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Mina Hawk, the CEO of the international restaurant chain Tony Romas, writes, low confidence and sticky price perceptions are influencing dine in frequency and check size. Mina joins us now, Mina, thank you so much for joining us, especially on this Christmas Eve. Give us a sense of what you've seen change with the consumer this year.
Thank you for having me for consumers at Tony Romas. As you know, we are located all over the world and the United States. While there is a perceived value because of the macroeconomic factors of where we get reviews of people showing frustration about the price of the menu. However, when I look at the sales data over the last four years, I am seeing system wide we are progressively seeing a sharp increase.
So when it comes to what does that mean when consumers are at the actual restaurant, are they still coming in and just going for less options, potentially ordering less off the menu? Are they looking for days when potentially I don't know, if you run any sort of promos, how are you actually weathering this storm?
So from a consumer point of view, what happened is if you Let's say they like our ribs right, and they try to compare the data maybe from a year or do ago. However, in our system, we try to keep the pricing stable. We don't try to pass any difference to consumers because of any macroeconomic factors. But when it comes to pricing, yes, we do run promos. There are deals. There are limited time offers where our franchise partners,
if they want, they can participate in it. In units where they are participating in this promo, they are seeing a very sharp increase in consumer demand.
Let's talk a little bit about beef prices, because that's something that's obviously featuring prominently on your menus. We've seen beef prices go up up two point one percent for ground beef in September. That is up from fifteen That is up fifteen percent from a year ago. How is that being folded into your menu offerings and menu pricing. I know that you say you don't want to be raising prices, but at some point the margins on that, the costs on that become kind of onerous.
Yes, I agree with you. There are many macroeconomic headwinds out there right now, but this also give us the opportunity you look into the microeconomics off our unit and see what we can do when it comes to pricing. Our initial reaction is not to pass those difference to consumers. But are we feeling pressure? Yes, we are. The margins are thin. Restaurant industry overall operates on a very thin margin.
But in my opinion, what I am seeing is the macroeconomic factors are actually allowing us to look into the restaurant systems overall and see where are opportunities to cut back on cost. While the food costs it is high because of various reasons, but are there many options? Are there enough suppliers? How can we diversify our supply ecosystem? These are the questions we are asking internally. While before maybe the restaurants operated on a status GOP for many years.
And I appreciate your saying that, So can you give us some more specific examples of your cutting back on cost set in a way that might be visible to your customer.
For example, one of the biggest areas of cost is labor. While we like to protect the jobs and make sure that our workforce remains competitive due to AI and the technological innovation that is one area where we can see some more opportunities to be far more efficient. Our corporate staff size have reduced drastically, but we are much more efficient due to the technological advancements.
So are you basically saying that because of AI you were able to shed some employees.
We're not setting employees. What we're doing is, let's say if there were five employees at the corporate level doing of work. Because of AI, the turnaround of projects, the data integration have become much faster. We have robotic server in some of our select locations. But we are not cutting back on employees. But what we are becoming is much more efficient the work of each and every employee.
Where I see it as because of AI and the data integration will become a lot easier and the operation will be much more efficient.
When you're looking for twenty twenty six, anything you can tell us on maybe expansion plans or any changes in the menu.
In terms of expansion plan, we just reopened in Guam. We had presence in Guam for a very long time. A local military couple just recently last week reopened our Guam unit and with the very remodeled and it's modern and the local military community is extremely enjoying the Tony Romas over there. We are going back to Calgary. The energy sector over there is doing a comeback, and Calgary is a very vital market for us. We anticipating an opening in the quatter two. We are growing in Asia Pacific.
We are looking into the Middle East as well.
Okay, so even as you undergo this expansion, we know that Tony Roma's is a fifty year old restaurant brand. There's a certain brand legacy that you need to protect even as you adapt it for the twenty twenties, and even the slightest tweak can backfire. Sometimes. I think about the backlash to Cracker Barrels logo change. How do you ees the Tony Roma's look and experience without alienating customers in the process.
When we are modernizing it, we are not, you know, changing our logo, our brand palette, because that's how our customers identify with us. What we're doing is internally, we are trying to see where are the areas of improvement.
Thank you so much, Mina for spending your Christmas Eve morning with us. That, of course is Tony Roma's CEO, Mina Hawk