Brinker International (EAT) 1 Nov 172018 Q1 Earnings call transcript

Company Profile

Participants

Joe Taylor	Chief Financial Officer
Mika Ware	Vice President-Finance and Investor Relations
Wyman Roberts	Chief Executive Officer and President
Gregory Francfort	Bank of America
Fred Wightman	Citi Research
Brian Vaccaro	Raymond James
Anna Papp	Bernstein
Will Slabaugh	Stephens
Howard Penney	Hedgeye Risk Management
Robert Derrington	Telsey Advisory
Jeff Farmer	Wells Fargo
Stephen Anderson	Maxim Group
Jeffery Bernstein	Barclays
John Ivankoe	JPMorgan
Andrew Strelzik	BMO
John Glass	Morgan Stanley

Call transcript

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Operator

Good morning, ladies and gentlemen, and welcome to the Brinker International Fiscal 2018 Q1 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Joe Taylor, Chief Financial Officer. Sir, the floor is yours.

Joe Taylor

Thank you, Kate, and good morning, everyone. We appreciate you joining us today for the first quarter earnings call.

Dallas CEO, in Roberts. here me is Wyman our Joining Brinker comments into to the And Ware, the Investor jump Finance prepared new newest team I VP our of introduce before we Relations. to the want and Mika opportunity take member finance the

Chili position. years very Mika an is in time am new as role. to know I for and directly She to brings her our of for VP And have statements. wealth while. getting her very with a privileged new served of to working her has Mika to position, she introduction Finance that who While going short a first pleased you’ll run be the to I am her incredible knowledge Harbor is important with Safe very I turn this long head very last seven me the know this in over Chili’s. to call

Mika Ware

and forward here Taylor, and Joe Dallas. released morning you Thank on Joe the and Executive quarter brinker.com. Roberts, Officer; Officer are and Results me our earlier join Chief meeting good all President, and were this Wyman available Financial I morning look of you. at for website Chief to this working morning. with in

will our Company. to Joe is and As practice, comments underway Wyman at the first related strategic prepared make and our initiatives operating performance

the open then call for your will We questions.

of regarding our Before beginning statements. Harbor everyone please Safe remind comments, our me let forward-looking

of into actual Securities that subject and are Reform SEC. Any management based that certain differ factors turn items forward-looking with uncertainties more Such course, Company's All measures which completely its review of such And to XXXX. refer non-GAAP statements And risk uses we the and the those may anticipated. During to release considered to believes Company's our this the said, may morning's are and items, and Wyman. the over call, include in could filings Litigation uncertainties, statements on entirely provide ongoing financial should call, management the Private described will facts. cause call from business the historical risk of certain meaning the to results not operations. Act insight of such discuss be I which press the in on will with within

Wyman Roberts

for Mika. and Thanks, the insights Good going from share turnaround today build we momentum that of Chili's morning, we'll quarter, our everyone, recap us thanks first forward. as joining and launch how on strategy our

$X.XX when moment. release, $X.XX, As you Joe the you expectations. of the quarter earnings believe more detail impact hurricanes, of is in share of a on saw adjust and ahead actually press performed for per for provide we we the about Brinker will delivered which

all impacted quarter pleased seen. share housing hurricanes we supplies. running were pay, did relief took of and present care significant with the weather has ever to First company-owned events that back our and I'm are during by temporary this restaurants crisis Brinker Company family emergency the time our most our and of up

year their ongoing them the support few restaurants, our to their weeks. next efforts aside, in it. anticipate Puerto help for during closely designed to continue franchise to provide within Hurricanes also We open remaining as plans partner we recovery with will playing reopen work our and Rico which out we the two is

and training our menu the finalizing about all was turnaround for new preparing for our quarter launch. teams strategy First Chili's, and

offering compelling guest share. focused happen, of it and hotter. make and And operational capture improving will and delivering we're quality on higher balance to price on our and committed market food, future that the and experience faster execution guests year, the For team that more increase to in, bring and everyone the is visits while points, marketing aligned

presentation a medium original the industry-leading, as Mouth at product offered nearly across category quality We across simplified Ribs, menu, reduced menu. and on this Texas guests Bigger ribs to the improved started and present for Burgers, With and biggest greater improved new and move brioche more smashed fajitas. new handcrafted our Fajitas quality we price the strategy with offer burgers, forward, that Our and business menu XX% same Size meat. rib and products Big specifically signature now the items served our XX% patties flavor the opportunity Full-On bun. half-pound, by a with

the with XX% We also to every across served the established on day, this nearly $X.XX new into operators And value of fries, menu can our with for six fajitas, is cheese preference long-time favorite, burgers, foods. a with our with in important weeks delivering Oldtimer ribs all entrees. hotter day. many solid foundation faster, category just about and signature these so and up choosing guests focus We're

and decreased are have every training at the guided to nothing so ticket teams overall that principle guest the been Our level that the except the XX%. experience returns. by matters, consistency times and far, of We've speed guest improve

More importantly, of those and are number much XX%, those are that complaints dropped generate guests greatest XX the more tickets than ones and now to likely longer have minutes guest return.

with for new marketing, We that's or year, A and prior new traffic all set also created is rate to also consumers tell give Chili's a them longer-term set about levels us. weeks reasons growth. up at the brand new try sustainable back into – launched marketing four media Phase X. menu, We're above the campaign, to a new

growth. operations for our inside teams on Going the present on biggest we'll more focus the restaurants, to our aggressively consistent build continue that by execution leaning into areas momentum opportunities while traffic forward, the

The dial the first comes turning our we're value our on competitive and it The highly proposition. up value to industry when value strategy. is remains

the team $X.XX our fries. foundation and is In menu place, We're future, also a half-pound working the atmosphere. traffic. products drive improving price and to the value value and aggressively our dayparts, have strategy to harder the quality us see more we even works of hard the strengthen that you'll burger the target to points right that address in Now beyond for consumers proposition execute

program Northeast are the of and With We're the the brand appealing. results more reimage relevant through latest makes reimages the preliminary halfway in and that nearly round encouraging.

continue to strength master that the remain and things build organization We most enough right the pivot can when lean, to business foundation are leverage forward. to the scale need moving nimble We of so effective, the we to. we this

improvements ability we in is traffic an operators' operators the signature into traffic We they're And have seeing we're hard some with and at strong the with now, Joe insights think, hand of the a technology, aligned shift support business the better to a committed second I'll for working and gaining shareholders. none traction. with in and to Brinker first put on I'm We're over working. give and delivering margins. best with speed the items higher Chili's maximize on The our to you guest. in that Joe? and in experience menu a business results. we performance transformation our supply and we're to We pleased infrastructure momentum. returns and our every chain on call the to the focused restaurants business for mix the quickly to driving and quality model build more quarter place of that and in with terms we are allows in maintain back invest team us the to that Everyone built

Joe Taylor

to Wyman. again And good everybody. thanks Great, morning

South August, fiscal of would due our in the indicated During our last weaker did of year, we for anticipate not quarter be the and year case timing new meaningful per we to initiatives. the and Texas the quarter. And earnings What than Harvey call the in share markets. was of our that as menu this last $X.XX adjusted impact Florida primarily from we first Irma marketing reported was and

almost closed the impacted, days of resulting two restaurants in During course XXX operations. XXX the of were storms,

unfolds. XXX respectively. hurricane Street plan The Insurance Let both for $X.XX. the recoveries, the our cents When quarters negatively effect the me the to back numbers storms our and morning. storms we comp we quarter the quarter lost back that We seen and of internal the impact, positive future recoverability by performance from earnings are interruption resulting estimate the provide our Chili's and would $X.XX, for would reduced have be some in this storms net sales markets for expectations. share impacted as and adjusted in those due basis insights insurance a of the including in the business is process to process The sales you above by accounted sales hurricanes on adding bounce I points, note, reported basis sales with earnings provide will approximately for to to numbers. XX XX including impact adjusted if Maggiano's per Brinker's determining ongoing. by several the points lost our as impacted approximately were any, been as with

new to were Now, the our looking the quarters to marketing launch menu last fiscal year. impact of both campaign meaningfully and quarter It's important first year. at last timed three compared performance to note

this promotion. burger included such, from quarter or wages a ago successful higher at first As that a XX% quarter year well the as year's as marketing

basis a future. the from to inline deleverage, increased points XX from and X% restaurant the the XX with impact hurricanes. remain XX due quarter sales basis decreased labor operating anticipated increased X% negative expectations, and to to margin points foreseeable for year First by for have wage year to prior cost are rates Labor points inclusive basis a our of headwind

and increased increase labor the do be we X% restaurant the in slightly the percentage will year-over-year recorded For year, QX. below full believe

sales for Our quarter to basis the prior increased Company cost XX sales a of year. of compared as percentage points

into in and these of of amounts investing our spend areas. are each and core burgers ribs, equities we'll We increased food fajitas

is and However, restaurant savings price. increased much expense and of menu this increased by expenses supported

across overall end up the some was note. basket be expense for cost second produce for from result, our approximately is move are XX% the Irma of have through of Florida felt couple the event year the Interest quarters. remaining with this September percentage our $X commodity and in particularly million year-over-year will we over on of the as fiscal now the the We course the an the an impacted contracted It As recapitalization contracted quarter likely year. sales the fresh do in particular crops produce quarter pressures of complex and in Currently, year. effect a marginal expect to of increase by next we commodity the last we we of anticipating tomatoes, inflationary parts lapped. be are was the of XX% quarter to

relates performance lift mid-single expenditures new in allocation $XX.X our the of primarily in from northeastern percent quarter, We're particularly pleased and initial restaurants pleased capital the of the for we markets. recently in we to million reimaged maintenance, As recorded above restaurants capital reimages support restaurant development range. with of the the are target sales seeing with with opened and comp it our restaurant

quarter, just free of the repurchase Along debt, this shares. some with generated we cash used $XX For incremental million flow was million. to under X.X

X.XX% returning early momentum move and to questions. next as adjusted our Kate the quarter now expectations launch upcoming Chili's. against X.XX of your now near-term is range. comments call for times X.X% target this our I'm of menu over leverage prepared multiple fundamental anticipate under ratio complete, upper the range, the Our In ending into our summary, for quarters. resulting let’s the process as can open on the we end the ahead year. we course we at above momentum the quarters. the remain through at of high simplified the delivered that move slightly opportunities in from the the our With the track We Q&A. provides couple go of encouraged end for We and us our leverage growing build begin believe further we the by of traffic quarter is of

Operator

Our Thank O’Cull. is question. then coming post first you. affiliation, [Operator announce Instructions] question Chris from today your your Please

Unidentified Analyst

are changes is or guest you implication? was in for in menu introduced feedback guys additional this this John [ph], you Hi Wyman, based on margin Chris. mid-September? any And on considering

Wyman Roberts

ribs are of we're first was just menu this with team between the so we Hi, in not bunch and amazing hard really have bringing may The and more to forward. a now we say of been kind hasn't John. that what burgers, fajitas, out on exciting team innovation doing team category doing business really us the up. strategy so past we're the in I'd we focused all interesting of quarter, late the to culinary that's line with The are that is very stopped of the forward to going more so difference rolled and definitely our drive but is move time. the what We've think ideas much got working hard menu. working is – own an

will of our the and propositions value So continue, recipe along to how more lines even and compelling well it'll bring yes, as guests. stronger, both we as value to be there be offers innovation

Unidentified Analyst

early there? Do you I highlighted of any items be? the you else could know those have where some go from but indications burger, on value what you might

Wyman Roberts

want right detail specific on wouldn’t dayparts, like be burgers, the to I now, share more looking parts Well much but of fajitas, and around these and equities, around of the fajitas. business it'll and segmenting, some ribs that again, at but the business too of take-out. Again, core ribs focusing burgers, around

Unidentified Analyst

Okay much. great, you thank very

Operator

you. Thank

your question then next Gregory Francfort. Please announce today is question. post affiliation, Our coming from your

Gregory Francfort

Greg is Hi two guys America. have questions. just of this from Bank I

plan we the on this marketing cadence. one's as and move throughout first year The the

XQ it expect be of question speed those just is of and of last of you launches, I of the on was more guess what value second to than service and the the Have then weighted it around new to scores, change? magnitude was you menu. Given change the scores either the and seen sort And year? menu kind

Wyman Roberts

you're run. have Hi we with years consistent pulled what initiatives. With the quarter, have the pushback will as to take menu, that first some Marketing more had operational new rollout Yeah, the you plan up it's been feedback on to guests organization of of of we your speed much for from there'll chance marketing said, the rest in have menu, their touched prior we the be there's set favorites. the where guest of be the the as marketing kind on just we historically year of aligned may away that items a and one the but and going regard the strong. Whenever throughout on opportunities now XX% the may heavier, because little of to are menu be more Greg. we marketing a you kind a back

biggest been gone with we the that's have. So and we've menus as as that well reducing challenge through ever

that's first Or work to favorite? us hey, exceptional the done my field the been group the through the group, think in phase marketing been used getting item and culinary eat, I of good getting in and where's the has now with we're that I up to my especially aspects confident play the as the that guest feedback prepared menu I of Those mentioned comments in speed on the remarks are service. showing themselves we're other both, of on improvements going well. out in that and are the

Gregory Francfort

the I Are seeing in customers guess improvement see recognizing quality check the in if the I the quality. guess? value scores I wondering think up, improvement mix and you that but are I reinvesting on back I'm quarter, value are the guys lot numbers side. you're and a

Wyman Roberts

positively. guest burger we are specifically, On like that and to the the that respond category the $X.XX very seeing things we're the – burger and react

So, yes.

Gregory Francfort

Thank you.

Operator

Thank you.

question question. then from affiliation, your next Please Our your is today announce Greg coming post Badishkanian.

Fred Wightman

Wightman impacts, Fred following speaking? that guys I you're you some bit broadly Could talk when know of you bounce I talking sort the about there? hurricane you mentioned, more normal, netted for about actually the Greg is this are to saw out guys the back reopening. on a mean of what things backs Citi. had you Hi from just

Joe Taylor

going menu the Hi, afterwards have back generally have Generally manner. situation. speaking, Fred a normal to traditional so bounced we're say, in say would too, that impact. and to launched more a Obviously, marketing the more good Florida we morning. back I some launched you're

cadence this that the events, hurricanes from to always want much maybe we bounce you approach. net into we're Texas, these at in more giving we but but a longer overstate normal slightly to what bounce kinds didn't bit back by did back point, be make do we You a those consider sure a little of impact back see that of

Fred Wightman

in you following moving bit back well. sense, forward storms Texas to I would a I on response it mean, program know in marketing if look, the delayed pulled more but assume sort look the of marketing assume assume, is was Florida, as too? quarter, from as would a of Makes you fair new down I and we the marketing I

Wyman Roberts

Fred. No

You national a local do so know marketing. marketing and we our is most of of don't lot whole

perspective, those else would. messaging So as markets getting that everyone from were the just

Fred Wightman

you. thank Perfect

Operator

Thank you.

today Vaccaro. question post next question. your from announce Please your coming is Our then Brian affiliation,

Brian Vaccaro

Would seem and you. morning to after a list willing Wyman menu thank to repositioning? October. improved to much bit provide new traffic maybe attributed have and be menu on the think that Good you we've sequentially that a is sort seen context and And stability qualify and you in advertising the heard some trends said industry you shift in the industry or you of launch. versus how your more the have

Wyman Roberts

Brian. Hi,

going kind as a you've here seen we're specific As industry performed our of I have confirm can is to better policy, that not the well what provide October. details. little in

started summer what above the to beyond relative through positive so know of going that's the some related Some like, part trend industry a traffic to turning more month, industry an so and we may little feel trends the of into them turn, with in level the the we've helped We economy our of bit we but year need perform kind and start early is as watch to the and to continue are us when industry again, it the change of that and see that. positive a that that's the say rafts seen of to we'll they kind we've little at direction early optimistic going weather the kind last be bit than to had industry. to start we're does move

Joe Taylor

want did from set on level talk lift at industry the is just to we're we that market again, when make at guidance industry sure throws into we to whatever about condition share I that the not effort you, us. remind performance, in to issue. the much build mean our all just capture designed we Brian, provided, so the And year

Brian Vaccaro

Okay, played growth helpful out in a provide Could that specifically, on and mix starting expect some to that you the is dynamic second a also how the the your just out moving but normal year. forward? menu just significant color additional that average check to question Chili's of you more quarter, you half of pricing that there, I if on could. fiscal pretty lift confirm the continue play dynamic in And level expect mix

Joe Taylor

Yes, mix in-restaurant driven merchandising an feature card first the let by in checkout our of me quarter combos. was primarily the first, smokehouse

mix within as such as that So to the makes the right we and and hear move doing mix that, impact again, too a quarter. incremental move as are have and bring from go the forward on the move along of kind in bit menu space anticipate value The new very popular OTC had will as value. that the item to on you that dynamics quarter. on and particularly, burger of guest context that that heavy as outside we it about marketing we does a up talk now last we if we you same And an would little effort. $X.XX pricing I opportunity talked will have menu relates further weights forward, us the the there of if the weren't about kind

into some We our our elevated quarter, we increases the price of will the December. year lap from of move larger pricing last as so last this we of then month remain calendar through this position end in year

intent and and will see the within to is that into range third we down X% range. into move pricing to our the you come well as our levels X% quarters fourth stay So back

Brian Vaccaro

Joe, just me heard just wanted helpful. very then I that's I make Okay, one to for And correctly. sure last

to bit for labor terms margin expect to see the your In little were quarter. a they store guidance, you less first costs than year compared fiscal annual up of

other think that meaningful seem Can a You on pressure to provide of color I would cost those cost expect a all you. some to pretty source be food line for on points? reasons, maybe operating modest there you've little described. pressure the the more offset Thank the you

Joe Taylor

the display hear You correctly back message. that put the we is did

are of of and see our labor costs and will, planned pretty tracking you operating pressure within the line line, along operating Our much the margin that level on restaurant expectations again, we to the restaurant we're and sales small in cost restaurant provided within the a increase from overall coming operating expense still the guidance benefits us line you margin. and of for the

Operator

you. Thank

affiliation today your is from question Please announce post coming question. your Senatore next Sara Our [Bernstein]. then

Anna Papp

representing Good is Papp morning, this from Sara Anna Bernstein. actually

Wyman Roberts

Good morning, Anna.

Anna Papp

to Good to maybe morning, the where is coming the Thank you first can we menu, lost grill QSR coming bar might you be it you. from? response from category traffic think where this about down? restaurants Is and burger traffic tell other where it as from trade or and might have some new

Wyman Roberts

of and the and is it's segments. some What changes. to little we're to read early earlier kind seeing do traffic restaurant get shifts a Anna, who's advertising talk we on in know lighter can coming the about the from the we from an and users messaging

the Chili’s And so exciting encouraging in to we is folks to haven't some that to been the while been new hotter menu a introduce an are faster, the guests haven't increase from getting to while, of and us in a and food. for seeing in that standpoint which

Anna Papp

And then just you. thank quick follow-up, a please. Okay,

versus pretty trade-off. and like a pricing sales looks lower advertising, it clear Given there's margin

moderate perhaps do what need you to you increase pricing, spend then marketing of comp type margins? As increase hold

Joe Taylor

to Again, Again, the of to standpoint, sales. in to continue margin X% kind obviously we from business to see on range the long-term year you we driver. is upward to expect a positive about comp from up flat first a guide quarter this same X% – for comps talked so stability typically would will that that a within move we've flat model comps that to sequential

suggest dynamics through in guidance annual built-in of yes, so quarters. would of but couple move a the we pipe, regard, Anna, we've business as down the next have that move that kind model So comps I don't the think changed the

Operator

Thank you.

your announce next question. [Stephens]. Our today question post Slabaugh is affiliation your Will Please then coming from

Will Slabaugh

expecting or you what improves thinking on potentially what to bit around question improves terms about and follow Thanks. likely not out either in what little on And want playing early hearing et over throughout if I a terms How sales not kind – new seeing, what more they get menu any through rollout, guest just you're dislocation expecting you're the of you're With sort of of of that cetera. they as from used in had improves, Stephens. impact XXXX? a that execution I sales guess you're XXXX before, of of the loyalty is if there. kind end and quality finding

Wyman Roberts

yes, question. Hey, Will. Wyman, good

I And a on As it it changes, mentioned, a it was good risk. through that why that you will change of a read we a we level but you any or last always the change quickly That's and a come a guest for time rolled and to that test menu the you response at and make month. of to important at of out we before the get a that bit us magnitude in pushback pretty curve. is that when there, put magnitude two, market, given that anticipated test it was little did make looking low very especially market

there. bit of be moving that from build on but you and going change minimal upside pushback traffic to will we're of and been a a that make there's So when always we're confident the a like it's trend fairly to the this, that little

Will Slabaugh

the on check be it that a there? you but to as a proteins, a also being and big sales little focus jump that And around or considering I little test Should think benefit of more so market am you've could margin, Just your time? cost new menu about the taking the as hits a impact I profit over as well. the dollar maybe bit guess on better seen you you. we that saw far Got just that or

Wyman Roberts

mean, of I didn't with we I Yes, the expectation the new menu margins, think right. build growing

that at strong there really those there's But from enhancing, some more category the to in. menu a drive and fajita value within So us margin a to conscious are the same is margin value want category we check those the for categories create time, platforms that work in consumers standpoint.

value but it with in again, So is foundation an price category good give margin in needs of there example. then Overall, bring that burger a potential, there's to $X.XX the kind the we point category. the opportunity proposition

gives So where be want with net-net, mix great we foundation of. and margin now. us build to It a right we're to off

Will Slabaugh

you. Got it, thank

Wyman Roberts

Thank you.

Operator

you. Thank

question. Our today Please Penney your then Management]. from coming is question next your Howard Risk announce affiliation post [Hedgeye

Howard Penney

you thank very much. if Two questions, okay. that's Hi,

menu on one the Wyman. change, First

So got be trying you some of sort I all all so to things, guess, to eliminating going to the could going kind there if be traffic, the want cares who I first of that customers some is us the the guess going that because maybe trouble, phrase of born question people drive didn't eliminate you're people, to be you're that I place. give to things into is use some to in if to those

how have play a that you then address can customers versus that out? see expect I issue and traffic follow-up. to just of gaining losing short you So of And

Wyman Roberts

have that – we I mean, think focus for the effectively, the Yes, are what anyone I but stands most of necessarily chasing you granted, them some do losing that that really Howard, I we take on and with tough the worth and how restaurant to we kind comes some for may of calls into kind compete customers not can had been make our have just trade-off. ever, think some weren't brand of we

is some of place – much but we guys lose owning obviously can the we group, be. a own to you'll with the much better so those trade-off early, and burgers, which ribs fajitas And think

of menu the changes getting magnitude that, in cycle see the we've this is fairly we we'll through exercise made. so relative think And again, that to change, going quick to be

Howard Penney

you that customers, good good I to not mean So lose thing. losing certain essentially degree. but thing customers a a it's was any a ultimately want to

Wyman Roberts

off in put the come thing it my whatever, more that any and that's a item and the as where's guests trading, pick lot I'd they don't we is other hey, when say, trading have happening more.

Our operators job burger hey, try though. you great new of are this listen, a should doing saying,

bun And new on done for a a had improvements burger give haven't it you category, shot. you what the a we've in guest significant can, smashed, and while seeing we're If our you in was satisfaction again, burger really should half-pound, example.

Howard Penney

on terms in menu to I’m as being guests losing So to to blunt that try going relate the well. because of side labor the piece

So a a labor the at XX labor was dining operating $XX than model ago, at labor. today $X different at or $X industry, a years casual a

of the you're throw anymore there you're that are to labor that to So getting that technology customers don't with hostess hostess, paid don't so out need And maybe a you it. necessarily away. provide the have aspects I'm the not you for customers going going the need you or because perception providing

just you're of if knowing cost evolution menu that's of happening the where kind I'm to as with what's labor well the labor taking Thanks. going? So the curious and

Wyman Roberts

that. it's think the not the models. done We But of a to dollar a component little have is we that make or in the obviously in we every model that there be more appreciate that that feel believe job are technology a it's Yes, And creates I it? the evaluating most best some sure really you're of that guests to spend to labor, labor California, and our has can't evaluate how invest within and dining is quality what's and way of labor in great handhelds teams afford that analyzing involved than to and Do the service efficiently. allows And invested. kind payback effective for guests component that say business then it? food and important, hospitality an that way of in hospitality that other kind okay, efficiently on. we're special, the we've the make one hitting so out a you and and to would speed that’s example them enablers scrutinize I'd get for rolled to the to that's enhancements and is way, with connection still most to what being be doing casual evaluating, deliver in now, right

a not across big So a as alternative of for great management we're just looking deliver to all experience at on too it's ways front/back, aspects labor, category both to to continue board at it as efficiently the possible. us look

Howard Penney

the apologize. I if what back the one and to menu cost last if chain the there terms number could you just items savings Is reduced a this, house? of in And into you're aspect in I bringing the supply one and to lower said throw

Wyman Roberts

much efficiency your go so down. There's the with because some back Not labor with and chain. SKUs obviously house, supply of

manage we it's more Your be as to many able manage efficient be labor should because to able should theoretically should you better as waste make we – better, doing and that theoretically, well. things, not

comfortable with So once advantage that of, byproducts teams some are menu menu taking simpler kind gets the the of or we then it. those established just are of very the anticipate some

Howard Penney

Wyman. you, Thank

Wyman Roberts

Howard, to All talking right, good you.

Operator

you. Thank

your Our next from post Derrington affiliation is Please today Robert question then Advisory]. [Telsey question. announce coming your

Robert Derrington

this on thank that store Yes, Telsey is cost, or quantify out hurricane-related if Advisory. store you, back the margins of level broke Joe, level you from I may, questions, drag filing, A cost the margins? the the simple you adding hurricanes, on as within specifically, couple the can your the

Joe Taylor

as $X.X at we Clearly, aspects to into we roughly Yes, operating – when it. the of that by restaurant Bob, went obviously good points deleverage indicated of number a way that, leverage that I there's comes were the do margin – the that’s most across impacted from straightforward indicated, XX basis revenues think to million, $X.X million XX it. the that's

it's like We release flow members. to team perspective, our also cash do some from – very appropriate we a for the felt things pay

were were piece so gains restaurants and do did while We obviously other willing that equation. to that charges, but into the closed. dial another of And we

is basis thinking So about XX applicable. XX probably points that I think, to

able little have more but of the some restaurant not XX had a points. slightly, have You favorable leverage because probably basis off items to been significantly adjusting on perspective expenses that those XX would would to you margin

Robert Derrington

begin time company efficiencies, year some to update helpful. historically last pretty pretty investing or maybe how begin forward-looking, around been sales the done those fruition aggressive and that's into or fair has of over pretty know so. future, not-too-distant you that Is heavy the a find within to a pretty that kind potentially us ways on of some technology-related the amount, Wyman, helping we'll come amount Okay, in trends? to benefit we on see you've there can

Wyman Roberts

Yes, Bob.

where with ongoing, those our hit it of kinds process, put you of relationship, I in button over to is time we've really dialogue provide and think technology, place up, that's system over allow It's now in made you. investment really you think I a industry-leading the an application order, by things investments again, that us and go we to way now, is industry-leading. an pay, we'll our now that create the we've and out communicate Olo go to app, what use our a the pull obviously in the are databases investment you years us into create the with made to and we think run investments have with to ongoing curbside you back kind app, that can in our

we're as So – now those those communicating aggressively. to we are and those start more able marketing things off now pay

to that that's more have out one separate maturing of now level we've quite we yes, allowing technology is investments made from that push So of others the the and sophistication. of example years and it aggressively over us think there kind ourselves same don't

Joe Taylor

the of our as in the leadership companies team just within viewed those a – and restaurant recently last Just of standpoint. being industries, couple weeks, the technology are that from rating

we're technology folks and cited dining about and top driving from you're drive business. digital five, just with price there Looking their to the of really leading you them. the marketing the at with top typically you five, we for utilization when it's talking business applications, say are and the were technology broad And that casual how Panera, Domino's, Starbucks, company significantly in mobile those everything right

made drive of I change again, use we've those business set points to approaching So this off of Chili's. think, up we fundamental have to in well all ourselves

Robert Derrington

as you I fast And that from with prices burger, of more new because does That's aggressive curbside is its the for lunchtime the for food of lowered does chains? that super example, the in some some offers helpful. to get program, reason the the marketplace the are the think interesting you at allow

Wyman Roberts

Sure.

Joe Taylor

Sure. Absolutely.

Robert Derrington

company you some Can looked how tablets. across update course of testing where an then know ultimately, at the within year? – lastly, view this that Okay. and the stands has business And on that I the of over give us you kind any

Wyman Roberts

of have being to all WiFi leverage and this technology Is technology, time. been kind system getting the can your just of the right. XXX% handhelds are all evaluated Sure. guest in become running things up the done California restaurant, provide the you to those make a we there an to technology of now, that's at When is handheld We've you to All move out sure in more how experience. efficient? opportunity rolled work understand a and to the better

can there's a continued So we're these curve going we've efficiently. it make we experience especially guest see maybe do opportunity here great learning do a that states in more a investments but and where through, to deliver become wage we because little high

so and we're what as are that not evaluate far. we've roll those the so so We're And technology it yet company-wide seen with this continue for we – appropriateness to the announcing we're happy throughout determine to restaurants. going

Robert Derrington

Got you, you very much. thank

Wyman Roberts

Bob. thanks, Yes,

Operator

Thank you.

Jeff Our next question your [Wells then question. post affiliation today Please is coming announce Farmer from Fargo]. your

Jeff Farmer

Fargo. Wells you, Thank

opportunities but efficiency control corporate you that the get with questions, So or restaurant new beyond of the that cost rollout of at understand the guys just that some menu either following up or pursuing the I come with new actively could efficiencies the and above cost level level, menu, menu? are that earlier the some the of might you on new

Joe Taylor

We're always those opportunities. looking Jeff, at yes.

whether operator. look the how just utilize I discussed, look is we effective is technology at historically, have restaurants, of at it across we we think look We'll managerial an continue we to efficient supply the structures at proven how chain the and that opportunities, board. how it that we to be

it's hospitality-centric that always as long within It's restaurants. context So it and in our is works of the a center efficiency. as front guest-driven model

Wyman Roberts

Yes, I’ll just add, Jeff.

I'm months. marketing Kelli over of marketing at looking that of has is ways One we more could place Steve it, that line done a put us would necessarily proud work bottom of the last six invest great in take out menu. of the we the job, drive or and on and most the costs marketing budget to can just team's done things that, finding to the aggressive kind that that not we margins in a that the plan

consider line, some the into it's that the dollars of investing improvements would what business dollars, of we kind non-media additional out through the And other they've the weights margin or helping of dollars, of in working menu in the so squeeze millions of media we're literally that we dollars, support able to of bottom the of of non-working necessarily whether or flowing been tens that aren't system to parts terms to menu.

a done you kind example, fall where probably but of best that's G&A, we've it’s the obvious things past, to the some as not see where be the the So of as things floor. may – rightsizing, in those

Jeff Farmer

And just somewhat helpful. that’s Okay, one more unrelated. then

on like been you guys touched on the results, what You but early color helpful. of officially did it, Anything Curbside-To-Go introduced things when have the you exchange? And I some off-premise, platform? some would provide be mean, can

Wyman Roberts

so nationally again, haven't to little been quarter, it speed doing a our able company-wide yet. slow up and is it. been but now have whole we franchise been to to the national It's been We – has push market getting for system not bit efforts

so we weeks and franchise up there, curbside to almost pushing more in we're we'll we're kind really almost results more few be do last we there's started that and aggressively we have and innovation whole we'll to-go. a of growth organization Now running, to-go, and the just of around some and the And upside lot with in positive start quickly think seeing still.

right We've we've the got then where about off that's strategy, innovate and that the the place, we kind Now model like now. got can the and that infrastructure go I’d and we've things foundation infrastructure and let's actually of of again, to get the in now. talked right,

it more aggressively. market Now we can start innovate against and it to much

Jeff Farmer

right. you. All Thank

Wyman Roberts

Jeff. right, All

Operator

you. Thank

Our next Stephen from question coming your post question. your Anderson [Maxim Group]. today is then announce affiliation Please

Stephen Anderson

to questions spending see briefly wanted as seeing quarter, Irma, know I business-related and today they're booking I wanted to the the talk that is Maggiano's turnaround, but higher has to want and X.X% while but that comp relates on second results, – Chili's it Harvey the how but I to Group. higher in Maxim discuss Maggiano's? exposure about other specifically trends you're and going of decline comp, quarter, than what about most From Yes. in I focused of terms talk want into the to to

Wyman Roberts

well. business how significantly walking how of feeling trends important that strategies, putting if some Maggiano's, has for season, is or to It's much the question. some again, bit them to but tactics Yes, have grow quarter good nice their of and season and are about they're a really they're that better nicely. holiday question holiday great great down great around a and the Maggiano's. strategy the looking. them Chili's, gotten banquet hurricanes little again, Their bit are much news optimistic of more early banquet tactical the tough the the resonating concept. and which ask some – that with aggressive appreciate will, of of really some It's team guys The Stephen, A they've about to-go kind against than have delivery I them example, brewed kind to a more stronger, is it's has it. additional the you for summer, in you got little into harder, business things much the and a hit kind we're to softness walking but in they're a gotten for and and

Stephen Anderson

out. ask I also that's – rolled as Saturday the well your that want brunch, to about doing you how since been

Wyman Roberts

address to kind Maggiano's model. it's fresh that they it weekends expanded Good. looking guest really and it positive to continuing great at is to have bunch comps how daypart we the so team's menu, continue see of a of addition pushed been all a to nice business week, satisfaction. with we're push the but really It's kind and – on keep available and opportunities more any The to

Stephen Anderson

Thank you.

Wyman Roberts

Yes.

Operator

Thank you.

question your from then Jeffery coming is affiliation Bernstein announce Please your question. Our [Barclays]. post today next

Jeffery Bernstein

questions. Two Barclays. From you. Thank Great.

I thought Just has mentioned to the one, hurricane you in believe is what to – month you where if But and industry. were leading the what beyond were you clear. just to I sure think you that just that the clarification. Wyman, able and back well just from the as follow-up. understood lagging new trajectory in Chili's to industry the Chili's know whether maybe it's mentioned fits dining you entirely that which be to confirm recent that went I most one or recently, and a maybe comp you reaccelerated, have casual make you've weeks qualitative both I I then assuming that within industry the attribute you just of maybe and even bounce just that menu, wanted I'm last

Wyman Roberts

both Yes, the Hey, results better we it just was that what to the industry mean I movement. and know, seen not – but I Jeff. results just wasn't making some I has relative clarify, we're giving and confirming seen specifics, any was some has to Chili's better comparison

Jeffery Bernstein

you. Got

Okay.

industry and are seeing whether you both commenting improvement, on the industry but you've or weren't or the now improved. So passed just you have lagging whatnot, both

Wyman Roberts

Correct.

Jeffery Bernstein

growth of that seems there color EPS should just rest fourth of more Should your it first nuances sequentially of the comp quarter and we assume guidance, comp it. know, in the of that or mean, in for year, the terms is of then, quarter and well, Joe, of growth terms earnings whatnot. I is based you gave last recognize for accelerate the quarter, the on like I the Got in stable, comp the And rest to we year? year maybe to see rest the anything EPS unusual modest the

Joe Taylor

through move last we of this unusual. talked I over the there's obviously, that don't course we lap that will we year. quarter, think of color the the anything issues I that about some would add as rest

we think in is the this the intact. quarter particular, in side view very much commentary around incident as December, we there saw guidance opportunities yes, for both our there equation of so retail year some we you softness November but If the the on and of with is some the PR lap through about the

Jeffery Bernstein

or you're model. on know know the I you suite you you've And then ask new I ongoing in obviously, had franchise didn't whether Got gave it. very familiar just give franchise the mix. lastly, consideration, I’d or I Joe, figured time whether the further just with some

reasons franchise how significantly over why of coming that think consider about you I and return increasing some be can cash, might the think cost-cutting and the benefits provide you I'm mix your mix you wouldn't what just years? wondering

Joe Taylor

think it previously, Again, we circumstances. would like in the right Well, I we've said Jeff, as we mix. consider the

you We from that changes numbers driver with to particularly can move that are very do have what as But really in partnering aspect the bigger the forward. and improvements more of just and at we look that and obviously, you making simply, business important which beyond have of drive is model of continue of perspective, mix the we'll driving in corporate is we the been in a some like. opportunities consider the regard. we environment look that kind a Who heavily

we’ll franchise great and we opportunities, So that we present themselves. evaluate have would piece as continue look I to today believe would do partners we

Jeffery Bernstein

Great. you. Thank

Operator

Thank you.

today John Our Please affiliation from question. Ivankoe coming next announce your question [JPMorgan]. post then is your

John Ivankoe

on just as last positive. And one of it heard so change trend a questions, the Great. did Jeff’s I the an the sure clarification I well. make question correctly to want is to versus Wyman, you say industry answer

your has got interpret that quote does first second versus traffic improved based industry's right, first I that quarter could has that is quarter one the same-store that just traffic second the that actually if quarter think answer. than industry I mean outperforming quarter traffic, or more same-store the improved on in your

Wyman Roberts

John. Yes,

so we're turnaround. there how relative It's we’re we're couple gotten in then data the of quarter said getting trends counting about what And to not all that or a industry confirming lap seeing big days performed on in October. of industry industry the early – we've to were the so in that quarter. what that the the traffic we momentum starting first we're optimistic last going focus Chili's. was in that. continue turning have from seen to traffic a on trends that quarter to They're they're for is some are at second I – turn. was better that to and our has that what we early hurricane public specifics the move building is month a that we But think benefited what of seen the overall, in the I is without in have early industry year Again, we're into

John Ivankoe

meaning And belabor it's is point. turning actually this to mean, or I'm less it's I sorry positive? negative so

Wyman Roberts

We're not details giving specific so.

John Ivankoe

that understand. forward understand quarter then or very think ticket, of Okay. the the X.X% And us of obviously All what remind XXXX with I especially at to with I those, check-ins brand like in average could us do average down? the I we Chili's above right. – it also, get you right of but do in pricing. of average semantics into see which things, come want No, comments understand. increase smokehouse one promotion you whether secondly, And on so or first what kind apologize, that, ticket store, tell that's for and we the is It's going combo and you the the

Joe Taylor

were PPA John, first again, ticking we from right smokehouse off standpoint, a the for around combo very driven up that quarter, of $XX.XX heavily promotion.

$X.XX seeing you're is I be what we think from aggressively more we and on opportunity, the burger messaging, to to layer the into how discussed, value lean as similar we going value the top incremental that. of how

are would So will driver we think meaningful these to move – I as have that more PPA forward.

John Ivankoe

getting Chili's a know terms of Thank question noisy dialed Plenti, point, I And some ended started to with back off or extent. guess, strong you loyalty. you. the Rewards very is last bit then I final in on some to from the year up and little And is shift rewards that My

XXXX – it might light the XXXX it, actually the that versus of history So like the loyalty benefits there, remind your much but margins. change in on expectations a less some maybe some just on how much are of us sounds some and how dependence of because margins in shed

Joe Taylor

a a but process it's we've high environment, through the gone engagement loyalty really a program engagement several of high I obviously, cost, going spectrum think, last John, from low-cost, a from very these to been kind perspective, and months. less

loyalty belief we our direct definitely forward. of the is marketing mean, our go central really will think of a is that equation I as – program piece our – be part I of piece

we to through understand we about have we be We understanding broader years. past. efforts. the better in We'll getting a last, I of at costs think journey. guests. context is the the two than understood in of months, a the think the cost are those our how that that so, level the but getting we from has can think point drive marketing a It'll the learnings where of the loyal XX But better component I really do. right think what right we really We're of drive level what are balancing is now and incrementality The been return look I we to it of engagement of much from cost, internally

Wyman Roberts

heavy the how that do traffic is are – John, I anticipate team seeing We'll margin But more that, loyalty. now. dial-up, more much based huge we control want with drive pretty decisions will, we're of piece you to lean do is working the if turn on want those efficiency on I improvement we've wouldn't we to into It's well probably becoming about got what under now. how think efficient to – that

John Ivankoe

Thank you.

Wyman Roberts

All right. Thanks, John.

Operator

Thank you.

post Please Strelzik today Andrew question. coming your is next affiliation from announce Our then [BMO]. question your

Andrew Strelzik

questions. I taking the BMO. have Thanks things. for two

point it Was to test, just of can something in you've kind the marketing there change market, First, as I that went going was in to to understand did points change. you just the what forward. obviously, model something I at more guess, not and burger look promotion the think in campaign the aggressively? promo background, price with if wanted intended originally, a that I philosophy it us I and a the have into better correctly, recall give a price referenced

Wyman Roberts

we expectation in to go right. to with No component you, a Hi, drive know people value wanted and made we menu. new but our the something – if I that change, these a don't was with to improvements out compelling wouldn't mix, Andrew. communicated there We've we so never

So mix, but $X.XX was rotation. rotation, multiple menu, various spots. in messages less the the The of to the burger pretty change half a were had in spot used good than communicate the

was to in and to so a to the some meant combination then come reasons be And message it always compelling quickly tell provide of see.

Andrew Strelzik

for Okay. and I I that. appreciate the clarification there apologize misunderstanding

little of question we just I quarter. bit the stronger for had a other had than The the the pace anticipated was repo, on was

leverage coming little You – balance down. bit about sheet now a of talking the mentioned facilitate bit that using little and a to of we're

a So that you might slow the the necessarily wondering, of I that some of year the What repo debt? shift for repo? the does implications then rest mean are guess to pace the I'm lot. or paying Thanks that for down might of capital

Wyman Roberts

the saw of that. stance. we We take that the I opposite we're no, stock value would price, Actually, understood Yes. in and the aware

necessary but sheet of the advantage We are our the for our cash changing our both guidance for expedite spent repurchase, capabilities amount definitely share took we the flows year, on in a and balance $XX the quarter to see we this that it's week you million of month of in continue October activity. later event incremental our when the Q and that first comment filed share subsequent will with in repurchase – an

below to So in anticipate when fiscal seeing that. do will X.XX second leverage moved of move – we want advantage do And the to ratio take we year. the again, see value of back and we see the we the it have we half

Andrew Strelzik

Great. Thank you much. very

Operator

you. Thank

Glass questioner final Please [Morgan question. Our your is affiliation announce your Stanley]. today then John post

John Glass

is value It’s you're Thanks sure to of time, the how Stanley. offers do I value how timing particular caught it's that Is retail in but incremental a the about items at on sit you period by question think like it do where related if an it you'll menu doesn't adding industry value of into looks the put for lap menu. market? My the to make this the some know about like a new the current terms easy of by very very or thinking And in maybe just while that, December, you items traffic, then surprise and lap, maybe think year. more Morgan in last in any to driven and be about repeat easy vocal just much. later itself? think year kind situation it's time not you that to you'd having do

Wyman Roberts

John. right. All question, Good

bit first the from and an the that's work because so easier that, one long-term. done a both we menu on is value being and probably short- perspective, new a is it's innovation The little control

offers market I we they're a our our channel, database whether time direct So short-term, can use one obviously think some the provide whether or are we value advertisement. and in a to you there at that through if marketing some to approaches or will, audience with they're whether go

would will those of work or think menu next the additional comprehensive I that platforms. and then value to step but be more relatively manageable on time, a period continued next the broader in levers there's include

kind longer-term in we're So and brand of some address some doing short-term to that. work the

being I we be to at So that secondary data. last holidays, of good well. be control as great don't that done as environment some there's more kind looking again, drop there'll work shorter-term, a off seen we stable I as all we the that's much kind have answer year. because a see the also and would haven't do question. that we're yes, that, With probably regard It anything saw consumer we're of seems the indicate insight is as but some to something longer-term anticipating would but you it's again, so

John Glass

fall the and evolve. further Yes, in e-commerce sales I'm year, of a looking and that takes at retail down goes greater every fact share

that your way wonky the of modeling question, stock tax the more expensing option Joe, think that accounting my comment. of was a just as I only or rate So higher changed. was sort because

higher Was I I'm how change? that that out just you are than others supposed any out and And still that. you out even So we it it are relative rate tax exceptions – change, understanding that XX% just or tax that was change? think this the year you given to back to are back you you'll rate guiding how XX% year? to about don't treat accounting the the to back thinking anticipated

Joe Taylor

see because that first is price which – going quarter an takes stock tax to could the where that Yes, volatility which expense and number. back to that's that's out drives stilted – the on could you is it be that's some the you mean, when we drives an from so standpoint investors place, earnings driven go I that more type actually typically quarter-to-quarter change of depending investing because

out a we So very we're to year. backing ongoing the guiding Yes, are that rate going take of on stance that much basis. for to a still an tax

John Glass

back… – changes, just you're that you're without But those that to going saying without

Joe Taylor

From adjusted an earnings perspective.

John Glass

Thank you.

Operator

have we any questions That’s all you. have the Thank Gentlemen, you do closing comments? time today. for

Joe Taylor

Yes.

forward for on and And like Just again, you. good look to second good early everybody, that, talking again we'd quarter. rest with current day, morning. this XXXX, We of the in to joining about thank have a calendar Thank everybody us the week. a

Operator

gentlemen, does call. conference and Ladies you. Thank today's this conclude

your a for phone have at day. lines You you your this time, Thank wonderful participation. may and disconnect

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