturday, we're closing at 9. So that was part of that. But then also, the ease of execution of our current menu and our future menu makes that very comfortable with us moving forward that type of model.
David Tarantino -- Robert W. Baird -- Analyst
Great. Thanks a bunch.
Steve Hislop -- President and Chief Executive Officer
Thank you. Our next question is from Nick Setyan from Wedbush Securities. Go ahead.
Nick Setyan -- Wedbush Securities -- Analyst
Thank you. In terms of the July trends, can you maybe give us the weekly cadence there? And if we don't get a scenario where the rollbacks improve again, are there anything company-specific that you can do to drive the positive trajectory in terms of sales or does it have to come from higher capacities again?
Steve Hislop -- President and Chief Executive Officer
Well, I'll answer it this way, Nick. Obviously as we retracted backwards in some of these states like Florida and Texas, we did see some double-digit drops from a percentage of what we were running in that 70% at the peak weeks, we are running to 72,000, 73,000 a week, and we saw that drop to 13%, 14% in the first two weeks. But I think, and whether this will happen in the future, I mean, people finally start getting tired of that, and they get out again. And so, basically toward the end of July, we started seeing a decrease of only 5%. So we are pretty close to where we were at our peak in June at that time.
However, to answer your second part of the question, when we are at 50% capacity, which is where we are on most states. I don't know that we can really do inside much more than that, maybe 50% or 60% because of the six-foot distancing. There are a few things that we can do with place the glass on boos [Phonetic], and things like that. However, we don't have that many boos. So that doesn't help expand our dining room that much either. And so, at six-foot distancing, we can really expand our patio and get a little extra boos, which we're seeing that now. We're on -- in the past, our patio business used to be 7.9% of sales. And right now it's running in that 10% to 13% of sales. And so that is increased substantially. So, there are things -- and the biggest thing is just really promoting and driving the heck out of to-go, which Steve mentioned earlier, we're seeing some good profitability in that to-go.
Nick Setyan -- Wedbush Securities -- Analyst
Got it. And the Q3 labour commentary and some of the commentary on Q4, like the marketing normalization, it's better, is that predicated on a more normal sales level or if sales stayed down around July level for a while? We're not going to speak of [Technical Issues] spending.
Steve Hislop -- President and Chief Executive Officer
No. We'll get on plan [Indecipherable], I think it's important around the holiday time, and that's why we're going to start the marketing initiative a little bit in the fourth quarter. I really wanted to talk about the convenience of our to-go, although not to go and also our partnership with DoorDash. And then obviously our other message will be the safety of it and the convenience of it. So that was going to be the value. So those -- we're definitely going to have that spend in the fourth quarter that Jon mentioned to you earlier. Just to get that name out and really talk about not only our defining differences, but what we think we also do well, which starts with our value, the safety and then obviously the convenience. So that will be an expense in the fourth quarter.
Nick Setyan -- Wedbush Securities -- Analyst
Understood. And the labor uptick, etc, all of that is going to happen. Basically it's not predicated on the sales trajectory.
Steve Hislop -- President and Chief Executive Officer
Steve
A little bit will be based on opening up. If we get rid of the six-foot distancing, which means we'll be able to go over the 50%, 60% of indoor dining, like Jon mentioned to you before, if that goes away, you will see the increase that Jon mentioned on the labor. If it doesn't, you'll probably see it very similar to the -- a little bit higher than the 7.3%.
Nick Setyan -- Wedbush Securities -- Analyst
Understood. And then last question, just competitive dynamics, are you already starting to see less competition in certain markets? How are you thinking about those stores that have been -- that have been temporarily closed? Any color there would be very helpful.
Steve Hislop -- President and Chief Executive Officer
Yeah, that's a great question. The key thing for me, and I wanted -- definitely there has been some competition that has closed the doors, and we believe there's great operators, and we have an opportunity to go in and even dominate some of those markets even more than we do today. But one thing that I want to do is, I've not been able to visit those stores in a while. So, after this is normalized and we're comfortable traveling all over the country, I'm going to visit our stores along with our real estate department and really look at what's happened in the environment, and specifically the competitive environment and all those closed stores. And then I'll start making determinations whether we're going to open those are not. Until that time, I'm going to -- right now, I'm just saying they're all temporarily closed. But obviously, even in some markets where maybe in the past I haven't been able to get into because of the number of stores, we love the hermit crabs. So we like to go into those markets and we look at some opportunity events and see if we can pick up some of those that will expand our footprint in our existing market points.
Nick Setyan -- Wedbush Securities -- Analyst
Got it. Thank you very much.
Steve Hislop -- President and Chief Executive Officer
Thank you, Nick.
Operator
Our next question is from Andrew Strelzik from BMO Capital Markets. Go ahead.
Daniel Salmon -- BMO Capital Markets -- Analyst
Hey, guys. This is actually Dan on for Andrew today. Thanks for taking the questions. Just a couple of quick ones for me. First, Chuy's has always offered tremendous value, and we've heard a lot of folks talking at the importance of value right now as we progressed through the back half of the year. And you touched on this a little bit in your comments around marketing, but I'm just curious how you're thinking about your value strategy moving forward, if there are any sort of menu or promotional actions you can take to sort of reinforce the value perception of the brand, while still maintaining margin integrity.
Steve Hislop -- President and Chief Executive Officer
Yeah. I think that's a great question. And that was the first thing that was on our mind as we've reduced our menu sizes through during -- to-go only. As we opened our dining rooms, and in the middle actually before we did that, we added these kits and there are these meal kits that we did and also our Margarita kits that we did and we price those that even a better value than a single item because we knew everybody through this thing with the layoffs and moving through the rest of the year and early into next year, but that value proposition is going to be even more important even though we felt like we were the best in the industry, specifically in our competitive set. Anyway, we valued those meal kits of fours and eights at very, very competitive price. So we don't believe we need to go out there and we won't discount. What we'll do is we'll look at the packages like that and really make sure that we are by far the best value in the marketplace.
Daniel Salmon -- BMO Capital Markets -- Analyst
Great. That makes a lot of sense. And then, just a follow-up on more on the commodity side, I guess. On protein markets, they've obviously been pretty volatile over the past few months, and I know things have kind of settled down maybe over the past few weeks. But I'm just wondering if you guys can talk a little bit about what you're seeing in protein markets and commodity markets more broadly? I know you touched on some of the inflation in July. So, you can fry maybe just how locked you are in your basket for the remainder of the year. And if you've had more trouble than usual locking any part of the basket?
Steve Hislop -- President and Chief Executive Officer
Sure. I mean, we were kind of locked in prior to the COVID any way. However, we did have some trouble. I think we mentioned in the first quarter related to ground beef because basically the company we are locked in couldn't deliver on the contract because of the shortage ground beef. So we had to go out elsewhere. And that was increase in our prices 100 to 200 basis points or above the 2 bucks a pound. That is since subsided. So we don't have a problem on ground beef. And then when you factor in the number of fajitas and things that we're selling, beef as a percentage of sales went up, but the overall prices stayed kind of flat for the quarter. We don't see that going in and we don't see any kind of changes in supply that would affect that going forward with ground beef.
We have seen a little increase in the chicken going into period 7 or July, and then dairy has jumped up on us quite a bit in July. So that's really what's taken up the 100 basis points that I mentioned earlier, but we don't see any significant problems in that area going forward. However, as you know, we have a high percentage of produce and Mother Nature can change that on a dime and it has in the past but that's normally just that quarter issue and have right-sized itself in the next quarter. But we don't really see any significant issues with commodities for the rest of the year currently.
Daniel Salmon -- BMO Capital Markets -- Analyst
Great. Really appreciate the color. Thank you.
Operator
[Operator Instructions] Our next question is from Brian Vaccaro from Raymond James. Go ahead.
Brian Vaccaro -- Raymond James -- Analyst
Thank you, and good evening. Could you clarify a comment you made earlier on the recent weekly sales trends? Jon, did you say that AWS in the most recent week was down around 5% versus the peak level and certainly 72 to 73 is the peak. So you're kind of in the 70,000 range in recent weeks.
Steve Hislop -- President and Chief Executive Officer
It was slightly under 70,000 in recent weeks. But, yes, that's what I was referring to, it's 5% down from our peak levels.
Brian Vaccaro -- Raymond James -- Analyst
Okay. Okay, great. And on the regional performance, could you drill down a little further on what you're seeing in other key markets beyond Texas, Southeast Ohio, Kentucky, Carolinas, etc.?
Steve Hislop -- President and Chief Executive Officer
Yeah. As you know, we don't really talk too much about a regional issue, but we're seeing it really strong kind of nationwide. We did see Kentucky go back to 25% capacity. However, with that being said, we really didn't see much of a reduction in overall sales in Kentucky. So, we're seeing that kind of through the regions. Basically some of our strong areas, Tennessee, Arkansas and some of those states have really been strong, and Ohio is another strong one. So, it's been pretty consistent throughout the country on what we're seeing.
Brian Vaccaro -- Raymond James -- Analyst
Okay. And then, just last one from me. Jon, what was the deferred rent balance at the end of the quarter? And can you remind us what the repayment timeline looks like on that deferred rent?
Jon Howie -- Vice President and Chief Financial Officer
I think it was about $3.6 million at the end of the quarter. And that basically can go anywhere from the next three months to the next two to three years. So we've got different agreements associated with that. We had about 79 of the agreements finalized by the end of the second quarter. And then we've got now about 11 more that we've got to finalize to finally put that to bed.
Brian Vaccaro -- Raymond James -- Analyst
Okay. And sorry, just one more. The nine stores that are closed, what's the status or what's on your radar in terms of when you might reopen those units? And that's it from me. Thank you.
Steve Hislop -- President and Chief Executive Officer
Thank you. Thanks, Brian. Yeah, Brian, as I mentioned a second ago, what we're going to do is, over the next two months, I'm going to visit every single store and take a look at the competitive environment, take a look at how the market has changed with probably some recent closings, possibly some seats in the marketplace and then I'll make the determination roughly in the next couple of months as we move forward, one that will reopen, they'll reopen.
Brian Vaccaro -- Raymond James -- Analyst
Thanks.
Steve Hislop -- President and Chief Executive Officer
Brian, I want to come back on the rent thing too because just we're deferring $3.6 million, it doesn't mean that our expense really changes that much because of how fast they allowed us to do the relief method in basically your straight-lining those through the rest of the lease. So you shouldn't see very much significant change in our rent expense even though we deferred about $3.6 million.
Brian Vaccaro -- Raymond James -- Analyst
Yes. Understood. Thank you.
Steve Hislop -- President and Chief Executive Officer
Thank you.
Operator
Our next question is from Chris O'Cull from Stifel. Go ahead.
Chris O'Cull -- Stifel -- Analyst
Thanks. Hey, good afternoon, guys. I just -- I just wanted to clarify if the sales remain at the average weekly sales levels that you saw in July for the remaining two periods of the quarter, why wouldn't the margin be similar to the remaining two periods of the quarter, what you gave in July?
Steve Hislop -- President and Chief Executive Officer
Well, because we're continuing to open up the dining rooms. And also, as we said last quarter, there were a bunch of services that we cut off from an OpEx standpoint that we're now getting back, as well as deferred some maintenance back then as well. So, we've got several expenses that are coming back online. And if the sales remain down, you have the fixed expenses coming back online that's going to hurt the margins as well.
Chris O'Cull -- Stifel -- Analyst
Chris
How many more dining rooms do you expect to have open over the course of the quarter than what you have right now?
Steve Hislop -- President and Chief Executive Officer
It's not a matter of the number of dining room because we have all our dining rooms other than the nine that we have temporarily closed as to what capacity we can open them up. And to the extent, some of them are still at 25%, to the extent that we can get those to 50%, 70%, we're still adding a little labor there as well as extra expenses as we are opening the dining rooms to get kind of our procedures back from a maintenance standpoint.
Chris O'Cull -- Stifel -- Analyst
Okay, great. Thanks guys.
Steve Hislop -- President and Chief Executive Officer
Thanks, Chris.
Operator
This concludes our question-and-answer session. I would now like to turn the conference over to Steve Hislop for closing remarks.
Steve Hislop -- President and Chief Executive Officer
Again, thank you all so much. John and I appreciate your continued interest in Chuy's, and we will always be available to answer any and all questions. Again, thank you and have a good evening and stay safe. Thanks, guys.
Operator
[Operator Closing Remarks]
Duration: 33 minutes
Call participants:
Jon Howie -- Vice President and Chief Financial Officer
Steve Hislop -- President and Chief Executive Officer
James Rutherford -- Stephens, Inc. -- Analyst
David Tarantino -- Robert W. Baird -- Analyst
Nick Setyan -- Wedbush Securities -- Analyst
Daniel Salmon -- BMO Capital Markets -- Analyst
Brian Vaccaro -- Raymond James -- Analyst
Chris O'Cull -- Stifel -- Analyst
