EAT - Earnings call transcript Q2 2018 | Brinker International, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Brinker International Q2 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Mika Ware. Ma'am, the floor is yours.

Mika Ware

Thank you, Kate. Good morning, everyone. Vice the Finance International's earnings Fiscal XXXX. Ware, and Investor Second Mika Year to welcome call is President and of Relations Quarter This for Brinker and quarter brinker.com. earlier Results website were the on our second this for morning are available at released Executive President, and Chief Officer; Chief Joe Dallas. in and morning this me here Officer Roberts, Taylor, Financial Wyman join

the strategic the During a more provide underway our Joe second and Company. and quarter will comments our portion Wyman of progress will the at update overview initiatives the of if call, detailed

course, comments, Of Harbor please me remind before statements. forward-looking Safe our let we begin our everyone regarding of

of statements During entirely risk are Company's Private and described Act results Reform and XXXX. discuss press on our could to should Such cause Securities include certain release All from based which in Any of factors actual such uncertainties, facts. risk SEC. those are more with completely the meaning such items anticipated. not statements morning's may the call, historical uncertainties subject forward-looking differ be and Litigation items, management this filings considered which to the the within

and in refer review on management call; that non-GAAP of into uses Company's provide will Additionally financial the the measures certain to insight may we business the believes operations. its ongoing

to will Now, the over I Wyman. call turn

Wyman Roberts

in earnings of new delivered performance share growth as an Good benefit of morning, From the the highlight and as next us, tax our quarter second to per adjusted us business; turnaround earnings taking structure, well steps solid second strategy. for Mika. Thanks, our account our everyone, and joining quarter thanks the Brinker the review $X.XX. into in Chili's was for perspective,

differentiate project the bonus help like back talent language, second as offer who team attract will we introduced performance-based tax program to lot top with and to are impact associate's opportunities the lower a team unique net cost also all passionate delivering reimage excited and invest look incentives degree, business ranging apples-to-apples benefits experience. by great business our When that of and We're on tax our an basis, about Looking brand from interest. no benefits seeing education the and invest all earnings, members at our on the accelerating an leading retaining business, in we driving just during attracting delivery. a will program, most we record members quarter, good Maggiano's dining our while the already an ahead, the earnings offers into which the delivered brand's We saw strong advanced will season improvements in banquets, rate Maggiano a the across we're the our takeout English room, growth X.X%, of way them. of quarter sales new has with and holiday to way. important guest

and we've menu longest faster methods. satisfaction our stronger of are our improving food business, key our right improvements We Chili's turned global meaningful as ticket appreciate and number first And strategy At delivering the we course. decreases East. trans also we've teams headwinds and seeing seen in Middle on sales full guest in positive the and half our in traffic returning the engagements cut the are is by this the strategy see we in move Operation's our back our and and to despite quarter hotter, simpler the to sales continue route direction. to we execution turnaround ongoing times corner and in was turnover

not momentum, the by satisfied. So but we're we're encouraged

consumers value strengthen to reasons and Chili's. bringing we pushing proposition laser focus back As our continue get even also guests higher to our service, quality with back food better to we're on more and overall come harder

top drive we business intensity dining up relevancy we're line. on believe key aspects our forward, of will the and Moving increase

meet Officer. we targeting ability built edge great needs that more infrastructure of And system increase example, marketing will Chief seen positive our power traffic already the promotion category during with to-go have marketing to and half board, marketing to especially of increases delivering with significant the He there of the elevate with often. driven Starting story the will business. potential with we the visit Wade as we've our digital still on Allen online a on second in digital to our the in franchise business. platform team to-go our delivered leverage We upside significant the For connect in into ordering. uniquely recent focus offers cutting momentum A and wide our of growth curve and we to our bear example is Digital differentiate the specific year, now to-go leverage sales quarter and teams to our by and the Chili's app power national further have experience. space their digital with [ph] is leader power guests. We're We compel the here great bring believe recognized Chili's to double-digit at the them space. our digital to of back is by we the and side channels the consumers to-go

to developed we've so lunch like seeing we working value We're attracting know business doing quality simplicity and remodel with atmosphere we've solid enhancements the reasons and today's and knowledge, look approach new past we which this well since that lot great a that our the weekend a lunch every Chili's of We've we're developed multiple build efforts. created model the Maggiano's. the continuing product as implementing daypart. Maggiano's to we party delivers and And leverage the we'll are over We've with And new often. to drive improve of more new guests we're innovation year, for delivers since loyal giving platform a the in own like well aggressively strategic taking and for experience return vendors now target our guests delivery our and been our momentum the deliver with working increasing to now introduction we've We've the that year-over-year third our to of relevant better-meet national food, challenging as last develop We're still the operational our shared what needs of able starting our and users, we marketing this learned we've dayparts older a generated to who started. cash tax new with get right, our dinner dividend just We a year daypart. more menu. changes off-premise our can simplified use to ribs Chili's infusing will as compelling meets to-go, operations our taken core are and Amazon importance for maintaining We're as also some supporting we insurer incremental lunch the to similar guests and model while quarter burgers, to more targets. program menu with most from accelerate into around efficient model purchase develop delivery believe our XX our We pursuing years once preserve fajitas. We hurdles. while recognize in to return a driven the also food can menus guests. of growth

more next that take impact will Chili's. we're better that years. at brand-wide reimage like of experience And now, every QX we're work engaged delivering the on the What in program in and into driving you about insight turn quarter today in the traffic give from we're to starting a second investing three a everyone over is F'XX, you in. results. guest organization excited call the away over restaurant So is to focused I'll I'd Joe? to Joe the

Joe Taylor

everyone. good and to Wyman, morning, Thanks,

update Let annual continue additional providing to impacts. due certain some tax operating our by reform the meaningful of our impacts the overview me aspects of our of those into more insight guidance performance, quarter highlight second and

The second Chili's menu. and food simplified the the implementation quarter marked a on strategy investment turnaround focused of

this per share the couple and aspects earnings our rate strategy, the brand's the by effective legislation. me have would the was compared change quarter the legislation the a our carry-out to recently the efforts their Maggiano's banquet impact In of earnings for of impact, tax tax discussion solid $X.XX, EPS let out in already from other meaningful combined adjusted offerings the due a in adjusted important continuation $X.XX the started $X.XX Factoring legislation, adjustments and for quarter, including rate positive quarter with passed quarter which to second addition, Since tax for last of the related aggressively-promoted of to reported an Both I've tax been to X.X% business. of highlight fiscal performance year. us. legislation change the it improvement more menu an support enhanced approximately

the the statutory a valuation in our $X.X charge First, asset of reduction approximately include of adjusting deferred our to accounts GAAP provision earnings reflect million, the rate.

as you the and decreased effective XX% from statutory to Next know, January rate X. XX% US

and tax XX%, June the blended for basically is at Fiscal half fiscal for Now, as XX%. such payers at XXXX statutory year a Brinker, the half Year our current year rate XX%

the we effective guidance XX%, our between fiscal XX% second note would effectively quarter. is be from expect higher of to year provision As and provision down expense what the that remainder expect the XX.X% rate includes first and to a cashing our we the of of the previous year now benefit ETR for the slightly result, for XX% in quarter a tax I ETR XX%. below this for up

statutory we had XX% year year, from range. our for to the for XX% been been effective new purposes, the rate to benefit rate in able the this entire XX% would have comparative For of

Lastly, of this our increase legislation. the earnings year per a tax share as will result fiscal

year original tax during $X.XX guidance support we benefit $X.XX. team for the and his to of a be This as highlighted are guidance member range remarks. compensation up reflects fiscal change As for $X.XX, to this meaningful from of the programs portion range of new share year such, earnings our range per utilization to our Wyman guidance $X.XX increasing

during me As call, provide some insights this all-time we to performance an an to for let have devoted record time earnings tax reported morning. earnings the the as set likely

of the traffic comp quarter, are traffic X%, based the important from our approximately the at of for positive at by days. the timeframe quarter comp X.X% I for of Sunday at the Maggiano's dinner sales sales those Chili's. trajectory X.X%. by improvement Chili's the negative weather impact in numbers, These Maggiano's the the we and Chili's basis by a and each effectiveness Underlying supported points strategy of X.X% Thursday brand first to those than these quarter at for negative was initial reported more sequential and represent XX in improve on would figures. X%, of sales results with X.X% Brinker change For note driven

indicated Wyman As strategy. earlier, performance initial encouraging is for of Chili's quarter improved the this the

year-over-year improvement. the partially momentum down Wyman quarter shift a our of believe level and pace on resulting build of the by basis points. year. of the the will the XX 'XX. healthcare merit both of The compared and and for increase. and points, for inflation half drivers second from Cost second operating by second as increased the restaurant to mixed with points, the Investment XX basis of the our initiatives aggressively primarily We of offset impact approximately basis and of initial increase the rate XX accruals, managerial were in and investment P&L, of satisfied in an expectations, grow employee restaurant menu margin not in increase our a quarter items year those quarter are labor, resulting core savings wage more bonus our food XX.X% due the when increases of we in-line decreased Further of new points wage rates. However, were described fiscal on was sales market during the principle to the result overall food hourly equities sales XX with basis to

$XX we million $XX free our bringing flow, For the total to year-to-date million. generated to cash quarter,

shares, During the million quarter, diluted repurchased quarter $XX.X we've the weighted ending XXX,XXX shares. with average

planning, Much ending operational notable the the start strategy to Sequential and formulate In to leadership around been for efforts to for training of positive the Chili's alignment very quarter its is sales tirelessly team adjusted conclusion, second to have most refocus the leverage to work are strategy. of Brinker on to quarter X.X%. ratio research, the still the we was the and went believe good strength. is thankful into do but plans The brand Our much brand. start momentum. start, It's attainable. initial and the the many build worked implementation teammates central our growth improvements who have a and turnaround we

back call comments to moderate your turn the Now with our prepared let to me complete, questions. Kate

Operator

Sara from question. coming is today Please then question first Senatore. and your announce Our pose Instructions] [Operator your affiliation

Sara Senatore

trying questions. I just understand. guess I just have is to two One

improvement, gap about to some other the again, the very efficient a in in reducing what thing, versus offsets where or with the you that there was You be you about front? to pleased you that you more about around would little address you that it a impressed it's about question a said you're ability your labor quantify the but talked I metrics how maybe quarter thought pace. talked and maybe but materialized Is much of in Could manage up? satisfied what it then what the wage where remind that? just maybe not on sense done that particular think with comps whether I scheduling terms so just us might perhaps you've those? Thanks. versus you've hours Is ended I'm specific industry? you expenses labor? what margins of Are that the kind tightly. bit can being and have of know mentioned second little and talk you've at inflation. you My more just to have just Could expected about and initiatives seeing around

Joe Taylor

Okay, Sara.

are the a unpack with first Again, the operators go your We'll as start this expenses. We've one; particularly to environment. we're us the of nature themselves. to we the give prior move to restaurant, overall once restaurant that We've and to to tools them that as opportunities. to through effective but with labor handheld Let continue do move help let devices not me going across obviously in for margins present that. their part where labor rules the we look help just us in performances talked of calls expenses. and do to second those things opportunities that of capacity, and back job We very It's lot a continue business of We developed question. that. our that look about in in and of restaurants the at managing can number of maintain through it's forward continue a they helped those

Wyman Roberts

Wyman. Sara, is this

about we it; it the Just encouraged Chili's that that how on seen see strategy. overall the of do is implementation with we change the the we've turnaround are

and central and directional on especially the to forward We those menu and have key movement that food fundamental were more fast quality belief metrics. and in metrics the we've the looking the we that delivering of improving moving consistently was the seen the both hard for business on

and of like but food-based So down part. path around quickly is around much lunch we going strategy example addressed to be much fast our proposition. compelling here. introduction is hard the move more of That's Not more consistent happen the the not more mentioned relatively The we towards making see unexpected, menu needs that We'd Chili's dinner-focused. specifically quarter initial continue to around this metrics moving delivery this the more as more and was traffic just both to and to one probably and improved. and day think

Sara Senatore

so Just was part dinner This of the with in-line you hope? a versus a lag to bit lunch is expectations. of maybe kind was clarify, day what little the would that business

Wyman Roberts

Moreso, yes.

Operator

Thank you.

Our today Slabaugh. coming your question. Please next affiliation, then question Will pose is your announce from

Unidentified Analyst

the traffic new lagging this this quarter? out tells just question, traffic? everyday the part relates saw need the voice. menu second that from lifts you still talk what got the industry bit. given in you little menu getting It's means apologies Especially for the the quarter more and And Stephens, Is us it anybody change about the the Thanks. of then better pour after if and the you a then to you versus the and you value value of can on as you

Joe Taylor

sure Well, I'm I've on tracked not part. your first

Unidentified Analyst

you got just versus sequential of lifts getting in new [Indiscernible] Sure. the terms better menu the your from improvement? industry

Joe Taylor

Yes.

there math and the see and prior the is industry's we roll traffic from think a between do the with where can the to were you I net and out. movement that difference movement incremental an traffic our training perspective, industry

been pre ribs relative that to metric burgers. selling we're the menu. seen to work From implementation they're to burgers but we close we has perspective, noticed where of has and work been have a that the have initiatives value performed we're and the relative us out out. perspective, absolute will recognizing we've gap especially to from categories. an movement Again, the do, guests the the that were definitely we post a put we of continuing burgers, quality lot improvements told yes, menu, roll more key place seen got on to definitely improve So on to done Again, the fajitas, industry, the versus in that

to enhanced. things other more exposed we That's in strategies ways to proposition are menu investments at those continue the and as the and either one -- way We're that. more as of well will promotional pricing the parts gain get So that value of quality guests momentum, believe as back being strategies. looking is

the All still in of that is works.

Specifically, again, really we've addressed. yet that's Again, that about talked day coming. to that has lunch part be

Operator

you. Thank

Our from next question announce today Francfort. your question. pose is and coming your affiliation Gregory Please

Gregory Francfort

questions. Hey, Two guys.

the guys started? savings aspects move was non-productive program business. and and expense restaurant the been is release on still X%? see get impact Can is we of the remind know mean the the guys question And guidance on on that you some does a when And full that Just in the an to on expecting I comps think the you reinvesting us sort just media. are on how get is there? have my flat that's what you up you update and back of trajectory didn't of year do then first the that to you making second I having remove line what

Joe Taylor

your very We and challenge of lift half the to build year the back we first competitive in and market very we're of the relates us. this of obviously question. aware understanding Greg, the the ahead are of to have

We on growing next we we and the question? going sales opportunities, the initiatives the are our traffic year today focused keep the business. growing second and where discussed as the focus move through build And for that to we're to that's

Gregory Francfort

the line on you're how expense restaurant the was It and and of removing that, much just it, non-productive saving the on that? timing from media,

Joe Taylor

look remembering range it's -- at in you accrual expensing have Roughly basis when advertising. quarter system based an for for the point XX the accrual we

Operator

Thank you.

Jeffrey Please question. your pose announce today then next is from coming Bernstein. Our affiliation, question your

Jeffrey Bernstein

reinvestment. Calling just fiscal you or is what because doing made talking back earnings a these in increase was and it I way think are from just the was fundamental is if no comp, quantify like talking like the from fourth I Barclays, said X% second plus the hopeful, back unchanged are be offset wondering of assume half in -- Is two $X.X purely labor you're assuming that. is in there to terms the remaining, the about but in those $X.X with maybe the that about $X.X questions; split the between seems fundamental the one, the that $X.XX you're I'm guidance we was which third there was reinvestment if guidance. 'XX achieve that? quarter, any to tax. increase significant It evenly and I'm I to midpoint comp presume unchanged, the tax. benefit could to the that the are flat then you But components the guessing purely I'm half think components -- +X%

Joe Taylor

and think of past will half end yes, the been Jeff, that is obviously and year in go the you on-pace equation I second timing. it's forward place the of the since reform, timing I the designed as tax the December, with since you're you're think at of take the piece reinvestment applicable referencing, the

Jeffrey Bernstein

provide Got is bit portion to said be then maybe think program. start saving just three-year forward color it. remodels And good tax going of I -- a a that on would more remodel you can this aggressive little your the you

whether course wondering the going any -- so already, franchise buy-in would color you had number are, just remodels not great. I'm you template So you on said be what the maybe be or think the the whatever Any of have insight for good sale doing? of that expectations, I they're units a to

Wyman Roberts

'XX, on on the With we're to in but seen I in program the tax probably Chili's keep just moving structure year. if to changing a keep a standpoint and and way. you relevant now back reinvesting it's and not been permitting are not we'll really dramatic until got the We've we're up as made. the getting in you we're the now them start going engaged ability much and regard see will, program. color excited quarter investments building actually a don't this remodel here XX-XX ready, our it's that the from brand returns The how won't keeping it to totally when over models, a you're savings significant out, stay re-image and so for We to to won't date, returns because competitive. almost finished a asking been change of New look, first right give amount, flow the about the a franchisees about area that's much, aware the that It's forward. you we're as we'll the England we we've working excited seeing the we've we're as than cash of invest, program we've of much capital start good we restaurants

out out roll the them. mapped for We yet haven't

Joe Taylor

But when I underlying the there go-forward allocation does remain some the incremental consistent one, we tax it from Jeff, as coming capital obviously with obviously a get would I know cash our progress process capital the thought the does fiscal our rollout and equation allow and to let the you to thought programs into think is question, expenditure provide of of fairly which there. for benefit is we'll things one piece is for we it's which probably what your guidance that. process 'XX do deal

to this budgets. program, it's year, year Wyman remember, when the re-image this get into program Roughly your R&M that million, you Typically the program to that have some that mentioned $XX CapEx the associated but of are dollars with our England in support there primarily New also restaurants. from equation. already side You re-image

CapEx, of spend thinking you're if amount we our a think forward, re-image meaningful savings are addition in cash support that of already to I equation. there from some this about the as that budgets CapEx move tax today dollars in the side will of

Operator

Thank you.

Our next pose announce Holthouse. today is question Karen your affiliation, coming question. then your Please from

Unidentified Analyst

actually on for This is Jared Karen with Goldman Sachs.

Just about time a The push some And the spending of bar around ballpark year. remodels? about how the you guys done question on fair have average your again. push? the million a the $XXX remodels that remodel to that last next does Is fit year meant into testing a CapEx over three think

Joe Taylor

don't forward to in specifics morning. CapEx. Again, I Jared, into to go want get good as

by CapEx is You're to the and going program, line be levels do shift and would form. incremental amount those the your buckets those meaningful getting to but anticipate from not some way, that of of out tax levels. of we shape accurate do supported think spend view prior ability in any the CapEx assessment of dollars the again indicated, as in spending or a we We around spend current I we

Unidentified Analyst

just could I bit switch little If gears a then.

to and Could of think talking how much go. bit remind kind has online bit and your spending Maybe a us online? double-digit the frame You little How higher? compares for increase that little heeling what ordering a mix your current of in a that guys is you us about? migrated to-go peers been has to mentioned you what

Joe Taylor

improvement mix of the stand that off application side in a mix lot the from Again, we of XX% to ordering start total mobile from. I from into total the running relatively standpoint, pushing business, we're put positive pushing the towards We making had think XX% been on feeling and a double gains a range, equation. driven digit of we're that increases good base in place. to-go a of up the is We've that high piece

and -- positive other not than we're it's growing larger peers base some as as growth but a some -- that that a off I think large doing. we're good peers it's

Wyman Roberts

we think marketing at aggressive key a there, And take priority haven't yet. the our Chili's. on will franchisees support more and getting advertising of behind things this; they're to-go I easy order again, and we put Jared, is is to been awareness system this a of about national the lot that one to and just now Getting put start it has up how our behind

Operator

Thank you.

Our today is Chris then your question. next question from your announce coming Please O'Cull. pose affiliation,

Chris O'Cull

Thanks, drove the Joe, basis savings what improvement morning, the can guys. advertising, balance XX detail Stiefel. on and Good points of some more year? you and on year-over-year to you improvement, a line but provide then expect mentioned you similar remaining the that do

Joe Taylor

run of maintaining the management accounts across through It's some of that we of different doing, the spend, that most R&M meaningful anticipate really consistent things There's year. is the itself restaurant things. moved one spends, teams advertising those IT margin nature. it would things that actually side across and number restaurant the of our that The has equation, when the rest expense. to one does a number advertising, of run and Again, I referred the are that job

Chris O'Cull

on percentage Because you lapping? some there year, saw last pretty Are half unusual line? you comp, you're on comparisons of that any increases that back the but lapping may think as the anything big due I have sales, to been unusual a is which

Joe Taylor

There's probably was right, nothing deleverage the year. really issue unusual the more meaningful and last impact you're

Chris O'Cull

growth be the do expect but of the last if this, quarters average I to then remaining check year? missed what the I And one. apologize one you

Wyman Roberts

Chris, pricing talk our We'll about, strategy. just is

for So we definitely know various for that last year was years one aggressive of reasons. the pricing us most

the our what we've been more our the a pricing happen just in to the momentum getting But and-a-half back. more as on get on than that in also that one from in now. the think last we that a keeping another that's traffic aggressive increase is focused obviously are going check pricing can range, past and lapping one standpoint, We to range. do pricing we to pricing tighter check. impact we from that percent biggest That's perspective, key XX, getting the and-a-half mixed driver so Promotionally

Operator

Thank you.

pose Our from Please next announce then is coming Derrington. today your Robert question affiliation, question. your

Robert Derrington

may Yes, questions, of Telsey sales at as there some cannibalizing try A sales traffic may. I thank have or which the check risk that risk think your or have tested? you Advisory. higher efforts about a day you a dinner during increased part, week there you, and average? and that Is Wyman, if you couple drive time is lunch to be

Wyman Roberts

on At price menu. points Chili's the lot is Bob, the being don't of check difference sold about it's The not where alcohol dinner. component beverage on worry a beauty biggest lunch is The difference between the No, a the that. in we and frankly dramatic. probably dinner -- more the that great obviously menu well, are question. base at

We the to that and people lunch dinner and lunch also and closer in restaurant to a have makes know tends dinner their sense have work restaurant is their to be they restaurant a world. most all home which closer their the

things casual how forward. around dining. those proposition speed, insight the really consumers about got those seeing lunch not part and appear business. as is of excited the the we're a nicely. some issues the We've We've lunch you're to So We're and What they are the grown I macro trading -- think critical kind all out business lot it into might bringing in value of on addressing consistency, easily using as demographic occasions in obviously are we're we're surface. what

Robert Derrington

on question Joe, tax And you. the thank rate. Okay,

rate talks roughly still lower the it Within rate XX%; years release, the know, tip to statutory credits you reasonable into that wage expect being be that range? subsequent should effective [ph] will that is federal more you that getting XX% FICO some about it

Joe Taylor

if as had the blended the we tax credit. that XX% of would utilize the is to year major obviously, indicated fiscal XX% tax script statutory in in tip XX%, expenditures effective one that rate year rate. have that at for opposed I driven, been entire of the have to FICO my we lot we this XX% the A Yes.

Robert Derrington

rate for probably within more that projections in out forward the it's vicinity year? a going reasonable So that we use our

Joe Taylor

understand guidance, I providing that that with Yes. Obviously would utilization.

Operator

Thank you.

question. then Please announce affiliation, question Our next John is coming from your your Glass. today pose

John Glass

have a just ups. few I Stanley. Morgan it's you, follow Thank

First, CapEx more fact will the are or The make? within question in what just did as of likely and What's reinvestment, on P&L the reinvestment think that contained of this reinvestments the to nature you the quantify be in the do you're you one-time? that reinvestment year wages. ongoing those

Joe Taylor

Hi, John.

can we're I it's objectives the the incentive in think restaurant initiatives this the in and and reinvestment [indiscernible] see that in component of range program the math that of you operators could you XX% do towards so at year. focused on. The that terms biggest

that's So as ongoing. which a about education more talked then that again, we've and program the is well,

a it's of little bit So both.

incentive as then of more program. education annual this or and we're we the to to the is And or that and it next change program continue Some year it program. whether decide we'll modify we year committed in not incentive obviously

gives the mixed, it's part, flexibility next us most the For over some year.

John Glass

be lower just the this Yes. mix will new drive And quarters. quarter on average? Is on even then question a lower a of you're mixed. answer. mixed at was a so Or if that the clear promotional The wasn't to anomaly? than It and just because traffic menu mixed is it's activity an the that's lower your prior trying in that function

Joe Taylor

it I at don't look anomaly. as an

I combination there's be moving a more Again, we that promotional scenario forward. utilize will the activity think of as go forward. we'll than normal and menu it

John Glass

the less is on Or half rated half? first there that back change plan the Okay. efficiency the a Chili's greater front, new the And a there versus to you in in then on that advertising you and menu? menu? just of advertising was rate advertising was amount do But spending new on finally gained. there some the advertising in the second The emphasize products noted half

Joe Taylor

be about opposed that straight is want about account is we saving cash lines I the we on year how advertising that the actual the throughout nature of accrual for advertising the use what clear to to P&L. costs basis an based talk accrual basically spend. the are John, on as We

three the quarters and we've forward. plan calls the in that for savings and in that we'll at year with incremental place talked remains quarter previous I think was first spend the in back continue designed our spend under that a campaign

Wyman Roberts

say comparable back challenging on John, levels, really mix. a but most really medium half, ourselves I thing which we is perspective, from in important are would are marketing weight the the the

working it into How taking a the efficient dollars. could to in Things effective marketing are we're place have that as digital? testing trying you play up and that can put most been changes and the does out we put and marketing come to different approaches much traditional spend plan hard with? deliver really lot broadcast you of the how much all we TV, With how How social? can into

Operator

you. Thank

Jeff is pose your Farmer. question Mr. question. today line coming is announce affiliation, from Farmer, Please then next your your live. Our

Wyman Roberts

Jeff. We lost

Operator

affiliation, your next pose today announce from coming then your Anderson. Our question Stephen question. Please is

Stephen Anderson

would tracking Group. Yes, I an in it dining's. if the of what out Texas now outperformer, noticed, I've couple some indicators. the see was seen parse seen can you to think thing markets of to lag Texas in you relative last where from some the has the I've been of wanted years? rest casual of other energy and One you've Maxim I

Wyman Roberts

the have observation. great was energy actually about a We rebound drag the we of markets. actually we nice some talking any markets where market long. are on Steve, about in call to those Yes, too talked for seeing than the weren't It far

some look I important. better economy, obviously Oklahoma and oil stabilize you restaurants. to with It's just prices rate started overall now of unemployment well it see that and Texas got when think to our That's places playing mix in in lift we're income and the a I you and and So out better numbers. some at think starting like

actually we're now back and to move start into growth to those mode. see So excited stabilize a markets themselves

Stephen Anderson

of taxes, some of you're looking that? potentially And from at of getting proceeds some looking maybe lower at you have your some the discussed also paying debt, with maybe down the

Joe Taylor

in we that's not have looked run. Steve, really the short something at

talked as now. and we're comfortable this opportunities. right look we we'll we've those scenario I call We're on position of different think we've forward the the what number very year tax 'XX. that maintaining leverage a at done about the Obviously with into continues get

list. far that priority I fairly would down view frankly, the So

Operator

Thank you.

Our next question today is coming from Jeff Farmer. Please announce your affiliation, question. then pose your

Jeff Farmer

do I ups. a quick follow of Fargo. have Wells couple

$X.XX and from responding? second You four guys fries, then months. your I'm a these for And surprises? roughly Any offering consumers at how have just been question perspective, curious, just burger think I a looking could now for the even terms for guidance reform thinking impact free cash about guidance your flow for in or that number how us number of any FY or tax 'XX, on in tax reform 'XX, that? have

Wyman Roberts

burgers, Just we menu fajitas $X.XX on in the the introduced moved October December. the back front, but messaging to we in then burger with

$X.XX So the was burgers the to initial reaction great.

the burger changes very the mentioned and in burger changes made response up doing feedback of on overall It's to significantly for made is earlier guest the the on we've our category. number Both us. in we've burgers burgers is call selling. well I've positive, think and preference, category the very to the increasing I the a were response the

Joe Taylor

to end As it flow, tax from are cash perspective benefits the a cash relates towards the there as you some fiscal the of year. move

dependent those the Obviously move we obviously payments. tax as will be of bigger cash when Some make upon more we into of benefit timing, various that the annualized F'XX.

Operator

you. Thank

your your Please from coming pose question. Palmer. affiliation, Our David is next announce then question today

David Palmer

well. A Thanks. Good couple ups quick morning. follow as of

tax that Joe? the the the XXX XXX, The that's Fiscal includes goes evaluation. I to think first which don't $X.XX Correct, deferred earnings thing was the XQ with

Joe Taylor

a number. on That is is earnings the The provided go-forward you're guidance basis. for adjusted $X.XX

David Palmer

XXX second that impact includes quarter the using the So, of for tax and deferred to the rebound? XXX is $X.XX

Joe Taylor

also year tax that that also. provided, we basis, Correct. netting the it's it's And utilizing rate for go-forward on and the the reinvestment effective had XX% guidance the a indicated obviously we discussion we've

David Palmer

And it. business. on the then up, the just follow basic Got

competitors core squint your point and make make more the of by you your maybe and that feels then ways trend did they're through that message traffic but I and some had improvement of customer on in fajitas. sparking quarter price like you the but dramatic two message phases value value in satisfaction race, term burgers, can the impactful, more can there it more scores trend not were you in long and terms about tweaks a more change? improvement running it things, in the see and some your their that dramatic sharp you're to -- to [indiscernible] numbers the through are know thinking you're other You the and some the

Wyman Roberts

promoting offer. David, there amazing, are terms pretty with some the out that and the discount in are some of just competitors magnitude offers of are more there that aggressively actually, the

folks things promotions a approach especially we sustainable that, through traffic limited offers is that consistent restaurant going P&L driving that kind shorter around That's some can offers, And and we we of drive first-hand. of brand There difference. those to the sits. some and help those that at quality back sustainable while we continue value we're some all marketing are look and business company-owned value time sustainable may in efforts but environment, foods tactics the build be will don't think with do that way, Our where out very term do to the and to Chili's with and is think really things a to there those strategically in other way impact execution. better probably aggressive and sales see at

we're what and very aware sustainable what's So isn't.

Operator

you. Thank

coming Please your your from pose Andrew question affiliation, question. next Strelzik. is announce today Our then

Andrew Strelzik

the me: what hit and understand are still I want morning. to step guidance. BMO. that just you're first well to year? Hi, previously half expecting the is that Two good Obviously tracking just you on in the range for questions of the G&A going confirm, that. up you're driving below back provided

days Thursday year. the in front from that on terms Thank provide understand can frequent question, in perspective kind of going Sunday on the and what's a how mentioned, can week? customers and much. color of of menu And any customers, You're those the you that traffic frequent is you half using you very they're customers, the second the delta of there that better of my we the to types anything

Joe Taylor

news relates that year. new be that incentive of all; to I principal targets it of and compensation, meaningful From really These decrease the think perspective, year-over-year compensation a was would there differences levels. is to no good the related morning there. there that for will as last be accrued the the and first related Andrew, to G&A, one

Wyman Roberts

more really of it at just we're the Andrew, aligns with new Thursday more regard strength through the up Chili's, seeing And right. again, menu the then, Sunday, was dinner-oriented, with introduction to

-- dinner-oriented burgers So on burgers that margaritas was fajitas, the were and messaging a ribs, and the between the the fajitas message. all and we focused and primarily

menu guest mix. lunch-specific day big around our it at a shift now pivoting parts type the messaging major the user in of fairly really different. well, and see guests or strategy. to specific but the That lunch again, we was both are component no same There's Although wasn't

Operator

you. Thank

Our next up follow O'Cull. is question today a Chris from

is line live. Your

Chris O'Cull

growth be the there about the not greater why sales the Thank that trying in first anything that earnings to understand rate. just that be of given we the in tax you. half, lower the trend to thinking Is than the be Joe, need year terms I'm of cause not back to improving? would half would

Joe Taylor

I I what to we've plan that, think our basis to impact about is incrementally continue which sales talked think grow again, earnings. was in ongoing to it that as relates to that will have an

side into of expenses. One just play. second are I half, equation. You mentioned do through Chris, that as have have the some you relates the lapses the that of to impact some expense There that move lapse kind incentive come an was the do

Operator

Thank you.

for from Please Joshua Long. pose then your is final question coming question. affiliation, today your announce Our

Joshua Long

curious than Great, historical the getting higher those Jaffray. that's reached question and if see talked if to Piper more back of something Wyman. past number one levels on was more percent, XXXX. My moving was of pricing year or in that's that's back down front, a thank It's run of that pricing, we I this you When rate you. and-a-half you about so that something some

Wyman Roberts

where over things to little we the think X% to a back and-a-half we address last number consumer moving bit really to Yes, hit standpoint. be always traditionally is target. sweet that the year, have strategically have place of range. our a of the and to in spot that best We're from in that we one is some the has been X% specific historic Really, because

Joshua Long

putting invested think And in and Understood. we about learning ready sort in put get there? other support? them around more about being those in been marketing trying to-go Any up investments environment and to systems using the that marketing and them we investments the should with start to Or then as as about the that real now that's that be they've you've of before some in about the been you it. of in needs think really to mentioned you platform, place

Joe Taylor

in to infrastructure us continuing invest regard We're our now. back structural to nothing holding digital with that's But marketing.

it's forward. kind incrementally just Now of finding move to ways

look the for this that we aligned, marketing now So have can new we start we the continue be of will can the -- franchise organization really to and we can provide aggressively because guest the a is little leader strength how especially [indiscernible]. already capabilities bit that of capabilities more a think and we more is we leverage area this our and differentiated in value to

Operator

Thank you.

We have in no further questions at the queue this time.

Joe Taylor

morning. thank everybody, joining this for Well, us you,

Thank talking next May all day. good and you we We earnings on call so for a to have our forward are X, then, look you. scheduled to

Operator

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

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

Brinker International (EAT) 30 Jan 182018 Q2 Earnings call transcript