Ladies and gentlemen, thank you for standing by and welcome to the Papa John’s Fourth Quarter 2019 Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] I will now turn the call over to Mr. Steve Coke, Vice President of Investor Relations and Strategic Planning. Please go ahead.

Thank you, Candice. Good morning. Joining me on the call today are President and CEO, Rob Lynch; and our CFO, Joe Smith. Rob and Joe will have comments about our business and provide a financial update. After the prepared remarks, both will be available for Q&A. Our discussion today will contain forward-looking statements involving risks that could cause actual results to differ materially from these statements. Forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our SEC filings. Please refer to our earnings release and the Investor Relations section of our website for a reconciliation of non-GAAP financial measures discussed on this call. Finally, we ask any members of the media to be in a listen-only mode. Now, I would like to turn the call over to Rob Lynch for his comments. Rob?

Thank you, Steve and good morning everyone. Papa John’s continued its turnaround in the fourth quarter delivering a second consecutive quarter of positive accelerating sales by executing against our focused priorities. Comp sales rose 3.5% in North America and 2.4% across international last quarter. Higher comp sales and unit growth drove a 5% increase in Q4 revenue and adjusted earnings per share of $0.37 compared to $0.18 a year ago. Long-term drivers of our business, including unit level profitability also continue to improve meaningfully as I will discuss in a moment. On the Q3 earnings call, my first at Papa John’s, we set a course to move the company forward and build on our strengths. We renewed our focus on Papa John’s purposes which I will reiterate here. We love pizza. Pizza brings us all together. The world deserves better pizza and we deliver it. This purposes our guiding path moving forward. That path will be paved by our company’s values, culture and strategic priorities. We are laser focused on delivering positive results in the short-term, but even more importantly, building sustainable, long-term value for our shareholders, franchisees, team members in the communities that we serve. It’s a credit to the hard work and dedication of our team members in franchisees as well as their energy and commitment around our new priorities that we were able to finish 2019 so strong and begin 2020 with great momentum. As we announced this morning and will discuss more fully in a moment, our 2020 plan is for positive full year North America comp sales between 2.5% and 5%. The midpoint of this range would represent our best performance in North America since 2015. We expect international comp sales to grow between 1.5% and 4% as we see strong growth globally somewhat mitigated by the impact of coronavirus in China. Strong comp sales will further benefit unit level profitability both for company owned and franchisee restaurants. Combined with the global unit growth forecast of 100 to 140 net new restaurants, Papa John’s 2020 plan will deliver the company’s best top line growth in several years. Our plan also achieves the strongest earnings in 3 years with full year adjusted earnings per share between $1.35 and $1.55 compared to $1.17 just 1 year ago. As you can see, we expect 2020 to be a great year for Papa John’s and the beginning of a bright future. Let me begin our 2020 discussion with what we are doing to drive long-term sustainable growth in comp sales, the number one driver for our business. Since arriving at the company, my mandate for Papa John’s product and marketing team has been simple, innovate and build on Papa John’s premium differentiated brand. And they are delivering fending off competitive value platforms without us having to deeply discount. In November, we launched garlic Parmesan crust. This was the first time we have innovated on our amazing fresh dough and are incredibly excited about the possibilities here. We fundamentally believe that increasing awareness of our product quality with our dough as the star of the show is the key to our success. Many of our customers and prospective customers still don’t know that our original dough is always fresh, never frozen, made with six simple ingredients and then it contains no artificial colors or flavors. People have never cared more about what goes into their food and with our product we have a right to win now more than ever. One way to increase the awareness of our brand benefits and points of differentiation is through our advertising. As you know, Shaquille O'Neal and his better day communications have had a very positive impact on our brand. We will continue to highlight him as a board member, storeowner and lover of all things Papa John’s. In addition, we also launched a new ad campaign in Q4 called Pizza It that focuses directly on our food. In it, we celebrate the pure joy of pizza by filming our food in ways that we never have before. We believe that by making our food the hero of our communications we will distance ourselves from our competition. And it’s working. Garlic Parmesan crust has been a success, helping drive solid comp sales last quarter and delivering profitability back to our restaurants and franchisees. Earlier this month, we introduced Papadias, a toasted handheld alternative to sandwiches, made with our fresh, never frozen dough and other high quality ingredients for just $6. Again, we are leveraging advertising that brings Papa John’s food to life and establishes a distinct unexpected voice for the brand. We have done extensive testing and Papadias is our compelling new product in and of themselves, but they are also a strategic choice to drive additional transactions, incremental profits and improve labor efficiencies during the lunchtime day part without cannibalizing our core products are diluting our premium value proposition at dinner. I would add that Papadias mark another innovation milestone for Papa John’s, our first new holistic platform that doesn’t consist of pizza, sides or desserts. Expect continued innovation to be a key part of our 2020 product and marketing plan proves that a new culture of innovation is taking hold at Papa John’s. We now encourage and embrace ideas that build on our core differentiated brand proposition and product quality. Papa John’s momentum around product and marketing also reflects changes in our organization. Under the streamlined management structure that we implemented in November, our new Chief Commercial and Marketing Officer, Max Wetzel, now oversees marketing, menu strategy, product innovation and customer experience. The holistic view and integrated execution provided by Max and his team are already facilitating faster, smarter decision-making. In Max’s first few months with the company, he and his team have been focused on three key initiatives. First, we are getting more productivity out of our media spend. As a challenger brand, it is imperative that we maximize the value of our media dollars so that they work harder for us as we are outspent 5 to 1 by our largest competitor. We have already identified multiple opportunities to create efficiencies and optimize our media investment and we are deriving the benefits of that improved plan. Second, Max and his team are building out our social media capabilities to maximize the brand’s influence across our social media channels. We are moving to an always-on model and developing engaging creative that is native to each platform. For example, we have recently executed a robust Snapchat partnership for Valentine’s Day which is one of our biggest sales days of the year. And lastly, we are optimizing our e-commerce platform so that we could unlock the full potential of the great assets that we have already built like our loyalty program which is an untapped opportunity with over 14 million members. Next, I would like to discuss what we are doing to improve unit economics. As I have said, our brand cannot succeed and grow long-term if our franchisees are not profitably growing their businesses. While unit economics have been challenged by lower sales over the past 2 years, we are starting to reverse that trend. Last quarter, median profitability for traditional franchises improved both sequentially and versus a year ago. We also achieved our lowest level of closures among our traditional franchisees since mid 2017. I am confident that we have even more opportunity. Our We Win Together investment of $18 million in marketing and financial support for domestic franchisees during 2019 and 2020 has helped our system weather the storm of lower sales. As this program tapers down and concludes this year, we expect rising comp sales and productivity initiatives to improve profitability and in turn support our franchisees’ long-term health and sustained investment in the brand and their businesses. In addition and under the leadership of Jim Norberg, Chief Operating Officer of North America, we have accelerated multiple initiatives to improve efficiencies and quality in company and franchise restaurants. For example, we have green lit a rollout of Papa Call, our centralized order taking system and customer service center across company restaurants. This will be completed by the end of Q2. Extensive testing indicates this should have a meaningful impact driving incremental transactions and increasing restaurant efficiencies as well as improving our customers’ ordering experience. Our franchisee rollout is planned for the back half of 2020. Thirdly, in addition to being an increasingly important channel to reach customers, our partnerships with top third-party aggregators in the U.S. will also support unit economics driving profitable, incremental transactions in markets where our restaurants are driver constrained. We are seeing strong results and we will have the top three aggregators integrated into our system-wide point-of-sale platform by the end of Q2. And lastly, we have identified a number of opportunities to reduce other costs, which we are actively pursuing this year. These include, but are not limited to reducing auto and general insurance costs by leveraging our partnership with Drivosity, our driver tracking technology to reduce auto claims. Building an indirect procurement team to drive savings across our non-food and packaging spend and more efficiently utilizing our labor, which we continue to improve in 2019 despite rising wages and a very tight labor market. Next, I would like to discuss how we are moving forward to continue to deliver strong long-term unit growth. I am very excited to have Amanda Clark joining the executive leadership as Papa John’s new Chief Development Officer. Amanda comes to us from Taco Bell where she was Executive Vice President of restaurant experience. In her role there, she oversaw the entire customer experience of Taco Bell’s 7,000 restaurants, including design, consumer-facing technology, merchandising, customer marketing, new concepts and company development. Before that, she also served as Senior Vice President, North America Development and General Manager of Taco Bell Canada. I had the pleasure of working with Amanda at both Taco Bell and Procter & Gamble and she is a talented and proven addition to our team. Amanda will oversee global development for Papa John’s driving us towards our unit targets for 2020 and beyond. Over the coming months, she will partner with International Chief Operating Officer, Jack Swaysland and North America COO, Jim Norberg to develop long-term strategies that build on our improving sales and unit economics to achieve significant long-term unit growth. In fact, I believe that we have significant new unit potential, both domestically and internationally. Last year, we opened 233 international units bringing our total number of open units to over 2,100 stores across 48 countries outside of the U.S., including Portugal and Pakistan which we entered last year. This asset-light pure franchising business also continues to generate steadily growing operating income, $19 million in 2019, up from $14 million the prior year. Looking forward, Jack Swaysland recently reorganized the international operations team to improve support for our franchisees. We have evolved our strategy to better support markets where we have a strong presence, while also ensuring that we have resources to target those geographies where we see the greatest long-term opportunities. We expect these changes to lead to improved unit economics and accelerated unit growth outside the U.S. With 1,000 units in our development pipeline and significantly more wide space for expansion than our competitors, Papa John’s international future is bright. Now, I would like to turn to profitability and our outlook for 2020 and beyond. In addition to top line growth, we are advancing multiple opportunities to improve margins and drive operating leverage for accelerated earnings growth over the next several years. We are focused on three primary opportunities. First, we have made changes to our restaurant operations, supply chain and technology support teams to align with our strategic priorities that we announced back in November. This begins the journey to optimize our support structure and costs. Second, as our turnaround progresses, we are focusing our overhead spending more on sales drivers and less on consulting, legal and other administrative fees related to the challenges of the past couple of years. Thirdly, Shane Hutchins, our Chief Supply Chain Officer, is leading a number of initiatives within his organization to create efficiencies, including optimizing route designs to better utilize drivers and equipment, shifting operating schedules across quality control centers to streamline cost, and implementing new driver staffing strategies to lower turnover and the overall cost of delivery. These and other efficiency driving measures will continue to reduce operating cost in our supply chain. Thanks to these optimizations which more than offset an expected return to normalized levels of incentive compensation. We expect to decrease G&A spending year-over-year in 2020 for the first time in 3 years. Now, I would like to conclude with our progress building a culture of leaders who believe in diversity, inclusion and winning. This is an area where the company has been making progress for the past 18 months and it underpins absolutely everything we are doing to build the world’s best pizza company, including our ability to innovate, to engage our customers, to reduce turnover and to improve efficiencies. I am proud of our team, including the leadership of Chief People and Diversity Officer, Marvin Boakye and Senior Vice President, Communications and Corporate Affairs, Madeline Chadwick for so many achievements in 2019. These achievements include our partnership with Purdue University to offer first-of-its-kind to wishing benefits to all of our employees; our partnership, with Shaquille O'Neal as board member, franchisee, and brand ambassador; the launch of Papa John’s foundation for building community, our inaugural day of service with the Boys and Girls Clubs of America; and the development of a culture, where everyone belongs through the creation and growth of multiple employee resource groups. I’d like to specifically recognize our LGBTQ employee resource group. As a result of their leadership and hard work, Papa John’s recently earned a 90% score on the 2020 corporate quality index for our corporate policies and practices related to LGBTQ workplace equality. This was actually the first year Papa John’s was ranked in the survey and we scored higher than all of our competitors in the pizza category and higher than most in the restaurant industry. Creating a culture of leaders who believe in inclusivity, diversity and winning means that team members at every level in our organization are empowered to bring ideas that make Papa John’s a great place to work and that drive our business forward. On a related note, we look forward to publishing our First Sustainability Report in April, which will highlight a number of initiatives underway to help make Papa John a good steward of our resources in our communities and the environment. In summary, 2020 is shaping up to be a very positive year for Papa John’s. We will continue on four fronts: the first, delivering comp sales growth through product and marketing innovation; second, improving unit economics at company and franchisee restaurants; third, becoming more efficient and productive, which will drive corporate margin expansion and accelerated profit growth; and fourth, building an inclusive winning culture for our team members to be proud of. Now, I will ask Joe Smith to address our financial results in the fourth quarter and fiscal year.

Thank you, Rob. In the fourth quarter of 2019, we reported a loss per diluted share of $0.18 on a GAAP basis compared to a loss per diluted share of $0.41 a year ago. The increase in our earnings per share for the quarter reflects the benefit of positive North America comparable sales. Excluding special charges and refranchising transactions, we reported adjusted earnings per diluted share of $0.37 on a non-GAAP basis compared to $0.18 a year ago. The special charges incurred during the fourth quarter totaled $25.4 million, which was primarily comprised of support to our North America franchisees through an incremental $20 million contribution to the National Marketing Fund as well as royalty relief of $5.4 million as part of the We Win Together franchise support package announced last summer. Special charges in the year ago period were $25.9 million. Excluding special charges and refranchising transactions in both periods, pre-tax income was $17.7 million compared to $9 million for the corresponding quarter in 2018. Looking at sales, consolidated fourth quarter revenues increased $19.9 million or 5%. The increase reflects our positive comparable sales in North America, higher commissary revenues related to increased commodity cost as well as higher marketing fund revenues from the increase in the quarter-over-quarter contribution rate. These increases were partially offset by the refranchising of 46 restaurants during 2019. Now, turning to business unit results for the fourth quarter, domestic company-owned restaurants pre-tax income increased $7.6 million primarily due to the impact of positive comparable sales, favorable insurance cost and the benefit from the expiration of customer loyalty points. North America commissary pre-tax income increased approximately $3.9 million due to the improvement in sales I just discussed and due to the impact from the reclassification in Q4 of 2018 of new equipment incentive costs which were previously recorded as a part of the North America franchising segment. North America franchising pre-tax income was $1 million lower due to the previously mentioned reclassification of new equipment incentive costs in Q4 2018. Excluding this reclassification, the royalties from North America franchising increased approximately $2 million compared to the same quarter last year. International pre-tax income was in line with the prior year as higher royalties and higher UK commissary income were offset by the settlement of a legal matter. Unallocated corporate expenses increased $3.3 million primarily due to an increase in management incentive and executive severance cost as well as legal and professional fees. These increases were partially offset by a decrease of $3.4 million in interest expense due to the lower outstanding debt. Total debt outstanding was $370 million as of December 29, 2019. Outstanding debt decreased $255 million during the quarter primarily reflecting repayment of debt with proceeds from the issuance of Series B preferred stock to starboard value. The effective tax benefit on a year-to-date basis was approximately $600,000 compared to our 2018 tax expense of $2.6 million or 39% of pre-tax income. The tax benefit in 2019 was primarily related to the benefit from equity-based compensation and other favorable tax credits. Additionally, the 2018 full year tax rate included the tax expense associated with the China divestiture. Our free cash flow, which is a non-GAAP measure that we define as cash flow from operations, less capital expenditures and dividends paid to preferred shareholders, was approximately $14 million for 2019 as compared to $50 million for 2018. The decrease was primarily due to unfavorable changes in working capital items, including the timing of payments associated with our National Marketing Fund. During the fourth quarter, we opened 19 restaurants in North America and closed 27 units which as Rob mentioned was our lowest quarter for domestic closing since mid 2017 for a net reduction of 8 restaurants. We also opened 90 international restaurants and closed 30 units for a net increase of 60 units. On a full year basis, we opened 312 restaurants globally and closed 220 units for a net increase of 92 units. We ended the year with 5,395 global restaurants. We paid a cash dividend of $10.6 million to our common and preferred shareholders during the fourth quarter of 2019. Subsequent to the fourth quarter, our Board of Directors declared first quarter cash dividends of approximately $10.7 million to our common and preferred shareholders. The first quarter common stock cash dividends of $0.225 per common share were paid on February 21, 2020. I will now turn the call back over to Rob to discuss our outlook and for his final remarks before we take Q&A. Rob?

Thank you, Joe. Looking ahead to 2020, our plan is to deliver robust comp sales and profit growth, while laying the foundation for long-term value creation. As I previously said, we expect North America comp sales between 2.5% and 5%, our strongest in several years. International comp sales are forecast to be between 1.5% and 4%, which reflects an anticipated 50 to 100 basis point impact from the 210 restaurants in China that have been impacted by the coronavirus. We are doing everything we can to make sure that our franchisees, team members and the communities that they serve have what they need to get through this challenging time. We anticipate global unit growth of 100 to 140 net units, which is approximately 1.9% to 2.6% growth. We expect GAAP EPS to be between $0.60 and $0.90 for the full year, including anticipated special charges of $25 million to $30 million, which will largely be assistance to the North America franchise system, including royalty relief in National Market Fund investments. As we have said, these planned investments will end in 2020. We expect adjusted earnings per share to between $1.35 and $1.55, excluding the anticipated 2020 special charges that I just described. We do not currently anticipate a material impact to our earnings from coronavirus. Our preliminary tax rate in 2020 on our adjusted earnings is expected to be between 20% and 23%. Block cheese prices are anticipated to be in the $1.80 to $1.85 range. We are planning to invest between $40 million and $50 million on capital projects in 2020. It’s a very exciting time for Papa John’s, our team members and our franchisees as we all work together to build the world’s best pizza delivery company. I look forward to providing updates on our product and marketing innovation, improving efficiencies and unit economics in our long-term model for profitable growth on upcoming calls. In the meantime, we appreciate your continued support. I will now turn the call over to the operator for Q&A.

Thank you. [Operator Instructions] Our first question comes from Peter Saleh with BTIG. Your line is open.

Good morning and congrats on a good finish to 2019. I just want to ask about your same-store sales outlook for 2020 I know you guys talked about 2.5% to 5% type comps in North America. Can you give us a little bit of color on how you think that will progress throughout the year? I know you have some easier compares especially in the first half of the year and you guys have new product launches. So any thoughts on first half versus second half or any commentary you want to share about the first quarter so far?

Hi, Peter. This is Rob. We are not going to talk about the first quarter performance to-date, but what I can tell you is that the comp growth that we are going to see is really driven by the innovation in the new products that we have talked about. We launched Papadias in February. We have got a pipeline full of new ideas that are going to be brought forward throughout the year. Every quarter is stacked with different opportunities for us to continue to create excitement around great product ideas and great marketing ideas. So, the growth is spread relatively evenly throughout the year. Comp sales, we are projecting comp sales between 2.5% and 5%. Obviously, comp sales are at least in part a function of what you did a year ago. So as you look back on our 2019 performance, obviously, our performance improved throughout the year. So our comps get a little bit more challenging, but we believe that we can continue to drive strong sales growth throughout the year.

Great. And then can you just comment a little bit on the fourth quarter or maybe how you are thinking about products going forward in terms of the ability to drive transaction growth versus driving mix or some of the new products designed more for traffic or mix growth or both and how do you guys think about that?

Yes. I mean, ideally, we would deliver healthy balance of new traffic and ticket growth. Obviously, we want more customers coming back and more customers coming in. So, we are really striving to bring in new customers and increase frequency amongst our current customers, but we are also evolving our strategy to be focused on innovation versus chasing some of our competitors down the value path. So, we do anticipate some healthy check growth. I mean, when you are relying on your check growth to drive your sales growth and that check growth is being driven by just charging the same customers, more for the same products, that’s an unsustainable model. But as you continue to bring innovation that people are willing to pay more for and self-select into that, because they feel like they are getting a good value, because it’s better products that can be a healthy sustainable check growth phenomenon. So, we are going to continue to strive through our marketing efforts to bring in new customers, but we are also going to create healthy check growth through our premium product pipeline.

Great. And then just my last question would be on franchisee margins, I know comps were healthy, a little bit over 3% this quarter, but we will still have a fair amount of inflation, especially on the labor side. So, can you give us a little bit of color on what you are seeing on the franchisee margin side, our franchisee margins starting to improve and are some of the factors driving that outside of the same-store sales?

Yes. Franchisee margins are definitely starting to improve. As you mentioned, the primary driver of that is increasing revenue through comp sales growth, but there is also a lot of productivity improvements as well. We are launching new equipment. I think last call we talked about the spinners that we were testing. We are now rolling those out into the system. Those are – that’s equipment that helps us to accomplish the most difficult task in the restaurant, which is actually pounding out the fresh dough and preparing it for the make line. So, the spinners are going to help productivity there. We are improving productivity through our investments in technology. We called out Papa Call. That is rolling out as we speak, it will be in all company restaurants by the end of Q2. That will eliminate the need for our people in the restaurants to answer the phones which can be a very distracting and challenging dynamic at your busiest time. So, it will allow us to more effectively utilize our labor and will reduce in a better customer experience and fewer drop calls, because people will not have to be put on hold anymore. We are also leveraging technology to get more efficient and drive productivity through our use and our partnership with the aggregators. During our busiest times, we really are creating an opportunity to increase our throughput by having this labor on demand essentially with our aggregator partners. And then lastly we are driving efficiencies in the middle of the P&L. We are focused – our operations team is very focused on creating culture of safety, and our partnership with Drivosity is helping us accomplish that and we are already seeing benefits as you will see in our Q4 announcements. We saw benefits in Q4 through reduced claims and that’s really just a precursor of what we expect moving forward as we continue to focus on building a culture of safety at our restaurants, in our company and franchisee restaurants. So, all those initiatives are helping to improve the margin and profitability of our – and unit economics of our restaurants across the system.

Great. Thank you very much.

Thank you.

Thank you. Our next question comes from Alex Slagle with Jefferies. Your line is open.

Thank you. It looks like the innovation and creative seems to be working to drive some solid improvements, just want to get your thoughts on the importance of establishing more consistency in value and potential for an everyday value price platform whether you see any changes ahead in 2020 on that front to the degree you think pricing uncertainty and consistency is still holding back the brand?

We have actually talked a lot about pricing over the last couple of months. We do feel like there is a significant opportunity in the form of having a more consistent revenue management strategy, a way to balance the everyday pricing versus our promoted pricing on our national programs as well as how we manage our e-deals and digital price promotions. So we believe there is a lot of untapped potential in getting that nailed down and creating consistency. In regards to very deep discounted national promotions to try and drive unprofitable transactions into our busiest times a day. That’s absolutely not in our current strategy. So, I really do believe there is an opportunity to improve our value perception amongst our customers by optimizing how we manage our pricing across our core and promoted price points that we are not focused on delivering the cheapest pizza that we can make.

Got it. And then on the development outlook, how much of an impact is baked and related to temporary conditions in China and Spain and maybe Russia? And then if you have any comments on the potential for closures, domestic and international, whether that will be down year-over-year?

Right now, our numbers and our guidance reflect that they will be down. The number of closures will be down and we will continue to open at the rates that we have opened over the course of the last couple of years. We are working – we highlighted Russia and Spain as two reasons for slower developed new unit growth last year versus our expectations. We have worked with both of those franchisees in those geographies to mitigate some of the challenges they were facing that was causing them to slowdown their development pipeline and we feel like that should start to ramp back up in 2020. We are also excited to open up new markets. Last year, we opened up Portugal and Pakistan. And we also just signed a big 100 unit deal in Brazil. So we have got a great pipeline. Amanda, our new Chief Development Officer, is coming in and is bringing a ton of great experience from her time at Taco Bell. As you know, they have been one of the fastest developing and growing QSRs domestically in the United States and she is going to bring that expertise to bear on our business. And we are very excited about both domestic and international growth moving forward.

Great. Thank you.

Thank you.

Our next question comes from Brett Levy with MKM Partners. Your line is open.

Great. Thank you. Good morning. Nice finish to the year gentlemen. If we can talk a little bit more just on the franchise side, obviously sequential and year-on-year profit growth is a very impressive thing given the challenges externally and internally. Would you be willing to go into a little bit more detail in terms of what you are seeing in terms of your – like your classes, your grading, how many are – have moved out of the bottom quartile, how many have moved from profitability and I don’t need exact numbers, but just – and also what are you seeing in terms of their willingness now to be net buyers and net openers as opposed to standing PAT or sellers?

Good morning, Brett. I will answer your second question first. We actually still see a fairly strong demand for units. We re-franchised over 20 units last quarter to current franchisees and there was an appetite for more. We have franchisees who are excited about growing the challenges that they faced over the last couple of years. We are also right now actively working with some new large potential franchisee partners that we think could come in and not only operate current restaurants, but build a lot more restaurants domestically. So we see the development opportunity domestically very strong and getting better almost every month. On the franchisees that are – fall into the different segments, we are not going to get into the specifics, but I can absolutely tell you that there are more franchisees today above what we consider to be the threshold of success if you will in our system than there were just 3 or 4 months ago. So there continues to be progress both from a sales standpoint and a profitability standpoint and frankly a relationships standpoint. Our team has focused a lot of energy and resources on building and we have got a newer team with a lot of change. And our team has been focused on building that trust with our franchisees and we just had our Franchisee Advisory Council 3 three weeks ago. And I can tell you that the excitement and the partnership coming out of that meeting was as good as I have seen in my history of working with franchisees, so really positive momentum on the franchisee business.

Would you be willing to share a little bit more detail segmentation wise in terms of sales contributions with respect to either newness on your menu value or on the third-party side and also how many of your units now have third-party built into their system and then I will turn it to the queue? Thank you.

Sure. About two-thirds of our domestic units are now supported by both DoorDash and Postmates. We are currently completing the integration of UberEATS into about the same number of restaurants. So, we are seeing about two-thirds of our restaurants domestically working directly and integrating with the aggregators platforms. And we are seeing significant growth on the sales that the aggregators are contributing to our business, where over 1% now – at about 2%. And that’s not a huge amount in totality, but we are seeing it to be very incremental. So, the aggregators are starting as we continue to integrate and continue to make it a more seamless transaction and more seamless partnership with them, we will continue to expect that growth to be very incremental.

Thank you.

Thank you. And we have a question form Chris O'Cull with Stifel. Your line is open.

Hi, Chris. Chris O’Cull: Hello. I had a few follow-up questions. First, would the company like to continue selling stores to franchisees?

I believe that our stores are a great asset on our balance sheet and they give us a lot of flexibility to accomplish our objectives. As we continue to see revenues grow and margins expand, I think we create a lot of shareholder value by holding on those restaurants and experience that revenue growth and commensurate amount of profit growth. That being said, if we believe that we can create more shareholder value by the disposition of those assets and refranchising those restaurants then we are completely open to doing that. If we have opportunities to bring in new franchisees by feeding them with some company restaurants and they are excited about coming in and signing a development agreement that’s going to commit them to building out new restaurants, which expands our footprints and that creates more shareholder value for us through increased royalty streams then we are absolutely open to doing that. If we have assets that we feel we are not able to as effectively run and operate for whatever reason whether it’s our footprint or some other inhibitor of our productivity, then we will also be open to refranchising those assets. So, the answer to your question is, we are not actively out there trying to sell our restaurants, but we are completely open to selling them if we believe that doing so will create more shareholder value than holding on to them. Chris O’Cull: Good answer. Rob, also do you expect the new products will be extensions or upgrades of existing menu items or do you anticipate maybe another platform sometime this year?

Yes and yes. One of the things I am most excited about, the new products are an outcome. The actual thing that’s happening that’s creating those new products is this wave of innovation that is sweeping our company. We have essentially created a culture that has removed guardrails from innovation across products, marketing, operations every facet of our business. And we don’t have a not invented here mindset. Ideas can come from everywhere. Our franchisees and their team members have ideas and they send them to us and we believe that they are better than what we are currently doing. We are all ears. If the aggregators come in with ways for us to better utilize their capabilities and partner with them, we want every idea. So the ideas are really – it’s become a situation where we’re having to get choiceful on what we do because we have so many people bringing their ideas for it. So, on the product side specifically, we are going to do both. We are going to continue to innovative against our core, while trying to increase frequency and bring new customers in with new platforms. Chris O’Cull: Okay, great. And then you guys mentioned G&A spending is expected to be down in 2020, what’s the base amount we should use for 2019? And then also is the company planning to bear the cost burden of the new call center?

This is Joe, Chris. On the call center, for the company stores, we will, but then for the franchises, obviously, there will be cost offset where we will operate that on a breakeven basis. Again, I think on the base level we talked about that certain calls will be coming out and then we also have, so will be lower, but you obviously have some – the management incentive cost will add a little bit back to that, but you can’t expect your G&A taking out the special charges to be a little bit lower in ‘20 as compared to ‘19. Chris O’Cull: Okay, great. And then just one last one, Joe, how is the preferred stock assumed to be accounted for in the earnings guidance?

It is in the earnings per share calculation that we go through. It is on the if-converted method. So, the shares are assumed to be converted and then you go through the calculation to see if it’s dilutive or not. Chris O’Cull: Okay, perfect. Thanks guys.

Thanks, Chris.

Thank you. Our next question comes from Lauren Silberman with Credit Suisse. Your line is open.

Great. Thanks. On the menu innovation, can you just talk about how you are balancing new menu innovation and the impact on operations and then how are you thinking about the pace of new innovation as we think through the rest of the year?

Hi, Lauren. What I would tell you on the innovation, we are focused on delivering innovation that does not negatively impact our operations. And the way we are doing that is we are developing these innovations with core ingredients. Papadias doesn’t use one new ingredient. So our supply chain doesn’t change, how we hold things on the line doesn’t change, obviously when you are making a new product, you make it differently than you would. When you are making a Papadia you make it differently than pepperoni pizza. But from a supply chain and an inventory management standpoint in the restaurants, nothing has changed. So we are focused on that. I mean, there will be occasions and instances where we feel like the upside on a new innovation that does require some new SKUs and new processes, maybe implemented. But right now, we have got a lot of innovation in the pipeline that does not significantly impact our operations.

And then just on the cadence of new menu innovation?

I am sorry, it’s those two things kind of tie together, because when we deliver innovation that doesn’t have big supply chain implications we can be flexible on the pace of sequence of that innovation. So if we have an innovation that we feel is knocking it out of the ballpark and we want to continue to promote that and drive that longer than maybe we had originally planned, we have flexibility to do so. If we have an innovation, hopefully, this never happens. But if we have an innovation that doesn’t do as well as we would expect, we have the flexibility of pulling it, because it won’t have a supply chain implication. So right now, in 2020, we have got between 5 and 6 what we would call big innovations. That may change if we have some that we want to extend longer or some that we need to pull quicker and supplement with. So that’s a moving number. But what you can think about moving forward is that our target goal will be to launch a new innovation approximately call it once every 2 months.

Great. And then just on the delivery aggregators, you mentioned opportunities for incremental sales in markets where the driver network might be constrained? Do you have flexibility to leverage the aggregator driver network, if you don’t have drivers and customers order through the direct platforms?

Yes. That is one of the biggest opportunities that we see with the aggregators. Obviously, we feel like we are getting new customers through their marketplace, but we also are leveraging their driver services and they actually have dubbed them, DaaS, driver-as-a-service as opposed to software-as-a-service. And what that affords us the opportunity to do is when we get into our highest capacity, our highest utilization situations call it Friday and Saturday at dinner and we see our service times increasing because of the order rates, we are able to leverage our partnership with DoorDash right now and the capability DoorDash drive to supplement our drivers with their drives. And they can start coming and picking up orders for us and help mitigate those service times. So that’s part of the rationale and why we are pushing so hard on these aggregators. We believe that, that gives us a competitive advantage. And we are the number one pizza company with the aggregators and we are going to continue to leverage that partnership to give us that advantage not just on access to new customers, but also on improving the operations and customer experience.

Great. Thanks so much.

Thank you.

Thank you. Our next question comes from Jim Sanderson with Northcoast Research. Your line is open.

Hi, thank you for the question and congratulations for great quarter. Just following up on new product development, I was wondering if you could give us a little bit more detail about how the consumer is using per se the Papadia, the new product and if you are seeing that benefit the lunch daypart? And if going forward, new product development might target some of these dayparts that are underutilized or ripe for expansion or development?

Hi, Jim. I am so glad that you asked that question, because I am dying to talk about Papadias. We couldn’t be more excited about this platform. We think this product is just a game changer for us. We believe that customers, once they try it, they love it, it’s convenient, it’s delicious, it’s unique, it’s differentiating. And so, it’s also very strategic and it’s for the reason that you have called out. We do see Papadias being consumed throughout the day, but disproportionately being consumed during the lunch daypart and that was the strategy that we talked to you about. That was one of the primary goals and objectives of launching this. We need to optimize our labor fool and our fixed asset base by driving more volume into lower demand dayparts. And so far we are seeing that and we couldn’t be more pleased with the performance of that platform.

Just a quick follow-up could you remind us of the breakdown between let’s say lunch, dinner, and late night?

Yes, I mean, lunch or dinner obviously is our biggest daypart is about 75% of our sales, lunch is about 20% and call it afternoon and late night represents between – around 5%, 5% to 10%.

Great, thank you.

Thank you.

Our next question comes from Brian Mullan with Deutsche Bank. Your line is open.

Hi, guys. Hey, Rob, in the prepared remarks, you spoke about potential opportunities capture efficiencies in the North American commissary business. It looks like margins were up there nicely in the fourth quarter, about 7% for the full year. Wondering if you could help us think about maybe the magnitude of the opportunity there, maybe where could those go over the next couple of years? Thanks.

Yes. Our supply chain is actually a very efficient model today and we operate that on a – it’s a very unique part of our business having come here from QSR and realizing seeing that we are vertically integrated across the supply chain was an interesting piece of this business that you don’t see in a lot of those other companies. And so we are working – but I view it as a big opportunity. It represents $800 million in revenue. And we think that there – for us and we think that there is an opportunity to get more efficient there. It’s a challenging marketplace for the same challenges we are facing for drivers in our restaurants. We are facing for drivers in the supply chain. And so Shane and his team have been working diligently to make sure that we are fully staffed that our ingredients show up on time and that we are doing it the most efficient way possible. Now that being said, that large of an operation, there is obviously improvements in productivity and we have, for the last few months, we have been focused on making sure that we have got the utilization rates at each of our 13 factories across the country optimized given the current demand, the current sales rates and current volumes that we need to supply our business. So we have been able to pickup some efficiencies there. We will continue to look at that. But right now, we are building out what the long-term plan is for the supply chain and how we can continue to get more productivity out of our logistics and manufacturing operation.

Thank you.

Thank you. Our last question comes from Peter Saleh with a follow-up from BTIG. Your line is open.

Thanks. Rob, I heard you saying 5 to 6 gig menu divisions in 2020 and maybe one innovation every 2 months. The company has a history of doing a lot of LTOs and kind of rolling those off every month or every other month. Can you just clarify – are you thinking about these innovations are permanent platforms or are the LTOs or are we just not sure yet, it depends on how they perform in the market? Thanks.

Thanks Peter. Yes, I guess, it depends on what your definition of a LTO is. I mean, an LTO could be a limited time offer that’s just a price pointed promotion on a one topping pizza or just frankly just another new and different topping on a pizza. I mean, we are talking about – when we talk about innovation and we talk about 5 or 6 big innovations a year, we are talking about more than just adding a new topping to our core pizza. We are talking about an opportunity to evolve how customers think about our brand and the products that we offer. So, garlic Parmesan crust was the first time that we had ever added any type of flavor or texture or anything to our original dough. I mean, that changes the way people experience our product. Papadias is a completely different usage occasion, a completely different daypart, a completely different platform that we think could continue to offer benefits to our brand and our customers for a long time. And so those products will stay on the menu. We are continuing to sell garlic Parmesan crust and continuing to sell Papadias. We will offer innovation that we will bring in for a limited time and then pull back out. So it will be a balance. What we don’t want to do is bring so many LTOs that stay on the menus and all of a sudden we have this proliferation of products that create operational complexity and decrease our speed and service that we are able to serve our customers with. So we will continue to try to strike that right balance between innovation that is for a short period of time and innovation that stays on the menu ongoing.

Very helpful. Thank you very much.

Thank you, Peter.

Thank you. And there are no other questions in the queue. I would like to turn the call back to Mr. Rob Lynch for closing remarks.

Well, I just want to thank everybody for dialing in today. It was a great quarter and a great close to the year for our company, not just financially, but organizationally, we have got a great team in place that’s focused on the future. And we are just getting started. So with that, I just want to ask you all for a favor. Please go out and buy as many Papadias as you can and as soon as you can and so that we can come back in April and talk to you about what a great first quarter we had. Thank you.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect. Everyone have a great day.