EAT - Earnings call transcript Q1 2021 | Brinker International, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Brinker International Q1 F2021 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode. And the floor will be opened for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Mika Ware. Ma'am, the floor is yours.

Mika Ware

good and Kate, you, morning, everyone. Thank on Officer and me today's Chief call Executive Chief Roberts, Wyman President; Officer. are Financial With and Taylor, Joe and website the available for quarter released this Results were on brinker.com. at morning our earlier are

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

call open We questions. will the then your for

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

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

Wyman Roberts

for review thanks, Thanks, see us of quarter future first our to and business. for performance Mika, highlights morning everyone, we the and this our share what joining

a continues the in agility be prouder the $X.XX likely of quarter improvement there more couldn't the dining obviously yet full category out throughout but of of earnings ending that's room in track those business. place Chili's in reporting be to I of traffic ongoing are marked Jersey, recovery the what from to build X.X% putting like brands its trends positive consumers delivered This still streak facing this include better down and posting continues reality to a is progression headwinds, Looking landscape. than hope see nearly solid pretty and comp to engagement that's data from of We New widened expected other category, Current down continued XX.X. card and the segment and a about cost Chili's structure improvement just given shift know When with we The the Brinker to with and pandemic significantly. view Maggiano's impressive and which team. feel of driving at first our both this California, In And sequential category traffic. share. environment, XX%, states a credit and expectations from whole a September continued and And of not gap and in operations sales And Chili’s managing challenged X.X% the Maggiano's quarter and relative we broadly impact both their quarter, a quarter return near we're its broaden is meaningful XX-point XX competitive September The there capacity. absolute sales our in an casual increased increasing Independence. negative Both last team are points environment, strong dining three-year is chains perspective. delivering good that a with month job there, the negative flow Maggiano's brand bold relative in We perspective. tough the we're the of brands the our the by greater Independence, where challenges encouraged a about to the strategy especially see outperforming quarter. a brand with Polished the of Maggiano's down Steve excited still is continue. resilience our reflects doing major casual this through. XX.X. are the team Provo their great gap shows the

restaurant When level spending March, the cost improved margin costs. the XX the judiciously quarter, all back maintaining evaluated then pre-pandemic a dramatically comfortable many the diligent in below hit year-over-year. points In re-establishing cases, of basis been about pandemic us to and P&L we're Since we've operating market For our within cut every spend drove our levels. we've levels.

our shifting we're for in we're good and made could the of Chili's more where harder spend. so And we advertising, significantly support changes fees channels we My We our higher that rewards. and on promotional biggest traditional the P&L, with direct was third-party rethink television convenience, with more tracking for in us reduced all digital marketing resulting like we delivery and based efficiency sales really expenses of with decisions. about increased aggressively One brands our work desire feel invest these to to delivery aggressively the

the care our help same our was model members our traffic and guests. business we since supporting meaningful pandemic. But top a the a out that been leaned been able even to critical prove that's and members to helping our this growth been wage to even category of And remains that, been we've seen managers years. now that last our to back Instead, predicted close brought is we're over of legacy safety they've And business. before our been our take ourselves they bonus to thankful in our challenge into leadership and Our the share target. levels. proud to We've effective of could it to team more guests three – hourly have could to And declines the Nobody them we spring. change take and for to we're the have we've that committed hard us able also back in that have years. their hit. management how intact. has didn't We've when team their strategies structure We We're pandemic that create team a you so the and our we guests. hourly working and maintain strategies priority of kept to most know

We is and this delivering effective have And business. right results we're believed growth a proposition organic in experience, right do demonstrate you the strong the available value our better By we thing. unlock a things. base category marketing, always more within if guest growth sustainable our doing

Wings. discussion enabled Just a do. a Brinker been growth positioned is us And introduce to value not first incremental to way virtual It's is. else An vehicle. Our that to disposable brand, It's long right. offers is barriers about vehicle for a virtual haul. Just the convenience do in improvements there's positioned in and to are this We're the entry committed one base uniquely no brands to lot what brand of Wings is and it to a well, doing brand virtual There our

scale, we can the X,XXX technology Just ownership, focus and the consistently. out, rolled Wings have and the kitchens, deliver We asset overnight our right strong operators When well-equipped restaurants. to capacity than available It's who and unbelievably more

say, Now that's to but hard to tremendously do. easier

generating meet the encouraged million and We're it's we're is about going well by track resonating our target everyone's We're really repeat XXX long-term to know first to how in than know any of usage. scores the what regard with already excited with far. curious with to DoorDash more It's is which brand. performing high year health brand satisfaction success strong consumer of brand sales. I we how critical already and sees consumers, data. so on The and So is

external Just executing at ensure we're forward, virtual focus awareness the expand access our just execution started levels we may phase Wings to maximizing an brand. we're and the as and accelerate different Just for potential. to It's trajectories. opportunities is increase growth to consumers. But Going wire level take This a and growth, possible evaluating one as internal highest brand's It's it Wings. We're and is

expand do have execute distant anticipate virtual the But and that planning hoping planning and know. have for demand we world, also say the portfolio. upside sickness a vaccine the end we level. few and ideas are for stability and Listen, to high post-election we COVID virus. in at here's an can Like things, to economic can testing Obviously, brand economy, the hoping ahead. the future. We environment. We're uncertainty a what believe a understand with a the no see recovery country consumer on continued We're to of we our too volatility this more a and not for ensure our that rest we of and to from and we one brands. better We'll virtual know, lot despite surrounding some and capacity deaths in the

our in our race We will work running own keep strategy. and

our and agile We we'll will flexible guests. and of other and care take each stay

create to that, We I'll stable brands, and will to discipline team great can our work an place P&L so more be sheet these continue we continue grow And model invest. it our And with our to shareholders for with to and a our shareholders. Joe. our even we turn will to balance members over for manage boldly to

go You Joe?

Joe Taylor

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

As fiscal bottom-line. on and the begin we XXXX top you our just heard, year momentum with

marking one quarter delivering by adjusted positive of hiatus. EPS our just continued our to We profitability $X.XX, diluted recovery a after return

$XXX quarter, were XX.X%. the negative consolidated were million reported revenues sales For comp Brinker’s and net total

posting each ranking of significant beat and continued only consolidated improved another number the in as comp recovery progressed September, Wyman Chili’s and one both in with KNAPP-TRACK Chili's materially for the X.X%. Importantly, sector important positive September margins sales to the And brand sales month by the as down quarter. quarter index in traffic achieved the In dining indicated as lead the comp milestone casual sales brand X.X%. traffic.

see results. to our Chili's impressive is at net comp Another way look sales progression to

fully were represent during Chili’s negative and as quarter for and X.X% open system and positive and X.X% XX% indoor those only These New September. approximately quarter, dining they Excluding such Jersey. California the restaurants for not restaurants markets of for the the

Food was by mix favorable turning year basis level inflation. offset of operating points margin versus prior year. quarter for expenses basis noteworthy improvement margins. basis beverage prior commodity favorable Restaurant the first points XXX versus prior were points XX.X% the low to Now was versus Labor to year. and XX due favorable and XX menu

contributed performance. items this several Now to improved

from from to dine-in quarter. off First, prior in benefited to sales shift in premise year labor the expense the relative

basis delivery advertising And the Wings labor equation. back XX and at plan reopened slower labor from leverage states increase up related some recovery, the model, diminish Sales that course, quarter were adding favorability Second, favorability sustain. the The Generating year. a seamlessly increase. to part overall go that Just integrate benefited points that we into sales the help our into in higher labor the buoyed was by our expense higher to It's lower labor is naturally forward. first fees during also benefit point brand expenses take we'll And the existing pace move as for a we restaurant prior of and the offset important flow finally, of and packaging repairs fact by labor deleverage the a our of positive cost recovery expense maintenance to an with cash will of primary ability which while expenses, versus partially was increases, process. the mitigate and was the

the With $XX approximately operating of more $XX flow cash than After for free of we million. million, the quarter business improving, our capital million. generated $XX flow cash expenditures totaled

restaurant is development. first resumed the in as Our cash have priority such, invest both new we generation business. back And reimages restaurant to and for

the $XXX year We this for have approximately year. fiscal expect increased CapEx our during now to and million budget spend

strengthening sheet balance a is of area key focus. the also Wyman As reiterated,

second our million. by such, during cash this debt strategy against quarter, As down to approximately we And pay debt. the priority reducing $XX is our long-term executed

to continue leverage times forward here, will level of targeting adjusted and we lower We as X.X from dead move EBITDAR.

our second to turning quarter. Now current

some continue me for color our quarter. October end some metrics first the the of marks comp it the we appears sales quarter. will established then period Let expectations to Today during the quarter provide positive the and for of guidance our and as specific progression

fine very to quarter positive its traffic further second Chili’s period, expect off the to We performances start. a build getting

in consolidated operating the provide in performance more Maggiano's likely will Chili's brand. we Brinker's reflect let environment for that holiday me year-over-year anticipate performance specifics With second the some While quarter. performance our being difficult the for second a quarter, improvements said, in

note I to are will the range. per margins store to prior mid-single down be believe expect first share in the restaurant also the shift year. second be our to impact $X.XX estimated sales. diluted $X.XX. be We environment, of quarter. in range range. sales a This Eve similar challenges quarter continue Adjusted resilience. positive flip operating share estimated and million have the quarter will QX. comp in to second million have consolidated comp of we We Brinker's to Day are third digit be period would and into in with holiday a to holiday XX to relatively operating XX earnings And Christmas be Christmas will in in average demonstrate moving offset ongoing It weighted we Despite diluted strength the shares to the the

quarter our to performance testament to results. is a first Our ability deliver

I'll the a for pandemic to of that, let's with restaurant in some is we turn you share short our team be operating to members to will doubt over move long-term. care industry While comes moderate. to gaining in and the execute uncertainties, guests your Kate, no a environment call And continue and with there and leader strategy, our the questions. take

Operator

now you. coming O'Cull. Thank from our affiliation, question today Instructions] [Operator your for your And the open is Please and Chris then question. questions. floor is Ladies first pose announce gentlemen,

Chris O'Cull

Good Stifel. it’s guys. Hi, morning,

Wyman Roberts

Chris. Hi

Chris O'Cull

the Wyman, factors additional virtual my restaurant what you support opportunity virtual concepts think that the are for and limiting could mentioned brands, typical question that? how Chili's for a do you is many

Wyman Roberts

so It's much how how It's it's much many, Chris. volume. question, a great not about

large And near nowhere Just end few volume, It's its you'd – so is its of as So the think do we like ideally as that possible growth. potential Wings right?

really, continue we're some that your is saying constraint brand least to And to brand we'll so capacity. level. kitchen from million $XXX And grow the at is now higher what that it's

every three of work. come just not we're two think is start the there point when as opportunity brand virtual game many as talking, on also low are have that or of one, put those a necessarily And you how you a modify. in options. to we this about – don't large to limitations point. you to really a digit depends current single kind kind get guests in every how brand single kitchen and the not the of fair, are digit, it's a that plays setup itself markets, of we carry It's just it is certain coverage looking distribution to have for for as would has with lot every delivery then whether There's Not out every are penetrated points still number. I have distribution, a to which distribution. It's that not of you

that as variables it's we we though that continuing of Chili’s we and is growth. it’s out. volume, $X million But couple not kind mean it we The sales all as I three. to our a there's that learn have is So a know news build it's we're about restaurant, test even good in – relatively do of average small number, our

of we've – food know that. than And that got plenty we out we because grow kitchen lot the optimistic So room what put business virtual capacity that a more of of of our have to average. brand we're so that's to we're and

Chris O'Cull

just you restaurant was been improvement the down Wings incremental could much level of And how margin one have by changes Just at helpful. That’s fundamental that versus the flow-through in break made the other of the driven business Joe, restaurant? It's question,

Joe Taylor

back it additive on growing line Yes, line we're of rooms example that, bring growing equation, to equation. dining virtual as was is but the more that fully do as brands top in piece also of to definitely we how important top the that going an

range, an at it Chris. basis XX Now look in points the standpoint when all-in from you

Chris O'Cull

Thanks Okay, guys. very helpful.

Wyman Roberts

Thanks Chris.

Operator

Thank you.

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

Andrew Strelzik

are questions My guys. the morning good margins. on Hey, BMO.

being benefits over and ago XQ advertising as mentioned time. of you it'll excuse year kind dissipate in about talked and You labor with line me,

year-over-year looking are kind in in dynamics going capacity, And of back about be quarter. year of you how in a better to or environment. are plus up you line the to how from we're ago. margins at should to play it, I down whether it's about margins COVID comps that what at kind about you being then this frame a mean, broadly, ultimately how flattish, XXX% more So Thanks. Just when business, Wings better much XQ be of It's you than aware thinking in we think specifically want post at and to that could are thinking however when

Joe Taylor

Yes.

celebratory special along that same banquet nature when lot basically and the Andrew, the QX, thinking want – start always I difference a side QX had strong of similar the the built to is second And out. of of going I think events about historically holidays. you is extremely right the our be environment to an see, So, Maggiano's Obviously, unique off driven playing equation. quarter the now delta anticipation we mean around to has Maggiano's the

contribution So an second the while oversized it quarter. in the to typically has consolidated equation

see see piece at of out continue margins get side. that more You're going out to as would a I out typically coming to from of the growth the to in coming headwind brand Maggiano's a of to you actually of the quarter. little the in the that anticipate bit Maggiano's business, of just contribution but look relative we it's that the second Chili's

think again, of be as of top go And a again a second think far specific basis, process. as that line. standing then growing that to I quarter back very that thought I on long-term kind

the we through still Wings coming will that or to very coming that then the we as are and of virtual as leveragability you the the important change additional look you their is dining mentioned the more discussion, get equation. very grow into But leveragability but look continue the a restaurant. Wings that brands, if equation further to bring online not either just Just is model again, of too, lot Just It's to I think the brought out speaking, labor brand and focus at as back the sequential at And base model. piece an virtual they've equation. quarter within Obviously again, incremental back you're little the the labor come It's improvement growth when we to in to as I rooms of business mean, dining within I going generally equation, to rooms we've which the very over ability high know a on important equation. in get margins, it's very, the I virtual part So you seen with impact brands leverageable.

then pieces that comfortable, are there that's model very already improved, after fruit about and margin platforms some from changes fairly think – lot a about we're a as able looking we're such standpoint, again, media been efficient that standpoint of talked business that we've and So improving business at a but we've of of and things of from of delivery the from and find and some weren't modeling Wyman existed. off margin a how drivers, efficiency low again, hanging we to the making We nature. a

Andrew Strelzik

That’s very very Thank much. you helpful.

Joe Taylor

thanks. Andrew,

Operator

Thank you.

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

David Palmer

morning. Evercore Good Thanks, ISI.

– mentioned would the margins about that restaurant you be flat. Joe, You

you Maggiano's I is a drag of much a in projected from to greater quarter? how follow-up. first much have a quarter, drag I might that the think fiscal How And be second year-over-year said be quarter? that the in

Joe Taylor

at I probably, getting their expect again, into specifics, in Chili’s of the Yes, margins the side again, the see on without it's equation. improvement I further level would where I to go if brand look

somewhat This drag. is offset piece It's very going be the quarter the specific improvement for be offset. equation. second is Maggiano's earnings to that's to by outsized that that Maggiano's the going So of quarter. Again, to mainly

that year to further So as the move mitigate we itself. tends into

to the we that's to So the time. of go to I period where where in Chili's see longer expect I'm sustainability pleased a see of margins And greatly continue business. would drive

David Palmer

longer you. to for there that higher share where a could a And does of helpful. go and that term, a a had area this go be? at Are clue provide And about statistics this the of very can how an looking there follow-up seems you you then clues and something just delivery sticky markets up? Any be delivery to chance to mature to to be reopened have on would most that you've with business level about business Thanks. us on-premise upside

Wyman Roberts

we not group David, interesting, of consumers, start And about it's right? with are restaurants, consumers a who large you going out Well, Yes. to right? there's of depending or going of go kind or what to know So, survey still more on just out, the they'll So not at, do population, not right? XX% whatever dine-in look out. it's out. go They'll you but to do it's take got

are pre-pandemic do what is we get volumes that restaurants know So levels. to back in seen

dining So we room. in are the

getting are, their even mix on XX%, have solid headwind, to And very the mix, of that we're – XX%, room. XX% seeing sales are of we close XX% pre-pandemic XX% that we with levels restaurants in take delivery. So dining XX%

feel to was sticky. be very says, convenience fairly I back higher that So that go comfortable restaurants, virtual and see it into the to by it the going pandemic okay, population where we what looks without right what take isn't to brands. and to revert vaccine, experience percent a back now Again, optimistic think now delivery then But of out going significantly does that that's post and mix. market I'll the We're the or pre-pandemic. very now broad that

mix. mix that as adds to brands we obviously that, the that in virtual So saw the

kind of at that's looking it. how So, we're

David Palmer

you. Thank

Wyman Roberts

you, talk Good, to Yes. David.

Operator

you. Thank

question. pose Our from next note your Please question today affiliation, Francfort. your is Greg coming then

Gregory Francfort

I Hey, it’s Bank questions. had of two America.

[indiscernible] pushing first question just digit I'm that harder the Thanks. on or what you margin that or there's math G&A I'm about time. the thinking second – you're on and in into second curious something? the for then It's comment options standalone what but is to missing, had like made was few just evolve off And there's look Wyman, if meant it And just remarks how on than something getting comment. that, When a quarter. options made what you just I'm concepts Just third-party the higher kitchen for comment I'm you curious question are, And I about prepared could model, if DNA I'm or a The or comp was single the by mid I seems those EPS is a down that guidance. plug a over goes Wings that

Wyman Roberts

And of drag again, – the modeling in second of too call, quarter a is model. be this bit the it There quarter into of the without again, getting a was to Maggiano's me, beneficial the little compared be on matter in second, the could to going of about prior thinking to G&A detailed in discussion slightly a first the you're how relative outsized year. excuse

a normalizes quarter. bit more to last that second little So in the second quarter, year relative

So And which not compensation about versus benefit quarter, could quite first as $X big to a year. you had of the a this million relates last in oversized probably benefit there. the year treatment really incentive-based

little bit So a regard. that that normalizes in

So you probably going some Maggiano's. the want of that to it's treatment make I'm make adjustments relative to but assumption the there, may

Gregory Francfort

Got it.

Wyman Roberts

brand. DoorDash it how getting it we're to other Greg, how to position broader to team excited going consumer base. our our the that's ways effectively. excited partners to appeal to the standpoint. acceptance future about on suffice partnership very with our say, other again, out to is a this great a strong our put But without it working with potential on learning from product about call it, not and more lot a competitive is share growth we're this do The to of – It's and consumer on just brand, ideas things a market

execute ideas results. of off we test as several kind the and about. think that those, at And talked we'll of we've could we And grow share base so those significantly looking we're

Gregory Francfort

Wyman. Thanks,

Wyman Roberts

Yes. Thanks, Greg.

Operator

Thank you.

your question announce Nicole Please next question. coming today pose is Our Miller. then your affiliation, from

Nicole Miller

Piper Sandler. and you Thank morning. good

and but first is less comfortable comfortable message you the discounting? think in that carry want is understand And something The with tone, are understandable could question change with you're marketing, probably you less to that by pretty or I you forward?

Wyman Roberts

great a question. again, Nicole,

because mean, the highest, have strong has some dining. I menu. not the look Chili's such of casual the We value category, you value scores if are propositions highest when built-in in the at in we across

there it's long got awareness it's day values strong in every enough, out and really our built So levels. been

to and We through will incent continue direct digital.

limited that not their like to effectiveness, but we just we're see to being And not it's sense, way not possible. we're we're in have going with is and don't first, those the just grow effectiveness. time – trying business And mean, effectiveness just So effective. a the And not we don't I we not – historic the like best promotions. about see that's as right, competitions, evaluate we it really any. really our the do them

And against so we great we're our job measure direct as effective more and what And a come to operators moving in. guests building and a what channels. we marketing database. done done have job think team's The much the more great vehicles can consumers our executing

in if So the out that comfortable incent that's to beyond how to and we we're very can come need to continue folks above we what's there on base menu.

Nicole Miller

of concept on nothing as same has however, soon but day thing. my But margins. every that, clearly It's single many email ago, months been incremental doing the sales and Okay. And out talked as with Just terms a in was, question about just the last you Wings, and then flooded it with

same that to the name use your especially support the data. specifically, So the peers and do given they land doesn't they they your you how ensure partner marketplace and have? that but data that only data do would you your nonetheless by Not have

Wyman Roberts

them We know any us partnership their relationship great We is do trust customers treating – treating built to on confidentially with the with DoorDash, it's us. other thing. they're right have trust. they're a – We

absolutely way ethical is about concerns I same that's have Tony business. And they run guy. that. the their assume so a very no we

do to partnering the So that to levels we to very no how with site And concerns get to them market that have way, transparent way. but effective grow they're their business the partner doing more the better in awareness brands business be right we're their through up. a we

Joe Taylor

Nicole, the And other…

Nicole Miller

the out but do help they enough people this point? and other I that restaurant [Indiscernible] there's thing. enough just, that room same the do don’t capacity you're there, just in if exact saying okay basically in this, category even mean, I want to you're you're is there's I guess

Wyman Roberts

do in regardless at I don't think to channel forces can is I to an brand if on on industry. large it at national There's fact such in small get there, again, the and premise any be as regional Well, setup. footprint scale at premise, you that's it that's competitive to going email think it's on opposed doing play, all we unusual that a the off or a a differentiating definitely might factor the

a that's Nicole. difference, So big

Joe Taylor

that's misunderstood That's generate a mean, it's scale have that through us. idea. they this matters. flows profit. think that to what out the distribution of Nicole, kind makes a many the mean, really unique it thousand sales, I restaurants I of potential that I creates points just if and put don't And I and restaurants, Wings to kind People can overnight. Just the they incrementally the big of own, It's that

have capacity capability So and the off. this that pull that it a unique, have is do to it and them kitchens some in to

than thing So it's an to create easier done said brand – it's virtual easy especially an one. sustain a to and

going one So long-term use we that's get definitely see pop-ups that are doing looking our strategy. to a growth vehicle. but they'll I almost some And them virtual through not of well folks is for kind us help forward. think at working COVID, This

Nicole Miller

very I you appreciate much. that. Thank

Wyman Roberts

Nicole. Thanks,

Operator

you. Thank

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

Jeff Farmer

you. Haskett. two And Gordon Thank well. as questions

with It's sticking just So Just Wings.

in week million that progressed. in any share I'm you if from growth three July? terms of system guys of type the You how information curious in million systems any three point that of July. the seeing level Are just generated sales made you can sales last that's

Wyman Roberts

every comfortable not Jeff potential – week kind or for our is we're plus, $XXX the about sharing performing get million want to to to we're into projecting just the levels nitty-gritty, of in We're don't we a like data. with of brand growth comfortable very now it's We're brand, how this those there. get grow from potentially the there. and and ability kind

Jeff Farmer

month share But have down did any helpful. But were which central I question nitty-gritty That's of September. unfortunately impressive. is That's commentary sales, Chili's I us? in one October share that Okay. the you terms you, X.X% Chili's, with and you on, anything believe can on of more for exiting

Wyman Roberts

that reiterate Chili’s of to direction give to grow And again, grow not further as will the we number? but to expect me specific October. that and or that And continue in nature, X.X%. some the period. September a also was in that be progression a September definitely we anything off going let traffic, Yes, and the up we’re this going I'm we of back Jeff to in of going comments as, positive I positive – to think, closer see of month expect we're in positive my and script that finish moving to

those traffic of a standpoint a positive it's sales comp on and our expectation. progression So, from is both

Jeff Farmer

All right, you. thank

Joe Taylor

Thanks, Jeff.

Operator

you. Thank

from Our next question coming pose Brian question. Please affiliation Vaccaro. today is match your and your

Brian Vaccaro

on sales more Thank where the I'm meaningful in Wanted across And And start performance prepared remarks, you Are and your markets and trajectory size that’s outsized supply James. there. some mid-to-larger in the perhaps everyone. ongoing you, a on your markets? in noted seeing to you Wyman industry there's just especially good independence. Chili's curious versus the Raymond markets morning, of up reduction? gains dynamics smaller how pressures, showing

Wyman Roberts

regard big performances is Brian response. to COVID No. market with still the difference

sales. consistent markets, these markets. across the gains obviously room data California, constraints, we in you're extreme can, New seeing share less Jersey, more Wisconsin, we again, looking share – And pretty with gains, through again, where So are see various there tighter the the that that's where dining

do share, what's on to we're with, And we're with as in again, some think not broad-based, states out folks California the they're dining outdoor I we are aggressive really be as So have. across where has putting way. going California, and working that like it may in country strategies gains seeing fairly specific more the using consistent

in may as dining state, and patios as bigger have that experience. not taking much be kind others put out and much share on that we all external some and so an of more And gone in

Brian Vaccaro

All right, that's helpful.

remind at us of you your And effective if capacity? kind missed frame the sorry on off-premise Chili's sales perhaps other quarter? you could I dining where are are capacity? maximize partitions to you but in it, initiatives was what the And enrolling And help and mix then where

Wyman Roberts

were prior again, off kind room on talked the equation. this of conversely the the as if of you that And upper the we quarter progression side XXs, Brian, of fifty-fifty remember, you XX% saw Yes, dining quarter, quarter, again, quarter. mix the premise through and the XXs but for you the you low was XX%, a in coming out and for that of moved

shift come open contend to So a can you dining as rooms, see back, us progression. in that

Brian Vaccaro

Yes, and – capacity of yes in terms sorry go ahead.

Joe Taylor

Yes.

can't just with Every county. in market different. a be – that not very is – to by with I because to even distance, to trying general Brian here. social with. give the state foot county every it's always again I'm there's sticking you So regard we're regard we're going be number But six to capacity it's It's hard, vague distancing

say could the least you that keeps so was or get at at I that puts just most – XX%. you And XX%

said, in. going And just you up If it hey, to and you the social just partitions open we're distancing. do put

restaurants, in allow get to plexi lot we're some were there, give are in are to high a of somewhere In more mandating XX%. aren't XX%. utilization putting so but to with be markets closer range. probably I just aggressive to little number, some tables, us little somewhere We we a XX% a to to some – I'd you around volume we're say again, If bit And greater more because less get XX%. are markets to that a XX% looking

So story. it is really market-by-market a

Brian Vaccaro

Yes, understood.

you. I'll Okay, thank pass along. it

Joe Taylor

Yes.

Operator

Thank you.

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

John Ivankoe

were kind basically general gatherings, month have with I kind just talked gatherings, – happen. for that the about wonder – whether you those have that what or going guess, secondly, the these some risk had people – of industry friends’ some I just can the busy restaurants you. whether overall, in Hi, restrictions of as people about. accommodate whether discussion obviously to There's office just very family do And previously are the the as perhaps capacity during accommodate you thank we of being, or a parties, holiday – it's

if Christmas is risk I of there the the it? larger larger for think what he So the And guess us the guidance, quarter kind your Chili's? Thanksgiving, of for I percentage for businesses of could kind with any example, over-index as December about Maggiano's remind thinking comp month? does sizes, implicating mean point, how at during parties are you timeframe, that do I quarter, banquets Chili's, the you you measure guess, and first can table is

Wyman Roberts

sales you Hey you Chili's. of look John, can I'll quarter is take over the Joe for first It is one the issue give on at as let Chili's our second years, big Chili's what the mix. on an relatively if Maggiano's we for quarter not really trends Chili's consistent a kind and us.

so the not people and at some higher brands celebration you days obviously, or have where other that when have impact of obviously, But necessarily mean, I they seasonal days. shopping. mitigate in we at a some close Christmas, We come the we're Maggiano's, nowhere near higher are see and couple those it's of place. do holiday where destination It's those Thanksgiving we're

nowhere So usage, there including higher as other in see Maggiano's. some as higher is and brands but brand you near would it's great our

change on cook. be at going everybody and cook we know less these of they still they're be to we And and to them. see consumers to they virus, we'll in quarter, of this the we our in with deliver think that of capacity. again, through prepared them got? kind They're shopping, going These be want speculating to it or to come there's of they're we're not not do know more to don't kind But going there'll way to not trends capacity deliver don't meals. kind data, but Chili's currently think also habits. and we're we think want travel, whether Obviously the we out, what's else. to to the look similar are look it the first see have of there'll as less want to Unless we we we some online, seeing. have whether the and for going we Anything control at going then have just at So like kind going or you’ve we're see food trends something and happens – outside we we

Joe Taylor

do, I'll again, the quarter, John, good we the for thing it and brands. to remind Yes, in as one it's Chili's, other and you both related

we Christmas, have for for the day is So do shifts and which of second shift quarter into the there. closed the benefit holiday a us

lift-ish out have a to you It's underlying support that X%, to do So quarter. in that of range some probably about piece. coming the

of the reporting get the sure want we when to to aware of quarter, just make is that. second So I everybody

make during benefit. is the driver of barometer best side this think, be standpoint that the And will equation, up Maggiano's which historically a would of nice from business about that's banquet XX% quarter. a margin the the typically standpoint. a their So I From of holidays, also

that's again, the that that unique I a big of as about relates into when piece margins, built the it quarter, to it So second the relates And talk quarter. you we've headwinds are as that given to that that to perspective we're contemplating driving equation. the

how see two next the So, out over environment plays the months. we'll

John Ivankoe

plenty to to of I spring. I chuckle the people that. make joke, just bit think of a it it on mean, the as got I And little could a of have pandemic predicted

because kind to good we it's thinking remarks, as not, anyway, going is but or I of about anyway, were that is the well kind I'm prepared hopefully glad was middle the of of so received As in And April guys. joke you but everything well. everything, hear of

Wyman Roberts

Thanks John.

Joe Taylor

Thanks John.

John Ivankoe

Nice talking to you.

Operator

Thank you.

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

Jeffrey Bernstein

sales continue Two like But you Thank not the on like go it weather improve very especially COVID Chile seem to potentially the spikes, seem increased capacity Barclays. mentioned, to biggest the put and as if recession further sales mentioned seem does sales it have a yet multiple XX% restriction colder like to vaccine, improvement you assuming much Wyman, seems first, you restaurants. from But does maybe not back entered. any should here consumers does ease headwind. just a capacity aside, which us. want the I to questions broader outlook, like upon with further, peers have prior and it from know

reacceleration in whether specifically further can still And to you Chili's over comp you significant, see negative trend thinking a that months? anticipate Chili's like and the do near still sounds follow-up. So just term, sales whether I next modestly it few or some the further you have then believe improvement is

Wyman Roberts

a question, it's I Jeff, right. complicated – Hey think the

some major a In let's like California have markets the – terms market reacting and responding to significantly major is because you Texas virus. like take of different than that same

take then they California feel to they like market, we'll world, similar a in are our is see drag Chili's that, then We is open country number and that starts if the to in know a XX% like and we've COVID if right open So, of improvement significant of shared willing can COVID what starts we rest growth in states, up it, kind the Joe numbers you. the now. like to you with a even restaurants significant see other sales. their to – mentioned world, overall that to the of aren't

when of are that up to XX% And pent until out going the in saying, at COVID is interesting there. if given they away. potential world, obviously – yes, an the at moves open have limited that's that's restaurants capacity, So everyone there's of run COVID we some then you still growth rooms not COVID just, demand comes dining And kind big a upside in again, the vaccine, tells population can a world. a there

Now our is of dining takeout have I’d that delivery, to rooms Does you once help? but and lot potential tell using a get very a busy they're there vaccine.

Jeffrey Bernstein

we're chains, some And sources same a to whether magnitude seeing you're expected is large share significant couple that was wondering many just, just yet. But that and the pandemic independents they seems allowing are about a for it it said obviously like then for the about initially. silver challenges the is all. not facing, follow-up then gains. And talking as market for of you. was independent that lining are I’m difficult the it Got mentioned closures maybe industry seeing

store this point? across independent Thank restaurants thousand good you. plus we a pretty at So your just what magnitude have the to you really country on seeing closures so would with gauge are

Wyman Roberts

on You know, then to to the the to by based pandemic tracking noticeable competitively. all space closures. previous haven't to the to seen absolutely guests are again, And and impact sympathetic this Again is what's we influenced in communities having correlation government first going we willing being aren't factors, in on not the dining the we so that. are go independent results on others many And response question, the any that space. and rooms, the

out. it's Obviously that's normal. that So tell tease to to in very of But going hard be to shift it's just element got we line know there. to there's because doesn't landscape to behavior consumer I when kind hard think be But very that the restaurants of going happening. up some already now you've

a So then once starts we get and in that to it you'll historically sense better had, like. the get what for demand mix the what replicate that looks

Jeffrey Bernstein

you. Understood. Thank

Mika Ware

Thanks, Jeff.

Operator

Thank you.

Slagle. from next question. Please today announce your Alex coming your affiliation then is question Our post and

Alex Slagle

evaluate Thanks, the you with on test Jefferies, how you're question and you options and Wings relative good Just different your to morning. tests I other look had doing what a virtual here? experienced what what these are brand like It's and you doing,

Wyman Roberts

whole other there testing Yes, so we It's Just out there share Wings. of a like before don't rolled it, lot are Wings really we're think anything reasons. that. you with Alex, I'll X,XXX we restaurants, for like about big I think a don't, it about we to we just tell ideas you talk Just obvious we're don't to just like But – It's I what excited. didn't

kind virtual the be that And effort. we're that Can test out to of think ideas worth big idea? It's the I two then testing it? us brand Wings can And the things the generate and have it demand. we potential Just long-term a we the are of two and evaluating first does, aggressively is learning. excited? making those and We of execute couple could it a Is there a in critical there to Like viability think those things gets we and we're are sales

Alex Slagle

or you've motion? a expected openings? development phrased Thanks construction resources visibility the your on available, this activities slightly, for thoughts that. those And is then function more getting in cadence and on any to of on outlook sites And better development

Joe Taylor

process a again, combination Alex. a that important process. it's was because to going it of longer-term Yes, the get I think, And development is

couple round a year. already six the out to restaurants year new we've far more fiscal mean, I this go so So opened to

now, being about really the capacity think when work looking development where a of up XXXX bigger actually into the side you half Again, the net have that X% to will growth X% from XXXX. back second really, development So done and of at of equation. get level the to of benefit, you're into like I'd new

of to, when of of and independence, it's become getting, when So you equation, really that all do both can the as think through work difficult to we as that go we opportunity impact that the efforts feedback site out into you novo said parse development making but you de again available, with going of we're they Wyman are before, pipeline, build see degree some possibly kind the kind about side sure going situation. this into where sites

we So there again of to take are may those there that that some we’ll build but and an resources off pipeline restaurant out that number lead now have increasing to starting the opportunities, new in place the development. development

Wyman Roberts

that add, were the pandemic six performed absolute we we've kind is perspective. that above very, restaurants an something And of well, in I'll restaurants in opening very nervous And these opened all expectations have just about.

our aggressive with So get of us more as development lot that gives confidence plans. we a

Alex Slagle

Great. Thank you.

Wyman Roberts

Alex. Thanks

Operator

Thank you.

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

John Glass

increases have statement have whether what will prognostications on maybe way, closer different the may what to Stanley. come? holding the Can setting you where already the frame you of what's or with higher is by much store so a It's in sort another And where wage asked are the at your you happen. morning. Good federal in of be? a business, are wage, just your would minimum we We’re and we rate can today different wage states versus wage way federal frame average minimum a or won't close whether Thanks. Morgan just wages. is question around margins that how as maybe My about conversation minimum election, aside level, potentially

Joe Taylor

conversation pre-election of Yes, about especially going topics. legislation around independence, We don't very employing to facing people over there that the just when do interesting actually just to always does first, these that said, millions really be is, is, to is facing reality even especially restaurant that pressure detail. a be there's conversation go server of unemployed to I state John, level a interesting to when right an we're there's difficult I tell now the comes is that know restaurant going right industry. in lot and table environment very think, $XX more talked your a to tours, the and gets That very what if to want time that's you your that are that on are now, this our the into proud in it that it's we I done, workers industry gets average hour. What what puts makes rhetoric of That industry. of restaurant that can the

the members, of wage. heart house average team minimum Our well making are over

it be tells of kind Again, deal highest as have members this this money. wages. value you Then value And with figured as good three California, we propositions and deliver out offer be navigate where efficient – great is to anyone through making in offer going are and legislation how as ten I that and So we for will we have work propositions. in the don't continue team scale we'll state our and comes. to to wage possible make to still helps. if on size is able say,

we'll it out. figure So

John Glass

restaurant the Just Is where any it? higher example much average, are – frame use, wages there California of to restaurant much margins follow-up are does are margins? of or than offset where state, I’ll in states your sort chain lower like volume how way restaurant lower to are

Joe Taylor

allow to things, the puts play, don't you've volumes And to higher. give percentages but guys us Well where, bring resources. are to pressure the the do just going again, that efficient, scale, but on to that's be lower, the and those numbers it I'm leverage are obviously the not to you more because that on, do smaller to technology specific got the ability more things have

just see a more proud our wish are actually may we're an from good but the And on that we And $XX that's what a making that, us standpoint, again, make over servers hour. sense don't it's competitive of. for thing. it industry, to So not

John Glass

Thank you.

Joe Taylor

Thanks, John.

Operator

you. Thank

Eric next your Our affiliation, Gonzalez. from announce coming today Please your pose question. then question is

Eric Gonzalez

was be danced sales a around Wings Thanks. quarter? marketing but you constraint. part year, in marketing will the It's Hey, to it's think a going this that's ahead? news talk menu thanks. like more perhaps new the seem the just Just It ahead could strategy ask maybe same directly, to like can months about store the I'm It's on of that KeyBank. wings appreciate TV innovation the in some of digital, do then big detail you capacity you forward? doesn't do bring being bit, months but focus the strategy how was I due the from it changes you or little now, But separately, a think in that shifting earlier. your to back and remainder for Maybe important what going And lift new

Wyman Roberts

I and numbers we million lot brand, pretty trajectory the going math. that in Eric. give broken plus there, we're saying not There on it's was a Yes, but you a now. it's $XXX mean, keep that it’s to out, simple

get if math you basic and sales, So have you our you'll in just ballpark. the do total the

did that's the pandemic didn't down, was think from reduce So our lot marketing response The do menus, what I everything of simplify there. perspective, you people number. we that. kept to, a a during to out the We've have again, fair

they right feel there whole consumer's us. and what for through they brand. know that priority a Innovation things love there, our is love time now Chili's perspective, period, the are about still and that's from we the they've So the top good not about been

We continue the have We still to innovate. month. of margarita our

didn't Bite you better get hurry. If Spider the you

before days a margarita goes that away I we think and the one. bring you got next more out couple

our using all to are the and we and every us. the into to leaning built value convey deliver our we food be doing menu of seem are messages. But channels every we they fairly the for And heavily innovating So are direct we're into and propositions day. that those digital, still well And quality day.

Eric Gonzalez

Thanks.

Joe Taylor

Turning to marketing mix…

Eric Gonzalez

I’m sorry.

Eric Gonzalez

marketing to and as started we'll Eric, television. time marketer future, the doing promotions years I on and with ago, again, industry in national see a in mix regard XX this limited Well

have necessarily they been. today. marketing that's to and around, and mean, is flexible try building the going think don't continue more shift effective And And our back effective that how do agile. just well to – to work, and very the know continue we'll world I brands we're approach I So traffic. to I brand if driving doesn't we'll driving and awareness team the

Eric Gonzalez

Thanks.

Just comment mix. versus Go high I able the it Would to on out be in the a that mix takeout your think, before, To XXs was maybe you made delivery tease comment breakdown? you

Joe Taylor

X:X of will And still that It's delivery, Go on equation. to ratio Eric. the to higher move a need piece on maintaining you. the To being about Go To it Thank

Eric Gonzalez

Thank you.

Operator

Thank you.

is from Dennis today question announce then Our your Geiger. Please your question. coming next affiliation, post

Dennis Geiger

quick you, just it’s and Thank UBS. One a follow-up to Bernstein's Jeff question.

apologize still, existing and you further if gains from dining but I the maybe about Just change don't if whatever just sales missed if you in restrictions have talk given capacity it could rooms for state Can step you I may maybe more a if and restrictions the right kind this now, gains now, of bit right chains state current increase further you a off-prem, you winter. independents up struggle think? driving within those do here, small

Wyman Roberts

additional think we to our making are regard current the increase things I within Yes, the – doing in constraints. some with capacity

very to use still allow few open that of our up more things a tables. but again, guests, and safe a for provide plexi like that, So environment us

news to to in world. of The And as I opportunity point those empty, path. the it of is big these through the to of now is fluid several move seen half cases, and then So through, I in some thing. get very of within we're know get certain half it's move moving some we it. the good opportunity to there. there's some even open dining that, the bigger that's mean, COVID where where and options states, XX% there just that that's constrained level, counties rooms to COVID proposition there'll but markets. I managed mean, news, full world good see some COVID a kind more Again, right? cities, out And that I we've kind are really it's don't be in up we'll that down pockets, – start And times address and the going up we'll the

or anticipate and reduction don't pocketed cases, traffic work can major more on we a So retraction, COVID through. in based it'll be that's we something

the And so business. a address basis. just that's And how that again, we see we'll market-by-market on

Dennis Geiger

Just company could just stores, opportunity understanding will out there just Is you be franchisees accelerate – And bit, Got size this think, feel I but Thank highlighted, on development then it share anything share, store? is I obviously there, anything field incremental like the to it. there's you more anything and just of it opportunity businesses little does there's this wondering beyond if if said incremental there the you. Joe? that? point, anything can looking that is strong is you've at if Joe, an this a to what

Joe Taylor

to is And It I'm more looking company from getting think be X% we're to the opportunity. the in broad-based, referring for mean, throughout that's also player capacity I to we're development that development, owned. aggressive the opportunity. or new X% growth country. development an definitely Again, going that is I And when

Dennis Geiger

you. Thank

Operator

Thank you.

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

Chris Carroll

Thanks. Good Markets. morning. Capital It's RBC

if early And presumably ask I'm expectations? sales are first, just digital on So about from observations curious have sticky – it's digital how mix And what any to relative are to of specifically growing those your sales. then launch? back I the sales wanted to the wings you the hear just your just

Wyman Roberts

again, we that up more. where back to again, at It's that now. in of of We’re with things want open we're based brand one very from to the especially Just made running to – range that around see aware a we shift with is XX% the to to the Wings of more where are how as And the regard benchmarks want And is We're see shape now? connecting we the It's Chili's both right are this of. the Just and But that rooms good in XX, real we're dining users. yes And world we good. kind digital those we in we're And stickiness, Wings more actually XXs. in were rooms very digital dining world on

Joe Taylor

about a level And COVID. relative – Chris going a that's that's than at twice we had really standpoint, more into from

higher at level. So stickiness nice a spike much there and

new being So set. normal

Chris Carroll

it, of sales mix? of comp, Got that to mean, it. then out trend But there right playing off-premise And direction? And the continue from you. portion the on-premise as mix impact overall is Just presumably presumably mix you It's on Thank a is see component how and just significant on Wings the I in got do creating drag. specifically any the

Joe Taylor

It’s may I something be And a great question, again, picking up as Chris? not much. people think,

we within response – again, our – our at you're the some that priced, and you can others. when on And just going but First, haven't right. with there's you tell seeing, mix also think, I pricing from differential sales, between brand, within and look traffic issues

planning We very So we're now. think now. a on being of not pricing we cautious right really lot about price right we're have –

for us. Wings it's And potential hit sales an from Just alcohol then future the an loss issue. mix It's issue. that's you So of alcohol move, It's not primarily when alcohol

of out alcohol And fairly a we're the come everything dining up. lose consumers get for takeout move actually and environment, dining dining you a good alcohol dining still world. sales that out as we can mix And guests back rooms our when it's the – doing But that into shift. are mix you into as takeout to So is room significant room clip. sales will rooms percent the back, that in come back the alcohol are

takeout back just in They creating and we opportunities. just as that the will it's guests up as come And of that significant mix they that's so organically dining drag. major back are dining, will drink. And is open they versus the come

Wyman Roberts

we have seen that. And

that mix do they improving see capacity. again, dining get openings, those progression in of more the as you So restaurants

Chris Carroll

very Thanks Got it. much.

Operator

the have all that’s right, All questions you. today. we Thank for

Mika Ware

Thanks you. Yes.

Wyman Roberts

right. All

Mika Ware

January. thank We of us look call time, out on run appreciate forward you you to quarter updating on we've and you second today the everyone. So in but results joining our

Joe Taylor

good a guys. day Have

Wyman Roberts

thanks Hey, everybody.

Operator

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

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

Brinker International (EAT) 28 Oct 202021 Q1 Earnings call transcript