Brinker International (EAT) 29 Jan 202020 Q2 Earnings call transcript

Company Profile

Participants

Mika Ware	Vice President of Finance and Investor Relations
Wyman Roberts	Chief Executive Officer and President
Joe Taylor	Chief Financial Officer
Jeff Farmer	Gordon Haskett
David Palmer	Evercore ISI
Chris O’Cull	Stifel
Nicole Miller	Piper Sandler
Brian Vaccaro	Raymond James
Stephen Anderson	Maxim Group
John Ivankoe	JP Morgan
Katherine Fogarty	Goldman Sachs
Jeffrey Bernstein	Barclays
John Glass	Morgan Stanley
Sara Senatore	Bernstein
Andrew Strelzik	BMO
Jon Tower	Wells Fargo
Gregory Francfort	Bank of America

Call transcript

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Operator

Good morning, ladies and gentlemen and welcome to the Brinker International's Q2 Fiscal 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. Call International’s Earnings Fiscal Quarter the XXXX. Year to for Second Brinker of Welcome on are Chief the Executive today me With call President; Joe Officer Wyman and Taylor, Officer. our Financial and Chief Roberts,

on prepared the quarter initiatives. the Then and and this are brinker.com. released Results call to questions. our first our for at make were website will strategic open for related morning your we earlier and will available comments Joe performance Wyman operating

of our our harbor comments, statements. I beginning everyone remind Before forward-looking safe must regarding

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

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

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

Wyman Roberts

our restaurants. was us. which morning, operators driven thank Good over ability earnings, for primarily level of adjusted to and everyone of the Brinker. strong organic Thanks This Mika. our shareholders. We $X.XXin of the year, effectiveness our a you through QX execution for and great joining was delivered for growth improvement our strategy in quarter a deliver prior demonstrates core XX%

us which raise our press a detail release, you Joe guidance minutes. in business in for this has ongoing the we year, morning's momentum outlined few for just will the in to enabled As

records. came Our with finished a of sales. our our with one sales a was best and holiday again quarter positive the quarter, with takeout consecutive Chili's and row outperformed third success XX was but Brinker strong seasons traffic. seventh softer Off-premise at up app comp locations on contributing. Maggiano's new up the eighth XX in trends, And had was sales all our X%, our for primary sales a as in driver quarter website delivery QX Chili's X.X% the quarter holiday once and the comp options starts party category positive of now delivery in set Chili's our

And operators pleased a consistency provide needs better with increasing will really and future our demonstrates guest set the ability We trend, stay keep in to drive and value for by continue meet commitment metrics, We're and core this level all-time believe to it the perform to at well as new best our our delivering experience. highs business satisfaction while focused our the our once operators convenience, we simple, systems on again, to we class into operations our other brands. in this can matched to model few uphold they execution. will consumers can proving a strategy so guest strong

support at further our these with teams those enhance operating strengthen Brinker up us keep hard efficiencies, levels. value and long-term exciting competitors higher systems testing the our to business from and our our improve increase those proposition, that can't operators our innovation are initiatives holistically model, us ensure on that of separate to shifts, performing We're us work remain great new focused allow at While running on success.

and our We first put our new efficiencies quarter this original were improvements guest example, the advanced significant system tabletop it's made of the to system. chain our more technology For on model. major replacing the table began to we experience with and

for allows as the our more activation database. create will further like and payment feedback this our near direct new and to login advanced more customer offers advantages to and marketing our And as operational advantages, system powerful which field relationship real upgraded communication, time in continue ability features just like new engagement the loyalty well program. any the and reliable like With like leverage leverage an system enhance even consumer to us technology, is more personal marketing

continuing into the back an important component business this are Investments like financial share growth. gains and in our

the Our Brinker XXX process this year. to fiscal Midwest end transitioning seeing half us. And we systems, out completed back in well anticipate volume These which higher over the a the during are They're more the Brinker our P&L of investment should is the to impact bottom converting for also playing of restaurants be smoothly. by year. significant line of fiscal

restaurant new six seven above restaurants open well. as programs well to new many hurdle fiscal restaurants, and January more remodel continue opened year. each relocated as to and with new Through perform this Our development we've

we it can enables This January. is available and restaurants strong All now in held in QX brands, was for line off that second great in think up areas Chili's that to with typically trade of for the share to scale into previously while We're year believe continue Brinker. an have And balance area fertile owning as sales are start share category. sight all take in by the don't franchisees. X% this win we longer we a we and accelerate, us a our and at We great of to in we our quarter were a at inner period in development over excited term. about results,

over through turn the you to Joe? call Joe And now I'll walk numbers. the to

Joe Taylor

thanks everyone. and morning good Hey,

regarding quarter Wyman's Before jumping related second comment pick the my quarter, on into overview current to performance. let me our up last

During built is Of of sales sales today. to compared holiday, recording out the performance on Both the ends particular prior period positive coming week brands net Chili's year. momentum comp above comp which X%. their note, January five quarter-to-date

lapse our the news our quarter performance and for X.X% and growth. this recorded This value our steak new I messaging on sets move top sales responded. January would plan fiscal very up comp organic to guests last back nicely and solid we Patron quarter, year implemented line note in as layered with around Margarita, have of

strategy morning, solid restaurant the growth and EPS results adjusted margins Moving as back organic XX% in annually. will XX% quarter, level by and improve produce believe this has to our second growth, demonstrated top-line squarely target of to to the we reported continue range the

top comp of total September. $XX acquired from the the Brinker Midwest X.X% full were in At revenues year. in capacity a X.X% the the of growth P&L, and a was prior approximately second million quarter restaurants by quarter of at versus increase driven early million, $XXX This sales

Off-premise Off-premise total represent to delivery now go sales grew both and year-over-year. excess XX% of in XX% sales of the quarter sales. in approximately

level of the top-line momentum, net the and by also at two prior This approximately last lapping quarterly for continued positive of the positive a industry its XXX basis was reporting quarter for X% of points. comp year. a sales brand two in quarters. At Traffic each stack X.X% Chili's the year to the nicely from X.X% results positive

Maggiano's That net solid X.X% throughout the top said, quarter Our season. these for being the performance brand line disappointed very for minus did holiday posted comps brand improve We're with quarter. December of results the quarter. a with the ended and

exclusivity, other through Maggiano's in Our now quarter the gave worked established drag delivery a up business. early has the they which transition toward was party if third team

and Brinker second managed the to systems our our of quarter. P&L line increase to margin year. bottom than Capacity effectively for growth the utilization tools well of weaker restaurant the effective Brinker's quarter the overall contributed and its restaurant XX basis combined last line to teams as brand expected points operating a by top the Despite success operating and by compared

pricing in margins look inflation primarily detailed year low as was the more points level a Taking basis of a and cost favorable driven beef shift of slight X.X% mix of offset XX the by and last sales dairy. commodity

our effectively specific team basket. avoiding inflationary supply to continues quality top our impacts sourcing manage Our chain to

against As commodity to key higher stated, previously for we we levels established have ourselves contracting volatility protect products. of

the versus the through XX% were contracted more unfavorable next of points year end first Hourly fiscal prior for to was XX% Labor in quarter. now and wage contracted XX are again the than year basis range. mid of X% up the fiscal half the year. rates We

and labor pressures help this sales to on the our focus mitigate operators area. Our leverage in tools inflationary

growth points favorable expense As the top year. is impact evident the our expected, basis prior line line, capacity to restaurant meaningfully positive compared XX of in

discussed, of strategy. $XX our first And to million operating is month expenditures growth totaled for our achieving capital of previously for our flow so has nearly the six cash part fiscal an After growing the for flow performance year this an half approximately free set targets the cash a of year. path first $XX far of the important increase our million As on period. $XX million, year half us

our while repayment recent breadth moving differentiate strong using performance of our debt to associated incremental with cash our our by of We're with forward business investing across acquisition. the generation

second it fiscal As specifically to year-to-date special share now in results enabled estimated year to earnings is be $X.XX to items And guidance, half excluding $XXX $XXX expected the fiscal to expected our the range guidance, relates performance to flow flat $X.XX. to is Restaurant several range is of free margin increase million in and for us per our pieces of the XXXX. expected operating million. increased of the compared to be to cash

aspects other on earnings our call. reaffirm as communicated our also XX, previously financial We August of XXXX fiscal XXXX the guidance

a landing Please As you XXrd for year will next in the fourth with it fiscal are additional focus year, week be modeling to on our XXXX. starting also many include fiscal an week of aware quarter.

on and summary, both in our is of focus And top to strategy performing as core the differentiating delivering execution, one top bottom In and dining. brands line. the on casual Chili's convenience value further

driving and traffic. to consistently We ability win an continue by experience our to improved demonstrate guest incremental

let's now our for call With questions. the comments open Paul, complete,

Operator

Jeff is announce your ladies live. is first now affiliation question. And Certainly, floor and Farmer. your the pose is question Instructions] questions. Jeff, and Please your for your coming open [Operator from gentlemen, line

Jeff Farmer

Thanks. Gordon Haskett.

group sell your relative store trends has function stronger improve versus peer January? that a shared Chili's of its month a seen segment What does or You performance sales and same performance that the January of trends.

Wyman Roberts

the from seen that restaurant in message. we're and Hi, little a so absolute we've a back comes focus Jeff. it about our business I into A movement think both, excited really

the that's that had to as a air well impact move changing between the $XX. with as steak for is of innovation on that and we the news excitement year balance about to into that on continue the in So rest outside at we the and find of the let any communicating on really, then half, them our didn't marketplace start focus we in January bring back first as new got on or and air delivery And or focused building out we operations on back the primarily restaurant shift take a opportunities. X And the messaging, for in and new to the communicating channel. as increased and trends our plan innovation the significant and the news – the through restaurant

Jeff Farmer

and Thank average Investor these Are to to up update delivery you delivery. just at orders per across able day, those are any love hear? quick to check, that you you an first metrics provide on able share we'd on your a follow guys you of anything incrementality shared Day

Joe Taylor

holding too move at you with tick seasonal incrementality, in the orders to the per this that on move you're the slightly see about consistent we're and through white the delivery so operation. moved to where at way looking we all are expected start day seasonality, with as expected them delivery a check the we about really holding we we really move of where August up it's the average, they're that. are in it The we meeting, experiencing year bucks the first Jeff, right And build of kind a particularly talked XX at seeing higher through a right as to check label. winter, incrementality and

Jeff Farmer

you. Thank

Operator

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

David Palmer

audit that. what's and basically incrementality that to are about you new quarter, thing ISI. through a second today, and brains Hi, going looked news, into going delivery. first you as just there and to guess entire and perhaps the what for think with played And favorites did the And you in how has it because you old new were the wondering, menu channeling here I'm going of not we've the are really menu marketing, quarter, $XX one value here. looks being how out on It's up been just that to But people's X fiscal another that. like went December channel on probably that steak navigate has the also you part was happened, Evercore like adding put forward? you the of part happened half for really sort supporting it toe I follow here that into news dipped our to saw as been a value. same

just separate out and too, these the doing own talk like some was that's about desperate one how Thanks. in Could is talking Darden menu be flare of thing, upon And may your causing here So are discounting you feels you about strategy tremors based competitor and happened results it volatility. or that swings then some even the stuff seeing discounting there's there. a not ups that's there and sustainable?

Wyman Roberts

I Hey, first itself. David. mean, the Yeah, on strategy

I think – line I would. delivery, the it incrementality with think much expected pretty in is as of and we everything falling

to may that think we thought organic Once it can get that little a I'm keep marketing probably that play things as one the how have kind support moving in delivery it of that environment, doesn't world bit can own of that into. its work. surprised and as I independent business has is it just require our about much you out of

really will so, well restaurant opportunities had – comfortably about as trend out nothing approach turn on more flare convenience has the little I desperation something of up, to back options. With in continuing think a regard sustainable. now planned, as the on that's I if but I various throw there kind you as and in people a think we not to always really And our and energy competitors think focused out we that try going there's balanced not people remind as that find focused maybe say, as on you bit very mean, space, move with of to the the much new. into I around, what's marketing

And guests race, in quality on and restaurants value, and out dramatic haven't basis. innovation, our chase, the for and part, way. to to components a deliver we consistency For operators the the not most a our continue put we run impact day felt in our that to want we continue us our the and together to to day

that's with that. of how we So kind deal

Joe Taylor

And when cards you that that come David very us back well. seen feature steak to on protein and with of steak we into they're about talk restaurants able as side $XX a it, but talk I for steak the it's to are the you've would offerings couple nice being add X on to equation the because doing and play where about have also the steak broader heard

you get of through the get you approach entire you they So a lift the segment value premium play as and of stakes kind of and kind move that window.

David Palmer

Thank you, guys.

Operator

Thank you.

announce from coming Please O’Cull. is Chris, is question next Chris pose Your your line your affiliation and your question. live.

Chris O’Cull

to Thanks. part specs Do items. the this from to come I Stifel. to Wyman, quality improvements up. follow know some or make the additional improvement any I made have just comps to then have also in of And the certain you food you've improvements plans of year? a had the menu

Wyman Roberts

that whether food ways it's and we guess general experience do the constantly the upgrade any changes their absolutely for us not overall of of I to service approach. for to in mean, atmosphere way reduce significantly looking looking to that our and I save are We kind are credit opportunities consumer Chris, Yeah, the quality costs gives in the consistently of strategy and quality at a product. is it just the or

the ideas have the upgrade your in continue to on products. quality coronary centre, to to the us yeah, question, answer So work can we bring being done we how of

we that better our alternatives at time before chicken were think talked is hand the I about chicken just we kind good significantly last of relative product. another product to looking is that sandwich pounded, breaded example that

and haul, seeing business we're up and showing know, impact but all huge it over have and guest around it's long a impact is that in right. the the metrics, immediately Now satisfaction better overnight turn

food scores And continue happen changes executing So our our the guests that standards. at in of are that well all-time highs. menu the to see we consistently our operators as give because us more as to

Chris O’Cull

you give half already reflect the fiscal on guidance it the the expectations have an restaurant quarter? view then just updated just the is And commodity does particular, Joe, may the update of the a what for us then and locked if in outlook an in basket more Or of to also, Great your you could internal year. margin second back upside for improved on 'XX?

Joe Taylor

in there. second relates expectations combination the of markets are It's some level the think the the 'XX an is a going seeing to of those it operational of in locked have little in execution out margins. as the that chicken, for of one of a quarter my I both standpoint, improvement which bit it's both one in the actually most well at level have because the from calendar buys. Again, of that performance of is And the and is taking product, thing not the we obviously and or restaurant one appreciative coverage place improvements and bacon which lot some largest of across we level in the pork that restaurant pretty have that farther December is 'XX of that P&L our year. at performing seen of operators in commodities, protein starting looking advantage extended ribs; on a end year our put our through, into very their much of Threats make the largest, contracts things of through the you've A probably regard. to we through in that related to we're goes the that half second flow locks fiscal extend difference

be to we're So very trying opportunistic.

and appropriate cycles reduce in to Our that, work seen volatility. They've there, within and are making the supply those this those to that how chain they've the understand been moves around and cycles done regard. is experienced all work extremely cycles

Chris O’Cull

thanks, Great, guys.

Wyman Roberts

Chris. thanks Alright,

Operator

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

Nicole Miller

Thank you, rifle Good more it's casual menu that if but with and good bit to shot Sandler. Chili's this of dining, then I'm a to is specifically. your same maybe terms true, all very for store it this about little is believe want approach understand morning. sales have Piper of And focused if that to a I progress question in in a back in, like fajitas, to when right. the you. weren't ribs, that look at Thank It's just read comps it strong then Margarita's. mix broaden periods looked two focused as being they today? today had full come is Why does and customers – are horizons prior feels what in where come two two as now you shift maybe how versus as maybe circle inclined

Wyman Roberts

Hi, Nicole.

beliefs our strategy year been I out of focus think our really laid probably and menu is our into execution. now, third

a a a standpoint, point, consistency to need So everything ever with want in those a menu on possibly more, I me consumer, the mean, obviously, items you restaurant executing that consumer from the high you is it. And listen, level expertise deliver ask to if at could give always want your they'll I experience. that, with the with great challenge of

getting Saturday kind under new an nights, consistently menu a to execute thing. items not initiatives is and And items them to the and innovation for menu menu, to especially and of stay focused new found new bring but kind for news a core so on critical is in to up to around also fresh. Fridays easy an caught not But volume those us, get that to keep high we've really your race them of kitchen arms

to or excited a that menu, people And are a short-term really really a maybe category period it the item of to about it an just our short time. only trend of them when group it. may so provide little or we've difference not because committed makes for consumers a bring are changes bit about small when some excited chase to And operators

more And focus It that results. on allows So mentioned have board make we're all people difference. you seeing of in muscle does that we because little to are I a totally memory. a again, as with our also be efficient,

Nicole Miller

may direct discipline you. recall matters. in delivery And Thank how about you've the past could So to you've and interactions do those it from I that extended good talked had be some like from sounds Chili's. catering across and Maggiano’s

marketplace, update on to a in any practices and third the of terms capture can how the on as the consumer but directly the brand, you a specifically? there data as is utilize casual best delivery with dining the party So go direct brand relationship customer how capture still

Wyman Roberts

we We doesn't third do restaurant model ourselves in do every Maggiano’s so to with think parties. as with we ourselves. own as the just vehicles in we Well, well that teams obviously use case. our as that and anticipate don't well have Chili's, work delivery With catering regard delivering

very restaurant the each the and as with a that and happy experiences. to partner in key marketing other our is working helping out I partner there making of for excited have sure we're opportunities leverage DoorDash think we're and restaurant and

do And businesses, on both into so with bring a of do you through partner again, scale how we it building other's the we will, on has to databases, the if the each lot strength that partnership.

Nicole Miller

Thank you.

Wyman Roberts

Yeah, thanks Nicole.

Operator

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

Brian Vaccaro

you, Thank Raymond. James.

day could you is anything if appreciate in light that fiscal that maybe to right? shed environment the some part January saw to it comments. industry may so, But want also the the else relative seems And narrowed, your that QX? what or you on? to attribute specific that is the value And too have you gap would cadence you speak Just can

Wyman Roberts

QX if at sorry. Yeah, It Brian, X.X%. was, was it's X.X. look mix performance, yeah, our really at price you easy I'm our

a low, kind don't line that that, time to that our been that And two, for a half We've nine And be two. for. communicated strategy X increase, planned so we you is little have some we one to what mix high up always always and a But take X.X pretty the And that is we little general, then told we given of they shifts. to price exactly. at Street a be in may price range high, was when a I one of timing end – may quarter a think us. clear

QX bit we little high were with right our in at we X.X, what of expectations. to QX we with, things on in so in in came the leveling expected a more kind and out end And

the a think communicated QX and traffic pretty a I of driving expected. beating trends pricing we quarter were leveraging and to then based we of our just the on not beating results but we That sometimes that lost industry continue we're And board little through for want and think more some strategy. menu bit is the this success that we have the in. small that, anything, way the we business. mix. that timing came in numbers, Overall, If exactly traffic So on the the now were with by eighth by points to consistently a row restaurants much gets to two normally not we approach on continue three in in traffic focus – would key aggressive keeping in we we're is busy

Joe Taylor

And that second too. gap to the industry quarter actually first increased quarter to

Brian Vaccaro

of January. Could Joe, either pricing performance where in about the traffic setting pricing quarter or expectations for I speak average check January, the January? you to Have should pricing half you road. you guess in to in second here just And second and the Okay how think also those? relative we were fiscal in taken

Joe Taylor

of the year. we'll we've to of Yeah, now that back half pricing, bring along, X.X% is second half range, it of will through the that and X% all kind we into second guided in range so what in it again, we maintain move down

Wyman Roberts

do we any yet. pricing January in didn't And

we messaging driving more So of really the is traffic those on about, just that a focused know in for function back available what delivery in the getting results restaurant. $XX talked available only restaurant as the X channel. really through you are is not into

take for that of restaurant. offer, steak the talk want into that to So come got opportunity of if when X you to about we $XX, on you advantage

Joe Taylor

bottom in from the Yeah, want be think that a too, menu color the expect to but see Brian, to end with upper towards range. and not the a range, the you pricing I standpoint it'll top towards of But err us I end. you'd definitely

Brian Vaccaro

rest of the of range this pricing Upper end year?

Joe Taylor

Correct.

Brian Vaccaro

frame that's Chili's color. I I delivery gears, in shift be very XX-Q. it, much was and it'll Okay, in and mix the follow us helpful third party helpful, versus quick is to at so the just the And if the help Thank what one sorry, up, missed But app channel, you. sales you how website? the coming direct can from and quarter think

Joe Taylor

marketplace, share delivery the the of marketplaces generating the much we a white that piece of of having marketplace. the Again, effort. that coming watch side October, party continues the from in equation. to lion's mid of third of in that. out a on that standpoint equation, early so the from that is broad it closely, It's call of started in incrementality we'll still XXs the It's Yeah, and the how great comes label but has wide presence be a percentage

Wyman Roberts

is continuing grow. emphasis takeout business and The out thing on to to that's encouraging of kind Brian is, we're now moving take the third of year our

continue And to take nice some we out year. really growth growth after quarter this prior see and so

able of again continue we not us the in it's all grow as about well, to it all kind growth as So continuing we're our encourages to business, channels. be through in to takeout lap see move business this which will and third party, we

Brian Vaccaro

the what Okay share that memory delivery in I was was think QX, can X.X% and you in QX? serves

Joe Taylor

of said a of Yeah, as at go the total again, off-premise a their the total X% equation above coming it's Brinker level, side of little now as feel growth at at out to And level bit pushing too. X% also of pushing towards is it's the little now I XX% total. a to sales continue it's you Chili's, and of higher

Brian Vaccaro

you. great. Thank That's

Operator

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

Stephen Anderson

a share, maybe major turn signs batch Wanted you're some space talent announced of another I closers of to pickup a as Maggiano’s any just seeing have kind the to Maxim upscale to market from also that Yes, some wanted Group. in if that ask in just competitor space. for lately, of of of that closed competitors

Wyman Roberts

it great job experience early matter of at as through, guests but the today's flow And it's to the – focusing It's be to probably no of guests world. I Maggiano's as always a what one the on a right be needs will for the relevant of kind that ranks making or deliver think to all Maggiano's industry. working premier on in great continuing you mean brand brands Stephen, to top. and at, look survey doing I in kind continued consumer little is

we really branded bit to need focused experience, a of powerful but kind little probably seen on what does we've the any on we really focused excited about to and asking that haven't to put the of grow we're together enhancing we're So got just that just elements, what of more a either. but job. update business is investment about, a how team some specific putting of to that of and And kind We're great relevancy brand kind looking been into ourselves that now back haven't we you're

Stephen Anderson

you. thank Great,

Wyman Roberts

Yeah.

Operator

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

John Ivankoe

of performance was seeing. a seem about Hi, Chili's specifically, experience trends January. a Morgan. little thank to bit Does performance better, that with of you you, more It Wyman, you competitive – unevenness October word point month-to-month, is the and a operators do sales predictable the some and with And and especially maybe of year-over-year current guess sake overall. December the surprise of economic you cycle? of obviously, the like of staffing have obviously for can achieve environment. that brands lack and the slow kind kind of but better levels lot just kind just stable or in little September some the you volatility, I this given you curious sales bit a monthly into does accelerate kind industry that think Chili's down the at for JP sales of a overall I re and only the November monthly monthly and year-over-year

Wyman Roberts

year to have especially looking this holiday of time impact. I little more dramatic calendars, the the volatile way went longer John, might versus that shortest it next. our of out out, that period period. factors through are there's and the or a into Thanksgiving, holiday from to month Yeah, year compressed think maybe one some consolidated last – the with a thrown period the a contributing the of kind had And Obviously, pretty than is it shopping lot played

So that, of through dramatic, a good for kind kind the things not overall, news moving some The here and point into us or it's But when you it. of at that of that's level manageable. of kind it's we're sift restaurant and those played doing in think encouraging at I and but in the become of that's the think more industry a competitive. And also Chili's, to right both sign lot is primarily I category maybe moving a here direction. of happening there things it's what that's the for

John Ivankoe

looking I – I if follow have for could packages your the have it you just mention remodels a misinterpreted to made more some we don't if can that you what call of that comments markets. slightly But at in be in some without now. reported specifically and rate maybe correct look conference talked to wrong that actually know I haven't what franchise my of unit about may, And beginning up the months September three Day acquired bigger for of ago. touched. Wyman some want question, at we monitor you in of and than and different a and units been impression those remarks I me development, of that some Maggiano's and kind the Okay, run if was Analyst prepared at I'm was But did Chili's you October quarter. stronger terms

you we to where shift, and those 'XX future all 'XX those CapEx show, out, as if in terms in about on 'XX begin focused planners rightly the What does at the say think two our of numbers models. certainly and for pointed does that As kind you are of reasons?

Wyman Roberts

buckets, the seeing, flows, we're capital move the range a years. the expect update we cash Again, side we think we next about look needs those mean, get couple equation, and the years. consistent to expect but that again, I a I to of similar would guidance see think for to between couple of see level models as I our you officially at acceleration of as as next that I of think CapEx different the of fairly would kind pace we'll the and

then years or of opportunities sequence and – [ph] also couple reinventing lie also. side frame of we'll start of have equation We in the a where we relates the work the to think that on what to more Maggiano's Chili's time in

John Ivankoe

you. Thank

Wyman Roberts

John. thanks, Alright,

Operator

from you. Thank line question your And affiliation your is and Fogarty. coming Katherine the Please announce Katherine next is live. your pose question.

Katherine Fogarty

I Great, thank Sachs. a have questions Goldman It's here. few you.

side more that the that but and it mix touched the we're for think whether? ground, consumer consumer kind the Do us that loyalty a a the of of know tabletops X in end first constructive helping accelerate of engagement getting strength trends of on know, it's outside are putting how kind some that. that is days delivery the do the standpoint, that's can the I $XX in anything improved or could or seeing of you that then speed referenced texts we've you're that attribute From spending? help that early January. still your on backdrop? and understand of you little better the rollout you. on industry, you of for ticket explain on help you're understand service, overall would broader in, business? more one new of Anything kind And the boots you Thank kind a of we it's we bit, So that to But it whether to

Wyman Roberts

components to whether to better a trend restaurants, that's other question going to nice dining could on the of segments. segment in, And players. to a what to the specifically may of ourselves back whether performance. that's aggressive, of do kind it's previous a the making initiatives certain from gets the that doing, term – more we're of again, there. our kind the what the come I we're relative driving speculating in really for by through not people or think end time I with I I'm they on in food before you been little that of open up little mean, considered day, or thing there, be lot delivery, to maybe casual. be competitor, think channels, options standpoint, marketing I strength going other to as not yourself industry in fast There start casual be shorter see see. at but of weather other fast so bit And delivery whether categories. an a think Katie, I may they All it's again, a mentioned is a occasions interesting there out And think spend has have Yeah, us that considered only some to

our continue So to the those of better are exciting about understanding sales grow we're leaning traffic. and to to kind as continue are that things and and are excited that opportunity to we us into expect

the up regard for for new the opened needed tabletops in and tabletop category six whole and industry casual equipment sure With we that so to dining years over be the to replaced. device, ago

computer run volumes those with can't forever. stress computers our under we You kind a of put the

system couple So we gone replace, to knew of we've we needed things us. for better that to a does a

parts. system, less So for wins us, the what moving a dependable more are it's

use people to and team and the couple and will and the thing good equipment get lean own. they'll handle members can work time a guests they it into because every their count to it that of gets our on things, So does that's our for a operators it on payment they to

standpoint that – other frees pay time the run up do the server high. we our forth. is metric as that's checks things And has so and back servers at And than call table It gives card that rather important because in eliminate those most loyalty also to chip credit us because of our that expense. machines our all the and to it debt some for engaging programs. And powerful from have readers is guests new of bad implications really

loyalty. to for very becomes easy log them in it So in and participate

to the ask more – phone as having of start those automatically. turned up, we're set we to they going them if want login. kind they to also more them on just continue them haven't push we yet start to And our in, to can are to walk we going capability database. communicate grow of that talking it now We things their aggressively have even without kind to for the They're

grow we that right ways Pushing now So are database the that to see about in growing individual nice getting market competitive really database drive us unique that to in will continue we as smarter and consumers to clip, future, how that to as and the are a use we smarter to at and a advantage incrementality.

Katherine Fogarty

X more. margins there up mean we to consider? the kind $XX need follow have on that is perspective thermally just pretty on I from X other a And the that for is also the on I for anything steak a pushing to comparable $XX? Or and on offerings of margin

Wyman Roberts

that so portfolio have platform tradeoff pushing X to whole and period, for items the and we're will, than we're is may X little going It'll new and it'll – be the some it's again, – And you we steak to a on platform period for added definitely better in little on mentioned, that we've it's then steak, pushing not actually but not go away. those a forever. in manageable. average if also they're the our be $XX of items for ballpark, time It's margins premium. well. a and Joe in portfolio up there as give And It's time $XX margin so doing

Operator

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

Jeffrey Bernstein

of better and it just suddenly as a Great, the improvement, uptick lot seems thank the that the I for you, $XX kind much was understanding that that from like to point you're questions, hoping looking of acknowledging advertising switch was to the in back at contextualize But January at as that I comparison the fact was difficult, X back your greatest is industry Barclays. one more with Two as steak. just mean, well. it the got did driver this it the

was you past trying feel the what believe And just the how fiscal the just about would versus of you is comp steak guide performed to get understand, it momentum, how the the one, like driver rising conservative. edition. if 'XX be maybe because lifting boats? if about Chili's you number seem sounds just contextualize then months was sustainable, like it think much of a versus how you it maybe that all would to And guys your for So industry I'm which kind primary quite good feel tide the guidance it therefore is can

Wyman Roberts

Hey, Jeff.

going within what's talk on Chili's. just me let So to

really that from and pickup about the talked on $XX air perspective. the into an in as steak success ate something good expect way X getting January consistent you and we people that seen change measure item again, was we've back and a drives on on how in usually would absolute traffic came talking is – many we compelling trend restaurants with the more on about So and message us seen we've we're that like for with for the

it program is Additionally, powerful. out our to the of aspect regard of of had will gotten our that driving this that and ever start year incrementality just most Margarita our month. and program the with Patron the to has business, with January unbelievably stronger successful of of in in the continues is a third every blew Again, we month get Margarita year Margarita, our next And month park. better

and possible it point well, products – that's to we there but lines compelling up value, will, trends. but what's That's out the you linked very kind be if that's with the strategically there really quality doing that's to out not what winning. put at to go a the to we strategy change great – saw trend bottom we're of our necessarily thought price value not quality again, lowest of products. deliver And with what So our what's

rest the industry, that been some some has with been little the more what's not been rest There to little pushing bit going There I'm expert a on on the people regard have exactly changes. have With aggressively. – industry. an a of again, other weather the it's of I'm and

half fiscal and year to for first just in doing it's and the see absolute. relatively little bit our category encouraged whole after absolutely the that what's a so, direction about both a nice positive But soft, for again, move relative optimistic we're And we're category. said the what been

Joe Taylor

had in you comfortable context we the as versus of guidance, an And now. year that's half the the comp range first our and of we've we've industry it to with relates provided where the guidance Wyman that Jeff, we're expectations. have underperformance what the very as baked Yeah comp into right said, the

industry an confidence very second and I the in come more But to we year. to where the the going kind of I'm end comfortable is think by year. improving of move out even as only range into we half we're the of that bolster guidance with So solidly expect

Wyman Roberts

Yeah.

Jeffrey Bernstein

you more Got is you your to just there's the range aggressive messaging and initiatives talked that you about just of know it and of kind I plus that percentage as what new percentage wondering my think some do entail. get think in sitting about when talked that you mix, specific even it's follow about I proposition prepared a Chili's might about mix? up and And your or value percent is the the as remarks, think still the sales occasionally value you a on in offerings. XX proposition, in competitors where value value how terms whatnot menu enhance of of But to currently are guys

Wyman Roberts

absolutely compelling which margins depends platform. platform, that's teens and see, those that we're the Yeah, And is value $XX, on platform to platform. margin think now. while again, new our good. you will consider and value we you a When now for as It's high about our to you look opportunities leveraging been for into can primary a see built X in into bring the our it It's platforms. structure continue we've and news we the a And what – would are that's driver.

that have So like you another kind channel in lean that. that into delivery of kind we're of the the fact will of buffer, between not continue offering and business to to room gives that we if we and pieces those us the

our can to excited outside database, bring we opportunity we then and And inside example, to to so an both doing between what about innovation and the continue the have we're traffic restaurant. as with we're that drive platform that

Jeffrey Bernstein

you. thank Great color,

Wyman Roberts

thank Jeff, right, you. All

Operator

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

John Glass

the comp in rest versus at looked the quarter. delivery you and Stanley. just if mix, stable particularly and the It's dynamics you. Morgan of the verse back second relatively traffic the I could second and to on go they're quarter Thank If quarter business, first

So rest will what be because way delivery it well that didn't outperforming The did. underperformed, the at you you as business look the to right of news. it or performed have

how there where are is does on you you delivery a still the you a as the And now, in delivery like that you both can't in that that you're offer to focusing get that delivery, dine well drive into go sales? period balance, delivery if what dine does thought. as so Is figure So out challenge you business? can need contributing to strike raise in hurt you

Wyman Roberts

No. Hey, right. John. It's a observation, great

into delivery. I So first six months think, off, we're

and business, we're much this mean, promotional it And we to as how discounting plays a to to do – much party obviously, you I learning others. you on a market relatively aspect a how that we're how much scale, it's of how of much how the did we by and as becomes right. – that business – to of very we've been space third your carried delivery, do didn't promote, optimize how – do it And but you lot How getting exactly regard So mean, partner? okay, bigger about, haven't small now hesitant business do it much the not have piece it. smarter it? does you done within with as I of gets of a to piece how the have

our cost emphasis marketing carried more always that's and it don't not than external because as with incremental messaging, for deal put looks an lot us, with opportunities. it we're the messaging we will that to and regard now news, to that's in to tradeoffs. much of into of like we hindsight on it, from of third of lot we more gets we've kind we marketing that's that's put great the an our So probably a lean that its now, and delivery need have in opportunity on require focus And on And have aspect whole as support to restaurant doesn't kind probably we so going those party. more is a comfortable business our it of working make what are own a the

John Glass

this that from contribute Thanks you perspective got And Joe better initially how an on acquisition. earnings then thought to for your and did that. from accretion better on guidance, increased that than of much you've is quarter part ERJ, visibility

Joe Taylor

at to. built as along annual contributed model level we contribution really expected acquisition last It in we our the the expectation was all But greater quarters. the two for the from

quarters, two normally more the businesses. As the you see as us those in just money higher make volume last are

performed that will line with contribute see last the and we continue so two it a built on performance that of as how that level. quarters will higher expected, we Both expectations play path So at out to in are model. we're the we that the

is they this of piece we're pretty but any have seen that we're interesting remember, part those as year benefits changes the what seen some we earlier to Midwest numbers, to pleased again, are about is bringing they that the the from quarter. direction too non-comp we're the about performance business where I restaurants very current would the of we've So we making not for of that's about that the is accretion great one in those out the that performance quarter the talked restaurants of things equation too not ride of specific and going. also in the it, note this in first excited coming because the of in first

John Glass

thank Okay, you.

Operator

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

Sara Senatore

to Bernstein. in specifically I back context I that guidance has if on and from just to wondering or mix Hi. up implications margins you course you're is the Thank and of at where guide. follow up you. margins, EPS was strong want high the and even return comp messaging of took already cash though of your of the running the comp but kind not January flow, end value, quite

what margin a top-line you out remind talk January kind store was look same though, a just of through sort or rest trying I or if year those higher we've understand the lower, related any the a channel there trade of the a of Thanks. different happens, be go, how than you may think off but to just And the little the channels question, playing the to as implications what notwithstanding that could just about about on said top-line. margin is delivery little of little offered bit you in how about implications kind margin think out, dictate are may more deliveries bit bit perspective. pointed from me So

Wyman Roberts

that Sara, the question. talk cost Hi, about sales and for. get of are maintain we kind how to me first higher to very what seeing as impact our leverage And not to it's to with these With offers, and let of that relative just show a margin. and restaurants, the planned it's flow to our comp more structure. regard we continue aligned downside cost we And you're The to obviously bigger margins really is the opportunity sales from than positive significant. great operators sales, what offsets any ability through that's much right and

and a through it high predictable And those so pretty a level. flow dollars

talk So let to Joe –

Joe Taylor

relates approach do. that that's markets, marketing going sight I supply is and sales our they as contracting where in Yeah hand into it you under, again, with teams is marketing great and the of operate think I a mentioned, mean, line they built the working achievement we're we the there's from standpoint to hand cost how predictably chain

on line expecting – not do you to is total in we've the of protections of we're think again, positions there's the we that So side the put as the what sight with marketing about equation. taken on place when the and to

don't So out equation. that expect of piece of I the any coming surprises

different characteristics, have As and radically different. but it to they channels, margin margins do not different relates

So one of you the that $XX I of margin the equation channel. X think that the overall – manage for when you mentioned that on for don't marketplace the that within as opportunity delivery have perspective manage Wyman that's ways earlier, side

by of the clearly business some our dominant that So based is about in dynamics. across those followed slightly dining clearly go those the of of has delivery and part business, margins on to which larger XX% channels,

Wyman Roberts

and smarter Sara, again we're how business to new getting and good it in And this it kind that. the and we're find delivery at of optimize about efficiencies pretty

looking the guest that can great experience. a have hey, we don't find at, team We efficiencies that's some impact constantly where

Operator

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

Andrew Strelzik

initiative loyalty had is the I'm an just which an that's and fits over time. starts there. is question My you. Thank on curious program, BMO. But for update

are of, in to that that's lean about terms offers still optimistic been to with an there. really membership personalized upfront? of out the or continuing see I lean ability In the to kind you've Have you grow? is started you opportunity know in the

Wyman Roberts

Hey, Andrew.

and even growing aggressively. grow it more to looking we First, we're are the database

totally which bought to is our a our of kind to smart leveraging this a our, get win. the approach into we So how that to this use can't. marketing, falls maybe market that into to and future database, that others towards just – your marketing our consumer about To are guests going for direct we're scale guests camp potential our we technology the - really getting to in way way leveraging

to just with some us. as we're absolutely get And up And the tabletops. for continue to restaurant, time. new it. customization So just talked we're like are to it. see we're into to it. but opportunities And we opens database about we to with And committed next level smarter the That bring the certain we take about technology some growing using yeah, that a of the degree, up avenues over we excited we as

Andrew Strelzik

have from last – couple quarters. efficiencies certainly labor turnover helpful. a of other been my is And question impressive, the That's

some performance of but the there with drivers, turnover, of the training the much to of the improvement I'm the of all labor has side? some mean, on about operations the those on some and has talked much and You've of how and contributed you. curious easing Thank kind that things, I how efficiencies

Wyman Roberts

lower for operators but better how everyone stabilize and we stability help think as our much a No, even believe better systems in numbers is our turnover managers because some continues we not metric on for seen an and lot, the and important an opportunity again industry, number management to metrics understanding us to focused level, we that's can of the kind turnover that's some be move with performing. us. to continue have still organization we now, look again of our more we for At some or the and forward better than something understand that we hourly them how right do they're

road not been move but to of big do we we it's So opportunity see a as it, leverage down turn component over. the

Andrew Strelzik

you. thank Great,

Wyman Roberts

Andrew. Thanks

Operator

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

Jon Tower

Great, thanks. Wells Fargo.

next it's pressures in to the forward Just How years? those longer kind specifically you and time? of there's flattish then operating the that, margins, components stay and have keeping a over or purely fiscal of do the restaurant should impact operating kind outline components But contracting I going some of future not EPS flattish the if expect think on therefore, to been really of question the growth, and income growth function. since EPS business, periods three am expand operating or you about been this think we those or level five curious accounting leveraging growth G&A so should how on an 'XX term business margins could over you quick on about

Joe Taylor

of combination equation. I top side really Yeah, the Jon, the line of those and is key the think a it's growth all

seeing of particularly half addition of this both over acquisition of next evidence that last capacity capacity fiscal continue great you You're year. really the obviously the the growth, will that's from second get growth from this capacity the from of the quarter and that and a the three in strengthening acquisition course dynamic comp quarters sales that

belief those side we've effective X.X% – drive cost and line should can and the have margin you perspective our and price about G&A P&L to of and through our, in opportunities go that again, to area at the of talked the on I equation. maintain the for that regard top equation. and traffic Investor of we outline that the back in the side have management think down consistent of way again, that day that side including But the – comp been X% price, do So management flow the there X% get you obviously, our without mix when equation long-term towards the that a we ability always a kind all flex to opportunity to

capacity ish and comp development So again, give new that range maintaining our a opportunity two us top-line, growing adding margins. percent that that side on to manage that restaurant does

Jon Tower

you. thank Great,

Wyman Roberts

Thank you.

Operator

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

Gregory Francfort

I had thanks the Hey, for question. two.

How Joe, the question Are other the price just in the volume for that was terms some those of contracts? Wyman. of is contracting does side. first The on And then for the fixed So my two. blend commodity contracts are work?

as like you it? about look of third Chili's world, economics dynamic? gauge party a how is delivery then profitability as will look try you thinking delivered that third a believe in think is mean, Thank or VC how the to And delivered higher you you seems you other in casual the As the about at also than that do you orders and your shift VC what aggregator party, at we Chili's dining I to dynamics it order, and are towards why you. changing that's

Joe Taylor

yes marketing of on answer part depends restaurant standpoint. depends first we're the Gregory, product product And your It is the short a from and to talking what on question about. that the the in yes. it that doing equates yes, you're how to

all combination be of can mentioned. it you – So of the what a all of

Wyman Roberts

the well Yeah. But basket I fairly again, I locked is think though. mean,

party third incrementality, that the the exactly us think right. to coverage. but we so question, sure, With to pinned regard gives the I'm Greg the are not economics And delivery, absolute

grow and good the feel one incrementality think we so and for to it piece profitably. a combined And grow about structure makes nice based and can business continue us of really on incrementality. the we delivery we cost And the

the when look solid. a from and incrementality we they're the at we about And totality absolute delivery, and we so incrementality so feel And important, the look margins of it that. good are that how at business with

our that mean, for piece to paying of after think So and are one delivery one Probably are well door? that something if somebody consumers demanding. a in again, that component, and to you're it they as convenience because is were good business not good worth but going is going as front right walk consumers we demand. I

than it quality rather fight a in for lean we're feel and going a do that, business delivering about we product us. way that to a model it that works and So into good

at delivery. So looking party we're third of that's how kind

Gregory Francfort

It's Thanks. helpful.

Wyman Roberts

Yeah.

Mika Ware

our that concludes so Okay, for that call today.

April. So the us on results and you we appreciate joining forward in on quarter look third everyone our call updating to

a day. So wonderful everyone have

Operator

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

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

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