EAT - Earnings call transcript Q3 2018 | Brinker International, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to the Brinker International Q3 earnings call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation. 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, Paul. everyone. morning, Good Ware, and Mika International's of and Finance quarter This to Vice the Relations welcome year Brinker earnings Investor fiscal is XXXX. President call third for third at brinker.com. morning the Results earlier were on website available this for our and quarter are released me Executive join this Roberts, Financial Chief Joe Chief Dallas. and Officer Wyman morning and in President; Taylor, Officer, here

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

course please Of regarding let remind everyone before statements. harbor safe me beginning our comments, of forward-looking our

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

its Additionally, believes of that, on we to in refer non the financial will turn ongoing I the now to measures into uses Roberts. management business over may GAAP and the insight Wyman will that With provide certain company's call, review operations. call the

Wyman T. Roberts

basis a for which us improved build minus review a third to delivered challenging despite joining thanks with the third and and ahead. everyone, impact. XX momentum our had sales on to quarter morning, in our in winter, of negative results Good plans Mika. the X.X% point Thanks, performance comp Brinker quarter quarters

and growth to hold slightly strong. have and Box. sales We below were been weather, of saw Black And our quarter a for to both sequential the positive. third though sales continues trajectory the adjusting quarter quarter business would quarter throughout So

to on are and traffic Our the understand strategies done, close the importance traffic positive reversing move plans the outperformed significantly first, our of designed gap, we've built traffic. results trends, to, then which category. We and

First putting strategy quarter place. in was the about

the to Second momentum in significant And quarter was with about quarter, in implementation. changes see traffic. we third started

an was catering building business about it expand Coast, impressive connect remainder of business by our the individual presence We're all drive Maggiano's touch weather with see positive also banquet significant business. comp food quarter, Chili's deliver first sales forward, more to another our we even strong especially off-premise our working and double-digit innovation enhancing relevance increases you appealing and out. have spend Maggiano's X.X%. maximizing And to needs. we traffic. when global time and our already and East their takeout given increase And moving our since opportunity driven to on their the is on take so the primarily new on corner, on sales to had our with in to delivered and to quarter up and menu will adjust delivery guests heavy then delivery. ability our add I our for We're around the it's Now, by on Maggiano's progress business we'll brand. the they

to We're negotiations Chili's will fiscal with and we across combined partners additional to that enjoy Asia. strong region. restaurants We're have Latin more Middle as strong XXXX do Already X.X%. than impacting Our what more net We factors year, a pleased excited comps challenged China, this for region. continue expand our the had and the negative our economic positive regions Shanghai are partner globally. dramatic opened we're first partners cover further announce comps, territory China. quarter global will with our to in of bring the the partners whose XX while partners footprint America cover about business in Pacific in given East The in demand was brand more

momentum dayparts consistent the second and to U.S., value across and and strengthen we're a work off. sustainable our we We're because improvements overall our to made are believe QX experience. perception. atmosphere of paying faster, turnaround strategy. convenient consistency this investments the in quarter improved seeing Chili's Here is And into our marked sales menu, the done we've quality, foundational it's the both value We've traffic providing more and increase clear we've and

last All would a our impact value of perception the value aggressive I on this that mentioned competitive a perception environment. strong of Chili's. more critical we get this very positive is And lunch. call is during having in at

went we dinner. and Then driving points with X about traffic. air percentage remind we lunch of $XX drove quarter, Lunch we third to offering and promotion, several up in our that is improvement followed lunch traffic our people for During which at on Combo

during in compelling contributing XX% increased what's upwards a our seeing more We're and users across We XX% company often model growth climb, added to alcohol among out they curbside to Chili's. have the of and at our also market great more quarter the to and program, us new every well. new $X overall month, to sales. with increased of frequency users growing with our as Margarita total sales efficient more has and innovation rolled which see and restaurants, to continues industry. the guest, ordering heavy and light more opportunity one Go grew than easiest And we our traffic experience franchise Online business is the experiences for back To a as and platform of creating consistent come both takeout online ordering for

we guests program. to to Rewards opportunity lean to the My quarter, into Plenti connect about Finally reignite the We're Chili's and ability exited in during space. excited digital the our the further with

guests database that experience our additional and further focus drive line. with the digital we'll from top our mediums growing incrementality. some making can build to forward, enhance to shifting And traditional already on resources customer drive we're our Moving guest we marketing of large by relationships more investments so

consumers First, tremendous on value convenience. place clearly a

So, improving away processes to the make on the experience. new off-premise easier number we're increasing who operational team the restaurant. the and and work resources to of hot, focused more enjoy devoting Chili's fast technology on want it food solutions infrastructure, for guests operator We've even a Chili's from to for assembled

Next, margaritas. around we're continuing ribs, do to invest and quality in food we menu best; fajitas what innovation, and target burgers,

goal working on maintain XXX restaurants as XXXX. core away business. simplicity strategy consistency. improve entire behind our take speed We fiscal for reimaging across as our is have to consistency us, roughly we exciting during momentum. And sustain improved you like What to today we atmosphere. back I'd preserve a we'll and work construction designed and quality, in We're started fleet We with our confident us is frequency winter well new recipes to of operations get with value increase this coming soon investing in can so well our finally to our that our can up

about that in opportunities We we're teams investments by excited engaged are continued the are ahead. in energized work and the

into turn give over will I Now, quarter's insight the to call third to you Joe? results. Joe more

Joe Taylor

everyone. good Wyman, and Thanks, morning, Hey.

questions. by, and our continue as overview me the to your earlier of then brief get some today, to comments Let third reported first, quarter performance providing can numbers we the

to in we year-over-year more represented weeks the saw that around momentum offerings this the drove that Wyman quarter. come as equities as we building our indicated unfolded, on fruition We move reached opportunity strategy earlier, ended second for as core traffic to quarter. As positive the quarter implemented improvements developed aggressively levels the the

the meaningful quarter reduction comp value last small the comp aggressive as third revenues X.X% the a million sales more a for slight represents comp with quarter check. improvement year of revenues of $XXX in opposed over growth improvement third growth. to traffic activity Our than quarter, as other reported franchise sales promotional offsetting Brinker and sequential sales drove more with minus in

a to necessary the running price we'd of the contributed quarterly X%-plus several from brand for while reported the the sales Maggiano's drop comp levels minus X.X% positive for X.X%, For Chili's of been X.X%. comp only At quarter the reported quarter, quarters. sales, sales last level, comp

comp trajectory sales now positive comp our will for comp minus range year be performance took reach in XXXX the While in the forward our guidance our X%. not sales earlier of quarterly will growth provided We we of growth, towards improvement the fiscal sales annual pace the step X.X% minus another believe of year. in we to

as margin result restaurant For increases XX.X%. successful as the year-over-year expenses. for activity in margin operating operating we quarter of investments of approximately of well a reported labor-related quarter, in The our is the reduction basis points promotional in XX

traffic restaurant points. Let that and me our X% which basis quality labor and the XX points by in remained effective Restaurant experience for stead. of detail. higher burgers, P&L XX.X% range. a March. income our ongoing savings in property-related a tax and from flows offset million driving started earnings claims Planned we the XX slight prior for we basis operations provide X Cost to added from quarter more share above the insurance The sales year. into of in for basis or improvement the of our our fajitas, during adjusted quarter successful early continued Cash of favorable $XX.X were X% promotion by reduced $XX abundance device rate were a supported by as points increased results of that invested and through XX little resulted ribs expenses wage market-driven quarter good as than components rate tabletop increases Restaurant $X.XX, costs. pressures net experienced to in costs performance the per from third in more Plenti in program the increased

quarter shares For allowed worth purchase for capital program. cash after the allocation part of capital This us quarter, the as of of of $XX flow $XX million expenditures during $XX million to ongoing we generated accounting our free million.

structure, agreement. our that to under As mid-May refinance we revolving the it capital credit matures bond our relates existing in will issuance

continue we continue are grow traffic they our of let's lines manage capital brands, Additionally, rate, support potentially resulting flow ongoing summary, believe allow owned sustainable we And strategy grow a of the as forward. capital momentum as of up to the focused experience into to shareholders. an us capital transactions, and benefits transactions quarter the assets. open and overall current business lower established, food guest share capture of revolver use cash In questions. Paul, move effective opportunity with our With that, the various the ability initiatives or return include improved the to the to as overall restaurant proceeds brands pleased to borrowings, our Such improving of the we operations, a direction for year, enhanced in positive, final review to demonstrating our with we're in and strategic allow would the sale-leaseback will manner. to operations the again including to tax of

Operator

question your from Jeffrey, first Please announce pose and your coming the Jeffrey question. is is And affiliation Bernstein. your live. line

Jeffrey Bernstein

Great. I made from terms Thank I'm granularity like you sounds you. Calling you mentioned Joe, about Barclays. any just you're real that potential guess, I you on in give transactions questions. the just just reviewing, One, estate. sale-leasebacks. can if focusing capital guess, the on greater of, wondering you're comment Two the

So, the sites the higher many So, can maybe that rent presumably in potential any initially being about, talking offset we're of how estate potential give paying? the the proceeds, real transaction. color be terms you you'd

Joe Taylor

is we restaurants. not specific obviously, estate What looking this at we keep appraised since have We'll have time. have XXX go lot approximately that said potentially you, in as a Jeff, of color of anything don't we assets we're there's the before owned additional report real regard through review. we to transactions,

if would obviously, we if the expect would transactions, included do one. to of I you a all in at Now, be not transaction look those

we'll you So, it'd be lower review progresses. But the as that. keep updated somewhat than

Jeffrey Bernstein

the to able Got industry on And Chili's, on thoughts seen both to just yourselves but does wondering you. narrowing recently. things is and drivers the Thank seemingly or think that trends, whether you versus you I'm that Wyman, specific for talk some most Chili's the sure if the you seem is uptick of just you comp industry trend? has want the could whether I'm that or an have gap like to think doing the industry talk you're it provide driven industry you. then what specifically not broader about

Wyman T. Roberts

Hey, Yeah. Jeff.

been standpoint, concepts, tough appear especially does you a it with to industry when obviously, pricing strengthening, their promotional with lunch of then an It quarter. the Chili's Northeast. your on that mean and that relatively I from strength that's messaging relative given items. is pretty for the the good. I Chili's direct past started bodes their capture, some play the been of brands and to by, was is past greater to think that momentum encouraging, out got encouraging the in strategies, a there slow and putting both again some the bit from offering sales, its that, got through a out been the of regard very brand independents, delete the to we start both some really the seen bigger with of And once through we that gets the especially some team we've encouraged to size. of the has the work process leverage pressure winter, marketing And we've higher that was think hurdles. a as for of averages, we've little after scale With like changes then cleared trajectory some out time again for its and there. get have to prior scale programs more takes momentum, XX% get and menu that years of their able And to holidays, we're the some their trajectory and we which see to starting well big that smaller I Making a so

see, traffic beat traffic-based gap As driving the third in And really is strategy. we it's momentum quarter out. and you can as a a move the wider

them that focus been is across and we're experience markets. into restaurant letting the much seeing getting all improvements have our that So, pretty made the people the and

Jeffrey Bernstein

Thank Great. very much. you

Wyman T. Roberts

Jeff. Thanks. right, All

Operator

and Please question. Sara, Thank pose your from next Senatore. live. you. is And your coming line affiliation question announce the is Sara your

Sara Harkavy Senatore

Thank Bernstein. the quarter. this you're just positive sure kind wanted But caught I to I clarify that. full running low-single-digit year if wasn't guidance you. Hi. implies I of comps

was, than expected, the have more have there food about you look that X So, can your price Because certainly on that might two of was just of you question compression component talk this? if margins, menu. one. value question And at then, point I I given was the

anticipate on of goods of price, point we should sorry, I'm kind extent kind that you this inflation. If pressure net kind should what kind looks it of net, – I it, X into to So, continue? X% cost but of of back of had still XXX like

like? between what tradeoff margin trying just line Thanks. understand I'm So, top to the look and will

Joe Taylor

with invest have the one And the are question, as will activity, you this the Joe. that's yes, To and as stated apparent quarterly would part but and then fairly $XX, to see to come And obviously, we that. look guidance, food. we fruition, of for current starting the Sara, of quarter. is you of moves business made, don't area. the through the promotional within quality abundance sales that the that such stated is cost you both calls improving question, your first to as on do we've X at that of for margins, does think relates when in accurate place implications and implications you're I margin then, we've it what this the And prior I think see

we consistent So, you of of the level year. have relatively be the move I kind this rest as through will seen think

Sara Harkavy Senatore

very you much. Thank Great.

Operator

question live. Thank affiliation Palmer. announce David you. And is the your coming David, question. Please is next your your and pose from line

David Palmer

widen what Thanks, narrowing first between future were and comp on the that in stores quarter? that and that RBC. in in you to you touch factors Do gap Could in quarter? the we last that company see the saw the franchise caused store that sales stores the that

Wyman T. Roberts

biggest Hey, just combination things, was weather. of David. It Wyman. a the being

weather and a And the partners there in through weather Our then middle to bit again, Texas, challenging where moved also that Florida, strategy. and a pretty more They the them. much are our a middle didn't quite the marketing the all was significantly bit company country same they of restaurants sit relative Northeast. franchise into of little the to of – run exact California, lot working are, was necessarily the

seeing year. gap. of that it was the the of as move a we there confident We're quarter will through rest So, now But difference move and the actually we're there. closing bit that we're throughout think closer significantly little as be I gap we that close a

Joe Taylor

the quarter into kind too, of color the too, I add, the territory Hey and a is that their with give performance thing throughout David, the very similar was strengthening that trajectory just positive you little that, the as ours, of to to up. to one business would wrapped and quarter move

David Palmer

fiscal be? Awesome. And perhaps with regard into retouch-type then or I you've now not at getting a and of about getting done. some programs any drag, XXXX, How least And positive type to reimaging, but that's were? could something royalty we're you've view that back you royalty, fits comments we talked meaningful should about that. or to net the on a being royalty reimaging. How also, Thanks. starts perhaps where with versus you've had boost, a know

Joe Taylor

will take shortly as reimaging view But into for opportunity the will in restaurants on will to question. approximately I reimage with we some be approximately your David. it and Thanks, program. moving kicking comments reimage have in the Wyman as a is It mid-XXXs XXXX. the second very targeted that start off we meaningful XXX do

it kind we'll actually as As that you lift of a we program. move quarters. have testing future kind of in keep you we we And that would to throughout gone program. of expectations XXXX we of for program, our mid-single-digit into more updated have insights performance you kicks and provide kind that that decent updated is see And expectation gear that from we've as some through

Wyman T. Roberts

David, And to loyalty. with then regard

assess opportunity want of going where we program Plenti away, the with do next. So go that have to kind we to

points-based decided we've to the program We the not And was get while program. My Chili's it Rewards a past, into have program. in points-based a

the that the understand the skill we we infrastructure built, and partners the technological with to with focusing compelling that the to just digitally, we that growing have, our with of to individual on, know return create offers can really database. unique that good marketers drive incrementality really we're how and guests we've first, with are So interact of the work We off a guests.

But want already increasing we're as there's convinced a mode, of be going we're So, now we as in focused just and forefront doing future investment our so the that on absolutely large technology. the little is that. bit a marketing well database, in recruitment right to on involved is we and led of of digital by be what of other to that the kind of really we're size are

kind brands excited And we're And are that's it headed others ways so, posed that where the large some help I we're about think could smaller that. things differences seeing of in drive in industry this some we the of of it. and I can't. leverage talk one we're think between those about to I and of that really the maybe is When brands, also

David Palmer

you. Thank

Wyman T. Roberts

Yeah.

Operator

is And and Please from live. Derrington. the coming pose next Robert, your is question your line announce your question. Robert affiliation

Robert Mashall Derrington

of couple and To the business to be program. than Olo, really have that of you Are the I heavily Go you the the your whether you're margins, you. allowing value loyalty some of Telsey program, economies curbside improving refining Advisory. the would Thank otherwise and it's years, Wyman, of some stronger over technology to given store-level propping guess, providing case, invested in with your all of kind up hold consumers? the last

Wyman T. Roberts

definitely feel hospitality making of in where culture about have. and Chili's P&L. the can to to got used losing independently, special to to the Maggiano's that more it efficient past bear that that it line and you without labor, across mean see leverage different help we when think, I items opportunities I people be to us continue and technology use Yeah. But think pressure we've we've come

advantage We traditional pressures and media increased also of a inflationary and in kind marketing offsetting on overcoming to sense. it see on big as the

able more consistently line, unleash see program that's XX% out that marketers which top-line leverage P&L, balance quarter. saw, then, So, this, of our the some segment, I then now from this help rolled that's allows investments saw and marketing curbside and think to and helping way the nationally in to and to the kind do that the of With importantly, that really drive just it, and growth. that's the we those kind you they P&L help and top really perspective. top But to Olo line through the more, best around growth traffic we what

the want way So, primary leverage that's we to technology, Bob.

Robert Mashall Derrington

think take-one it's one to I your trying Basically, started of if system-wide Maggiano's. buy-one, an of program. and program, I'm a figure restaurants on question or local add-on has Quick offering or out not, a

$X catalysts fourth similar that business think you price add-on the one an forward see a as that quarter is get – the is or $X it's of something for I to entrée the second here? – of you move into to

Wyman T. Roberts

delivery remarks, my Bob, about individual in program to our mentioned that excited taking a Maggiano's we're I more at level.

about talking And I so, Nashville... assume you're

Robert Mashall Derrington

Yes.

Wyman T. Roberts

already testing of we're test. those popular of individual broader a where at consumers. looking to now the to of Maggiano's program right is very so a But broaden ways appeal much ideas, we're a ...which base one that's what's and within

Robert Mashall Derrington

great value. from hope It's us. take away a I don't it you

Wyman T. Roberts

it away. I coming and would won't we take say, keep

Joe Taylor

And responding I Nashville it. well would say, to is

Wyman T. Roberts

Yes.

far good. so So

Robert Mashall Derrington

you. thank Okay,

Operator

The coming is your Thank Glass. John John, line pose and question. from you. Please your your question live. is affiliation announce next

John Glass

the business? that from, – is about Chili's your is that to their comp Some – traditional XX% It's in now quarter? pieces, To said of what Wyman, much of Go? whether morning. was Morgan the traditional you a business the Go Good sales. of How in is peers And To it the is from coming Go, talk talking it's it component To business an you about To us online How half of year is does how ago. I was what this growth Go versus Remind the the little it bit more relative growth delivery think can aggregate, that the contribution Thank. business. Stanley. or a piece to comp? are

Wyman T. Roberts

Hey, John.

To things, important the to I'll Obviously, detailed Maggiano's, on business. we So, Go, perspective. and for you both a from specifics. But want Chili's obviously, piece some is too some don't give of get just competitive

wasn't ago, that long XX%, XX%. at were at we So

category, as all and that quite seeing bit to at the across technology, stated, by XX%. close move has which rollout across I that's But been the as and number really than growing we see the growth usage the Go. more new up driven, double-digit of curbside being a To we're So online

seeing be to the month, it somewhere half the for third the of could in the that improvements So, part a we're account – comps. seeing we're the a depending and that of business on growth week in

John Glass

That's very helpful. In...

Wyman T. Roberts

regard At With – delivery business. another to in know With Chili's, that the it. very – bigger part delivery Maggiano's, to John. sorry, almost of still now, delivery a was invested it's regard Obviously, we've the I it's program at small a for where piece. piece decade of a

just And an to expand to leverage delivery Maggiano's way so, do the at bring what and most we as are as our guests. Chili's looking and appropriate for we well financially that, understanding to get viable

Chili's kind that. of And of a of with the well third really people tasked percentage delivery organization as tests there our is smart so, within new evaluating as out small. a there of very group party lot are of But lot with business, as a very, providers a

John Glass

sales on very implied And price? simple a cost to that Joe, what is lowers there us over there will. cash tax step-up just what – any sales-leaseback, versus or as dimensionalize gains was or is of the how basis look the much friction, the And will if be Historically, you versus properties the at you for you actualized to the way it got it then, capital as hump on That's helpful. reform said wasn't that?

Joe Taylor

bigger it lower update to be pertains in first of rates the to part, the you a give obviously friction does the there, to But moving materially the is as second any will your statutory reform drivers the decrease transaction. of that tax level involved really one Can't part question. because

we're at But kind the So stages would the specific in some transaction. as dynamics you still evaluation to of announce. that that nothing how and clearly look again, changed of that of

John Glass

it. Got

Okay. Thank you.

Operator

the question Please farmer. line question. Jeff, from affiliation you. live. is Thank Jeff your And and your pose next announce your coming is

Jeff D. Farmer

that John's sales-leaseback pushing even is me you level why think, an following question, facility to pursue on get from still leverage And Seems elevated X.XXx a Wells Thank to potentially as again you your level. would you. of up to Fargo. it's sale-leaseback. than credit opposed so that X.XXx guys rate level from above, debt just your out would target better with I

again, why So sale-leaseback?

Joe Taylor

And again, clear, comments, I said it exclusive in be so potential my I wasn't to want transaction, to capital sale-leaseback.

options Jeff, opportunity, have of to You variety a you're correct, there. obviously look at the

undergoing the review process that's that now. So, we're right

Jeff D. Farmer

And over has things That's some a quarters? that's you your you your this have perception score value last Sounds then customers helpful. really the popular Okay. of like traffic been one share conversation with morning. trends three value the Can what's been driven better that's for guys?

Wyman T. Roberts

Yeah.

we're seen at how as all have and by kind for They're those. a time value encouraged significant improvement reaching in scores. the levels us the We of the for composition much of we're getting

some of starting And skewing is things I of the how business start pressured be that a that's I kind lunch really at think that is momentum doing to kind continue some having success for right we're we offers presence it. more to and lunch doing daypart pretty daypart. that. means overall the the are lunch your we're category of how the to of business also see us. of one – It's and to lunch right you menus we've that's your think you differences, when promotional look better. And one think category much that base the the so, and well. some We're see again, and Obviously, at move I drive And and of good around do got now focused successful think on we the

we're guests. the across portfolio itself playing proposition in seeing kind So, strength of really growth well is the value and and it of

Jeff D. Farmer

And then, just final question.

the sort statement income What how guidance are is rough same-store You the touched – And EBITDA dealing guys you to the range allowing guidance? on sales piece restaurant-level of with and here. we're of implied margin with it, do guidance EBITDA range able the you reduced know on ranges deliver but that? to I

Joe Taylor

of cash out be improvement as expect obviously, side target anticipate within we trajectory we Yeah. the to business performing go improves, are as are flow equation. the think would But the to the we equation. we I side the to the that I of the are mean, close well see some through and there through ranges, G&A flow rough to the of the of year, again, Jeff. ranges of The rest

Jeff D. Farmer

Okay. Thank you.

Operator

And announce is affiliation next question. your Francfort. Gregory is your line you. Thank the coming Gregory, Please pose from live. and question your

Gregory R. Francfort

Hey.

the in year in Just couple prices that to value, you a a impacts kind the theoretically reduce and when and customer think comes dining going just times back traffic. I some so of delay probably of casual when there's

And so, now Do a of you quarter. pricing there's think that and do in the in is? lowest couple how a had clearly, you think long this lag effect normally years

Wyman T. Roberts

lower aggressive those level to and we we Greg. interesting on fiscal a of kind specifically starting think, I a in it now the trends in pressure more past. impacts than more past really as opposite. think – our traffic. And the aggressively some our that we've Chili's have this And that up momentum fiscal more of the the more late we're that last to way. I a of out pricing through. kind rolling back kind we've kind We've on strategy price and impact impact working pricing, that the kind of third of we're of in way traffic And at impact the the pick get think an the of pricing it Yeah, of or got with year of year lapped of taken that see, pricing and second little quarter, of kind quarter, into I of had aggressive

and it specific we so what about aggressively offers get pretty immediate making understand feel them some I more see happens sure when we kind put the trading we're kind of we we're When but talking maybe because that fairly same understand people about impact, So, can immediate. are we think value out impact obviously they of that of there, we price. the impact

that to visit communicated frequently right sure – implications pretty out up marketers it's And and value are that away. pick get see that put when we we really And so, has a that there proposition broadly quickly. at we margins price that making good

Gregory R. Francfort

Joe, Got for it. question Makes sense. just you. And one then

the that? the thought revolver there? putting any how longer-term about sort for help debt thinking of what terms are deal, of in doing a of And the the terms you was opposed bond guys as on refinancing In process

Joe Taylor

appropriate it point from standpoint, we so about a you a more revolver from at a moves evaluation, developed maturity. the we it's time think of perspective, forward. again evaluate have a that at looking possibilities, then move go kind transaction I that structure we condition to capital the for if market capacity, to Greg, of timing an continue as from maturity, can to, capital from the the really other business And chose easy of at

Gregory R. Francfort

Thank you. Understood.

Operator

your is coming And Holthouse. Karen, question. Please live. you. pose announce next Karen is your Thank the line affiliation from question your and

Karen Holthouse

Goldman Holthouse It's Karen from Sachs.

of side pricing the things. on question Another

Or away the pricing home? basis, sort So, price industry from home you've there? to started to roll a to sort only a being the go-forward from do strategy of, gap with kind year. from back of off Should think increase on you last food sort pricing go the away of to then we from and of of need or full-service one-year think that or food reset can a one-time you maintain

Wyman T. Roberts

think think look I strategy Karen. historically our But somewhere Hey, really range, Wyman. be and have beef historically the range, stated that It's guests a perspective little to in that – for keep you industry that beef I in kind category steak shot prices in plus just price target to general, to to is that I X.X% kind mean manageable of a seems accordingly. with guest of at more the which have where traffic mean absorb. tends where without that or the brands up from But pricing when minus they've Yeah. in kind maintaining aggressive works able dramatically, where you. examples or bit. keeping to I are for strategy maybe been line of be been and your in there trends to the your best

Karen Holthouse

you. Thank right. All

Operator

the pose is line your you. And coming your next Andrew, announce question affiliation Andrew Thank Strelzik. is and live. from question. Please your

Andrew Strelzik

BMO. Thanks.

help So, traffic's the of matching of asked sales gets the Chili's you've been negative, been negative positive through value positive you COG the momentum when already been a can through hoping side back question, comps equation. volume. were that to is that But going if better traffic, sustain and lower flow to me You've comp? my also about to labor think comp and

count need you if will perspective So, look back better? get a to head Just trying labor adding flow-through might from be the what comps to understand the like.

Joe Taylor

Again, and see per to in to back I equation. hours needing se. to it the continue restaurants improve, head as volumes wouldn't business improves, labor added continues as traffic add you could Andrew. view Thanks, into count, back

providing that is good guest very our We of component thinking. model hospitality and labor a focused are experience. on And

frankly, But regard. envision So, see from don't situation, from our that's volumes And thing. some it driving you a of per se, perspective, a labor I count that could hours. head changing increases kind in in good

the do been our going to as We And to on bottom this of the to the and you focused going to still flow through into the we very flow-through continue aspects of to because through making improve are are very we'll strategy the And then manage there are operators and be back margin of very kind opportunities that. to side move need through diligently we've investments But flow be and working business. the flow-through, cognizant process. line. expense control manage improve are the to traffic-driving of

Andrew Strelzik

past there can believe Okay. might next about, of that that fit CapEx you're some And still on to CapEx, next it then, the you clear said, I year, that thinking upward trajectory an outsized increase. still that just kind kind in question, we my fairly be year? see thinking talking wouldn't current remodels the think you've second of But is within been the I or as mid-XXXs

Joe Taylor

been and somewhat, the you outsized key float haven't we've increase. you we to Again, guidance. specific think I very up while a keyword see said provided comment is just the consistent would expect that CapEx

the in it be an making CapEx. be I increase But through to wouldn't will more capital reimage expect We program. outsized investments

Andrew Strelzik

very much. Great. Thank you

Operator

next live. question. from Please your question coming the And your announce is Brian, is is affiliation and you. Thank your Brian live. Vaccaro. Brian, line pose your line

Brian M. Vaccaro

that. about Raymond Sorry James.

few a questions, if Just could. I

weather back had the impact, you of Maggiano's that parse between comp the just Chili's outsized you first, and third impact, out an bps mentioned fiscal So, XX weather Could and that quarter Maggiano's, specifically? impact. to

Wyman T. Roberts

Yes.

of Maggiano's, rebook they I – at Chili's an – usually presence mid number think just is kind the usually the because of because over the and the and Maggiano's kind X.X-ish to of And because the range when weather hits was average impact the go closer impact the event. was Maggiano's they weighting. Yes, of don't but booked, restaurant banquet's really there impact their away. and double

So it soft maybe a having when little a you that lose a back kind bounces of night, typical a or up kind different banquet up in back bit pick restaurant, that – on a a little of Saturday some has Sunday than Saturday you effect rebound back later. of just it

Brian M. Vaccaro

Yes.

I that is you even And of days? the what at taking resetting Okay. the And Thank be end was to that you. Joe, about these the And quarter? ratio thinking Xx X.XX% of That use ratio, I circle covenant, would sense. or which that. just back think on comfortable on potentially leverage your leverage makes ratio context at your potential in proceeds sale-leaseback, lease-adjusted guess I above want the of

Joe Taylor

times to keep I further the to We And – we of comment appraised kind other prior that finished financial leverage. again, similar have. quarter, to we that's make we make other if any of the don't the any quarter, you – Brian, X.X changes philosophies at on have any pretty or really will

Brian M. Vaccaro

fiscal the then to margin updated understand return but that margin got implies in costs fiscal saw should puts Joe, and that decline sort are other Okay. trying there are low-single-digit Is the of positives, in on looks that I'm dynamics We've as takes quarter. to of we year-on-year guidance. to the implied implies fourth And guidance a food by like or comp aware quarter? similar third guidance sort primarily store of what store guidance, you be the your the just

Joe Taylor

consistent be it a combination round similar out activity, of the it the food promotional think as approach will year. the should All ranges fourth in I relates we fourth the be think, quarter. fairly quarter, investment, I as to for

Brian M. Vaccaro

the on check lines. And to to first Do D&A still wanted dollars, then, Okay. three or just quarters. one last that in and me, million you year? for $X the million through G&A I up $X flat from G&A be expect the

Joe Taylor

get the going on compensation run Yeah. G&A through the level. side be programs of equation. would necessarily to our G&A that incentive impacted I for to final calculations not back quite to from those primarily is expect that increased individuals

Brian M. Vaccaro

the the little around or $X was that year. were a it... $X expecting million, in ahead down million bit Okay. down also And is D&A, for what on old million of question $X Is same were guidance to coming you

Joe Taylor

will range. of I think that a little guidance bit come Brian, you're in right, head that

Brian M. Vaccaro

Perfect. you. Thank

Operator

and... Thank Stephen, line you. And next the from Anderson. is Please live. question coming is Stephen announce affiliation your your

Stephen Anderson

morning. Good

what back follow-up. couple Just calling of out kind out quarters, been of a on And markets. on a the was going I had energy has comps? can know there that your to going a comps, I parse recent drag you years, like – actually actually have parse but some a sort the of – it's effect positive

Wyman T. Roberts

Yeah. Steve, Wyman.

strength after them encouraging of to of markets back, that's markets in side, over-weighted way out on Oklahoma, flip years markets. exciting and for of the energy see and with come know talk kind seeing Texas our kind we obviously, the those as having kind said, lead So, the about you and to Chili's those we're across portfolio. That broad-based especially presence seeing are

some markets, and Texas as the seeing performance see country, as some pretty by and as a states. you'd led performance Black those oil markets. Box, oil California in good good So, Texas well primarily, into if Florida to other some and in the Oklahoma Oklahoma, I but were of and you think of really And look

maybe it country. a broader across way pretty the economic its of like is growth and the So, working strengthening, income and of section feels household there's some growth, broad job

Stephen Anderson

gears talk Plenti bit, switch about program. a to wanted the little I

customer of data you I think of retaining thrust Rewards there program, the see not the cost – Chili's first My joined of – I some in-house, of your bringing Chili's part if you well, thrusts you the regaining I was savings. – one taking do bringing Rewards contemplate of flip back that, back My you now part remember the mean on side potential as when back? Do key do in-house? back correctly, those costs And

Wyman T. Roberts

was Well, quality of players right. went that because first, we objective of the involved, reason the program Steve, Plenti on the – the or the with were

You ever well as And involved more really as leverage saving costs. that other powerful really The about on potential with for strong combined create program, reasons, and just in objective the a resonate American the Express, had all and there that of AT&T, for at had didn't would. AT&T just all ExxonMobil we catch and we like American really Express us, about that lot program running marketing wasn't way it more a thought didn't thought had it model of Exxon was to thought. kind us us. it. brands It of Folks

it's been so, side. to kind And put of the

in that. technology we're if we will our mentioned earlier, to it leveraging forward, a than go as committed can our our better direct do as, good think and customer we allow and team still digital As relationship not strategies most. I marketing investments to do we and in as And us

that been but are generation importantly, hasn't got in kind of some been learning good knowledge and learning, come to of strong without investment. agency move marketers, there with has us has team that next partners really more But of a really that we've learned process, some really digital it some So, some helping partnered marketing. there good

Stephen Anderson

you. Thank Okay.

Joe Taylor

costs to And will of expense in the will it that line, components the program, reduced critical there that mail the addresses of that report in we seeing their into of offsetting we're yes, is that Steve, of program. the individuals equation, one cost the comp seen forward. piece acceleration numbers your and the providing piece becoming as and But relates part with be be expenses the that comp of database the loyalty is sign-up restaurant going

able we've So, that key build of And acceleration. of to being one database. that seen that's components the

So...

Stephen Anderson

the jump cost food every When of beverage related that? hit can I free from quantify you how costs? see food free seeing you a much in are you you get you a you or sign-up And mean, salsa. time for program, go

Joe Taylor

equation. we be a provide an going you on And comp forward, the that of it would seeing component the impact not cost number again, really side food we're the of and

Stephen Anderson

you. right. All Thank

Operator

And coming Ivankoe. is question. question your your John, and line pose the John Thank is you. live. your Please announce affiliation from next

John William Ivankoe

package guess, to average for or for reimages model. of you. With that you've focus part I was at us, I that JPMorgan. remodels the XXX those Thank XXXX, in on CapEx an Hi. doing you're identified, least fiscal hoping that

Joe Taylor

have give John, average I to really package don't an you.

I the John. thought – I review the think we're were we down that. in going Oh, a... a sorry, remodels, process of from

John William Ivankoe

want I would answer. to be going were curious for you I was take to whatever you don't answer that it to away that from you.

Joe Taylor

of Sorry, John. ahead out getting you,

package but be some of an $XXX,XXX in a per based of in that's that I looking average will spend. at lesser think restaurant and the between There components them to the number spend criteria, we're will different will $XXX,XXX a be some range, $XXX,XXX on $XXX,XXX John. have that most of reimages, restaurants

John William Ivankoe

could for what see efficient going I mentioned you the going but to lift employers is customer going you it's be, remind the the restaurant customer-facing, if mean more to to sales accomplish? know And be you what the is and I what it? run to going any, to think And us how, is

Wyman T. Roberts

the done bigger be with about, there, we're kind up of two a a today's from over relevant that more bar, which almost the relevant John. more is you the it that we've really of consumers. last last more on a perspective, a really work in but All consumer talking But for in the and worked Hey, just reimage half, is this to puts puts restaurant questions different There's space focus slipped importantly, light. what as the one versions year opens we've in. the brand

years in word. unbelievably I more a of think lack the it design, materials style. contemporary you've Not that's a creates got it's old. strong, forefront today's to just for XX that more And more the contemporary, brand are The better we're energy. it's they're but bringing but a that

it work looking on it people today's remind that for the hey, to a and reimage And rolled which this we're think, also is So, top handhelds, piece coupled and the some that of laid guest you're you've to message for. guest today's of the efficient, do work continue And and technology like continuing anything be to or get while more conveys provide we're to service, to then, potential got providing some And what there can consumer through. we an that. They're provide, that not, the with in this better when to we reimage doesn't investing even that for of restaurants, hospitality, about is to currently we are that's consumers. effective to got out more a with vibrance that that the And experience got ideas looking experience. are that, relevant excited the to that better understand sit we're keep experience in we little hinder quality that food kind the the and obviously, that's different.

So effective. the actually team looking reimage more but itself some to the are we're that at is make more work jobs and customer-facing, there members' also things easier

John William Ivankoe

every just through finally better And through whether Certainly, month, going April, mean obviously, as in end I consumers think that taxes. got lower maybe are paychecks their any I in better excess about less feeling their of And wages separate the in April. question, there's weather, the or a weather then, Great. completely got you're in of whether cash if impact. industry Okay. better it's up again talking that's at trends March, to it's they

feeling the income past, eased from in And regarding that the a benefit kind the cycles Every it of, to dining? casual we restaurant own X, to other is I as the including is maybe relates casual spend money, we've are XX the obviously, grocery, cycle next If consumer's independent move where of including then about you I what as or overall view they statement we are ton industry a your trends macro, There to seen is, even we're pulls for industry different. call, there guess, seeing trends restaurants. the how and improved. dining Sometimes of temporarily fair that mean, the again. sustain and just the months? how trends dictates push branded restaurant these in it's guys and can April throughout XX, economic

Wyman T. Roberts

our we trying economy for of the kind Look, lot we control. don't mentioned. economy of you a of is the predict feel time whole where It's, spend good so about out going. where at the is to today far, John, reasons

the they're for term. think to near I going hold

So, X, have next line would I months. anything of X, sight kind don't we to the of XX why know change that in that

those going brands that these are propels back If feels to all higher for focused in how historic Low So, good. strategies What consumer consistency proposition doing. unemployment, household regardless doesn't on gain to that how we're very on that's to really more in good quality, value, level and do a industry. really value our forward. be that's win. and and the of more to little the a and forward. that's through We economy. consumer focus. for in people workforce, quality, higher way strong we a consistency the good gets economy stronger They're are going a still softer, incomes is some a grow confidence And change focus our getting environment, what the it more moving think that's the how we and really bringing kind we're And is share the of competitive restaurant economy levels,

John William Ivankoe

Okay. Thank you. Understood.

Wyman T. Roberts

Thanks, John.

Operator

your the question. And your pose from your coming is Greg live. next affiliation question line you. and Badishkanian. announce Thank Please is Greg,

Frederick Wightman

for actually Citi. on It's Greg Wightman guys. at Hey, Fred

sounds last been you'd the question that traffic X it that Just bit a quarter, quick on mentioned for benefit of the has also know lunch. a but I was quarter. like this disappointing, $XX

about where daypart like on a be talk basis? versus to just that longer-term you can So, is it where you'd

Wyman T. Roberts

It's there, Fred. getting

call focus of we back traffic some up I team really the driving lunch us. daypart kind was for we – we going – were the that into think the set work to it the last that going to on

people then every for As at what Chili's lot lunch, a And has there challenged that there, it's of more really offering out the for an reminding But daypart day out We message great impactful. especially just hadn't reasons. was with and a week gone from promotional while. industry, specific marketing marketing turning we the in more in on a lunch in the a kind and we've about sit momentum we've were where as of here January and of we to April. significantly reason getting the as business has helped well that seen March the why direct aspects major move where is aspects talked December, some early

Frederick Wightman

Thank Great. you.

Wyman T. Roberts

Yeah.

Operator

announce And Will, your next Thank is from line Will the you. pose coming question. live. Please Slabaugh. your question affiliation your is and

Hugh Gooding

taking morning. question. Hey, And Stephens. on my guys. this this is Thanks for Will Hugh for

going for to see touch to but digital any and any around on we overall business us wanted growing Sorry contributions business. Its just mobile quickly could updates maybe give To I if there. that adoption Go metrics piece, could back and you get the

Joe Taylor

business. hi key driving of component the very and Hugh, To Yeah. it's a Go

ordering very Wyman And on XX%-XX% a indicated, the Go being XX% of that seeing consistent are as think year-over-year delivered kind growth north To exceeding orders basis. push between again range. I consistently of You're the in so mobile XX%, are of rates,

forward. the to is as go an to to it one is To Go we think and increasing So, is and going relates increase continue accelerate it as workforce we business

Hugh Gooding

to of activity? at we it, And of out and promotional tick level from mix just highlights footing of back this higher looking the new just run some to through work That's time protein-driven And expect and Chili's value level would you expect the for can comp, items? figure menu as great. Thanks. Chili's in its at we as more the then kind to works mix

Joe Taylor

that I is right But a a opportunities based given and level. you're in of think What think there's tick. promotional this quarter below possibly now, indicative to things perform this slightly contest, pretty will maybe in any I seeing nature. range range, it on our consistent sequencing, the

Hugh Gooding

Great. Thanks, guys.

Operator

is line question next Please pose your your Joshua Thank is from coming Long. your you. affiliation Joshua, question. and The announce live.

Joshua C. Long

to was My or It's curious to a how – back more encouraging geographic daypart performance That was know of of of you basis? on a been to week on Thank everything and similar how was was trending part the less mentioned of if Great. kind But Jaffray. hear it. curious basis. comp question and you. trends. the going is Well, just lunch was Piper week that It on spread improving. the daypart kind tough improvement a obviously has kind early or I a weekday

Wyman T. Roberts

across early late as and have we well the week week seen Josh, Yeah, lunch dinner. all dayparts improvement as

daypart. still lunch more again, So challenged early broad-based the perspective, an a I absolute business. week think the in from perspective, relative From been is it's that improvement

I of a their lunch well, strength food that, industry it's in know to the a at think some good challenged business. the more again, it said it's of in job do continue crowd. heavier you think a I times casual a dining, and in guys I fast We couple now, daypart, as see especially growing that, obviously, they the as

week those as as well demographic and is the So, few macroeconomic early issues, a bigger lunch reasons for think we challenge. the

Joshua C. Long

some how smaller casting connected Wyman, that terms is makes the from – That chains seeing I more performance a of between of as larger in I sense. clarification. go how appreciate your on to just split of little and color kind and or you're comments, chains you Chili's? more giving curious for little come just had a getting getting not little or not guests as can a incremental that that performance of – that seeing we And you maybe been of that wanted more and bit some a now that back on and if getting coming that earlier early, into to bifurcated if curious of Are in had guests improved your you guests just might kind you're brand where of getting from. been is a Was your little that wider It visit less people be dig bit favor? connected performance your with or roll bit some if but often? lapse, out? had some – core Or set you're you're perhaps they're and net that a guests in in and kind in kind them

Wyman T. Roberts

of them us frequency Josh, users excited get to think – is about back menu encouraging, better is in some lighter stronger the that, seeing we're offerings to what's kind what to with some and hospitality track the in both. of usage, experience with users which our execution restaurant potential increases and into those do We're our users, we Actually, right, we and with got are some heavier and frequently. and back lighter get to more continue seeing

So, we're seeing it in both, our heavy and our light users.

Joshua C. Long

you. Thank Great.

Wyman T. Roberts

All right.

Operator

we you. live. a your coming Robert line from follow-up Derrington. And Thank have is Robert

Robert Mashall Derrington

you Yeah. And your some here. to me maybe Thanks. numbers Joe, of help trying Wyman, I'm out. understand can

fairly numbers, franchise yet lower your company As we unit Are at is about and/or lower those? look new average sales as royalty international other or been think How at franchise stores look overall an we lower annual for on trending the franchise increasingly and that? basis are substantially. revenue, royalties the counts the the the unit the principally do locations on we company's have

Joe Taylor

Bob, take they're No. large royalty second you there. things. of is the in across the income franchise to fairly not, and a part, have mean that revenue component no, they're other the I consistent Remember the board.

You development there. fee in income have

You and fee expenses flow card-related there. through the All banquet gift have incomes income.

revenues, gaming category. different of our takes – is that there lot puts a within there's So, and

royalty given the period I to up or to wanted at any of just So any equation. construe down piece the change

Robert Mashall Derrington

you. Got

Okay. you. Thank I'll follow-up.

Wyman T. Roberts

Okay.

Operator

there the line. Thank from other And you. no questions were

Joe Taylor

August this call. a And you everybody's everybody, appreciate We to our look again we And attendance good to year-end morning. Great. day. conference in with have forward talking

Wyman T. Roberts

Thank you.

Joe Taylor

Thanks.

Operator

gentlemen. and This call. conference today's ladies does you, conclude Thank

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

Brinker International (EAT) 1 May 182018 Q3 Earnings call transcript