Jaime Oikle of RunningRestaurants.com & Roger Beaudoin of Restaurant Rockstars jumped on a live session to talk about the pressing issue of staffing, plus Roger's recent decision to sell his restaurant. Check it out.
Find out more at https://restaurantrockstars.com/?ref=jaimeoikle & https://www.runningrestaurants.com
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I have my friend Roger Beaudoin from RestaurantRockstars.com. We wanted to jump online here and chat about a couple of things. We're trying a new platform that puts us on Facebook Live and YouTube Live here if you want to poke on and ask some questions. We're going to start talking and see where we go. Roger, good morning. I published an article that you put out about staffing. The reason I put that out is because it is the number one thing on everybody's mind.
Restaurants are saying, “We can't find staff.” I'm seeing it at the restaurants that I walk into. They have signs that say, “We are having a hard time getting staff.” I'm reading about it in this magazine, that website, and this blog. It is factual. People are having a hard time finding staff. Your article went back to your history about how you recruited and built your dream team. Talk about that for a second. Talk about what else you're seeing in staffing. We're going to get into some other stuff a little bit later about what's going on with your restaurant, but staffing is big, front and center. What do you got?
I'm a huge believer in incentivizing staff and giving them reasons that motivate and inspire them to outstanding performance. That's a foundational element. What you said is true. The article that we put out goes back twenty-plus years ago when I was starting my first restaurant. I needed to hire twenty people, but there was a hotel being built within 10 miles of my place and they needed to hire hundreds of people. At the same time, I was planning my grand opening.
That was a huge threat to think about how we are going to possibly find enough staff if this hotel is going to be pulling all those people out of the community. I knew instantly that incentives were the way to go. I believe that every restaurant has what they call or what I call an A-team or an A-player. That's an outstanding person who has the experience, who has a true desire to serve the public, who's reliable, who takes initiative. You wish you had twenty more of these people.
Even if you have just one, what I did was I had two of these people that I hired right off the bat. They ended up staying with me for quite a long time. Who else do you know that might not be happy in their current job? Maybe their boss doesn't appreciate them. Maybe the managers don't lead by example. They're not recognized and rewarded. They pay the paychecks, but they're not giving any praise or recognition. Do you know anyone like that? Do you know anyone who like yourself might fit what we're doing here?
You mentioned that we're a dream team. We wanted to create a family. We didn't want to create a management-employee situation because I truly believed that that type of approach was going to give a better experience to my customers. It was going to set us apart from the competition. We wanted to train our staff. We wanted to recognize and reward our staff. We wanted, most of all, to keep that staff.
It's been reinforced over many years, that turnover costs a restaurant a significant amount of money. I think the statistics are somewhere between $3,000 and $4,000 in losses every time you hire someone, train them in the job, get them up to speed, wages, time, and productivity, and then a couple of months later, you lose them for whatever reason. You fire them for non-performance. They’re not a dream team person, or they leave to go somewhere else because someone else pays them more money. That costs you a tremendous amount of money.
I knew that two decades ago. I came up with an incentive program. Back then, it was simple. I said to this A player, “I'm going to pay you $100 if you bring me somebody great. If that person lasts three months, I'm going to give that person $300.” I knew that, with our training program, recognition and rewards, and our nurturing approach to developing our people, chances are they are going to stay because no other restaurants in the area are going to do anything like this. It was somewhat revolutionary. We spent a lot of time doing this, but that was a very foundational element that served me over twenty years of business. Even though I had a seasonal business, here's the kicker.
I was only open four months a year, and all my people had to get laid off, then go find other jobs, and then come back to me eight months later. It was that foundational way that we treated these people. We treated them like family. We recognized and rewarded them. We gave them bonuses and incentives for outstanding performance. That separated the A players from the C players who quickly dropped out. We had very little turnover. In fact, after several years, year after year, we had a 96% retention rate in our multiple restaurants even though we had a seasonal business.
That's the backstory, Jaime. I'm still using that in my current restaurant. We've been very successful in taking new people in who are referrals from some of our A players and paying bonuses and incentives. You have to do that. Thankfully, the government funded the new Restaurant Revitalization Act that's been launched and is funding restaurants again. You have to take some of this money and take care of your good people and use it to recruit new people because everybody is looking for staff. You have to be able to compete with industries that are paying higher wages.
It's the fact of the times because you can't afford to lose people. If you're in a busy tourist community like we are, you can't run short-staffed and provide lackluster service because your customers expect more. Again, it’s a sign of the times. That's the strategy I used a long time ago that I hope helps operators today. It's called recruiting, not hiring.
A couple of things you said there that are super timely and relevant. I'm seeing restaurants put things like $100 or more on their chalkboards, on their signs, signing bonuses, and getting started. It's something we haven't seen such a challenge to fill spots before. There are several reasons related to COVID and decreases in the labor market, safety, and so forth, and people coming back. There are a lot of reasons why, but the main point is, “How do I find people?” People are asking, “How do I find people?”
Roger's tip is rock solid. It goes back to having great people in your business. Looking at them first and incentivizing them to bring other great people in is the number one tactic. What I like is you also talked about having a reward on the backside if they stick around. That's important because it’s not the idea of jumping in and grabbing $100, quitting the next week, jumping in, grabbing $100, and quitting the next week. You could probably bounce around and try to play that game, but that's not beneficial to anybody.
The wages thing you talked about is probably a dramatic question for operators. They're used to paying a minimum wage or near that, and that is no longer going to fly. We've already seen the push towards fifteen in other industries, and restaurants were adapting to that before, but even with this pressure, it's going to change. What are your thoughts about the wage aspect? I've also interviewed someone with the technology side. Maybe we can operate with fewer people somehow with technology or other cost savings, and pay people more. How are you seeing it all intermingle?
Certain automation software products eliminate staff. You have to vet these very carefully. In some cases, the personal touch is lost. You still want to interact with your customers on a personal level. Wages have gone higher, but I have found that quarterly bonus incentives take the emphasis off a higher wage. Either if you hire someone or if someone expects a raise, it's going to cost you more money to raise their wage versus giving them a quarterly incentive.
In our restaurant, it seems to be working. Every three months or so, we're giving people a bonus, provided their performance stays high and provided they're showing initiative. We have a whole list of criteria. There's a complete job description. There are key results of what our expectations are. Those are the things that these bonuses are based on, but it's raising the level of performance and raising the morale of the place.
It's also augmented by regular recognition that we do on a weekly basis. It’s that whole difference dollar thing that you and I have talked about. You have to do all these little programs to keep morale high. You have to treat your people well. You have to treat them like their contribution is important. Most of all, as an owner or manager, you have to lead by example. You can't just be a figurehead who barks orders at people because there are a million choices they could make to jump ship and go work for somebody else.
You have to protect and keep your staff intact, but then you have to keep them happy and thinking, "I don't want to go anywhere else." It’s too much fun to work here. I love the fact that they recognize all of my accomplishments and that they pay us incentives regularly. Use that government money for this purpose. It's part of the rules. You can use it to pay your staff, and we're certainly doing it to great effect.
You have to protect and keep your staff intact, but then you have to keep them happy.
You used the word protect your staff, and people probably have thought that way in the past, but it's a fight because they could find a job. About 30 seconds after leaving your door, they could find another job. Sometimes it’s, "Sure. Good luck, go find another job." Anybody in your restaurant could go find another job within five seconds.
It's scarier than that, Jaime. I follow restaurant owners' and managers' Facebook groups. I've seen multiple posts about unscrupulous restaurants out there poaching employees on their way in the doors to someone else's restaurant. They see people wearing chef coats and aprons and carrying knives. They're offering them crazy stuff in the parking lot to jump ship. It's scary to say that it's come to that. I can't imagine an owner-operator that would ever do that. It's scary.
I know we've talked about it before if you have a good experience with the host. Maybe you're at the bank. You even go to the bank and have a good experience with the teller. You're like, “I love the way you are. If you're ever looking for your next thing, I run the restaurant down the street and would love to have you come in.” That's normal, that's acceptable. It's not acceptable to walk into a competitor's restaurant and be handing out your business card saying, “Come on over. We'll pay you more money.”
Poaching people in the parking lot.
That's not acceptable.
That's crossing a line.
I loved when you talked about the bonus pool. Maybe we can spend two more seconds there. What I was imagining as you said it is maybe a checklist of 10, 15, or 20 things that the person is scored on a quarterly basis, and it tallies to a score. That makes them eligible for X percentage of a bonus pool. You could get fancy with that or keep it pretty simple. Are you somewhere in between?
It depends on the position, but some positions in your restaurant pay you an ROI, or return on investment, for these incentives if you have people in a position to build your business, drive new traffic, or come up with innovative marketing programs that create affinity with your customers. If you can track that and see a definite ROI, then that's the way to go. We certainly had all of that for our managers. Our managers had their basic job description and their key results, but then they had bonusable line items that said, “If you do this and if you bring in this new business, if you create a mug club, any of those things, you’re going to get a piece of the action.”
It's almost like a profit-sharing thing. Even though they don't have an equity stake in your business, it's a powerful motivator to give them a percentage of any sales or business, if you can track it, that comes in. There are certain things that you can track, like mug club memberships. “If you raise the membership to 100 new members this month, I'm going to give you a percentage of that.” We did a lot of that. That was super effective. Even servers, if you can track their sales, and if they're selling versus order-taking, then you could give them an incentive based on their consistency in raising sales and suggestive selling. That's a fine line too. We did all this stuff and it worked for us.
Again, this is Jaime Oikle from Running Restaurants along with Roger Beaudoin from RestaurantRockstars, talking about short staff. We're going to get into the decision to sell a restaurant momentarily, but since we are live, and if you are with us, if you do want to throw a comment or a question in, we're happy to look at that and go impromptu and answer it. Feel free to do that. We appreciate that. Roger, one thing I wanted to point out on the short-staff part, people are juggling people.
I know there's a restaurant here where we live in our neighborhood that had to unexpectedly close for Mother's Day. I think they put a post on Facebook the day before, maybe two days before, that was like, "Unfortunately, we don't have the staff that day. We're going to close." It’s reasonable to do that, except guess what happened on Mother's Day? There's a post on the community page saying, "My family of ten showed up at the restaurant with reservations, and all ten of us get out, and we go up to the door and see that you're closed." Was that not a happy thing to read?
Imagine that. You get all dressed up. You tell your family to go. You plan to get out of the car, and then knock, “Why isn't the door opening?” “Sorry, we're closed.” That was brutal, and the people eventually found another meal, but on those busy days, it was hard to find a restaurant to eat in. That could have been a disaster. People are altering shifts because they can't get them covered. What the heck are you seeing?
I'm seeing a lot of that too. It's getting even scarier here in the state of Maine because we are a tourist state, much like you in Florida. Every summer, as soon as the weather starts to get warm, our border gets bombarded with tourists from out of state. It's a hospitality state for sure on the coast of Maine, with restaurants and hotels. There's so much pent-up demand, and things are starting to get busy, yet there's not enough staff to serve all these customers. Customers are expecting great service. They're expecting that word hospitality.
It becomes more and more impossible for a restaurant to deliver that level of service when three people are gone. This person quit to make more money somewhere else. What I talked about earlier, the recruiting thing, the recognition rewards thing. It's like you needed that solid foundation in place before all this craziness happened. It's not too late. You need to start that now, but this is unprecedented what we're seeing. What's scary is our state government is talking about dropping the meals and beverage tax to encourage the tourists to come back.
The last thing you want is to not be able to put your best foot forward and serve the people who are coming from out of state because it's the reputation of our state's tourism and hospitality. If we can't deliver that, I'm afraid to see what may be coming. I know other states are dealing with this too, but with warmer weather comes increased traffic, with the end of the pandemic and the vaccines, and people wanting to go back out to restaurants in droves, we're getting huge business levels, and if restaurants can't serve the customers, then the online reviews start getting slammed, and it's unfortunate.
The bottom line is this. The customer has expectations, and they're not necessarily going to understand the challenges we as operators are facing, nor should they have to care about that. All they want to do is spend their money and get a great experience. It's up to you, the operator, in the customer's mind, to be able to deliver on those expectations, if not exceed them. Unfortunately, as operators, we know that behind the scenes there are a thousand details. Labor, staffing, and keeping people is our biggest challenge. It pains us to not be able to deliver based on being short-staffed. That's that catch-22.
The customer has expectations. It’s up to the operator to deliver and exceed them.
There's so much. You already said it, the pent-up demand, to go back out to restaurants, is 100% there. COVID is over. In some places, there's very little sign of masks, especially here in Florida, which has been the case for a while. People want to get back to normal. The cases are down. The vaccine is out. We're certainly not all the way back there, but there's pent-up demand. I think dollars are in people's pockets from the stimulus. The stock market is doing well. Whenever that happens, people feel wealthy. I have money. What do I do with it? I want to spend it. That's our natural inclination as good, solid Americans. Restaurants are busy and struggling.
We talked about short staffing, 100% there. As you can see from our fancy graphic, we're going to talk about the decision to sell your restaurant next. Roger is a longtime operator in the past in state of Maine. Eighteen months or two years ago at this point, he purchased a restaurant again to get back into the business. That crazy decision on his part. Things have changed in the interim. COVID happened, and you are now under contract to sell that restaurant. Tell us about it.
It was eighteen months ago that we decided to get back into the restaurant business. We saw an opportunity that we thought or believed at the time had great potential. For those of you who have listened to Jaime and me speak about this before, the restaurant I bought was a turnaround situation. It required a significant investment to bring things back up to snuff. We had equipment issues. We had a renovation in the kitchen issue.
We had big plans because this property does have a post-and-beam barn on the property. We saw that as a beautiful new venue to add a bar and a wood-fired pizzeria restaurant. It has a courtyard out front, and we envisioned acoustic guitar players playing music, the Italian lights at night in the courtyard, the wood-fired pizza, and the bar. That was a major reason why we purchased this.
We renovated the kitchen. We fixed the equipment, and we made all improvements to the business, and then, the next minute, the COVID pandemic hit, and we came to a standstill. The restaurant has been forced to close for almost eight weeks. We had to rebuild our business when business was down 80% across the country. Crazy stuff. We survived, thankfully, due to a lot of the government funds and the PPP and all that
Just when we were thinking about starting on this barn project, and I was about two minutes away from pulling the trigger on an expensive wood-fired pizza oven imported from Italy, and we were starting to plan this whole thing, we got a call from a commercial broker that we had never heard of before saying, "I represent a client that’s familiar with your property, and they’re interested in your property. What do you think? Are you interested in selling?"
Our first thought is everything is for sale for the right price. What’s the state of the market? We learned quickly that it’s a seller’s market, prices are high, and properties are turning over because people see opportunity and they have some money that they can put towards a business. Maybe they got laid off from their job, or they’re working remotely from home, a variety of things have happened. We interviewed these people and had a couple of conversations. That was the start of us thinking, "Should we list it for sale and see what happens?"
I have two partners. My wife is a partner in this restaurant, as well as another person who was a partner in my last restaurant. The three of us said, “Let's see what happens.” We found an aggressive commercial broker to represent us that had moved a lot of commercial properties. We put it on the market, and a day or two later, we started getting serious interest in inquiries and showings. A lot of showings happened in the first two weeks. There were four interested parties in our business. One very perfect buyer emerged. We're now under contract, and we’re very pleased with the opportunity because we know that we’re going to move on to other opportunities.
We’re also focused on our current businesses. My other partner has a solar-powered building business that is also very busy. She needs to focus on that. My wife and I are focused on Restaurant Rockstars. Maybe we didn’t have the time to build out this wood-fired pizzeria. Maybe the timing is right, but it appears that it is. That’s how we came to make that decision.
I think of two things that are fascinating about that piece. It is the unsolicited part. Someone comes to you, and your existing operation. There are no signs that you're for sale, per se. You’re running. You’re pivoting daily. You guys shifted, you moved, you dodged, and you weaved during COVID. Someone knocked on your door and said, "I like this location. Have you ever thought about selling it?" You said, rightly so, "Sure. Let's talk." Much like we're finding with residential real estate, it is a seller's market. It is hot. Prices are up somewhat surprisingly and somewhat uncharacteristically. You wouldn't necessarily think, coming out of these situations where things have been so dire, that prices would be so high, but that's where we are. That is the reality of the market.
It is maybe fueled by stock prices and people feeling wealthy, and thus having money to put towards stuff like big investments. It is an interesting time to think about your restaurant, especially if you've gone through the worst year of your life, which is virtually every darn restaurant operator. If someone were to cash you out of that situation and you'd already been thinking about an exit strategy, it could be the right time.
I don't know if it’s so much the case this time as last time, but last time you sold your operations, being able to sell strategically and successfully has to do with having systems in place to show this place ran profitably, and you taking it over and you're going to make money. If you don't have that, it can be a real struggle. Your new sale sounds more like these people like the thing, and they're going to almost even change the concept.
It's a little bit different than looking at your profitable model and buying your profits. You can elaborate. If you are selling it, hopefully, you've put things in place to show, “These are our customers, this is our marketing, this is our menu, these things work, assuming the time is right.” What do you think about the systems piece?
The systems are essential in both sales. Having a management team in place that makes it more of a turnkey operation in any sale is a huge plus. When we talk about the systems, I believe there are three foundational systems to any successful restaurant. I'll list them quickly. The first one is having cost controls and understanding how to maximize your profits. That's a system unto itself. Very few restaurants that I coach or come across have those systems dialed. If I ask you a question, "What's your prime cost? What's your daily break-even?"
These are very simple questions that a lot of restaurants aren't able to answer. They can tell you what sells and what's popular. They can see that they're filling their seats. A lot of them are wondering, "Why is my bank account not growing?" That's because they don't have the critical financial systems understood and dialed.
The second one is the staff training piece that we talked about earlier. The staff training, development, recognition, and rewards. That is super important because your staff creates every single guest impression in your restaurant. They're either turning your customers on to what your restaurant is about, giving them lots of reasons to leave you positive online reviews, build your business, come back again and again, and tell their friends, or they're sending your customers to the competition. I've seen it happen both ways in clients that I've worked with.
The third one is marketing firepower and affinity, building affinity with your customers, that powerful sense of loyalty, or the cheers formula. We talk about this often. People want to go where everyone knows their name. People want to go where they're treated special like they're the most important customer. That is so important.
Those are the three foundational systems that every restaurant needs to be dialed. We had those clearly in my last restaurant. A buyer could have come into that restaurant with absolutely zero restaurant experience. As long as they didn't fix what wasn't broken, that place ran itself. It was a beautiful investment for someone who wanted a turnkey cash-cow restaurant. That was my last situation. As a plus, the person who ended up buying my last restaurant was a bartender who worked for me for two years in the winter. He owned two restaurants in the summer.
He wanted a winter operation. He saw that it printed money. The due diligence was very simple. It didn't require anything. He worked there. He knew the place rock and roll and that it was a cash cow. Thankfully, he had the wherewithal and the resources to buy it. There were no brokers involved. There were no commissions paid. It was a smooth transition. This new sale is also about having great people in place.
What's key is all the work we did to transform this restaurant from the old café concept to a grab-and-go market, beer and wine to go, cocktails, prepared foods to go. That transformed the business. Sales are now exceeding what they were the summer before the pandemic when it was still a café. Our sales are exceeding the sales we had when it was a sit-down restaurant, where no one's sitting down anymore. People used to take up tables for 45 minutes to over an hour. Now people come in and they're buying merchandise.
They're buying chicken pot pies, lasagnas, bottles of wine, and six-packs of beer. We're still serving breakfast and lunch from the line that's takeout. Pivoting to that market model was a benefit. The new buyer wants to expand on that concept, focus more on the baking operation, and take that to a whole other level. Plus, the barn is still a plus. The barn still has tremendous potential to be another outlet of some merit for someone to do something great in. Those are the two scenarios pretty much.
I know you were excited about the potential of the barn. It sounds like a fun piece of the property there.
I'm ten minutes away. I'm looking forward to seeing how that place continues to evolve. The local marketplace is also exploding. I may have mentioned to you in the past that there are probably five new subdivisions going in within a nine-iron shot of my place. Location, location, location is still very important, but I'm in a growing town, a growing community. Our pivot to that market model made a lot more sense than the old café model. It's going to be interesting to see how that property continues to grow and thrive with the community growing along with it.
We talked about everybody's biggest challenge, which is staff. We talked about that for a good fifteen minutes, what people can do about it. We talked about word of mouth, incentive bonuses, and big important stuff. We then moved into Roger's decision to sell his restaurant, which he's going through that process.
He's under contract, which is an exciting time. It could be the right time for you to sell. If you're an operator and you've been looking at it, you may have that opportunity to get with a broker, and there may be an active market for your place. People want to go into restaurants that already have a lot of the equipment and staff in place. It's easier than building out. You may have a space that someone is been coveting for years. They probably don't think you want to sell, but maybe it is the right time. You could explore that.
It is a seller's market. We talked about those two things. Roger, in addition to myself, we also do some podcasting. I have a couple of cool episodes coming up here in the near future. One is about another QR-type code where you scan it and you can do the menu. You can do the paying. I love that stuff. We put one out yesterday that does that as well.
I hate sitting at that darn table waiting for the server to go back and forth. I feel like I'm done, but it takes fifteen minutes to leave. I wish I could scan the QR code, pay, and walk out. We did a couple of interviews with folks like that. That was cool. I had a great talk with Kyle and Sarah, who's got a podcast of their own. You may have worked with Kyle already, I'm not sure. We talk about everything under the business. That's going to come out probably in the next week or so. Also marketing. One I did with Rev Ciancio about third-party delivery stuff, which is a huge topic. I have stuff coming out that's going to be exciting. What do you get coming out on your podcast?
A whole bunch of guests are coming up. Everything from technology to sales techniques, to marketing, to finance, a whole range of guests and topics over the next couple of weeks. I'm constantly vetting new guest opportunities all the time. I'm going to continue to involve you in some of those interviews because it's always fun when we co-host a podcast.
We do enjoy it. We can go to three-person mode on something like this and so forth. As we close, you hit on Sales Stars. Tell people where to go to find that. That is timely. If you have folks coming into your operation and your profits have been lower than you wanted for the last year, which is everybody, then let's take advantage of every single customer that's coming in to maximize their sale. What is that? Where can they go and find that?
RestaurantRockstars.com. On our shop page, we have a variety of restaurant training systems, but the flagship product continues to be Sales Stars, and it builds what I call the dream team. We talked about that earlier. It's a complete recognition and rewards program, but it's a four-module training series for your entire front-of-house staff. I think the difference is if you train your staff at all, it's on hospitality and the basics of service, but I've yet to see another program that teaches people how to recognize opportunity and sell because, after all, sales are the lifeblood of every restaurant.
Sales are the lifeblood of every restaurant.
It does that as well. It also includes what I call Pre-Shifts to Profits, which gives you 30 days of proven training exercises for pre-shifts, which I believe are foundational as well and important to do every single day. I'm not talking about 20 or 30 minutes. These are 5-to-10-minute exercises you can do to get together with your staff that focus on a strategy, every table, every time, that increases sales and delivers amazing dining experiences. That's what Sales Stars is all about.
If you check that out, one of the things that I love the most in his training materials is that iceberg graphic that shows the tip of the iceberg, which is where we don't have it up, but we could. Anyway, what your staff is doing is that little tip. That's easy. People come in and they want to order food. You grab what they want to order. There are so many opportunities below the surface to increase your sales, and it's so much more profitable.
Roger’s training, especially in this category, is a knock-out. Get it for your staff, and maximize the opportunities as people are coming back in with their stimulus dollars to your restaurant. Please take advantage of those opportunities. You can check him out there on our site, RunningRestaurants.com. Check it out. You have over a thousand articles to dial into on the site. We have over a hundred hours of multimedia at this point. I'm sure there's a lot more. We haven't tallied it, but on the site, there are tons of interviews and so forth.
You can check us out at RunningRestaurants.com. I had fun jumping on here live, talking about staffing, talking about the decision to sell. We can perhaps jump on next week as well, where we can talk about what's going on in the business, what folks are looking for, and what tips they can share. Any closing parting thoughts, my friend?
This is the time to get the passion back for what got you into the restaurant business to begin with. There’s light at the end of the tunnel. It’s almost there. There’s more government money. I encourage everyone to go after it and get the passion back, build your dream team staff, make an exit strategy for yourself, and revitalize what you had before the pandemic hit. Things can only get better. That’s my best advice for operators out there. It’s a business of passion. It’s a business of hospitality, and both are super important, not only for yourself but for your staff as well.
Get the passion back for what got you into the restaurant business to begin with. The light at the end of the tunnel is almost there.
If you don't have that, it's going to be a challenge because you're juggling so much coming at you. It has hit so hard for the last bit, and it's not slowing down. I’m Jamie Oikle from RunningRestaurants.com and Roger Beaudoin from RestaurantRockstars.com. Thank you, everybody, for joining us. We're going to sign off. We'll see you soon.
Thank you, everyone. Bye.