Earnings call transcript Q2 2023

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

Operator

Good day, and welcome to the Brinker International Q2 F2023 Earnings Call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation.

It is now my pleasure to turn the floor over to your host, Mika Ware, Vice President of Finance and Investor Relations. Ma'am, the floor is yours.

Mika Ware

good call. and and participating you Holly, today's on you, morning, thank everyone, for Thank

today Kevin Financial me and Joining are Joe and Executive Taylor, President; Officer our Chief Officer. Hochman, our Chief

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

do, Joe the open As to your make questions. related will call prepared will we always strategic Then initiatives we first comments our and Kevin and operating performance. for

statements. our comments, our to would Safe Harbor I forward-looking of beginning Before remind regarding like everyone

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

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

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

Kevin Hochman

maintain us morning, momentum. thank everyone, to Mika, momentum Thanks, good and share you as for insights seeing the that and strategy, business, plans our and joining in we we're the on progress against

and margin had some with start as accelerated very Maggiano's, strong I'll growth which sales delivered the quarter changes recovery. business second of model have a

year-over-year improved pre-COVID the up delivered. levels sales quarter margins during and expected significantly. XX% team We Comp performance to the were exceed Maggiano's and

which an quarter pre-pandemic increase big was XX% the drivers during levels. of of the off-premise the business, delivered One versus growth

it are is for different who guest. incremental. than sales, the than the replace and get-togethers Maggiano's visit Customer And home dining that at consumed Maggiano's meals dining Maggiano's known everyday telling sales visit off-premise off-premise celebrations occasion us at more home for. are often guests highly us are that are that which insights

and coupled frequency. business incrementality business with things So of Maggiano's channel about two excited future for core recovery off-premise of very solid drives growing the The really us incrementality the off-premise the fast an improved Maggiano's. of like makes model, the that we plus

At solid progress strengthening our Now results. we've generating business Chili's, momentum Chili's. and for core made the in

Second We've to and quarter and guest steadily the team sales same-store member were experience. up returned X%. profitability improving were

our that best recall sustainably call, quarter, you by I we during position As and our grow core implement focusing shared will in last longer-term differentiate to the Chili's areas key were the starting last business marketplace. the strategy to on

still there's our ahead four of While a our team has across of lot encouraged of us, progress the strategy. made work am I by pillars

goal first lower we rewarding, the lead increase and pillar will is their ultimately and experience Chili's. making engagement, The believe with of at fun, which member team more better more to team easier, jobs guest members turnover, and

to make meaningful procedures our in heart-of-house. menu continue and We both our progress simplifying operational

quarter, commitment As an one-time team. simplification is but a last not I to ongoing event, mentioned our

are to also are front in hourly hourly below at and managers feeling say have pre-pandemic and now work manager levels. the we tours I members in future changes do employee their host the they country. as turnover changing the are team they around team continue and on leadership as both we back direct of claw listening a the understand These Our -- see And have staffing We challenges, and still level, resulting heard to is operation. right happening, turnover, have engagement direction. all in beliefs trending significantly that the numbers which especially now but improved lower from scores the now

have for. more dine-in and feel more is service evolving manageable model cared to service both provide we Servers to guests are key as our and for of the process welcome support better now staff and our shifts pillar. second Hospitality make off-premise We're positions in sure guests.

changes, As these restaurant are a feel more result than supported of teams they our telling ever. us

well I stress of first is in the was to the felt a their significant member lot our metrics. less market weeks In me fact, the seasoning this guest and on pillars are all together completely turnover, with improvements told team These engagement and Florida to managers our teams. working two a satisfaction first that improve years driving manageable few ago restaurant as holiday as

excited happening we're for making team I'm really matter. turnover see and the a guest the inroads you right business. see good all member direction, in the it's engagement this in things because trending a satisfaction sign When to And typically that it's confirmation that

that ensuring buildings ensure our for great. the and vibrancy third a well is order equipment We're to bringing and more our our and is in all our restaurants. atmosphere. to look we're that equipment maintained It's focus back us year working restaurants are and The pillar this of big energy

deferred should COVID; the progress labor during member have to the experience. In of still the changes too, us. guest by levels ahead both the we given encouraged but of maintenance improve We're team addition and the here work

fajitas, final and drink. And equities and margaritas. is food we're core four pillar committed sell apart: that on Chili's the our burgers, to And winning crispers,

an we Hennessy, a it of And along Sangria-Rita our the southwestern alcohol the the menu with new Hour bringing and popular mix quarter, The frozen a sales, The Sangria success is we month. the grow favorite, with customers offerings impressive more Henrietta. as our increases the Our menu the first as quarter. favorite. it and promoted Happy classic offering, and drink we're now and margarita Bar bar to was Raise the in very Henrietta launched products we Margaritas delight with building during second guests the a with PPA features our breadth Chili's a is This premium re-imagined to swirled Sangria-Rita last some updated business. And program, to time taking the on nationwide. including and wildly made delivered menu of margarita popular launched the new highlights bar that margarita the

premium Now bar we've margarita first has re-imagined This this reflect the innovation just quality pipeline price robust positioning. this is will higher of the as developed. team a premium wave that

launch and later regular NCAA time a fun NBA for driving We'll our to we translates month start sales. a updated Margarita atmosphere month final a more contest the members season, is the this increased vibrant engagement of which for tournaments, the in team huge basketball and of is these bar offerings program, the our driver Madness internal check know

innovation is year, market currently sharing upgrades margarita CRISPRs meeting. our Investor look new the Day to forward very that an encouraged as in process We'll more innovation have by. as platform during coming platform the stage-gate we're significantly and details well on test both permanent running all through this June new menu later to more We that's

Now let's about traffic talk Chili's. at

well reduced less During strategy checks in profitable as the first half amount on system. reset we the of deal and the our the and of of work couponing depth pricing fiscal traffic of frequency out as year, some to order

with our incremental improved we're stronger able a foundation traffic build more business. Now to performance, driving investments the manage effectively into our to

are We're with gets TV. over abundant At a the to more a with saved bottomless of guests our for start get marketplace. we're seeing at value excited The on years This consumers in just meal in be record the and platform. Me point. time includes for Three that about on $XX.XX first when will bundles platform from discounting less size with coming chips, prices we which restaurant a sharp in Three salsa, some being air, drink. the portions, complete reinvesting than many be price time smaller quarter entree industry-leading And a on unlimited other three and unlimited for back a soft Me TV also dollars variety in we'll we'll full

up merchandise For $XX.XX $XX.XX, premium trade the and offerings margin the to the decretive business, platform in will encourages and which more at restaurant.

and Me for point. Three $XX.XX traffic our role in out-of-restaurant moves price of the volume will with business. the Me $XX.XX majority of for the driver the fact, advertising, of at now addition Three And play the In

offers through incremental help reboot the promoting regardless We traffic of will well national the share win drive as us and believe condition. this opportunity to our market media as macroeconomic loyalty platform

passion spend strengthen that team Johnson, organization. a world executive share working for I the Jesse little talking time Marketing, VP and Wieden Chili's the additions will Jesse he And and Chief to to they the our time. in drive to agency, touches. our embraced who by importantly, leadership and world's advertising embraced and excited to excitement advertising leader I'm already senior class on develop has already at our Kennedy he has energy to Chili's an Lastly, Officer, near-term Felix. been a a creating of of strategy of for team everything as brings joined some the has Jesse leader and our most George work news marketing brands, brand that accomplished as to Marketing our -- robust worked most the the strengthen team marketing want an over is brand. has traffic a about iconic

chain, chain James large chain as in strategic of served Vice strategy. James past, supply supply well-respected of make excited help multi-unit co-op Butler very thinking only will a to worked high-level that as our the welcome our will Senior know business of leadership with a our will leading in I Supply of also he new progress concept. is a the I'm and President James not to bring fresh Having help restaurant advancement SVP accelerate Chain. recently supply leader but highly who our

business four the macro we're our team economics leadership improving We driving right a our wall help believe team, four world-class and with will the Chili's regardless for our executing the making strategic of business our on stronger guests pillars, and choices business, environment. for members, experience and Maggiano's

will that's Maggiano's our growth stronger be future focus at I'm on core brand. more this why potential Brinker. the will With competitive a And its Chili's business, encouraged unlock and about

to hand to call the to over going I'm the walk numbers. through Now you Joe, you,

Joe Taylor

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

move quarter appropriately price strong second for from forward this reported continued nice to business. operating ability our a morning mixed demand, benefited the Sales fiscal results results. more consumer and The represent

started our feedback more commodity initiatives. restaurant importantly, in response Our environment economics and guest in and to to improved became improving recover evident,

of second increase prior billion, the quarter of of XX.X%, total $X.XX $X.XXX an a year share, from earnings of margin revenues For adjusted reported per $X.XX of Brinker and year. operating fiscal restaurant XXXX,

in with and sales the At the both elevated price resulting the with feel the incremental comfortable more actions relative quarter structure, third-party on pricing executed menu X%. and this of comp positioning competition. we in delivery XX%. Chili's pricing to overall in store year-over-year brand price our channels Even level, We increased value

was an our for of our restructure X.X% of menu expectations of discounting. Three quarter, concerted This, of resulted in important mix mix. last incrementally platform, brand. more October with the effort clearly ability part sales offset Negative unnecessary with of move X.X% higher was to traffic Chili's line than away quarterly mentioned our we from with strategy the drive the As levels in is our positive and for at coupled Me to price and

had by now driven season. and X.X% exceeding Maggiano's outstanding an realized quarter X.X%, favorable of traffic a positive and banquet, Digging Maggiano's pre-pandemic The brand all comp of holiday reported off-premise, revenue by in sales dine-in, mix. deeper, with traffic of their improved business price XX.X%, fueled levels. channels, great overall

operating margin establishing basis. was for representing to a quarter restaurant margins decent on the double-digit a stronger Our XX.X%, consolidated beginning second

the the around costs yields. increases XXX Cost year-over-year coming and Let and weather by quarter from comments in poultry were to Food to in me points first largely and of make the and components spikes beverage in inflation inflation XX%, some recent XX% related for basis ROM. in beef down driven our commodity as quarter. with unfavorable were produce specific

the expect mid-single-digit each inflationary moderate to QX. anticipate by these XX% QX we pressure below further pressures While in quarter, balance we to the of and fiscal year, for down moving range this

hourly rate were offset costs points payout quarterly sales prior XXX higher quarter a was the performance. improved approximately from Wage X%. versus due partially increased year, wage inflation rates, leverage, for basis to benefiting manager and bonus Labor favorable by the

over dining the guests. more we our late of labor are work in the model in second improve for started As course the The and updating to our the of team for year. members Kevin environment worked experience the fiscal model the into way and broadly their system our quarter, to changes process the the mentioned, were

during results improved deliver peak We positive our to better as hourly rates experiences sales of labor well tune through needed number at and hours are Early for to guests. guest and members levels. the improving fine working to managerial driven metrics as team turnover contributing have the both the and hours, flow

less bit investing believe originally Importantly, desired we model now the anticipated. can than a we in improvements, generate the while

elevated and was our for cleanliness quarter the maintenance expense to R&M supply increase XX in the of on inflationary issues The for basis work costs and repair restaurants increase expense points several our an and due areas Restaurant improve deferred year overall maintenance. investment versus as overall and in to expense labor to prior catch-up and normalize. chain condition reflects

the for in momentum development. restaurant Chili's evidenced performance of brand's is Additional the new

QX, four communities the a opening restaurants online at Through some three and San $XXX,XXX added the a as such All to came week, levels, in are Kentucky Texas, Florida, Inverness, January. above new were Owensboro, fleet, as very strong Juan, embrace and brand. more

for the fiscal incremental half year on future forward back We results this have seven to calls. and more sharing of openings planned look those

of making are continuation no to operations fiscal our point halfway current material downturn. various the At the with environment in assumes annual opportunity our and update This update incorporates the the we we are guidance. economic investments into taking year,

XXXX Revenue year. billion be is fiscal is the anticipated the to We $X.XX $X.XX raising to EPS of million is our are and million in for following. range the the fiscal CapEx $XXX of $X.XX to anticipated include billion. in full-year $XXX expected between to $X.XX, now and range guidance

excited In macroeconomic and performance driving short-term moving is operational understanding conditions. We're to initiatives, in focus closing, heightened member our to further while we our the build right potential business traffic team believe momentum from key strategic impacts in opportunities now investments, the reengage our direction.

bring highly our Chili's engagement and of is taking our through of every to is efforts experience direction the teams It The see, we and we day their see to restaurant for them, to are heightened Maggiano's life are exciting the around will we guests. our appreciative success.

Now our back call the let's turn complete, for Holly, over you it to comments with the open questions. moderate And to Q&A. I'll

Operator

[Operator At time, will this a question-and-answer we be Instructions]. conducting session.

BMO. first is Andrew at Strelzik for coming question today from Your

Andrew Strelzik

you how first quarter, that the in and I I'm I the last Hi, so thanks had to know was cadence for change, could been strong. My traffic on the taking question. one, with data you quarter curious curious the that. obviously menu since you just some January's softness early to industry time evolved quite if the that speak just said

continued or that's or anything great. about you say can color whether So not any would be

Joe Taylor

an quarter. strengthening The morning. of consistent. throughout to month of actually And as a right headed good you the really end we where good of cadence hit through the the December. December kind relatively Andrew, was Yes, was traffic we impact until at variation a They quarter weather. tail the you had you were got Not huge kind actually end moved December. of as through second

that think probably results you And the that saw. consistent But looked the I very numbers not you we were quarter to immune. you saw at. in of industry some that

think dynamics forward are the And of I carrying traffic into January. definitely

been from equation with the underlying of the still driving in the I COVID part as a at to COVID the said going comp have we seen you're with place calendar have you what be January's kind expect work trends. might you Dallas, some to looking the seeing tundra as move unique lap, are weather that As you're think seeing of year. acceleration frozen Also side of moves lap. as the its we on of throughout the I the dynamics you're window January. my the similar into at very seeing first But industry business

keep and moving out thawing to forward look I So forward.

Andrew Strelzik

Got it.

far? the the just investments in And referenced so some model. in Okay. metrics. ask you exactly That's quarter then that referenced helpful. What you have the wanted late you improvements You I to labor made about you done on

of Thanks. maybe speak bit thinking If how investments you you could the labor little round the that. and next a of timing and to about those are

Kevin Hochman

Yes.

Just we so Kevin, understand just designed you is the how program. so this

best leading the Mika So biggest well a field business, leadership support into were at to our team understand home has folks Ware impact. as investments if put to center it make both going would our restaurant labor the we been as back where in office

hours first the But into changes tables; better time that the so it's team servers to back bar, And just an high obviously rolled not traffic the at And And the it the the do on/off serve towards you that team try one, we that second manage a end from had the up that get things all switch, actually of to some not tables December, the highly tail a and to building. bartender in bar time so restaurants and so add manager and added managing that is out bodies of that to the focus we leadership to the heart-of-the-house. takes round bar with we giving area. position task and to the doing fewer the to on two, frees an to frequently added coaching paid those do. tables on were but the could focus in adding that really then expeditor during cleaner member additional was traffic, position want keep or who option more tables service manager areas runner/buster they stop more those things

of kind round we changes one. that's deployed in So the that

daily, still metrics which our Round on tested, worked is improve, to problem, to I being we've has a significantly two so guest we throughout and give guest like quarter. number until seen metric we're experiencing don't is that the that you so improved one have The that go. ready pretty look details at the

as bumps really call at as in feel field significant well RSC. engagement increases about both our member good last our we at shared that. team I our So the had

was it We impact in comments field manager report beneath is pleased manager So where prepared our we're to turnover. seeing were pre-pandemic. having that meaningful a on the changes the now in turnover

made to hourly there So too. see we're now turnover improve we starting feel strides like and huge we've

on some pre-pandemic do But work get to levels more to there's to that. obviously

team talking talk manager obviously better we're engagement engagement, we and metrics, improve. about member seeing whether we're is when about having a those the guest all and things then experience So

our We that time. scores. that had some grade of the we've a had food grade thing other scores food long is long, seeing The we're best

team labor then and guest the so then in having experience. think better restaurants, you food better better the more the a they about better a provide service, better can members And And experience, having make if as has they make food.

as work as seeing lot the know want progress so that those say right in make quarter, the we're not direction. as accomplished in we all do. I said to right things But to to don't the previous trend there's heading calls, more long And continue right victory making every is we're and direction. that moves. a I We're we

Andrew Strelzik

I appreciate Great. all color. the

Operator

Your next question UBS. with is from coming Geiger Dennis

Dennis Geiger

Great. Thank you.

levels seeing First to what to the consistent from like respect the satisfaction commentary customer's what to your and additional the digesting I you're traffic sounds wanted and any that? are was largely encouraging, as how you're with on about It and it which seeing improving any customer expectations, pricing ask with pushback customer. levels pricing levels but is relates

Kevin Hochman

then Yes, Joe see to I'll start and has add. I'll if anything

the we seen incremental And customer off. that end we low have saw tail before we took pricing. So

coming So was frequently the new the strategy we is even started less continued. customer before end low that and

in We other. or haven't a seen change trend the one way that

guests are are to that considerably the more. willing For spend coming they

shifts significant. we're seeing So mix pretty

And had -- XX% quarter. a on on price the X% So increase of end had a the we a at that result a is we stack, mix increase the effectively right?

are higher, carte, Me, in soft priced that so Three they're because buying And more moving carte they're items are la but à non-alcoholic that folks buying they're not drinks more included right? also appetizers the the is à the not happening for la and what's

are meals data for the of have Me XX% Three purchased some less we just So being day. per that

more as the prepared on I Three moving price Three of average price up over the the check in points. at actually $XX.XX for half is for purchase per Me than And points, comments is and menu said Me my higher Our $X.XX. $XX.XX

In two-thirds fact, over are at moving that.

the would the the seeing that's is scores news service increases. continue And this improved, increases. to which have the because value levels is right? that come what given be our are net price we're good ticked And So we the think customers price quarter up, surprising actually accepting

not and you what consistent is. get is just it point, price idea The of but it's value also how

So both seeing that's service to improved how the we've levels guests -- our spend value guests, well that And been to the the as the scores. more. are willing as continue come have

Dennis Geiger

helpful. that's appreciate I

Joe Taylor

a Dennis, -- thing would little that price as the menu the increase. only what I'd add only thing to I'd the insight to Dennis be

at You're about actual increase that The year-over-year menu at X.XX. was numbers obviously took that range. October looking in we XX%

not look more see I'm And I So on again, a lot a it's X.XX what my year -- I actionable. looking lot a them the experience. back of did of to prior sequencing what sure probably are did and frankly, that think that is guests

think If about the react favorable. so they all how far you might and been has to wanted pretty reaction

Dennis Geiger

That's very helpful. Thanks, Joe.

-- to on spoke Just driving with more, coming one up. gains Me driving traffic for the Three Kevin, you focus advertising and share

relative you the if if curious or quarter if also in I you're market comment from driving importance Just able up what just great. seen share saw perspective. you've to you. a speak of would don't any to what know, kind frame both, it the could you -- get can be maybe and share perhaps market you in but profitability, January Thank to there even of

Kevin Hochman

but during very data we from Yes. a grew like -- speak a dollar high-level, me, at have grew in front don't the of I I we switching believe we can high-level. share. quarter,

got we of of we and that we coupons as lose the deep traffic said something of via mail is the to believe we traffic discounting happen, of what on amount in traffic. of dollars monitor versus out expected we've continue bit is we as map, comments, to a e-mail. talked we obviously the based to we the about want see especially share. black we some to in unprofitable don't we're this And the that lost box of and that prepared So market But it some to going as shedding little

a of or price industry shedded point customers our industry those were have now. customers, those but a on on dragged from We know as And behind customers on versus Three some the Me. freebies in lowest right we little those getting we we're bit we've layering growing believe the dollar traffic, addition standpoint, for to

Dennis Geiger

Great. That’s helpful.

Joe Taylor

And say kind at as positioning with sec monitor of the relative top Kevin, the the the heat. two improved through to overall really brands the our for that, that competitive industry, went I the December They highest both discussing performing in period. our relative performed competition, folks of quarter the that were would in of the in we position brands

performance relative move nice So we quarter. as the through

Operator

for John Your is Ivankoe JP with Morgan. next question coming from today

John Ivankoe

Hi, mean, maybe changes priorities. so of year we obviously in some much. interruptions to you thinking guys be. maybe million allocation generated some thank at that CapEx higher the and thought -- and of maybe at you about this going million end obviously of business $XXX of was $XXX that's gave obviously or lot I cash things I are a maybe wanted to that talk that But historically to kind medium-term was how the a about kind where priorities. of a made COVID is capital this and different number

get I'm I'm your inflection we down direction And asking go as or those basically through that if back catch want shareholders. because going do and the improve remodels question EBITDA level let Thanks. just to grow? a the what's new can, debt of customer decent there up of to other way as point to trying are but about paying to benefit and -- go to your units, -- we ratios employees. debt at really you forward? things, to for mean that the EBITDA that where more think I up going should I might here you So just are chunk apologize this Joe, refits of as because can do I'm and obviously it, money I I go asking store the Might that

Joe Taylor

Yes, in take and them let reverse. me kind of

think debt. also will move forward. we we we down from improve EBITDA to ratio continue The anticipate growth as absolutely pay I will

X.Xx. we'll So get at both down overall to we'd from as talked, ratio again, the those. of below And we've go like it

of Xx X.Xx to moving say And let's this just So on we we rest a as basis. that go the see debt to nicely EBITDA year. of through kind direction fiscal in ourselves

to want incremental up make -- restaurant as development, I sure forward those far again, whether kind going opportunities at look to that, deploying as as there's of new we're we yes, with be The capital and investments. it's we R&M think we'll effectively expenditures, move caught

work So indicated do to I think still there. as Kevin

space we kind about the look the And more quarter R&M So also if last restaurant XX% move at side some is capital we'll the there's this in we spent invest as forward. expense of of you there. opportunities equation,

be a equipment nice next opportunities. new move bringing also that. into some of look we'll But at pacing we equation there'll some as years. So of kitchen the There's we that improvements the think couple we'll be through

at all to see determine we'll and CapEx that it it surprise line But So be. why's go. what wouldn't that, right to that now. where where where -- it's going of are out sight up as money's sequence period ticks a to moves lay we'll up me give and time of great where above could to is above obviously going those them once get we numbers But the actual the you

you to but improve optionality of of a think have to we directly XX I the cash different there of a again going probably lots evolution, it's that to going from over equation. back the the As a generate lot looking that months and cash the of rationale think return standpoint those next base on return just generate at X that opportunities the the an one incremental all business be to into And to or pieces is through ongoing why John, to as we then opportunity clear some flow shareholders. can and indicate of business we is do as operations the that, is

John Ivankoe

question. That's job. Joe. perfect. you Good for unpacking Thank Thanks, the

Operator

from Markets. question with Your next is Capital Eric Citibank coming Gonzalez

Eric Gonzalez

hi, an was quarter, at and morning. of that -- reclassification wondering the I'm also period. believe is the labor the talk a lowest about some you several but, was if about just margin to can years less cost that Maybe of about that which expected, is KeyBanc, current My And step a it's you and way that off? about we should I then driver perspective. pretty during low labor related environment? drivers just down good know revenue. quantify think investments but the maybe there, I big but question to XX impact pay low XX%, that what what you in quarter said before can it'd Did runway quantify staffing see I from be there you those underspend the you type expect previously sort of that? operational due any the on investments, in we than should

Joe Taylor

back", And see labor of the yes, no, from indicated some as you're Eric, the the in be incremental of labor we the putting of did didn't were to benefited really that I as we and we think where "investment really an system side Yes. back piece leverage impact late dated at, -- equation. the they the when much quarter good the still sales you're have into hours will of started that equation second but, because

move as of the of see fiscal you'll we kind more through rest the that of So year.

the positioning. they you drives some do guy team to all off member the good traffic. benefit like as puts still member percentage of to good to deliver insurance able sales a team takes remember go model in related manager hefty those that had as of delivered was on There's ability also things a the related and We very through make have payments labor for kinds there and labor nice year-over-year see performance of We pay a you that were a a it's bonus, and model. labor so

traffic relative a those generating labor little volumes. benefit necessary was there So less hour lower the to from

I percentage we move up tick forward, somewhat. a you couple you'll move through kind something the of as quarters, see of as as labor sales of expect -- next But

piece I to you in on second where points Obviously predicated probably There on think let's were XX what from see leverage a you'll the say do of quarter. lot something stories. nice top-line. a is increase the the XX ability basis of in that's labor we the

of you I think sales some to about the about think our create top-line labor be can sales But leverage of company's think when going a So as to as top very -- percentage again, ability so again out labor. line. delta, is don't you drive

kind of you'll think basis XX I points to see in that XX it range.

Eric Gonzalez

sequentially first All mean you the XX XX right. basis from to points quarter? Did

Joe Taylor

from sequentially second the quarter. That's

Eric Gonzalez

Yes.

quarter. Second

could any also I particularly Okay. you're you And channel, about maybe customer quarter. wondering mix, to took the it's mix relative what in I in aggressive so held if I the that of delivery I'm can sustainability deteriorating then just to-go was you apologize on to just being if that, missed was you that but -- that, aggregators wondering the on think case that much channel but the price out the the the quantify maybe and there's very if is that do environment? on Why extent And given pushback seemingly the what on that carry or how price delivery acquisition you up. that's to the expensive macro differential some it know seeing channel. -- is huge talk any I is

Joe Taylor

the delivery people. channel resiliency Yes. I think proving it have I is to relates it is to -- and again, is one

that need a little think consumer different. I is to related the stayed

that probably demographics think of equation. towards skews side is using the economic the I the higher

right is in the So now still channel percentages. resiliency pretty willingness delivery the to similar use to place. continue the we Overall, and

range go You're to the remain off-premise that in can really seeing quarter. XX% to XX% for

steady to I state. think that have a it seems

The whole Maggiano's a again, guests introduced level of capabilities. nice they've is their off-premise another to on thing

a seen the improvement very little in off-premise you've side equation. year-over-year their over So of meaningful XX%

to to for robust them we So channel forward. kind that which that's a move nice grow, of new continue

Operator

Your is question Stifel. O'Cull today for Chris from next with coming

Chris O'Cull

guys. follow-up conduct Chili's what pricing the impact because morning, removals and of the be company discount least guest. Chili's at think good I question, determined frequency the the how either related need would wondering would and a discounts. to I to the will I'm Kevin, on traffic, impact just given had test the several pricing months just company's over Hi, a or evaluate of

Kevin Hochman

Yes.

didn't balance could order So We think me do far impact, the on a we I versus pricing that's wait to candidly, to call I that question typically great that. like something we of the a someone industry. the and do behind the In understand were even would pricing think test. asked and so last

why I guests that's get. to the for the able you restaurant. as we're Chili's opening of that is forward the to and value abundant quarter food this dining. so we $XX.XX are to not the be investing to This will that going quality as going why point in that afford that thought start I later of casual or we needed we've protected experience could the be shout are advertising and well that really we the improve things would protecting the price about an lean otherwise say adamant

pretty compare and point fast unlimited entrée, think QSR drink about for meal food chips a a And or with you and to that's and complete salsa, bottomless a price unbeatable. $XX.XX full size a that even

honest that long think price going So that that really needs think about we to it as to guest the as protecting we're as in be are I order for sure in, points make we okay. I generally come

why favorites when the out and la still we've ahead up folks the Me. for there. on they've Three can shrimp, coming want in mix menu If they of we're the carte that the for gone steak that's A that they in gravitated available remove Three that's based back within think I we And menu. lot À get variety Me. they want have to the traded or seen it of Or either

and the Obviously to still we'll we going delta economy So everybody are. big it. what's between with where right, a to big have either, the and it immune has monitor happen pricing, question mark we we competitors but continue that our we're are, to not pretty where relate to maybe is

of positioned the casual pretty feel pricing. good context we dining So within

we point long can that that price that to regardless two delta as we close dollar then within do feel those points to really one dining channel we opening you're we traffic. that, of as we'll in, the share. grow are continue maintain we'll that really, on aggressive, feel confident stay the industry And versus If

Chris O'Cull

oh to -- returning You ahead. mentioned TV Chili's sorry. advertising Go

Joe Taylor

is one-time -- a removal not has actually the been lot just a too, quarter. the this timeframe. piece in also reintroduced the And coming of then September, new of of beginning after bar That we kind this add August We really discounting started the back was changes. of shortly also remember the started to these the going took that together at menu, kind not that out first of that to which I Chris, discount in event of equation. rolling some out of

a over this first half year. of been of effort has So of the rolling really the the course fiscal kind

many bar And out of that, improvement the place, of look expectations the response have we've on four that can the bar and actually equation the something like see of very there. a So the watching seeing been over side course and planned came exceeding our particularly, you been months. three, it's nice those of discounting impact we and you're that closely at in and moves really when the

you're So exactly right.

about. continue lot age of You watch are might seeing to for moves well. leg dislocation -- starting to worried any a otherwise effect have the And think that, themselves that you concerning but the to of of very be the not I these we're

Chris O'Cull

you from there? in fiscal traffic? performance to it for to our what if level impact be to have you return just traffic the TV expect the expecting Could I'm do set terms and improve worst was then XQ of or wondering be expectations could help sequentially on advertising

Kevin Hochman

Well, I what about expect we a is you from price we on abundant can advertising. with sharp value at What the I think share guidance give don't want to be point. you it'll

earnings weights sufficient that with detail will that advertising of at that you for how at reasons. the meaningfully investors or move it hope will start But have I But to can't the we to I when June business. will on and competitive next share share be long either going meeting the are believe call with We it all you.

Operator

from with coming Evercore Your Palmer next ISI. David question for today is

David Palmer

dining trend And and how Question speaking, traffic Thanks. room of was the traffic dining you those rest how about the you your traffic just trend compare traffic. dining what to think generally year-over-year room talk year? Could levels room XXXX? on will

Joe Taylor

Yes.

We the pre-pandemic your impacts dining obviously dining a grow that room. -- thinking that's obviously you actually that little room of actually of to through that we're which be traffic the is Obviously, dining eliminate relative piece the rooms. entire down largest continue comp discounting business some to would the seeing equation, the bit dynamic, have and when

And bar. totality about particularly the when right it's in business again is stuff some of we've is the you done direction. not, But think moving on in the

favorable. the -- trade again, think we business, to dining overall what So similar standpoint within talk the I the about very room been in is has

reinvigoration the of of A to platform. kinds walked place things of program. through the for are things see margarita that the the of dining we more the dining obviously the going takes Those obviously room skew lot some rooms side. within Me kind on Kevin of Three to

equation. gain than give price some similar of offset and the So on traffic, mix up but more adequate the side

David Palmer

something I your And I thought the -- also room dining wanted double-digits right? like about in was hour ask mean that. that labor growth. pre-COVID, your assuming I traffic And that to down versus is I

hours, and traffic. about You now labor the versus that up? where think sort room you of that of do in of terms up bit. just dining really I'm you a you'll pre-COVID about labor curious talked dialing do Where versus end are you proportions in think

Joe Taylor

really process Yes, later that of again, December. the dialing in we're starting started that up,

on go continue focused that we not forward. versus to pre-pandemic So as tune fine as current. we'll I'm

do is drive we're I and guest the on that better service, responding metrics better how that think the to again, experiences atmosphere. guest we better better focused the that show food,

more opposed going range you're that, dining your the low I current three some So is of back we're in think to analysis I that at that that the in traffic as years to thinking. think the in looking room regard. environment keep, point in Yes,

offset think to by moves well but think we're it, an again, other all I not making. that's way the about inappropriate

David Palmer

would've struck you If expected was is maybe you month, I traffic like becomes have Thanks. example, -- you're out decline, that level I'm pricing? weird a here? that normal. making terms obviously but down road -- have traffic think Chili's maybe are comparisons what Like there the but for trade-off feel where from trade-offs the the just make you on of you more about was to wondering become the I question, could the the the should kind so ask, there some traffic thinking X.X% including or natural what not -- January that about X%, Is acceptable? business, in adjustments? a for summertime, how the a we how if decline the And roughly of trade-offs, Is

Kevin Hochman

long about business So both the we're thinking sales pretty direction as is the on in the and we good total as terms moves. of right feel we're profitability, about how moving in

closer closely. not get true, So right? to very to where start that true. to going it things that's be some at to if going look make for We're to we're obviously, not not wait to interventions, Now, we're going

through continue allow a Our strategy price and belief allow we opening then but we to we as business. that where to experience, the us barbell then that protect on points into to flow long keep price back some think points the as able items, is be to grow will reinvest other

for have might anything revisit If us time, point, discounting, seen investments little some as that traffic, couple beliefs we grow that long we've we that service better improved pricing. untrue, in those that might that really if a advertising to -- traffic points we've decide allows direction the we as over looks will would And industry it's a plow at this good bit we we with back change hope wrong macro are then or got to haven't our a go back then whether of business But to will, to protect headed strategy. lead believe to the away from run, or us and the especially little food. and to and got a we on levels more equation bit to

it. continue we far. that monitor but if things at to significantly, data that that the the that's We'll we -- so right look the changes haven't belief. to we're our seen reserve So strategy it seeing We

Operator

James. Your is question Brian Vaccaro next with coming from Raymond

Brian Vaccaro

the that you was awareness reduced pandemic? somewhat that's of morning. coming not much And you you and be do Three you I'm to but that due have advertising the as potential back during studies good you as Hi, curious benefit macro, thanks online? you we how changes due for to that my the in Kevin, share I low-end the consumer for could And and Me. data mentioned try you were case the much, to pricing think -- perhaps since and that thanks or bring the about as before said on think any taking even think could on questions off air

Kevin Hochman

like Yes. The a mind we done We -- we it, studies. only data of the data that haven't specific we that any have on have awareness. is top

digitally, businesses where world of the whether Chili's, new is industry got restaurant, could mind you a you're terms, our always in third of -- always you So transacted in important to at Like always market, literally this right? restaurant market awareness, for really you're top in you're you're or marketing shopping home the always a the in because always food. eat, especially you're you're buy at or right? in And then out

point. driving I'm other no at, in then mind to a going going focused at that's think relevant right? we're to a of mind that is when it's we be top the we're about value guest, for on price message we think what on; of The consideration that put And we're great that I have that, advertising of words, awareness because awareness when why TV. that a great I'm is abundant So actually hungry Chili's about of dine important it's you if critically going you're chance part top that restaurant the not closing to set think of and

our some in direction. sure things things awareness those jingles trends start things mind you to data would hold in take the is would that what the and that moving throughout the like the to Chili's from time declines a we went of just dramatic some and right seeing top Chili's I in We that, as move So are using like that in pandemic seen well tell takes In that expect of start advertising the points. of some and logo dark. to past you those It right? is, for advertising our unmistakably making as unmistakably as have addition we the

right of more long. been data mean now of to back have the using traffic, have a off be just far what that putting in traffic air impact the that as advertising so on incremental terms for idea we better it'd Once lift, very of the on. we'll we've difficult data is estimate TRP like do As of give you to because an an

Brian Vaccaro

fair except Is large I'm than of brands awareness that, it chain. one for of of has of reason national terms air peers or in off have mind aware come a Chili's that assume that others that to one to top is lot relative more dropped

metric? Chili's XXXX has Can So or come those lines? is -- down it more us on anything that has tell along underperformed you versus --

Kevin Hochman

the will top Yes. awareness, of I this -- data accessible mean, our companies. is research with we mind well, right publicly

to at the mind And we'll marketing clearly advertising Day so eat. versus talk the set to where that for this consideration Our biggest back June has pre-pandemic. you top Investor just as the business that get declined some and top and of their of for from standpoint going consideration we're an it's is of in about awareness our mind advertising of we set detail part strategy. in they're share opportunity customers But of with

Brian Vaccaro

back comment to it. questions your Got just a you. on circle couple I've of labor wanted Joe, Okay. got. I Thank

typically skim seasonal XX a of QX it volume. is would you XX little in that in seem versus just bps that saw you on half bps historical to second or even sales quarter. think ratio than second up your just quick first I half cost a the lower just said, higher pre-COVID, what the labor And

So that that, around I of trying be seasonality to or other expectation, to on it dynamics clarify guidance. to actual half you'll about in that. hone embedded XX mid-XXs I we an to the think in that investment your that, kind all-in kind just is need wanted XX second that's that the just in want clarify, of perhaps to call

Joe Taylor

as that latter the the through of a effect We're in bonus that kind would I But Brian, putting hours year. to equation. of in opportunities of on side anticipating set to be the we guidance rest gave those if see put benefiting relates all-in line. takes nature. Yes, coming system. all-in, There's some else yes, equation, the we're leverage side. it would to to some see the higher all also in more Obviously you going the hours expect It's and the normalized area the go some the obviously on of probably the what you of piece fiscal manager labor of of of I sales of things had the kinds kind it going to puts expect you into

Brian Vaccaro

Okay.

And Thank I we OpEx know a you, a there Okay. the for bringing are you while thinking just the pieces, name Joe, And certain and are there's high-XXXs it's we fiscal categories, advertising utilities, that back, that. you And than line also, to in are then now line R&M, second that to drill about the quarters? of dollar in a certain OpEx I recent have just lot of those moving help talked categories down been about half but dollar for the advertising and can few. offset be other on going second? up Or higher year, there other expected expect decline to moving increases? should

Joe Taylor

to we as and piece the key move dollars, drivers OpEx it goes move talking absolute build of advertising up. cited Again, the you I line. one think as the that will of -- would advertising that I through accrual as the forward you expect you of kind equation be

we'll where that. see that's So

investments as elevated cleanliness back forward as to labor. restaurants the I think make R&M continue the speaking, condition typically as move we generally than to costs improving are you janitorial to flow of of at such seen expect level the a it expense, have through be on little might and opposed line I you that more some in

the you you relates labor, it it's going be more equation. an where side as are hours again, And thought to So things in of of a into OpEx might something going to inflationary that just still actually environment. for in have there have kind might the janitorial that number of

build will I have of through things when inflation about we year-over-year. normalize as to some mitigate think and those you to start move the year. think continued of expectation you But most

what that's sales So see also items the There's dollars you'll yes, where to those you over I leverage chance up good cited. very also just absolute think hit of too. so tick some of starts

right relates that expenses make stable of calls should it relates percentage on it of R&M to basis a we of improving slightly So run and a advertising through I kind on sales. possibly percentage be think forward. move the that some as to the it of basis; we'll fairly a to are kind But as as

Brian Vaccaro

Okay.

quick have quarter? that was two housekeeping great. for Okay, sales then in And second items. the just each percent Do off-premise brand this you of

Joe Taylor

don't, have sitting right in have that? I front where that don't do of right -- Mika, now you I me

Mika Ware

Yes, so Chili's --

Kevin Hochman

Yes, go we ahead, -- Mika.

Mika Ware

was was Maggiano's it XX% Maggiano's just and -- -- here. didn't Chili's Maggiano's sorry, I'm over memorized have at looking right

Kevin Hochman

Low-XXs.

Mika Ware

Yes, Yes. were they about XX%.

Brian Vaccaro

XX%, Maggiano's.

your sorry And the Joe, to tax Okay. going long, one rate last so me, for guidance. keep embedded but in

Joe Taylor

tax that the Again, we expect mid-single-digits that annual on to basis. low-single-digits rate

Brian Vaccaro

Thank very you Great. much. Okay.

Joe Taylor

That's -- effective the and rate. effective that's tax

Operator

Bernstein from coming for question is today next Barclays. at Your Jeffrey

Jeffrey Bernstein

a Great. largest the here. an Thank one for to of the yesterday players U.S. from you one, mild macro QSR a spoke the Two speaking very about first just assumption much. questions, recession, presumably downturn broader

you downturn. mentioned not think a assuming I

a And come follow-up. think you impact recession So had I then what And one mild I'm terms in a maybe you would do in your from respond of business? need be? change just what on if strategy wondering -- how would

Kevin Hochman

Yes.

I'll I Let then macros positioned me on we we're were based the start like to and how going about worsen. think what just talk with where change you the to customer's think if to about how

our and like gap I'd where positioned versus versus we're industry, where so the large that on with one, increases number catch-up we've So competitors. versus taken, still there's pretty the our even value recent is playing we're pricing price a

good that. I feel about So

Our improved in the have menu. took since value the actually October pricing scores everyday on we

levels. think of service a I function that's improved

have direct we way that XXXX in and million we but back loyalty to have several have the them. we members thing have other to too, didn't XX that have we The recession talk a others in

value could little sharper can target so than And we then. bit we a back

a you opportunity a if better can us, right, So had you a go because advertise doesn't, had the that go -- with that it's to everyone. the sharper to think one to then that huge guests it need I versus capability, sharper the little before than you value need for you would

value. on So more you laser-focused be could

with industry at lastly, in think what then on that And back unbeatable the I $XX.XX. air we're is the getting with fact restaurant a advertising --

impact have think on I we'll a nice traffic.

afford experience. do have see they From a to can't what is continue get that a bad the to customer you the if or standpoint, if if macros -- them worse, recession

tighter, are is the places things dollars happen count and the think that necessarily what'll can they lowest get because to they're so value, so they but and And on not trust. that price, going consistent to gravitate can they

the whether not. to that's the or recession of And consistent concept, regardless us the macros and service worse so going whether of help not, the a improving levels, or of strategy improving being more idea food get

to we're tailwind as my so direction the is things be doing got macros. on a to the slow that team consistently down what to that. might on that we have the that if happens sure we important the we the is macro. and labor focused all And stay That regardless that need to the we're aggressive food don't to our perfect. But Those and really better look provide can't model because things do fix make with -- levels investments to are restaurants our service great we of

as a some lot the their be pull things guests of we it we'll if think one, trips. value like to they we'd value on because that get the we did with would need far know sharper our and CRM against back As see I loyalty get changes that able worse, our if make

blasting everybody. just to we having a out instead value of So

them to better, get our is that going and as back and some making to continue fewer place thing the a where margins items, second we're business. that's lot the got think we've that of into to we're accelerate allow and making as simplification whole a us invest improve to I a to well

that's is to And that from going hot point, then to think macro. third traffic you're to the a price got I mitigate a stay thing the to advertising obviously I on because think headwinds get we going try on

in us the to the little tweak, short-term those I don't drivers. reverse with of see then more swing are you'd strategy. of traffic things I of that see like pendulum some but back our we investments bit center I a long-term do terms would think major the think a course the the balancing

Jeffrey Bernstein

full-year then guidance fiscal just least versus EPS mid-point looks by but beat $X.XX, follow-up, quarter $X.XX. your second at like And the Understood. that for the it XXXX looks you like you the raised by at guess consensus I

second or if perhaps as internal and think wondering prioritize quarter the conservatism I'm incremental maybe whether and your whatnot. still than So you advertising expectation in or you're just and consensus mentioned R&M you more modest maybe or you maybe was not is beat earlier, labor guidance relative perhaps can factoring to the

relative the second in pretty full-year Just the more EPS. the you. modest trying to significant what prioritize Thank increase beat quarter led to

Joe Taylor

numbers. Jeff, expectations Yes. again, relative -- the arrived those it might consensus, and beat exceeded in some a it relates might get the have how those that the there that too of been have quarter too, what at but as between numbers. a going our The up two they consensus I to caught internally differential was to to mean not -- I'm

the -- does the And are momentum And but the also. again, business, thinking as out sitting about we're to in some understand prudent investments macros about. talking the what that to see get there kind what's incorporate of you're level the we of it are

some to we -- really the the cases the move assuming up, of we quickly in as make half they're investments. opportunity be want as quicker again we little So the can. moves those -- have If the as second stays on we able into the move of a to to even some year macro

don't of on macro pieces the the talking everybody either. weariness equation to with see over So this our the out we're of that all need equation of the through you about that thinking different we that piece get skis

Operator

question Stanley. with Harbour today final for Morgan Your is from Brian coming

Brian Harbour

the immediate so something the started initiative Yes. pick what from see of mix that just kind Is the the about bar kind but here? ask reduction from most piece actually up comps. to discounting Good have of of Maybe that expect impact, obviously the you. or of some morning. of you your was Because I'll changes? Thank product to far you

Kevin Hochman

to The mean our this you properties drive to both which can test and CRISPRs, of have is what how And how order I thinking today core and we is we CRISPRs margaritas, so idea big innovation a mix. some like we're do and so on call that to in we currently pricing so Yes. -- platforms example an fajitas. bring is strategy like part mix? burgers four, for those the understand about

it's reduced the opportunity we -- buy we sell have different because CRISPR a today, on size, no So offers to two right? or same piece all bigger count. one, three but two there's we So now they're

way tenders, that's so And to eats wants wants want not competitive sizes. concepts, see everybody if you they bigger People size. really multiple chicken guest the smallest and the have the buy not

people sides. six the testing testing And from testing to three, as five, see taking moves that what five. that of then are help mix, from additional we be PPA gains virtual it's making importantly, CRISPRs trading us, a bigger we We're a just sauces even so We're result four, if going significant if down And test we're upgraded move with and because right? So a count. four, testing it that's why in CRISPRs we're brands. mix We're and expect that it's would not in test rolling. the to overall versus obviously check within more

to if far their so It's do And valuable they're going you. be for a about to solve meaningful clear spend in whatever really their with seen. test, -- we're needs as more you and and what the encouraged willing that it we've way; are guests,

And you're to the going in see that show think up bar. so I

through high over show see we've exercise both so only of -- fajitas at not and in fashion and as a that our field through a at how and in about everything up once this innovation, restaurants and so gone it as restaurant that our teams do so And with pace can The much within quality sequence the you're why just right? change leadership going support are handle think as handle RSC do can't that's once, we think all manner, to can driving challenge seeing for us I right? period. change, mix we we we well So it time. team The just it team like do all you're that menu the evolving the XX-month literally is right?

we're mix. not the could value do think best for about how But industry, lowest of but just be we about that that's We thinking growth in the us how meaningful the source point think having the for as price we a create guests.

Brian Harbour

year. what the kind and roll previously as down more of to Okay. on the the was I end you. it Is you do XQ still case? kind supportive menu that And pricing, ends? you number just think as in think cost year X% outlook level, pricing you Great. had add said that of is might we of then or Like closer still the Thank some to expected your you

Joe Taylor

look adding incremental Kevin think menu look We exit kind to where we expect we'll pricing XXXX, any some I the and currently think necessarily don't level the work there's things outlined expect anticipate a and of some price based I just off take do next on through the mix year. Hey, I in as our menu, at different, to may at on how a to would about at we range. menu this fiscal continue at opportunities X% opportunities there. we're lower of some

will of exit year you as moves move prior XX% again some an with X%. kind that down of start rate forward we June As we and ending. year period, the the of to the get that move that lapse to on And see around somewhere kind probably now that of rest

Mika Ware

All right.

everyone on for call our concludes April. look that quarter you, in our Thank third So to and appreciate you We results joining us forward updating today. everyone.

Kevin Hochman

everyone. you, Thank

Operator

This concludes today's you. Thank conference call.

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

Brinker International (EAT) 1 Feb 232023 Q2 Earnings call transcript