EAT - Earnings call transcript Q3 2022 | Brinker International, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Brinker International Q3 F’22 Earnings Conference. 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, VP of Finance and Investor Relations. Ma’am, the floor is yours.

Mika Ware

Thank you, Paul, and good morning everyone. call Joe Roberts, Officer. Taylor, today’s and Executive on and President; our me are Chief Wyman Officer With Chief Financial for at released available were the morning Results are and earlier on brinker.com. this website our quarter Wyman operating and our related performance will and strategic make Joe comments to prepared initiatives. will open for your call we Then questions. the

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

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

Wyman Roberts

track Chile’s Omicron March. position January with positive for we the average clear and on got the with whipsaw all noise is effect throughout accelerated at your highs. in from the a you business. All sales. right. results February, staffing quickly EPS in February short which comparisons, Thanks, February average quarter progression morning. just may of from last and $X.XX and live quarter, in Mika, and the be ended We and an growth with weekly which thank adjusted guide a emerging Considering you talked had this year Last the beginning reaching third all for to while on the generated $X.XX. joining with March back weekly time sales we is sales Brinker a stream us the believe we’re a thankfully the up significantly of of good and wave,

Maggiano's value to same data brand’s back. good off-premise Maggiano’s we continue Now as to starting delivery Off-premise seeing the we’re for about but play is growth. about delivery business. that really our shows the we’re so shift a brand’s the into sits. the more is we’re specifically true And than guest, from businesses is economic we check changes the versus as challenges XXX% top as navigate for banquets feel proposition averages. rooms, the model business consumers grow are over encouraged poised pre-pandemic. dining restructured at driving and in higher optimistic off-premise. made dine to pre-pandemic attracting the out, highly line really businesses XXX% the both which At Chili’s, where some by incremental back good remains And The cautious up levels the we’ve come

permanently. at today biggest ahead, operational new inflation. won’t effectively piece our dealing costs a run year. surprise come work will levels these members and the forward going we’re on staffing side, we we’ve team business cost we’re We focused can do that that challenge now we It We in the like needs. pressure our the guest looking stabilize labor systems experienced foresee of great pressure now our as wages much to addressed most On as the seeing that inflationary as our believe commodity is training managing to as elevated on through we’re last start don’t as we no deliver critical with stay experience. And

the pricing a and to traffic that leverage taken ensure our We strategy protect isn’t consumer acceptance growth. six this long So already passive, a we’ll year either. put but isn’t pricing been into driving to leader guests AAVs to as We’ve a in ground our term And for competitive actions we and reckless continue advantage cycle, move value, stake becomes as us. key increasingly frequency. in our which slower an this has industry economic important an

restructures a mitigate operation. efficient as we’ll future new that also proposition pricing rollout ways pressure, operational a our weeks additional as further to and we’re which us close to pursuing So better will inflationary get for margins a X%. price reduces more few the actively In to complexity, menu well flexibility takes value run

gains handhelds the servers both tenure making which they’ve than we turnover and already reduces experience. and of house a service the are We’re members and near those at team pressures money fully with efficiency ever associated P&L also guest know better, more hours the consistent more on made now implemented and With food this runners. seen front lows labor leverages our achieving we’re record model that model, deliver

As term fronts. we manage to longer we’re how of accelerating investing term. the grow really about on in lot and business timelines offense business the continue our a near also aggressively we’re headwinds, playing excited these I’m to

in we on been to basis. the And consistent investing tremendous. pipeline. done our restaurant build All opening has their the and We’re we’ve the pipeline Chili’s start has work to response now come hard fruition a to brand new

than week most in just more our Antonio $XXX,XXX San expectations. did outside beating recent example, the For during sales opening first

all our new recent locations have. As most

great the communities a from doing by guests great loyal delivering creating are in experiences job first these visit. very operators Our

on month. into we we new every two fiscal open As to next move have year, restaurants plans three to average

brand We’re investing on business our two fronts. virtual in

drives well. as business through markets, footprint quarter, across previously And as I which with expanding additional kitchens second, embrace partners our markets in delivery around we’re mentioned of we’re global and the existing distribution business the locations. brands party We our points partners last portfolio. and country to whole ghost third expanding smaller our taking think First, untapped this

internationally. and domestically both potential the about optimistic we’re So

the efforts to for technology innovation our kitchens we’re fully our close to first Now takeout in time our upgrade implemented years. house of systems, we model the that pivoting based XX and front new service

a house members high efficient, jobs makes team easier, testing effectively We’re is volumes. supports out more new our exciting delivers better and some equipment product, of more that

quickly moving that We’re down path.

So finally, And service to stand at the robotics nearly years come. we’ve with we’re model. into on experimenting host the now taking for that new three technology, been more incorporated our and

this is has expanded expertise robot exceptional most potential Rita leadership the fantastic example organization innovative bringing of our to been restaurants, guest our a the growth since XX systems strong love competitive from enable run another team to volume additional technology seen. been doing how and a better. us we’re runner. us edge and with founded advantages and yet are have XX operators leading today remains Norman to a restaurants, our Our her. nearly It’s promoted years She team, and our navigate exciting job does food technology cycles to which and of continues We’ve scale the stack higher of job that company an many great our challenging managing headwinds this quality and business through to ever Recker

to give doing. have the And guidance on to and of in will work this team year. prouder Joe? over And business is turn couldn’t I’ll clear term. you call I grow We for quarter grasp details the Joe the the what be longer and the this near a on update

Joe Taylor

results for quarter top good this Thank reported representative our morning represented progress is line and industry. but that challenges also morning The another a of you still everyone. Brinker the facing Wyman one

of XX.X%. For consolidated million $XXX the positive one year comp fiscal XXXX, with total Brinker sales quarter reported third of revenues of

Our diluted was adjusted EPS the for quarter $X.XX.

due month well progression back the Both mentioned our for and We during availability was quarter. nicely as these analyst particularly estimate approximately negatively staffing January positive as Guest the and and brands the by impacted EPS month. As performance the we spike from weather rest call demand during $X.XX. short with of a our challenges during was through labor traffic our difficult the meaningful last issues as a term the to consolidated pullback a quarter move in Omicron experienced spike January events. guest bounced

positive X.X% of positive one which included traffic. XX.X%, positive the comp one of and comp Chili’s sales Maggiano's For recorded XX.X% quarter, traffic. year were XX.X% with positive sales year

The weekly of quarter. business. weekly average strength average sales weekly in $XX,XXX quarter, useful accelerated March. brands through throughout at the growth the throughout Average the the move the average the rooms $XXX,XXX strong. lap we a for of reached pandemic sales with lens further third Both weekly consolidated gained As restaurant dining brand to Chili’s averaging year off-premise also per beginning for remained the Maggiano's sales the at sales as two is sales has $XX,XXX Brinker the were recovered and level of quarter March.

with Chili’s with actions price. of increase took increased Brinker pricing Maggiano's in X.X% the menu a of in brands further quarter Chili’s quarter fourth year-over-year carrying exiting anticipate during recorded price third with pricing additional the X.X% the menu For price. exited June. approaching the X.X%. X% pricing of actions quarter Both quarter year-over-year We

continue be focused and and perception our price traffic of value Our guest to our sector in the determined actions context maintaining leadership strategy.

margins. turning to Now

expectation partially was and impact quarter, points food our operating continued beverage pressures year-over-year menu were with in third in XX% basis adjusted X.X%, higher the Third quarter inflation incremental the XX.X% by original consolidated restaurant by price. driven quarter, areas. and operating was inflationary of beyond throughout commodity costs margin P&L margin numerous In XXX the offset

by impacted pressures season, events, throughout this world situation inflationary heard maintain than that have being incrementally a expected. are longer commodity you As originally will earning markets

percent XXX likely markets Labor as We the a moderate unfavorable as states. high will changes, calendar basis prior of continue move in rooms as lapping primarily that year to to environment compared year, favorability believe of XX% sales company rate was rate expense, wage and eventually and XX. again to into commodity driven prior dining due wage close one-time points of by the we the increases

training also of we to year-over-year model in leverage particular areas elevated inflationary such to Restaurant fixed XX of points area costs an normalizes. expect and improved top expenses favorable work we utilities were to by favorability XXX maintenance, basis by basis continue year-over-year our approximately out points. as this turnover cost incurred said, was impacted points reducing also as which by We XX That XX overtime line. being basis and as pressures, with the

for operating $XXX and million of year-to-date Brinker has of remains cash year-to-date flow generated third EBITDA flow million. $XXX cash Our the quarter strong.

level. increasing expenditures brands an in million new Wyman the As driven investments $XXX we invest mentioned our and totaled to by ray year-to-date technology restaurant Capital development, of growth images. at in continue

increase times. of was From investment lease our phase times quarter leverage expect adjusted We ending funded leverage as sheet perspective, of fully our total into debt the more our pipeline. we to X.XX and construction our development balance expanding move pace was X.XX a

Maggiano's and repurchased certain year solid due release Chilies press our to guidance. or we morning’s performance, million COVID to demand quarter. This no do macroeconomic top their updated softening further addition, the shares continue pressure. fiscal also assuming consumer during line of $XX expect In spikes, We worth of aspects both of

million inflationary of $XXX most short that CapEx is continue driven revenues the ‘XX recovery is now Omicron to to Some through of specific $XXX run. Due the to of to appearance beyond elevated We range total $X.XX. our our in we adjusted the to range in be continued million in to phase and guided This work still to should range. pandemic EPS be next two to previously $X.XX annual has driven of moving updates, $X.XX the annual pressures, the years $X.XX the in inflationary billion. expect environment. of U.S. billion challenges last expected be welcome Fiscal spike the

However, call over the our about And bring for we prepared brands, questions a with in value with strong of I’m and invest our hour. until the to to our guests, good remain our actively through open ability you perception moderate. Paul, top from improving just comments will it to back going our us to in the that the confident complete, form. turn of operations strength let’s

Operator

you. floor and for a questions is the come [Operator have now we gentlemen questions. Ladies Thank in. few Instructions] did And open

announce live. The your first affiliation and question is Please question. your pose is line Slagle. your coming Alex from Alex

Alex Slagle

morning. Good you. Jeffries. Thank

profitability if with could you smart on Just back costing opportunities of inflation I wanted improved And and and be dine that the Curious of if want start what beverages other how that could wondering the food guess, impact brought drive XX attach in obviously on levels to and the pricing. costs the kind on discuss and that you the the opportunity lots and up to goods towards has menu with is. just to volumes curious remarks. goods additional in prepared you the then dynamics expand of on

Wyman Roberts

of can on I’ll the details some Yes. and bit about opportunity, in on talk commodities. little the Alex, then a Joe fill

differential margin a similar. from in are the the well, channels perspective, think, takeout I off between and first various both pretty dine margin

we pricing, don’t solid like made sure we’ve delivery that in that margins. maintain takeout and we see So

see about through we’re some to efficiently, new as side kitchen well of our excited some to from when faster, mentioned, are build from though, opportunities we and to come help model, is absolutely check. average us things efficiency in we’re check here bring really as the and perspective, that opportunities, come the dining the You’re business We on COVID in organically that more like behind guests helps the that they more think the service right, to see and and more more that. alcoholic we things throughput our more I room, seeing back really people back. comfortable stronger It’ll the more get And a situation people plays create feel both through as equation. testing we of continue

a at of we’re rate. the to business you to dining in back And that? we’re with got to of both how now. part natural we’re continue an to greater incent the the model. come So right see then anything And into to comfortable moving people going to and to Joe, that’s move change it’s kind But add important encourage the room. going just

Joe Taylor

moved And now Yes. Alex, into Obviously, that back XX%. in we’re just our down getting rooms they I say, January. mid right meaningfully dining

just be of definitely quarter speaking, kind country past environment. little eight, your to there again, pandemic room in dining moving as the go for incremental of a $X think guests the as the front So is significant And of in January farther really, see to I There we’re and difference that I see that an upside impact again, can’t continue is, and about overstated. the equation. side farther over opposed generally

that that be of But the there as from not incremental little check leverage the to looks is variance just that nature build and add-ons, is, a off think the pretty And important. about of you mix everybody’s I guest can pretty leverage ability channels and of things Because So with. goods. the that like. check ability alcohol cost that familiar between sales it’s said, that and there what

Alex Slagle

Got it.

the that provide, how there’s weekly by difference. acquisitions? are On sales not you the average of metrics much much sure those franchise a recent I’m impacted

Joe Taylor

Well, good it makes little a difference, a Alex, that’s question.

we’re nature, in lower restaurants the of in some markets in that at things come volume. of nature of the the slightly that average basically Just they a

a between I opportunity, can restaurants the great is those kind those to the again, a roughly the and think that fleet. acquisition we So think $X,XXX And impact averages restaurants incremental because think performance. current probably of we the I rationale, view to that I closer as from bring

Alex Slagle

too I margins guess. The

Wyman Roberts

doubt. a Yes, without

Alex Slagle

Got it. you. Thank

Operator

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

Jared Garber

kind seems number the But actualized Are in EPS will Hi, healthy. figure year And puts metrics? top Sachs. you but line about thanks dig and than of Goldman digit full high I takes it that. the the to digit was remains fourth like in the that think, single if just pressured the of cost on commodity Just sort thinking fourth for above fourth for that half, the the by we quarter, frame heard just inflation seeing trying the the increases. question. being of could in line? what the we’ve others. price? you’re guide thinking time Can Joe, single quarter? the the the what’s margins quarter X% I inflation implied last for thinking sort that a greater Is and kind line obviously, into maybe that from be obviously, we’re that out third then high with pretty how you And guide of about some how here? we second quarter spoke, are the that’s

Joe Taylor

Yes.

about is of because If the the construct is at they January top guidance, would rest line in levels the the you perform. frankly, we right, impact delta the anticipated the pressures of saying you have you’re think that inflationary then pretty performing obviously, to much for the of and really embedded related the

inflation. XX% foreseeable operative we continue very in gave do And that we think cogs expect at you do low So expect mid range I we that think that you referencing future. inflation but that of for kind particular, were the that I is the

into equation. definitely is that So factoring the

Jared Garber

Great, thanks. That’s up helpful. on the notice. And X% then The one pricing. that just follow you the on Yes.

Joe Taylor

That’s the pricing. exit

a that indicated again, couple So of Wyman takes move that place in is weeks.

really impact end current but have the, of the the in it’s quarter. back some it’ll So

So indicative year. into heading it’s will carried that of fiscal the to really going next be price be more

Jared Garber

XX.

much. Thanks Okay, great. really so helpful. That’s

Operator

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

Joshua Long

you. new six windows, Great. Piper thus in up Sandler. I price mentioned six incremental I follow thus you’d far Thank pricing piece as wanted to actions think taking the well, far.

you’ve think learned there much in there curious too mean, we’re keep before but you’ve out? Obviously, come menu you value but you what that of too is as want But and the frequent, narrative pushback, where want what in that and you’re just your guest. those proposition prepared smaller provide with mentioned for some maybe things just seeing doesn’t guests to hearing doesn’t items comments. balanced, you your they’re reworking Just more price curious be in what optionality what about at. to you tip new terms line and can and share hand the to some curious that experienced you the I how of much seem increases, too

Wyman Roberts

understand Josh said the seeing. we we’re pressure the Well challenges we with inflationary like Sure.

We strategy getting the of importance understand pricing also right. your

data and thoughtful this demand the tested as sure so the too you’ve these said, has reaction, wise them we and kind the away of that channels, side them the brands about we’ve broader value the more were with system. terms do to taken probably and understanding most we’ve make price that they’re the and we many receptive whether base have onerous see be consumer before sure through we in these equation that actions. guests impact of concerns them to people to all industry our about ratings, We’ve weren’t of reacting. To consumers’ so pricing chasing And the taken too how far, fairly price across virtual year to business, increases. be in across been said, And We as they wasn’t some have guests different action. delivery, chosen make timing

that. So to we kind be and their be perceptions at want cautious their to And of always looking of expectations value.

we As about that about deliver That menu It’s deliver and that good think been going more to about. restructured here our we’ve do talked our a those also be of our up. the a restructuring more the we will we a and platforms pricing the forward, kind we margins, when kind challenge to the at but guests to bit or better moving to propositions going test, move are come mix of cost everything’s out menu. we way beef across our value feel as shortly. us area the But we’ll how in whether menu chicken flexibility have items, more that and in now of various kind various more able differently around typical is that’s menu, or move most geographies cost got kind in the especially the harder little and a past, some very restaurants been of of maybe product around issues as of unique we’ve benefits been move of shop favorable see in starting Chile’s get to categories. they’ve because to And more this anticipate varied we’re of in commodity product to we’ve is across the little prices been see the affected it’s different the hey that’s significantly of to around one we

where we’re So that’s at.

the kind move proposition very value a long price consumer, future of with to want the term we is about we’re it. with an at real to little forward where at to we as inflationary into. how value make we intact. about And lean to take again, pressures that them that look for uncertain going have regard Chili’s, proposition make excited of bit cautious sure are sure especially to we especially We’re But our strong

Joshua Long

That’s kind mentioned anything calling very about worth in card come as holding think out back know out has of When the by day interesting? helpful. calling well. that worth you dining you But there? geography, conversation in found to premises expand that’s week day part been out either rooms there as we Thank trends or you. I that just regionality if we day that anything the would of or curious

Wyman Roberts

Without there’s things say we much not the going are some a Well, as come on interesting of very giving of geographical Josh. that there’s will away of kind post-COVID are same a lot too out environment. everyone’s some reacting I there

variability teens low geographical sales now, what typically you’re had You you to post-COVID high are still response numbers probably in three we call seen regional and little single, various seeing get, to a in to the with than areas what we’ll and point difference more their regard of we’re bit a prior. of world. still maybe some two this trends past mean, I to was kind seeing

out. we in fairly those And because of settling large in anticipate kind we’re that, see numbers. those to some upside we So areas things of

is, taking little we their on So areas, some bit see those post-COVID upside those more you that’s a longer. get some get feet, little little, of where if a so a as will

Beyond that’s that, for portfolio the like I think reason. we that

are balance we of most and We’re that for areas ones the some better. everywhere. more with these And challenged part, of kind out doing the balance off

Joe Taylor

to dinner side little which normal of great probably Josh, is little again, which to indicative we’ve a a a that seen Yes, reopening think I pretty your lunch a I part, seeing rate at higher than day standpoint, of reflective the you’re extent. a is saying saying, activities a more of X/X probably bit lunch lower increase equation, day early favorability from it’s part note on lunch, would But typical. X/X still weekend

pre-COVID of back structure. to seen kind we really typically a in what So opting

Joshua Long

visibility And on about have Very helpful. running one basket XX% you squeeze the cogs I more if can the now. in that for

commentary your that we can in then any curious where Just provide in mean, protein still environment largely of sense everything pieces locking pay? of visibility necessarily premiums do up type I higher? sort for Are of the mean, going Wayman you there? that to I And the you have is driven, have? doesn’t make basket commentary to what

Wyman Roberts

Yes, I proteins. mean, of our big basket Josh, the really again, the are drivers

more complex So chicken, kind you’re well. beef and as broad seeing of movements in the chicken whole

historically So more products environment volatility chicken what has breast of been kind a into kind more stable now with has wings of moved traditionally other like meat.

when that’s so Again environment, to we commodities now. do some side kind look are the this. of at going And the out add these costs the there into of It input doesn’t really just and that the of we prices. of on kind right just math you don’t, up

are think both not prices exactly the in reasonable too going just knows in to efficiencies, out back future in chain those looks what level although to things on. opportunistic these in than pricing side we that And some we normally bring So there’s and a more up. know, distant settle that taking themselves the into taken of like. us go the that distribution And all nobody will frankly, there’s as supply higher got being would are be then consideration they

for too little right to about here pricing of people more it’ll we’re cautious harder more we back little just a distant the So is believe come around. kind why to proteins future. a because that’s move it’s not in it level across reasonable a little broader And those do and

Operator

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

Wyman Roberts

there? you Hey John are

Operator

your John, live. ahead. Please go line is

John Ivankoe

or I does today. question much The periods about added shareholders. the guys. and value decline enormous maybe returning. in DNA the and how Obviously, reduction of XXXX stock your kind new capital than new returns And to and where has free that, CapEx of XXXX was is on focused I CapEx development in guess, cash go flow less back we all. not improving management at about this kind the think to there lot not on existing I context of saw a you overall price obviously, units does shareholders, board units the guess attention at where yield of stock mean, basically was all price timeframe basically I and previous really I about a was and capital Sorry store mean, I significant it of Brinker and think return senior growing CapEx maybe

are So past. I do how you is of here of, consider it’s kind a how hey, the the again philosophical mean and if kind kind corporate an in guys question, stock know know and I we I you responded how more what sense down environment? thank think back of type listen this great the of environment of new question. unit indication very a in that and make still long strategy And and that is you in consumer bad returns you allowing slowing that me can environment the significantly doesn’t get in buying construction your own cost equity not CapEx obviously for why but

Wyman Roberts

investing absolutely I of back in in think you when terms reacting believe we these would if more you think do that you investment, that we back a timeframe. kind restaurants prices, opening what are prices markets But the understand we John, think what environment. this XXXX, it’s inflationary low, to Sure. timelines. year were to of your we XXX too to referenced because in it today John stock about talking were think back these at with Sure. a do great I has our

and opportunity to the reference. see frankly, much both, you model that what And So going XXXX, strengthened when traditional XXXX at time we really operating doing better when standpoint business in the the it’s and when to from we had talk we’re talk was on lower we growing capital the a we prior we portfolio about about to level got back spend XX, significantly to those XX, referencing, and build excited there about handheld as front. what you’re and being kitchens heart we’re service opportunities with more with situation new investing our which And and now that we house doing with ago the new our years XX in helping up dollars helping in bear us of margin again model to the what bringing efficient the well technology our the did into is those sales.

that got And do help And as a how have gains, we realize on our to so And story. I organic investors approach. just balance think that But key how about growth we’re balanced we model. an say focused would it’s organic organic is you’ve growth we believe what that’s growth. is to to

to story Now we we have as generate growth a organic an lot well. of want cash, but

brands And think spot things we grow good why to that well all we different trying about the returns, bring as business to but there organic the that’s growth a about organically virtual so cash delivered find find as way, also just talked story. back to that and points were to shareholder sweet great when we the distribution

Joe Taylor

to but and leverage this be want but is Yes, and add a is the to it we grow the invest to able time at in forward, business to more to at you’ve referenced return at to capital position. period do balance we John it be also we would lower before shareholders again, going going think that when a the one organically as about piece want basis did we important I leveraged so the

is you slowed rebalanced that’s that while investing debt targets towards this return then and of of back a obviously standpoint But start time. in shareholder a decent growing part to levels down way to in So off period those and still more COVID dollars really the can the once got at the we’ve business. the transition. our for of the clip the that directing trade back

John Ivankoe

to end, holders and but not new question a was the at unit Yes holders, construction. debt the equity at or least the whether certainly guess I

or much it’s ask to just the ‘XX network in fully the you If business? have? maybe that let or to much So a were will basically if How changed do much would be flow that discretionary question, memory, the CapEx as necessary, this non fiscal cash me to you happen up. in How you maintain future? CapEx How guided? flexibility is consider grow the of conversation

Joe Taylor

keep think I really there, to lot even in And of about of a to million expense But forward maybe running that spin. the engines that’s $XX flexibility I Yes. John, and what of range. a IT to capital when numbers. million little good in be and We do ongoing variability because kind that investment those going probably maintain $XX you’re consider there’s be the moving kind

Operator

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

David Palmer

the term Thanks. total, it would in calendar restaurant to margins some ‘XX of Evercore early fiscal you’re terms visibility and would this of too increases costs in going making pretty be the talk the in simplification, through be price imagine I to here your good changes rest might I the near ISI. you on but year. menu have about imagine also

to margins, fiscal So I’m thinking about ‘XX. to you’re thinking closer something but talk in are the might want about be might margins? to XX% here. margins year first XX set wondering in plus you numbers how to half which about thinking if tables the you restaurant your that on How the sort XX mouth I’m you specifically of next could of exiting for half put I don’t I into doing guess first path restaurant

Wyman Roberts

see calendar dollars are ‘XX, of we of, gave talked turnover also as David, moderate robust about, areas are of the on I years. think to to again impact discussion meaningful start and have forecast impacting as about next there next our fiscal there would I kind again, I call. current his think, it half to the opportunity you impacting back of improve And, get improve wean XX drivers some training, again, that moderation discussion we basis a believe we that that we But or think be that very margins on continue at in those in we But which, starting the and heard you system. ‘XX think points into that point. can can margins, out I don’t comment do that costs of transitory We commodity I a prices Yes. there. that We’ll the have is a to to will XX we want

I I So too. direction, growth move time. going on table there’s margins. But number put think will top continue growth as today. help, the the continued of the to will that to And opportunities. any I think again, to I’m over do specific opportunities line progression improve to top not for into expect a brand And Optimistic next going comes deliverability is David. we the would see too line you discussion on with year. of we that

David Palmer

today Yes, service two curious levels. I’m that things customer about and no, the guess I I service that. hear experience also the

then experience near getting in working target of but being just all some I front it bad about target. if still stories the are from where about about labor And Chili’s, and I’m serve in obvious as consumer pretty that service XX.X pre-COVID curious you reasons. as about that that house also time XX.X margin but Is and customer that intermediate talked not margins? thinking of industry we’ve and for to this had hours you’re I’ll an for all heard lows, you how scores you wonder pass everybody on. You that talked kind good up a intermediate that versus But

Joe Taylor

Yes.

questions. two So

So let it. service you David see give take me we as the just

two components. So

So getting first, back it as mentioned was we up. staffed

And so The than we in news members had we a big system just I members the had have in good industry. turnover. our in a mean, today team is restaurants of we pre-pandemic. more and new the lot team

team and we’ve restaurant. well. we’ve our a changed run So trained newer the But our And not got members, model. as they’re need service we system, the they’re to

outstanding. service it’s experience running and more making the Team of know we faster, it’s so were as need it to money running lot money, better, as that model when well scores is are is what kind we pre. And members make a than to And they gets, more programmed run personable. of is it’s

with state and model as most to training focused up, quick everybody it of right to all that then model all a system, it’s comfortable restaurants every we’re leadership to with for new getting of our the So moving the of now in and it. throughout And of service understand getting on it. that Because the just get team member we’re possible. runs curve as that

that. that’s So

Additionally, one of in it and biggest than as much the with efficient the that’ll see have speed food. opportunities of that get rather the to that’ll my up, talked you we hey, get where’s restaurant challenges kitchen we side industry more about the service kitchen

and kitchen, as get win as people that them another can we in there for. restaurants more of the looking process so a the speed as us the delivering while And as into real through well the product. the push We well the helping for they’re up dining in fashion the better, see room, out more in consistent guests timely

So we forward. bright see the for regard and kind team of us got our the play to we’ve in guests nice to with a our systems both future real members technology and move

then First train to take to kitchen roll next and some we stuff to level. out got got the even it we to

Wyman Roberts

of of the have And how since those any initiatives line remain half question. to David but obviously to we time specifics numbers sight optimistic that happen. second lot Without a I has a over into can improve originally, ability in our in changed your margins talked these about I getting again, again

leverage to our continue top we we’ll forward. again, think go line as I

as what of that see do that whenever the of happens cog improvement out the inflationary on on notice you side I I will of cycle this we can have that intermediate. term margin But means. you kind of envision the So a equation, perspective move Anybody business. use the

Operator

live. Brett, is Instructions] Brett question. and pose your from question coming announce [Operator you. is Please your Levy. affiliation The your Thank next line

Brett Levy

Levy, Brett Partners. you, MKM Thank

on of Just the off labor that side. little building a more question on the bit

expectations. supplement think think you And don’t cost you to parse solid points of said from transitory. about did labor? expect said everything quarter? you have this talked talk is about secondarily, January know How headcount, XX from You morning’s a a that should stable, hit in a you little just but basis for I already Can about that competition XX you specifically your you have about we implied wages. guidance? to you just out how a you those from perspective? going And gains? your in brushstroke, estimates. can given it where bit need drive you from that you about think much more As pressure labor do to the broader on then think on that’s what new that? And Thanks. you we should in Was Or $X.XX last to guidance

Wyman Roberts

the any really I We will on comment guidance, XX commentary was the didn’t make implied. last not first, call.

January close not So had even and obviously, time. that we

XX in this So implied level. guidance

Joe Taylor

model. the getting count. didn’t like, we So But without end two of

of marketplace increase negatively the challenge in that seeing spring in the and out on the a is obviously re-staffing last there all pressure supply. that a and was and lot little summer, with demand, of industry, in a summer, movement what with Just we’re of bit

just having rates, situation were You saw raise to recruit, a that and wage to bit recruiting. as people spend having quite well well of rates to as, we in as money as

March. that area. came the three significantly And expense the folks added the of news these you’ve advertising jobs mean, came into numbers. hospitality XXX,XXX just the over recruitment almost So I just is I for employment And out months, that is, The restaurants. especially getting up last came seen into I the good think showed in ones from, saw, those today almost XXX,XXX

little takes a demand to we’re or that out be as balances industry the more. supply It equation. So staffed demand continuing an the and up, that and

So we’re get in. always rates not to seeing just have to to as much to raise There’s going be pressure. pressure folks legislative

going on supply last seen are like pressures But easing. of demand have we that everything that increases their see And not it in coming XX. calendar. wage can to the looks going much see as the we’re to months minimum happen are as So we in the

forward. kind going see that’s So marketplace we that how of really

Operator

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

Dennis Geiger

you, it’s UBS. Thank

given Just behaviors menu the on observed at using lower lines consumer the to-date a consumer to weakness those to period changes relatively wondering any bit all the to-date. curious etc. some brands you I’m that how perspective, I comments what about anything then to And on are on from just little maybe that in anything if from helpful customers at could you’ve a guess income environment you. seen your we’re along consumer they’re Wyman, in how if quarter-to-date Just you’ve from the dynamic brand? you’re importantly, just relative changing? specific pricing, speak very virtual now. you’re your thinking the you level, that But seeing you that more could broadly your right more the a sales Thank gave Anything where high recently comment in

Wyman Roberts

talked in too what had into positive. third January the we’re now. Dennis, the above about in And been trends It’s at granular on February, [Indiscernible] but I getting comping in already experienced the quarter say from without happened sales major pre-pandemic Hey, the back post-COVID since both I’d stability March, and sales we’ve general, we brands then seeing mean, through the virtual brands the now are that’s levels kind holding, and encouraging. been solid of impacts, quarter.

line So especially that the, as in given more taken a years short we we’ve XX taken feel as situation the top time, we’ve price about this. kind period of than in good of last in lot a

levels them the shifts they’ve cautious of shifted kind watching for and where’s more sit we the them, that cost dealing the and more think to They whole that price, as great this, more to if market. but sheets have what moderate will will, going continued seem to trends more. tightens need commodities price opportunity will we So holding, labor lot without be and all to the balance of through go we’re also work the kind to of we closely. consumers have, strength about, with having we’ll the see be be it’s themselves economy The we to move mitigate, watching on it price to the as consumer there maybe more okay, than us up, where where best with. is be than side and sure a down we perspective, do pushed their of by a to out place menu And got or on have move own. to them menu we’re that them very gone to driven anything just about make that we’ve and often on seen variety our we’re relative we’ve by But the consumers. from in We’ve with the marketing menu to behaviors and quite I’d of people regard been the say more that. and that

Dennis Geiger

as far becomes you you’ve got price thinking this quick a but compelling how some, a that. may, tip recent menu, in about promotional the as follow if perspective spoken to one from much taken And going to particularly you’ve up some look just pressured, on haven’t the years, that, consumer just keep I the Appreciate you’re your value staple to if ahead position of really offers, course. as

may Just to And resilient under all on pressure. incremental add that? anything be if category, consumer to have anything brand how will take more be. a on comes where basis relative If else the that’s fair, there the share you and the from you if

Wyman Roberts

up then glad I don’t think the gets enough Well, I’m you asked question. in of brought it terms share market traffic. of

market take So and success. of the years. in casual measure to continue strength of traffic four for the taken brand environment And our critical that’s and dining belief and is even most last firm we’ve probably that this share

so the obviously, Chili’s, works there’s so especially more brand, the better it’s And model just brand. folks. the beloved we But about has available business to much business And for restaurant. of bodies work. brand. to And a think It’s the when in the position ubiquitous needs it a model when be

a run success don’t that have we if know of critical a off ensure to some is pricing the maybe busy so we from It’s a difficult in term, And you restaurant we of it. restaurant. that do very lot successfully trade have the to the potential sales would bodies short in just come to traffic that running

well against that the proposition. a price value us. against our well-positioned holds and so We elements and other we’re both that’s balance up our tougher consumer of building economic into value come for environment embrace in propositions It to positioning. And the our think

our we more And way a doesn’t as so damaged that making environment. work sure that could get we’re consumer kind difficult of be what into

Dennis Geiger

Thanks Wyman.

Wyman Roberts

Thank you.

Operator

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

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

Wyman Roberts

everybody. you, Thank

Brinker International (EAT) 4 May 222022 Q3 Earnings call transcript