EAT - Earnings call transcript Q1 2020 | Brinker International, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Q1 F’ 2020 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, Paul, and good morning, everyone. Welcome to the Earnings Call for Brinker International’s First Quarter of Fiscal Year 2020. call Joe Roberts, Taylor, today’s and Executive on and President; Chief me are Chief Wyman Officer With Financial Officer.

quarter our the are for were this earlier Results morning available on website brinker.com. at released and

and Wyman operating our strategic related and usual make prepared Joe As performance comments initiatives. to first will

We questions. for will call the then open your

harbor it statements. comments, our to beginning forward-looking my job remind regarding everyone Before is of our safe

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

non-GAAP And operations. of that insight the may in call, the management will we course, to on review ongoing the company’s believes business financial into uses provide and measures its of certain refer

And with I that call Wyman. turn over the to said, will

Wyman Roberts

X.X%, year-over-year solid in of Fiscal the good right, for $X.XX. for us. All and adjusted increase sales to revenues for earnings XXXX with Total positive start year. net $XXX line right a a thank X.X%. is were Hey, everyone Brinker, with million joining our off per for you share thanks morning Mika. expectations were quarter of the Comp

quarter comps. were in sixth differentiated of marking execution Chili’s, positive primarily with quarter consecutive sales results driven X.X% of These comp our another by of

New continue and the pleased our into particularly regional we our performance of and lap. across England. in trends into And October. we’re country well with markets Texas performance So drove strong California, the critical We’ve seen we’re these

ended quarter positive the sequential like a both perspective, quarter industry, throughout traffic the GAAP we we the soft drove rest beat. saw seventh consecutive but with than ended relatively category improvements the quarter in and traffic traffic. of sales our September the and a early more were and points fifth basis flat. we consecutive the beat quarter XXX We in traffic, the From during And to sales

to into we that more plenty the on our sale and we’re direct performance deliver we we’re compelling delivery. than laid is momentum operational head two offer you earnings strategy outlined year. to scale, primarily a through execution, ago, to relentless everyday years the the volume to confident to result as value of we for The guests the out nearly our higher best-in-class leverage quarters, digital and and leverage have our growth for today we’ve delivering takeout way to And expertise, our wanted, convenience of the offer deliver focus

to ever and more performing good reveal well operations feel team, made, Best-in-class core focus the pinpoint progress of metrics that operating our aligned and about we’re we’ve our I systems as an set our around again. place. a where we’re take opportunities. as a we better place all even rise room clear metrics path And about forward, high I it’s operations to to time watch guest an the great there’s because feel from good

our ready how our far to bar how time longer can and knows guest all team highs playbook focused own and enough. are good see just the As and satisfaction. operational consistent, win now They’re no raise remains they to take their

with ability while quality our also keep deliver flavor to on to food our global maintaining new operations our bar We’re the raising simple. profiles commitment

improved new just we example, rolled product. chicken a out For

Chicky crispy items all that chicken awesome Chicky And feature new chicken to pounding that hand-breading now which an a higher sandwich a chicken And much creates we breasts on our leveraging and we’re We’re order, product. we in-house quality call breast. them menu introduced this Bleu.

adds that bold complexity keep we Instead, So, launch menu product engaged new didn’t introduced upgraded and consumers key quality item for broad confusion drive a and for we and one of guests. operators a to the do menu frequency.

first our to and their primary quality to our and the quarter our our operators a excellence. way our our the at ability We’ll guests continue pace convenience brings offer of of the results balanced wanted leverage technology with from platforms came our strategy of to leverage to this meet can that driver execute strategies food strength expectations. new But improves innovation news the

takeout positive see business. First quarter the for marked upside to segment quarter eighth continue consecutive of our this growth we of and

one also Our achieved on. channel start delivery business tremendous a is quarter, turned which first the during

over digital expertise bear our to a it’s more it us. provides marketing off our building – for off-premise sales channels, take differentiator for couple future We’re of through coming we’ve methodically of past makes Currently which operationally efforts. been the the digital are bringing data and efficient significant years and two-thirds

of for category, our channel open drastically powerful point, number the it the players the this say deal as performing our At frequency. greater and delivery all really is experiences a a Delivery guest larger who we’re door to of option. metrics do right, well

high-level make delivery our we’re and just choice executing a strong menu getting started. Chili’s and the and breadth compelling at of a mix We’re value positioning

initiatives We’re working runway for in to see test we profitability and segment. optimize to this packaging staffing leverage new the models, alternative while growth hard through additional we long

XX great continuing. and partners to the belief quarter is have our our first a testament They brand well brand. grow the demand these the partners brand during internationally see ongoing Chili’s Chili’s the The the strength opened in we of restaurants as for the growth business. continue world, to Chili’s the the Around trends as

feel restaurants team to to potential of of support business. and we’re of into welcome and the closed We’ve we about these Midwest leadership members home, leverage XXX their family. restaurants at our additional and for the Brinker our a deployed system here restaurants strong the these team transitioning good their these accelerate to communities excited We in upside the acquisition our into existing team. the earnings And add

our I as I’m when you so ago. confident strategy more years than nearly two not if just was, today, to I introduced when

to a sight environment got for clear consistent solid We’ve withstand outperforming ongoing continue of returns and deliver We the we’ve can this a our and line that created results industry. foundation shareholders. challenging to

now, call Joe I’ll Joe? turn the to more you details. over to And give

Joe Taylor

Hey, and good morning thanks everyone. Wyman

me underlying key our Let the success couple my of morning. a quarterly insights reported of start overview this results with

our at First, our well the at warranting during solid performance dollars. through their a of first providing guests, and sales our eyes call. through positions as fiscal dining execute built momentum the the of in balance value move the and we quarter, time experiences And the brand the us we continue traffic the operators goals to quarter as and of deliver differentiating very that outlined is to the second level Chili’s last the year

generating P&L the press quarter the our earnings This day-over-day sales per execution this release, effectively support at expectations managing of line quarter. share adjusted meaningful with This the $X.XX middle in and flows cash is growing came in first in capital in morning’s allocation investments of and for reported strategies. our

by previously compared prior As stock we impacted year. when expense quarter the to comp incremental indicated, was

A executives certain are our under eligible plans. now retirement

these the these instead made to As to period. take such, over vesting we are the total grants of executives immediately, expense required for

of in our remaining $X.X Our expense the subsequently incremental the we’ll impact every first This the year-over-year reduce stock-based are quarter quarters. quarter, for made in expense $X.XX EPS million but by of grants negatively impacted year. this

in the the partner X.X% P&L, acquired the first quarter the comp X.X% top our total versus former by early increase million, and year. driven for This from in were revenues At franchise sales from $XXX Brinker a the restaurants additional prior growth capacity of of was the September.

starts a these While region growth three restaurants Midwest the that level quarter, nice the of capacity impacted will the the of continue fiscal last year. only weeks rest this of

casual $XXX both newly these of the company Off-premise in growth fiscal in the of primary comp sales level, perspective, points. and growth continued and expect regional solid industry brand top the sales total strong gapping of the is year-over-year the by across the net gaps comp over Traffic dining performance and represent will momentum, million which sales with current prior by country year. quarter, record a lapping industry the quarterly the of reporting year basis in the At rates casual sales We owned flat approximately close every sales. segment X% X%. the was Chili’s for delivery positive positive a was excess region. driver overall X.X%, From XX%. to now at line dining to-go of XX% Off-premise XXX brand a restaurants sales the approximately to was in

sales expectations exclusive Maggiano’s sales DoorDash. this results of negative utilized below resources were delivery had first brand offset impact comp to from with industry The X.X%. the fewer in short-term a greater migration to softness net quarter with and marketing our contract quarter our

full and restaurant with quarter was Our margin year line quarterly the XX%, our expectations. in for operating

Overall, of the points, Within to main to to contracting and in is system. of net protect volatility sales was produce as near-term margin the tomatoes. into we’ve levels commodity being lower commodity due the against expected key approximately avocados a basis inflation of primarily performance, That operating year-over-year of market working higher for with established XX driver products. experienced the levels increases cost the behaving said, increase, inflation

and commodity XX% our of XX% quarter the the the basket fiscal contracted year. now current contracted are We through for across end

primary costs. sales inflationary fiscal XX% employee driven remainder to leverage Wage are flat range it by labor the Restaurant for relates the As various in headwind continue lower was the year. as X.X% the for rates of we health the quarter. proteins, contracted year-over-year manageable and

quarter have compared the Increased by Chili’s leaseback from operating we payout other categories. to-go were third-party for incur. incremental the top the are sale points management of EPS packaging an pleased $X.XX to were and Restaurant year-over-year fees rent prior manager effective quarterly higher the benefits increased Improved offset delivery also XX year, line and expense from favorable basis costs started of to so performance growth. we to leverage our bonus transaction, our expenses costs, see leverage

restaurant remaining the provided acquisition is the three course leverage franchise Midwest of margin that complete, from by benefit will our restaurants our operating sales the over quarters. these additional Now

quarter our cast year-over-year the brand with of earlier, good key flow cash in generating the capabilities demonstrated metrics. the mentioned I As growth

X.XX leverage associated to of quarter flow be while incremental metric cash closing the cash at debt Adjusted year just of through cash flow our annual reduce acquisition. almost was target for year, the to debt strengthening is million, deliver $XX flows year. leverage X.X times. our We franchise our forecasted the the move XX to level Adjusted due quarter of leverage cash increased high end of total meaningfully point free with the which the from $XX the operational we times, points, with expected as adjusted flow. the plan free ability approximately million, end grew basis significantly over for to Operating to

XXX, this adopted the we standard. Effective quarter, accounting lease ASC new

present the on we recognize of over result, now value the on a balance based leases term. As lease lease operating payments sheet, the

can results lease impact release find standard accounting is details in soon more this morning’s change of to be this filed of accounting Overall, significant. on regarding our the You press the in and and not operations cash flows the XX-Q.

and I’m value quality, our delivering on very summary, start and convenience guests. In with to our fiscal focus continued our pleased the year for

through effective of P&L management our As market performance the the we the continued efforts year, for top share should gains, and of achievements brand’s goals differentiate growth, these expectation our positive year. move with line

back With let’s open facilitate. your turn I’m call to it our to comments for going you over now complete, are questions. the to Paul,

Operator

question. the And your is live. Farmer, and from [Gordon [Operator coming announce your affiliation is your Haskett]. line Instructions] Certainly. Please Jeff, pose Jeff first question

Jeff Farmer

that Haskett. curious detail Earlier can Gordon continued just some incremental in that? provide in you on commented Yes. you call October, the if trends was

Wyman Roberts

we’re that go. I as mean, out a We that. in in laid quarter than tend pretty with we’re what the we you quarter know, do not in in Yes, out to detail Jeff. October. deep about are as as but no whole experiencing lot here trends the more That’s much line Hey, first to going

So again, in good off the to second – start a quarter. but

Jeff Farmer

more question then. One Yes.

marketplace? went in is quarters? your So from I you trend and mix app. coming coming DoorDash website of where delivery appreciate in month delivery live the app what a that been can that Chili’s versus the the think only But And since percent it’s do sales mobile functionality Chili’s

Wyman Roberts

kind we’re early, our give own. partners you as then whether said, our Yes, as to on delivery, convenience doing probably of – stuff they’re detail. independent going the that level initiatives Jeff and we not we’re on call of to-go, kind It’s all of of them,

our experienced we’ll we’ve really So very to probably we’ve overall got well kind results probably of here takeout the testing more what’s own third-party, pleased as to insight past that better ongoing. as some about get while, we’re next more out play I with stages But of going you think come. today and the both and and the we with initiatives get we’re what sense little we’re over for give excited delivery a as

Jeff Farmer

Thank you. right. All

Wyman Roberts

Thanks, Jeff.

Operator

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

Stephen Anderson

Group. Maxim wanted of I costs the few now. to impact on out the follow-up talked swine China. we’ve commodity quarters, about with the food In on Yes, coming your the comments potential flu last from

Just follow-up comments change a you have you cost your from additional and want if overall to see, commodity that outlook? whether

Joe Taylor

commodity No. low year. the Hey, is three standpoint. our to level, points, see move we as the morning ASF, on X%, throughout of that watching and the Stephen, on before, it we put than haven’t that Again, was we very good coming it a indicated continue in off Frankly, closely. from believe we’re based outlook is as anything X% of the years and we a changed pricing commodity last kind we’ll if commodity most range inflation low more

indicated, ahead of standpoint, this – taken point I particularly contracting at As where as our we’ve it typically to proteins. a relates we’re we from are

we every eliminating make to from we’re potential to volatility We extent can equation. the sure want that

very beef on side, them what areas But obviously, in not being long-term ground the we’re market. are we’re is seeing erring of of comfortable contraction I’m there that couple with segments still So a one too. those complex, that of

if on pretty what incrementally the it we So develop. protected that and on would to much course with right downside expected be

Stephen Anderson

I’ll queue. the be I And Okay. on afterwards. Thank a follow-up, have you.

Joe Taylor

Okay.

Operator

The you. Please pose is James]. question. coming live. line question from Vaccaro, Brian is announce your your Brian, [Raymond affiliation next Thank and your

Brian Vaccaro

Thanks, and good morning, Raymond James.

the on fiscal the Joe, end contract. color through XXXX. of commodity Just appreciate I you gave the

point? the any Just proteins curious XXXX or the have even into maybe tried calendar of at extend back cover some you to progress half particularly made this further contracts, around of you those

Joe Taylor

some into well into we relates, the of and we FXXXX of some it contracts of Yes. to course we particularly end to to looking have some out the have steps detail, great the Without at of go XXXX. of some – taken getting term those through are of proteins the calendar those calendar as and

our maintain, we to as an it’s we operators. that again, So, as environment want for certainty can

yes, that looking at we’ll at that. So we’re look to and continue

Brian Vaccaro

operations that? or further. of to update just then key also on to Okay. Could of then opportunities alluded you just And Wyman, rolling you some elaborate on any that an timing the saw you you handhelds operations other And improve see give XXXX? the the initiatives in fiscal

Wyman Roberts

delivering we’re Well, to our an of better system just a we will, Brian. side I and tremendous that referring seeing that’s pinpoint, I challenges mean, job the are operators you from have think stay support are really where down the some experience. amazing done from I and Hey, there also operators we results, to but operations what of really where put kind both an and side fundamentals, our as on our energy allows and on guest just focused locked was the it focused is systems – if the us

satisfaction seen just creeping As than we’ve our better guest visitation. and for we know not bodes I highs, over well levels all-time they’re really mentioned, future that are significantly ever

So that’s to kind a nice they’re which about today, operations was when is what I I the job. referencing than get of even doing really talked better opportunity

we Analyst the more that of Day. the some at to laid regard or conference at With the initiatives, out probably

fourth continuing We’ll of to We’re to as moving our a devices well avenues. fronts, but leverage technology forward on share examples, the across to are work and in about table a good couple the those leverage the digital probably rolled new third as on to doing the quarter, third here have different on are the well out feel evolve. more be of as in quarter, making that handhelds as top convenience lot we’re progress on two CRM, initiatives. Those technology we front we’re the the looking

Brian Vaccaro

Joe, rest that in in through layered the show the on comp, that quarter in real model up will or quarters? of XXXX in then of way timing just fiscal any an that outsized next the be does two And quick. Okay. stock-based shift few specific

Joe Taylor

No. outsize G&A quarter of equation. this The the only in the side is

grants, over you see So rest of to the it it up so of you and make outsize, second, kind a an the don’t those yes, benefit fourth for which the of multi-year slight are and third but life in it’s quarters.

Brian Vaccaro

willing Okay. of on to on the you. tighten seems And sure depreciation we’re your quite street. the guidance on D&N? then range be estimates of Would a fiscal page it relates up D&A you for wide what’s same XXXX to just that as line that year, embedded there’s to Thank in the make

Joe Taylor

And Yes. some reimage Midwest seeing we’re layering and on is the things that to guidance plus right that changes we year-over-year of nature. programs now regard, of that normal sticking with delta, that the provided we’re you the our I for of we’re think part in, obviously and region due development

So lot expect expect I $X I $X probably the would range to as that up. it to kind to move there, in Probably, in not be, throughout year. do specificity the it million millions of be we a incremental but million yes, of high-single

Brian Vaccaro

you. All helpful. Thank That’s right.

Joe Taylor

Thanks.

Operator

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

Gregory Francfort

actually Francfort seeing, to delivery, questions, Hey, performance. prepared Maybe then you bit of of of earlier daypart percent it’s Can Thanks. you’re launch learnings how flush mix kind sort first to on how Wyman, remarks the customers what And stronger the you early delivery little But for about for lot a into kind America. of just alluded can guest or you a just the get that metrics, of using or right for to what now in maybe pointing any want are sales. Wyman. you’re Greg there? But and just Bank mix in now? maybe two don’t about guys and both customers the a using right and of for details on you out seeing there’s of talk Chili’s brand know if focus? are from And I delivery on kind you’re

Wyman Roberts

Sure. Hey, in-restaurant every operators guests us from a survey Greg. Well, several feedback with with metrics size have metrics, of we focused guests. we that at a we’re but obviously look our we our robust day. And different get on real our key of very XX% almost giving lot

movement and it’s is So experiencing improvement. the that kind the pretty on – the on broad-based of a guests are number any service, food, it’s it’s on across board, of difficulty,

are Our well, reaching the scores really in good we about value value they getting that we’re reached or so highs as see have experience. all-time and the feel experiences

We also external but what have look that scores we we’re And metrics social to a us. on have also seeing at the what industry, nicely conjunction with relative metrics, and in the moved of those we proprietary is up tracking in social about environment do restaurants. focus our some we also saying kind

different we the and year So over pretty way the of in the team feel at ways continue kind about track we delivering move trajectory been then good last it, at several every on. has operations that look to

So, is little this just what And partnership. starting in we’re more still again, with the were others, strong With seeing delivery and do see expect but at our be exclusive is, opportunities we broad-based, business especially excited go across it this data Hope with forward. marketing during But about regard talks how effective all dinner, bit we’re with that right? at for. what we we and as now can are the it lunch. that grow we to to share as you about we the just delivery make some country, do we’re primarily an used, would we’re dayparts, consumer, can more has covers to how it’s looking usage and pretty you what and the and what – being the really than that we journey, have excited partner

Gregory Francfort

you. Yes. Great. Thank

Wyman Roberts

All right, Greg,

Operator

affiliation next coming [Stifel the Nicolaus]. from is live. Chris, your question your and O’Cull, Thank Chris your question. Please announce you. line And pose is

Chris O’Cull

full the Stifel. were comp the consolidated guided lower than the It’s for range. quarter year Thanks. Wyman, sales

what opportunities remain do performance, the Maggiano’s So are with appears given to see comfortable still range you you that to improve weak? industry and

Wyman Roberts

we’re comp of of the terms Yes, kind of our ballpark in in the end at sales. guidance top topper end –

business hand. comfortable sure got Chili’s, feel that for the third-party number Maggiano’s, to that headwind with With some it bit tougher multiple to given. mentioned, we to So there was little delivers developed of as the some partner. through for I’m a we’re a quarter, regard our quickly They really has we’ve with many at close there we’ve very of of from the there – went headwinds and we X% was kind just the at not years that single comfortable partner. little Maggiano’s guidance we’re been took was them and guidance moving in Joe

to and what of doing And holiday biggest and the that in this about that banquet traffic drive In challenged focused business the work it’s they’re catering and the on as restaurants weekend they’re good was market it’s becoming here that coming on about really pushing Maggiano’s, with. season, more they out probably efficient, business all even their the their their happens within about feel one quarter communities. things they aggressively especially all into outsized their the being more by

on going them. business are the into critical So the that there’s things of to drive going season lot for a holiday

help got pretty kind we’ve doing really longer-term of stay compete some the to a upscale things we’re challenging then brand fresh and in And that environment. casual

Maggiano’s, about but work overall, a at pretty what that’s So good tougher into little holidays. they feel good towards the we walking head feel going they’re on about I as the quarter,

Joe Taylor

on comp has just on yes, Yes, Brinker impact and mean, little with the a add there rest I XX where for us also. weather and the I’d context, Chris Chris set up your a very comp. to context at but the – question I dwell about for comfortable don’t We from year. it point basis we’re of was give the this, level the you. One, again

to throughout was give well how some as just you that to but we the despite impacted. quarter, context that, again, performed So very

Wyman Roberts

a little actually hit was bit it harder and Maggiano’s. And Yes.

Joe Taylor

At Maggiano’s, right.

Wyman Roberts

a based locations. hit of took a bit their They little Yes. weather on the front on bigger just

Chris O’Cull

I’m guidance Chili’s for Just to clear, not the only, X.XX% group? make X.X%, the that’s to for sure comps consolidated for of

Joe Taylor

the that’s forecast. No, Brinker

Wyman Roberts

Yes.

Chris O’Cull

And do Wyman, is more service digital to you platform Chili’s delivery, missed this. expect But apologize aggressively? if I start offering now the then Okay. I that when advertising

Wyman Roberts

already our Chris, that talking digital the out about Well, advertising, delivery both various platform on there, as the use. as we national we’re channels well in through

So we’re there out today.

Chris O’Cull

stronger Are digital with were I you at in the seeing from shift the Chili’s, – is mixed for you as are mean, on or Chili’s? a you terms the performance platform than digital of line the usage platform mix what in at hoping

Wyman Roberts

third-party probably own Yes. of our on going pleased give Again, – on own we’re as going call But too we’re with within the specifics. label to we well what the as delivery, what’s white our not on both detailed all website. aspect

Chris O’Cull

for could the lastly, I you affected us And that. Joe, there just remind But impact sale details provided quarter? quarter, are on what you items know that Okay. several some know the incremental was then I the compatibility during and leaseback

Joe Taylor

Last we first took minus year little $XX of Yes. a the in a quarter. a million net over costs gain transaction gain,

sale looking that one, incremental then numbers, at That’s the leaseback from what about comp adjusted of the have about from you’re have obviously standpoint $X you we million. I and reported from you the If dialed rent a stock biggest out standpoint. obviously, talked an

impacted it this from quarter item year. lap you that that that get and us last $X So million rent about the this incremental of specific is year-over-year the

Chris O’Cull

guys. Thanks Perfect.

Wyman Roberts

Thanks, right. Chris. All

Operator

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

David Palmer

comps, Thanks. higher the seems franchise. what much Evercore were a – company question ISI. than on sales A the trend, to they

weather it is that factors of that you created stronger. about few You that because think we there other mentioned were that or should a and Was mentioned gap? the regions that

Wyman Roberts

kind the Yes. same There equally, The in regionality. and a if delivery there pickup every doesn’t on out people on couple you obviously market every the franchise across partner. The play will, isn’t Rewards program process isn’t where our leverage same. with is are CRM, Chili’s market of our the is in every of and things, at

we’ve to have into see, So there if the a here we tend study it quarter are out, move a little that we out be of a tends There reduced franchise the different even into more the – same play. further you space. and volatile of it, community over where our come variables is we of kind there but time, kind world. little franchise time that of you tend to size Over all to kind may or now

David Palmer

to level margin ERJ cost, guidance trying about I’m there the how are acquisition? ranges will think Yes. And that still launch better out you here, the guidance on the to the Are fiscal for things from Joe, did that change wanted Thanks. worse and just cog slightly might initial side restaurant trend on ask than labor intact or things delivery on the guys I you that you XXXX gave play side. from the here.

Joe Taylor

Yes.

guidance very we’re XX, intact. We down restaurant flat quarter. still margin to I think and XX operating provided guided down year-over-year in think for we this much the is I

from there’s starts it line play a mean, into leverage much to start we weeks with have first marginal I that, the coming right now that to in in only of because quarter the acquisition of the So really top play benefits line will was at a couple heavier the rate.

think we be little a anytime some can you’re more there. more volatility you the this last get with produce, I quarter saw dealing of commodity episodic, inflation

So rate run shouldn’t that’s you assume can’t kind of – a forward. going you

brings. continued where see and managing we’re exposures we’re it within that the the are top growth P&L, lines expecting the operators of down we’ve the line the ability we those and really locked way the contracting across all leverage So middle market from comfortable standpoint commodity the of from a

puts sight we those as of a that and comfortable, it’s to P&L, So great there’s throughout of forward. takes go going always how on middle we line be takes and the but to have manage puts

David Palmer

Thank you.

Wyman Roberts

David. Thanks,

Operator

coming question Slabaugh, is from Will affiliation the you. [Stephens]. please announce your Thank your And pose Will, next and question.

Will Slabaugh

With assuming but Stephens. hear mixing the question call three lot the Thanks on $XX, about well. waiting had to guys. on it’s I’m for the platform, a a I still

comment menu going would year? to you said had is or think going that how into about previously if wondering was what what been and sorry, you forward seeing I that this innovation you So you versus work

Wyman Roberts

been $XX as we’ve do Hey, not delivery. current of delivery, in offer great doing mentioned it’s it’s third-party question. a what to is to perform Will, we’ve targeted terms Consistent, absolutely Three for very in seen, before, and well. continuing mix

a will So $XX interesting the kind of market we you in that’s how channels. if and for leverage various an twist, three to

over that layering whole near we’re at doesn’t but regard culinary been we we’re in could we’ll could of year, a standalone, but and business, three on some we come very great innovation, for a little more real be driving in $XX Right aspects of the opportunity leverage innovation obviously innovation – be back play future. in see we to the the done perspective in team but on with the will focused convenience the the that now, aggressive way. of future come the team some that the from tests in haven’t in working mean With half here back couple quarters, a ideas exciting lot again, will the that an some innovation to done a have and haven’t last job, forward marketing of hard more

Joe Taylor

of we’re had last the now of the also lap that’s three Hey, with getting, year. now things was this, on starting $XX and that and Will, points mix there introduction the about release indicative aggressive We’ve we’re you for I we’re I realize top of the in implications the one jump through to basis think pointing the let talked now. think saw me mix really of out that XX positive that

coming can that around a we’re for out we’ve And $XX. so doing a we that steady us always work category other see the to give But the more foundation and can great opportunities basis. for look you’re within now quarter-over-quarter three that that you state, that, mix results now benefit as start into slight of thought in

out So this this results apps, ad-ons, nice PPA out quarter coming out last year the of – some last of coming program. alcohol of coming

it I and things So that that kinds those to a kind rate now $XX. the front as you’ll of think into are center of run we’re relates three for more see

Will Slabaugh

call like, about it looks a had quarter, know moving I margins, looked only would had year? pieces Got thought that? it And it margin you the the but on the how along it. start Is It is in guess points, basis I question how helpful. XX year-over-year. side on flattish like it, you would things And That’s about then I at I some of that Joe. going the should roughly you look trending

Joe Taylor

again, And Yes. yes, assuming operating restaurant very much. margin,

So they’re we that things episodic to how expect some is in much that go. would difference, point but there marched see again, really XX across line, pretty it cogs, basis

Will Slabaugh

hear. Thanks guys. to Good

Wyman Roberts

Thanks, All Will. right.

Operator

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

John Ivankoe

Do second pieces in you looking which difficult second it think kind the math, a traffic my July of JP of I with kind you With moving I ending than kind how or your about to similar different Hi, thank comparisons continue in we a specific which for lead view wanted the put at just month, with being – of little in mouth. expect reasons comp had things October? trended just of of the more would? quarter, Morgan. to be I and Should to want the lower you. that And And Did first actually we quarter week the number you of first, Wyman, the think simple unusually September obviously. commentary. a positive to comparison when talking were like is nominal result that you positive quarter back about it terms don’t some get that the quarter in important traffic, sounded to comparisons your bit have. higher? or any words September

Wyman Roberts

traffic higher John. more the – will say give wanted broader and we to kind kind concerns those to the category. just of were solid we some sales we quarter position And October. we of I’ll traffic color in a and having because obviously as of positive as much same a experienced we industry into I outperformed in sales with think industry trends and end But from of of metrics. that, of did solid first as just strong but I place some don’t some get yes, watched little see if trends the positive Hi the continue as that know some detailed people the and Well, they I of

message the that share was wanted – that’s So we there. the to

headwind, regard kind perform the pretty happened we whole continue some question going quarter. we with quarter. the With we’re several to was lap but of timing the to lot was they’re the significant quarters you to see changes well, we’ve don’t much this us was, to holidays, over a are the There performed of but ability anticipate in of and the don’t additional strange in that And what’s quarter rate posed in second first in within lap, things quarter, that ago to happen now that when we into regard all to lapped. our

some month-to-month, quarter clean. I see on think the but we’ll within own it our be should relatively So things

John Ivankoe

Okay.

So words, out other really December. jumps to and in that in nothing November you

necessarily the optically look they’re comparisons, they harder. so if And harder, optically even not

Wyman Roberts

we look at as it. Not

John Ivankoe

end, amount was Okay. remaining attention of And important. you of they a – guys That’s kind in that if that focused the upcoming if the All what’s of own from build status secondly, on Analyst advertising forward. could their right. some to them going try their getting the platform, Day there’s me, remind terms there then Chili’s tremendous the even just from could obviously anything, and of what carousel, out DoorDash, drive in maybe brand is you at

Wyman Roberts

we were with like just are working day side on pleased pretty the brand and specific, integration say but Yes. done primarily testing done very one hard stage, with Chili’s is the support and Again, DoorDash and that’s early too We now. we’re both we partnership much to with get comfortable their work the live. the Chili’s it’s actually went the was with being brands they’re I’ll we we’ll with, in to that, but

Maggiano’s to the to fixes little place. a to has same Maggiano’s in just with they’ve bit partnering get system, done technology into the a nice there job integrated the lag and a now get of their place us DoorDash it’s system so been

different now And aspects initiatives forward. we continue various to marketing partner move and as with them we on

to So business the to leverage drive we’ll support we can our well to as what DoorDash. as help both continue the do partnership

John Ivankoe

Thank you.

Wyman Roberts

you. see to Good John. Thanks

Operator

Thank Miller. question. your announce affiliation Please coming your line live. is next Nicole, is Jaffray] Nicole and post from The question you. your [Piper

Nicole Miller

does back you to good Piper If I to of drive improve Jaffray, of packaging, food the one terms the of even then the interesting. delivered for delivery thought was and of I cetera. overall around in comments how look we thank that cost your way to in prepared earlier could morning. ability And ability is terms go the the and terms looks, to it the or just packaging, in want about circle to what way down that delivery like? back hot et

Wyman Roberts

of part energy it we Nicole. put this you Yes, want – becomes our takeout forever, these and We again, bigger doing to great we’ve as there. the bigger are a as much but if QSR. and in of that of necessarily a did on kind Hey, business, that, – been we you is catch don’t new haven’t great, focus business aspects mention would as were

do on happening as it’s And just on do are leverage costs how at, deliver, experience. with we the are How as much And smarter looking effective of across on that we is the – side what’s the cost What packaging? guest the we experienced as we the well package? well with packaging? both the more get fronts, How business? this business. again, the on packaging, the more we we’re How getting now exactly But closely What is

doing metrics but our always do better. of want we’re fine, to today we All say

lower consistently where experience are we’re to and to opportunities better cost. a for do looking so at deliver the And a guest it

Nicole Miller

that that, out to lot next going get to quarter we mean, bring that you out, see it how the the or personally we just this of is end something if with is ordered can element far packaging the soon are opportunity? that year, is I How fiscal like we curiosity, in a of keep up market?

Wyman Roberts

there’s you on so think times we we’ll able know, change. doing to some in we’re associated the put company by second some making half, pride we a with changes I obviously anticipate has lead Yes, be quickly But things relatively and place. big ourselves that

may they consumer, place of a some how it efficiency how as us, them more to Some we do notice buy don’t efficient. I – but some you’ll we and we be and in how house our depending leverage have even the things just think or of scale we on

deal experience, regard guest to where with seeing challenges with then those we’re And we immediately. with the

takeout experience on jumping in basis on operators daily are guest working our opportunities We’re a the where and we on measuring satisfaction and and level our our time. real in-restaurant have that

Nicole Miller

been a few, tune if season. mean, bit we ask higher-end worrying and/or you’ve final what comp that any discussion expect nuances any about there maybe around little overall that still that indicator of the was big Is to softness both, a picture looking should component have then period? of Maggiano’s And that. about for just I on of the decree to at this a higher-end consumer a a the worry Maggiano’s, fine but consumer holiday to the slightly addressed holiday or there’s the question leading just I why of a now and some but is good wanted that’s question curious down,

Wyman Roberts

of take I’ll them kind separately.

higher-end the a of upscale there there’s than consumer, if headwind some casual it whether more it’s consumer, some whether little and it’s looks fine, lapse it’s or not you bit a dramatic – I just the that’s not more higher-end there seen think that’s be it’s as looks there. issue, past, pressure drastic, the like it tougher on headwind like you in definitely the little at mentioned but a they’ve look may

sure excited their things another and aggressively out regard are and team – great initial season, holiday Maggiano’s that looks holiday booking already making rate we’re With the has out booking looking is season. good. The to

they’ll the where some there’s it’s good that I for inventories another holiday holidays, very well overall which we’re concern think would about optimistic again bode household environment, at. at, on how again, it’s mean, employment the I I in So perform think season. where overall

see think we’re out this year. people the to to going holidays celebrate wanting I

Nicole Miller

you. Thank

Wyman Roberts

Alright, thanks Nicole.

Operator

question. next the question line from Jeffrey is affiliation is Thank and coming you. Jeffrey, please your live, Bernstein, And your post mention [Barclays]. your

Jeffrey Bernstein

line, that as basis the what see I’m impressed of surprise. of from hold seeing peers attribute that you you efficiency, to leveraged any to Joe a we’ve maybe line the you’re ability talk you hold labor Barclays. that a you’re to about year. line, your as questions, quite flat talked wondering maybe do the seeing X.X% know or points in we’re a there’s allowing able has that XX turnover couple for hold heard Thank pleasant calling you, recently. whether change biggest to on Especially that percentage perhaps just been the about I I you’re inflation, driver just Two greater one, sales. am

that. wondering any are have follow-up. really one there support if to are that I big just then initiatives I’m And helping So

Joe Taylor

of lot things is we’ve a within just as and done important as think keeping job. menu. muscle really simplifying there the a operations was to the the discussion as And possible the just I in and know are about equation I past, simplified very always the memory, biggest effective straight the around as the side. initiative operators It’s bringing in forward talked execution restaurant is ongoing Yes, things we’ve the

better against see we labor utilization our So models.

models. Again, against those the those operators periods expectations utilizing and our delivered tools have and labor on now for several

So well. played yet that has

on equation particularly the that down the side well. has brand the of come managerial in as performed are environment We seeing rates turnover

that process. I to contributing is the think

within from that that. on We’ve talked And some out CSL of line quarter are a that benefits within nice and the some we’re side helping the equation offset accrue top are even in I then play that some past mean, labor, rate the still inflationary this are opportunities to again the just volumes, and there. the again, continuing wage leveragability was ongoing, of factors

work that on to got the and really teams is have aggressively focused labor something So now. day every you right we

Jeffrey Bernstein

then like clear the have well. Chili’s if it end Chili’s in seems challenging at single wondering perspective, you the a from you’re managing made pleased inflation. you that, just prepared your I’m or seems could I strong maybe that quite how you industry, challenging it. Labor, just And know terms like what remarks, low you’re Wyman, commodity you specifically about contextualize whether it momentum, talking environment. mentioned you environment, Got in were have of you of maybe digit it

you’d challenging talk well, you talk when wondering, end? about for just your was call if maybe all your anything about on broader going point out and things I well peers be it’s this as in that is the seem there whether environment, or So industry, particular specific Chili’s a to that at lot of

Wyman Roberts

we’re Chili’s traffic the than bit industry And just trends economic on traffic little lot was that, on given – that’s brand. do a to the side bodies little comment. surprised that coming that continue put driving a confident keeping and into in more of emphasis why the that really macro industry the specific, that’s we’re Definitely especially we’ve place that continue and the the is strategies frankly background struggling got a will we the for to

Jeffrey Bernstein

you. thank Understood,

Wyman Roberts

right. thanks. All Jeff,

Operator

Thank you.

Our next question. question affiliation Sara your is live. coming from and [Bernstein]. post line your Please is announce Senatore, Sara, your

Sara Senatore

about so the on understanding comp, I correctly about want that if just sure also, was of up terms and talked forward? labor of there managerial that’s how offset in where that a of it we you make going Thank few that should a first sound an think to line. it’s just the like is I was showing is please, on lot efficiencies, follow-ups know I is you. the bit did actually and Bernstein,

you’re I of the it’s delivery right also offsets the forward question. said you then just going it some As driving happy to something the have And think sure, was on a the on you’re is line? follow-up but trying the I to I strategy pay for labor and to think about efficiencies

Wyman Roberts

that which made Yes. of assuming year-over-year incremental managerial think, you’re about again and bonus, level Sara, was I bonus a the $X.XX that referring we pay, comment managerial yes, was there I is I’m to score. they’re EPS they’re the comes we with of to are and top-line, at levels things. that GEM do, expense managers see means a delivering That through expect good them flowing lot delivering

it suggest as So incremental the positive show it across rest of the ramifications in up of performance labor would the but expense, does company. that has I

really see it. will where So that’s you

Sara Senatore

you top-line assuming a of continue sort expect of we forward, should similar magnitude trends. kind going And these

Wyman Roberts

incremental think Again, long as one things, they’re line. benefits see our insight that mentioned that It against along that. into continue would to give we too you depend. and Again, be expectations as that in some comes that you’ll come will before, system I top some the It the range. I we’ll leverage if as see of at performing could to – with you’ll performing

Sara Senatore

your Great. delivery, maybe at near-term, and inventory Thank or there’s any in curious aggregators we’ll least of driver, obviously competition sort step you. brand to among particular drive could in economics benefit things whether get an competitive that is aggregator or see could volumes, because around if from evidence expectation up not, had been some the sense a to on restaurant and broader you And any for you might it do or you perspective? sort Chili’s I more of was just a the marketing then any more see improved you the actually just picture, in have that just insights volume share of

Wyman Roberts

and help we several yet – continue us own. our let know us be don’t takeout aggregators I the pass we’ve that have will with DoorDash to we see doing regarding continue carry business. to now about partner out partnership and like going –everyone’s got seen is that are talk our delivery with have I’m the think if And I’ll that significant on rolled the weighing aggregators, will more how build as folks we’re what themselves, I our will well initiatives on with as familiar probably momentum both which we and just to on

our into we our have positive on runway with ninth a We together. delivery. And any long now growing comps quarter similar reason We’re see into – can’t of while going don’t takeout. they’re

business it convenience the this important, trend. of aspect is So is a

a partnership, we’ve of our a as just the of going to drive to also and on business about got going think we’re position leverage to us have as business. that’s then great initiatives excited independent we well takeout then the some continue We strength And in category. that to

see So that’s we of it. how kind

Sara Senatore

you. Thank

Wyman Roberts

Thanks, Sara.

Operator

[KeyBanc]. Eric is announce your live. coming you. Thank Gonzalez, from your Eric, And and the next Please your question post is question. affiliation line

Eric Gonzalez

It’s KeyBanc. thanks. Hey,

think I this about think don’t past what growth the a takeout but was of eighth quarter on digit the or been, type rate takeout, talked think that double rates. So I had growth, of said in question the you just you a I strong mid-teens was growth

by what quarter during delivery rate launch? the was of takeout cannibalized much then Thanks. the growth how do the you was business that and think So

Joe Taylor

again, digits, on Hey, high-single delivery, energy continuing Eric. Yes, marketing level. almost just And organically with moving was kind of at of a really our was forward. that to it focused so more growth lot move nice a in

business. strong piece again very of the So

great I new rightly think channel, step that it’s very And also delivery. it’s and it grow important strong lock get that go but continuing to to around much because to business, so established in delivering is a we recognize again, we have very so when time with energy and a

a now we to it convenience want well initiatives leverage that those it providing to channels. play that consumer not want the or dine-in delivered or play is are they critical, established all of whether or So pick And convenience think I to has going up, to to they it want that across forward. where

Wyman Roberts

of delivery of experienced in all. things And options, in for the are we’re they’re much incremental, were excited Yes. familiar it some that very with us. the of not brand is are them now of the options more at one viable the And Chili’s other not the a delivery, that they’ve some lot quarter takeout about become the guests heavy users, that really introduced our this

Eric Gonzalez

Thanks.

Wyman Roberts

thanks Eric. Alright,

Operator

Advisory]. The your from question affiliation your your Bob live. line and post is Derrington, Bob, coming Please next [Telsey announce question. is

Bob Derrington

innovation Advisory. anticipate about earlier bit you on have that call. talked I because Two quick think questions. front, Wyman, Yes. so you we in the One, Telsey that especially way Hi, to real product the et a a little maybe in many this other product opportunities takeout, to innovation that – of business, I the less guess a complex the years? year relative typical cetera, will drive delivery, be Should

Wyman Roberts

one our for year Last of a Bob. better year Hey was simple very and years. us

out are marketing have it’s got higher we with make think operators more about stepping probably pressure the strong, with much up difference it’s restaurant And system, changes holding that we’re in a and got they now resonate innovations some the guests. a to something we’re got restaurant, compelling The be test going it’s for what are terms, in talk on putting and those I a So the massive at culinary to into not are the level. we’re it’s to brand doing so and looking with norm, the really team we’re in great when putting standard that is breadth our new we standards that. things in to –

program a out high-level a a absorb guests. And execute a things the of restaurants weeks. few and on sold with one the today Month in most example The of into to there We’re probably way out that it makes that bring our things out done. market difference lot it, to of and can now monthly innovation in how specifically successful Margarita – the a in but system of in the a current we’ve this the it basis, great great we program, fantastic a is last at into have the the do it team’s job Margarita operators the done and figuring

we So the said, process a we – will and we’re anything about innovation. very excited kind as to innovation the market think difference. That will I it much about of bring when as make

Bob Derrington

also future you about something they’re Is the is suppliers is is your that’s get just African concern, the the extending swine what that some will more All you’re said, outlook as are but future, real suggesting contracts, the it talked you And year, costs about big you helpful. more look things the it Okay. certainty quick aggressive? that looking concern fever, or of at playing like? gives out question, your kind and your this anticipated right, that there Joe, commodity outlook about that

Joe Taylor

a think chain it’s been we is air right the price volatility now there’s can. do Again, try from lot is and swirling around I a our much little on approach issues that Yes, operator to certainty certainty the too the out supply we We the And as so it want side and to the philosophical give to commodities. of more equation. of there feel relates as minimize a potential probably reality the world to overblown.

time that we channels but same wanted lot want a make understanding the with again sure that, minutely experts at we management the commodity and spent the time to at approach risk to appropriately. look take of very the global we’re We

again contracts, pricing commodity of good So a environments. remember out setting coming we’re pretty

this So aggressive together, when those combine elements you little sense the in more two be risk a the makes to side line. management of equation

in are we where of that. kind that’s So

Bob Derrington

Thank you. it. Got

Operator

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

Andrew Strelzik

you more you are of aggressively Thank that? timing kind And there that and on are in the and you. What CRM the on other I program on you program, where now the where end are is your commentary the know get perspective? given are plans lean side I pathway over you? the update BMO. time, versus performing particularly up channels. to in, where plan to membership was hoping up about way a Are seeing loyalty perspective, the happy you from to progress favorable the with all an digital sign the

Wyman Roberts

becoming member. kind to seeing And the that as of restaurant towards have. loyalty program making we database is say all to we’re, Andrew, the Chili’s we definitely sure understand of now that come good operator stepping mentioned the already targets. I’ll of grow The we job guests into the great we’re value acquisition. we’re that build regard loyalty and with continue the significant doing And up that a our

move With going momentum of as we as actually year. everything continue increased through anticipating to as a that is we’ll we’re the kind So out see planned.

well as. for working And us very the program is

individual understand to to more on out communicating effective each them As much again, of almost we motivates our members that with basis, team’s at able more there an messages loyalty them the – and most. become exactly our resonate reps get and those putting and more what more more

Andrew Strelzik

but Okay. more Great, one, that’s what feels more recently, with moving is feel number aligns current one value like seen, is three second promotional how with just like been kind Chili’s the it consistent centric feel industry how helpful. key incrementally positioned, strategy component, you’re and And a the two, of as just a that competitive you me, like from $XX, I you the is obviously you’ve values lapping for do number guess and environment.

Wyman Roberts

it more been it; that if think that this that but value LTO’s on think know of that the I the there’s in competitiveness it’s past. looks of there of move not probably system, is I promotional face the pace has gets like than the an out – Yes, and proposition don’t through that they’re believe effective. in been strategy out to continue there strong through refreshed everyday to go. in kind way necessarily innovation And unsubstantiated I recent we of kind

we of to continue it, to about how overall of what $XX mix good doing other value continue to menu. it, refresh ways we’ll move well. strategy, we’ll our our plays enhance the is kind for through it and in channels So look but work feel three as also And for

Joe Taylor

Yes. to, but continuing the the Andrew, effective meaningfully Chili’s it be a We might market of from comments, brand industry. I competition. think heard now, effective. and extremely whatever just the will gap that want across way talk the conditions, brand it’s down country, to gap a you to us continuing we the the has – positioning be and think very not be variety you assume is it gap in coming it’s pretty It differentiated in have about now clear

on we and that environment this weaker focused face. strategy might So like differentiates but we to execute stronger continuing industries, we’re whatever industries

Andrew Strelzik

thank you much. Great, very

Wyman Roberts

Okay, thanks.

Operator

Thank coming And the is Howard next Management], and live. Risk you. line is your affiliation your from question announce Penney, question. post your Howard, [Hedgeye Please

Howard Penney

Hedgeye Risk as question delivery a I have Management. well.

is that to your and you to the losing take your complex If would how relationship you decision new make momentum? it how beginning, and were if were strategic without you understanding just delivery but long change you’re DoorDash is provider,

Wyman Roberts

of that off There to Yes. would Howard hard question that. make are variables that in there, the kind just like top answer

able playing we’re any out. desire happy the partnership quarter to we have inclination nothing very you’ve do have. we’re and that in with obviously studying the we to with it’s the this that don’t we’re and relationship So our or seen how business performance so it’s drive that that, And

change, I DoorDash. to with happy to obviously and we’re with but So where think now partner so can excited right yes, we’re at continue things

Howard Penney

Thanks.

Wyman Roberts

Thanks, Howard.

Mika Ware

Okay. Thank you everyone.

I think we’re time. out of

everyone our the call second Have look results So, us forward we day. joining January. to a and updating on you appreciate today wonderful in on quarter

Wyman Roberts

Thank you everybody.

Operator

ladies conference gentlemen, this you call. today’s does and concludes Thank

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

Brinker International (EAT) 30 Oct 192020 Q1 Earnings call transcript