Greetings and welcome to the Bloomin' Brands Fiscal First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow management's prepared remarks. It is now my pleasure to introduce your host, Mark Graff, Group Vice President of Investor Relations. Thank you. Mr. Graff, you may begin.

Thank you, and good morning, everyone. With me on today's call are David Deno, our Chief Executive Officer; and Chris Meyer, Executive Vice President and Chief Financial Officer. By now, you should have access to our fiscal first quarter 2020 earnings release. It can also be found on our website at bloominbrands.com in the investors section. Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appears in our earnings release on our website, as previously described. Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward-looking statements, including a discussion of recent performance. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from our forward-looking statements. Some of these risks are mentioned in our earnings release. Others are discussed in our SEC filings, which are available at sec.gov. During today's call, we'll provide a brief recap of our financial performance for the fiscal first quarter 2020 and a discussion regarding current trends. Once we've completed these remarks, we'll open up the call for questions. With that, I'd now like to turn the call over to David Deno.

Well, thank you, Mark, and welcome to everyone listening today. Our priorities remain unchanged as we continue to navigate these challenging times. We are focused on taking care of our people and serving food in a safe environment that protects both our team members and customers. We have leveraged our strong off-premises business since the pandemic required the closure of our dining rooms. As a result, we have tripled average off-premises sales for restaurants since the beginning of March. This is a testament to the strong affinity for brands and the decision to invest significantly over a number of years into building a robust delivery network to complement our takeoff business. These outstanding off-premises results have allowed us to keep substantially all of our locations open during this time. The goal going forward is to keep a large part of the share gains we have seen in carryout and delivery. We've also recently begun the process of reopening our dining rooms as state and local governments allow. For perspective, we had 23 Outback Steakhouse restaurants open for dine-in service with restricted capacity during the full week ended May 3, 2020. Comparable sales at these locations were down 17% from the prior year. We are encouraged by these results. As of this morning, we have 355 dining rooms open across all brands, with limited seating capacity in 10 states. As these dining rooms reopen, we are adhering to strict safety measures. This includes additional sanitation and disinfecting practices, enhanced handwashing protocols, use of gloves, and face protection for employees. We're also providing contactless payment options for our customers. Each diner seating configuration has been modified to adhere to social distancing and reduce capacity standards. For added convenience, we are leveraging our cable management notification system to allow guests to wait in their cars for their table. These results would not be possible without the terrific work done by our 90,000 team members in the restaurants and the dedicated employees in the restaurant support center. Their ability to pivot to a 100% off-premises business has been energizing to watch. Not one of our employees has been laid off or furloughed in either our restaurants or the restaurant support center as a result of the crisis. Hourly workers impacted by the closure of our rooms have continued to receive pay as we work through the current environment. This decision has been an important part of what is driving results and we are seeing the following benefits. First, we've been able to retain a highly engaged, motivated, and trained workforce. Second, as the dining room reopened, we have teams ready to go. Our hiring new training costs are minimal. And most importantly, it was the right thing to do. Turning to our financial performance, we are tightly managing our cash usage. We have stopped non-essential spending, significantly reduced marketing expenses, and deferred nearly all of our discretionary capital expenditures. These efforts have allowed us to minimize ongoing cash burn. Also, as previously mentioned, our decision not to terminate or furlough any employees allowed us to reopen dining rooms quickly. Earlier this week, we took steps to further strengthen our liquidity position through the pricing of $200 million of convertible notes, which is expected to close today. These funds coupled with our reduced burn rate provide additional flexibility to navigate economic uncertainty over the long term. Liquidity will also enable us to capitalize on opportunities in the weeks and months ahead. As relates to our first quarter results, we are on track to deliver a strong quarter prior to the impact of the pandemic. The strategies to enhance total shareholder return that we outlined on our Q4 earnings call were working. Through February, all of our concepts were positive in sales and traffic. We achieved meaningful expansion of our adjusted operating margins during all eight weeks, and we began to see the benefits of our expected $40 million of cost savings that we outlined in February. Once we have successfully navigated the ongoing crisis and capitalize on our opportunities, we believe that we will be well positioned to build on our early 2020 success and emerge an even stronger company. And with that, I'll turn the call over to Chris.

Thanks, Dave, and good morning, everyone. First, I'll provide a brief summary of our financial performance for the first quarter versus the prior year. Total revenues decreased 10.6% to $1 billion. GAAP diluted loss per share for the quarter was $0.44 versus $0.69 of earnings per share in 2019. Adjusted diluted earnings per share was $0.14 versus $0.75 last year, and adjusted restaurant level operating margin was 12.5% versus 17.1% last year. Through the first two periods of Q1 2020, combined U.S. restaurant comp sales were up 2.6% with positive traffic at all of our concepts. In addition, adjusted operating margins were up 100 basis points from last year. It was a strong start to the year, but as we entered March, the COVID-19 pandemic had a significant impact on our Q1 adjusted results, such as sales deleveraging across the P&L, driven by the closure of our dining rooms. The payment of $16 million of relief pay in March impacted the labor line, along with increases in restaurant operating expenses primarily supplied by the shift to an off-premises-only business model. As it relates to our cash utilization as the pandemic began to impact our business, we took immediate actions to minimize spending including the elimination of essentially all discretionary expenses. These actions combined with steadily improving sales performance have allowed us to reduce our weekly cash burn rate to $6 million to $8 million per week. Now that our dining rooms have begun to open with limited seating capacity, we expect this burn rate to continue to improve. With respect to near-term financial performance, it is important to consider a few key items. First, incremental profitability flow-through will be lower in the early days of reopening our dining rooms, as we will incur additional service labor among other items. There are typically minimum dining room staffing requirements that negatively impact flow-through at lower sales volumes. But as dining room sales increase, flow-through should return to more normalized levels. Second, we have continued to make relief payments to hourly employees in the second quarter. In Q2, we expect to pay approximately $14 million in relief pay, net of tax credits available to us under the CARES Act. We will stop paying relief pay as each restaurant reopens its dining rooms. Also, our decision to pay relief pay will allow us to reopen dining rooms with no hiring or training expenses. Third, we have not seen any material disruptions to our supply chain, particularly in key proteins such as beef, poultry, as well as seafood. On the liquidity front, earlier this week, we announced the successful pricing of $200 million of convertible notes. We began evaluating multiple options for raising capital in early April that included discussions with multiple financial sponsors, some of whom expressed an interest in the Company through our prior strategic review process. In the end, however, we concluded that the public convertible market offered the most attractive terms and the lowest cost of capital. These notes in combination with our strong cash position should provide us with sufficient liquidity to navigate these uncertain times over the medium to long term. As it relates to the exploration of strategic alternatives that we announced last November, we have ceased any further steps in that process as we focus on our response to the current COVID-19 pandemic. This includes a suspension of discussions with interested parties with respect to our Brazil business. Brazil has also been faced with mounting challenges from the COVID-19 pandemic. Similar to the U.S., our restaurants in Brazil were forced to close their dining rooms and shift to an off-premises-only model. Unlike the U.S., it is more difficult to execute off-premises in Brazil given that most of our restaurants are located in malls. Having said that, our leadership team has built a carryout business from scratch in just a few short weeks, and we are slowly seeing signs that less impacted geographies will begin reopening dining rooms. But just as in the U.S., we will be thoughtful about how we move forward, prioritizing the safety of our customers and our employees. Finally, this past Monday, we successfully closed on an amendment to our credit agreement. Among the important terms, our total net coverage covenant has been waived for the remainder of 2020. In its place, we will be subject to a minimum liquidity covenant that we are confident that we can comply with given our strong existing cash position and recent capital raise. Under the amendment, we will be limited to $100 million of capital expenditures between Q2 2020 and Q1 2021. We will also be prohibited from paying dividends or buying back stock until our total net leverage returns to be in compliance with our prior covenants. We are comfortable with these restrictions over the short-term until we can eliminate our cash burn and pay down debt to strengthen our balance sheet. In summary, although this situation has been challenging, our strong performance amid this pandemic reinforces the relevance and strong consumer appeal of our brands. We have taken the necessary steps to prudently shore up our liquidity position, and we are looking forward to emerging as a better, stronger, operations-focused company. And with that, we'll open up the call for questions.

Thank you. At this time, we'll be conducting a question-and-answer session. Our first question comes from Jeffrey Bernstein with Barclays.

My question is about the reopening of the dining room that you've already started, and it seems like the early results are encouraging. I believe you mentioned costs were down by 17%. Can you provide some insights into your confidence in maintaining this trend once the novelty of the dining experience fades? What have you learned from those locations regarding dine-in and to-go options? I'm trying to understand the recovery trend better. I also have a follow-up question.

First of all, we have worked tirelessly to make sure that when we reopened restaurants, we did so safely and appropriately for our customers and our employees. And it really helped to have a full staff ready and trained as we reopened the restaurant, and that really helps us out a lot. The team is ready, the protocols were in place, and the communications were in place. So Jeff, we're seeing the gains sustained in those states. And as we move into new states, we are having conversations with our state teams, discussing our learnings. So as we share those learnings with other states, we get stronger and stronger. I mean, clearly, people love our brands. The team is doing a fantastic job and the restaurants, and we will comply with all state and local regulations, but we're ready to go and we're going to learn from it and get stronger.

And then, just my follow-up in terms of the commentary and the prepared remarks about the convertible notes, obviously, you had various options. Just wondering what led you down that route? And I think you mentioned the extra liquidity will allow you to capitalize on opportunities in the near term and just wondering if you could provide some color on what opportunities that might be. In fact, I know you mentioned there was some interest in maybe buying a piece of the Company as part of the strategic review. So any color you can share on that would be great as well? Thank you.

I'll begin by addressing the first part and then hand it over to Dave. With a convertible bond, especially with the call spread, it was simply the most cost-effective capital option available to the company. The call spread feature also enhances the cost of capital, allowing it to function more like a traditional bond offering, where we can repay the principal in cash and prevent share dilution up to a price of $16.63. Therefore, cost of capital was our main consideration, and the bond-like characteristics it offers were also very attractive. Regarding your second question, we want the flexibility to manage our existing concepts and protect the substantial market share gains we've achieved in off-premises sales. We need the resources to safeguard those gains, optimize our asset base, and capitalize on future opportunities. This is why we sought additional liquidity—to give us that safety net. We are pleased with the outcome, and the team did a commendable job raising the extra funds, providing us with more options as we advance with our concepts to strengthen them further.

And any color on that interest of some investors in investing in the Company more significantly?

No, nothing else really to add there.

Thank you.

Thank you. Our next question comes from the line of John Tower with Wells Fargo. Please proceed with your question.

Great. Thanks for taking the question. Just kind of curious on that last point you made there, David, just did in terms of cleaning up or thinking about the portfolio in terms of moving forward and improving the existing concepts and potentially optimizing the asset base. What do you mean by optimization of the asset base? It looks like in the first quarter you've closed a few stores; I mean, are you thinking about potentially shutting down some more in the future? How should we think about that? And then I do have a follow up.

Yes. No, when I talk about optimizing the asset base, I'm talking about going on the offense. We've done a good job over the years addressing our closures and things. And we may have a few, but I'm talking more about building our off-premise business even stronger, building our dining business even stronger. That's going on the offense as opposed to doing more defensive stuff.

Okay. And you gave some qualitative information on Brazil. Can you maybe help quantify what you're seeing right now down in that market? And then just in aggregate, what you're thinking about for the balance of the year? When these competitors last night offered an outlook for the remainder of 2020, they suggested that they're not going to be moving back to positive same-store sales. Just curious to get your thoughts on that as well.

Yes. In Brazil, their performance is quite similar to our Bonefish brands. They initially did not have much of a carry-out business, which has decreased by 70%. We have essentially established a carry-out business there and have nearly tripled the delivery business. They've managed this area very effectively. Pierre and his team have done well in seizing the opportunities in the market. What was your second question again?

Yes, it's related to kind of forward-looking guidance.

Yes, honestly, it's just too early, I think, at this point. Obviously, we're still in the early days of just opening up the dining rooms. So much of it depends on government regulations, how fast they can ease some of these restrictions related to capacity. Hopefully, by the end of this quarter, we'll be in better shape to give some perspective on that. But we're just in such early days regarding the dining rooms, but it's not prudent at this point to give any guidance on the balance of the year.

Alright, thank you. I appreciate it and best of luck.

Our next question comes from the line of John Glass with Morgan Stanley. Please proceed with your question.

Chris, first, can you just do the walk on the $6 million to $8 million cash burn? What's the breakeven level at the store level on an average sales basis? What are you assuming for just for weekly G&A just so we can understand the sensitivities around that?

Yes, so I'll give you a little perspective on some of the various buckets. We'll start with sales. I think we're assuming levels that are at or above current levels with a small contribution from the reopening of our dining rooms. And I think that's why we gave the perspective that we think we can improve the burn rate as the dining rooms continue to reopen and our sales improve. I guess on the expense side, full salaries for field management and restaurant support center staff. The relief payments that we've been making should go down significantly as our dining rooms reopen. Obviously, you'll have increased costs or COGS and hourly labor as the restaurants ramp up. Minimal discretionary spending, with really only maintenance capital in the model in terms of that $6 million to $8 million, there'll be a small amount of marketing in that number, mostly digital. And then I think as it relates to rent, that's the other big toggle. So, obviously, we have very good relationships with our 900 plus landlords, and we're proactively speaking to them since this pandemic began. I think the good news on that front is there's pretty broad recognition among landlords that, even though we have shored up our liquidity position with the recent capital raise, we're still burning $6 million to $8 million of cash a week. So, they also recognize that we're going to be here for the long haul. So they're generally open to having conversations about deferrals and abatements. But in terms of our liquidity model, to give you some comfort, ongoing rent payments are contemplated in this burn rate, and in the going forward liquidity planning just to avoid any confusion. So, the last thing I would say is just as you think about that $6 million to $8 million, it does exclude any changes in working capital, either in payments that we've deferred or deferred to future months, or on the flip side, any working capital buildup as the sales improve. So hopefully that gives you the right perspective.

Well, just one additional question on that. What is the average sales level at an Outback brand that gets you to cash flow neutral at the store level?

It just depends on various factors. If you look at the weekly sales generated at Outback with an off-premises-only business model, we were able to reach a point close to cash flow neutrality, if not at the restaurant level. However, as I mentioned earlier, when you factor in dining room labor and initial labor costs, those early dollars aren't as profitable. Therefore, we need to achieve a daily sales level that returns us to breakeven. In terms of the overall perspective, I would say that if you consider our total profit and loss statement, including all costs from our restaurant support center, general and administrative expenses, and interest payments, we would likely be in the range of down 20% to 25% before reaching what I would describe as cash burn neutrality, meaning we're not consistently losing cash.

Yes, that's totally helpful. I appreciate that. And then, just quickly, just on the off-premise business, how much of that has been delivery? I mean, obviously, it was a push left late last year in the second half of last year. So how much has that takeout business been delivery? How much is your delivery versus third-party delivery? Any contacts that will be really helpful?

Yes. So, as you know, coming into this, we had such a strong takeout business and takeout still remains predominantly the vehicle that customers are using. We're probably about two-thirds takeout, one-third delivery at this point. And then, if you look at the toggle between the two delivery forms, either our in-house or the third parties, it's about a 50-50 split between those two.

What we're seeing is that on the third-party is that new customer that makes it so interesting. And when I talk about going on the offensive and doing things, I mean, preserving that and moving forward with that's going to be really crucial as we go forward in the rest of the year and after that.

Our next question comes from John Ivankoe with JP Morgan. Please proceed with your question.

You could imagine some of the strategic initiatives specifically around G&A could be either accelerated or pushed back because of COVID. So I was just hoping, if you could, I know, we don't want to get into fiscal '21 guidance too much. But could we think about a fully loaded incentive comp being paid G&A number for '21 or '22? Just again as there are so many moving pieces and different things just kind of become prioritized new organizations just from a dollar perspective? It's the first question and secondly, on Brazil, that was a market that you were growing before. In terms of units, I mean, how long should we expect either development in Brazil to be curtailed? And I was hoping, if you could give us some detail around the $12.5 million cash distributions for Brazil, why do you think that would just be a one-time event versus a potentially recurring one?

Yes, sure. John, I think, when we addressed our overhead in February, we talked about $40 million over two years. That's moving forward. We continue to look at going to market in the most efficient, effective way possible, the Company that will move forward. We've learned a lot during this process, like the last company may have. So, we'll continue to manage our G&A appropriately, going into '21. It's too early to give a particular number, but I can tell you all of our niche initiatives are on track and then probably more. So, that's going to be a big part of our story as we move forward. On Brazil, it continues to be a really strong business for us. We have to manage our cash and cash flow. We continue to believe in the business and its returns and as our resources open up, I'm sure we'll expand down there, but it's too early right now to say exactly when that would happen. We want to see how the marketplace moves forward in the U.S. and Brazil, but it continues to be a top performer for us.

No, go ahead, John. I was just taking the follow-up on that.

Exactly, on the $12.5 million, if we could think.

Brazil had a strong cash position coming into this situation. Generally, Brazil is very self-sufficient regarding its funding needs. The $12.5 million investment we made into the business should support them for a while. As they start reopening their dining rooms, we are hopeful that they will have sufficient cash to sustain them in the near future. However, it ultimately depends on how the reopening goes and how their sales performance stabilizes later in the year.

Our next question comes from Jeff Farmer with Gordon Haskett. Please proceed with your question.

You did touch on it. And I appreciate that it's been only a couple of weeks. But for those 23 Outback locations that had been open to in-restaurant dining since sometime in late April. Have you seen those same-store sales steadily improve? Have you seen increased demand for that limited seating capacity, any color that you could provide there to sort of paint a picture for us for what it's like when these restaurants reopen?

The restaurants are very popular. We're meeting the local guidelines. The dining rooms are filling up and the sales are sustaining. We'll take those learnings, like I mentioned earlier, to other states. But we're balancing the need for safety for our customers and our employees with the demand for our restaurants. We also want to make sure we keep the off-premises gains that we've enjoyed. So that's what we're trying to do, Jeff, as we balance these different things, and we'll see how the states unfold. More states are opening up, and we'll see what happens. But it's too early to say other states right now. But I can tell you what we've seen so far in Georgia.

And then just as a follow-up to that. So Texas and Florida I think are both limited to the 25% capacity. What criteria needs to be met at the state level before that capacity can be eased to, let's say, 50% limitation? Are you guys aware of all that? Is that information out there yet?

It's not out there yet. We're aware of very safe to keep in touch with states all the time as far as what their plans are; we'll comply with that. But we can't speak to the state’s Jeff as to what their plans are. We're just staying on top of it as best as we can.

Thank you. Our next question comes from the line of Alex Slagle with Jefferies. Please proceed with your question.

Thanks. Hope everyone is doing well, for the restaurants that have reopened at this point. Have the operating hours been similar to before and what are you seeing? I guess when are you seeing most of the demand? And I'm just wondering how that's playing out if you envision enough demand that you'll start to fill out the shorter periods soon?

It's similar. There’s nothing really different per se. I think the biggest thing is just managing to the local laws and local compliance and running it to our best of our abilities. But it's similar to what you'd normally see.

Okay. And transitioning customers from the wait area to the cars seems to make an interesting solve. What are the customers saying about that? And what have the waits been like?

They have appreciated it. They valued the steps we've taken as a company, and we've received very positive feedback. They also acknowledged that we have reopened. The wait times differ by restaurant; some locations have immediate seating while others experience very long waits. It really depends on the specific location and circumstances.

And more importantly, the customers have shown a willingness to wait.

Thank you. Our next question comes from line of Matthew DiFrisco with Guggenheim. Please proceed with your question.

Thank you. I have two questions. First, regarding the new debt spend and the adjustments made to the covenants. You mentioned that in the first quarter of 2021, those covenants would start to take effect. Could you provide a range for the EBITDA on a last twelve months basis that we should expect you to adhere to? It's clear that cash flow will gradually improve and return to positive, particularly through 2020, but there won't be significant debt reduction. What would be the EBITDA range necessary to meet that covenant?

I'll give you the covenant perspective first. The way it will work is, you take the Q1 EBITDA performance of the Company in 2021. You multiply it by four with some adjustments for seasonality because Q1, obviously, is going to tie as a seasonal quarter of the year in terms of sales and profit performance. And then you would go to Q2, and then that steps down to 5.5 times to 1 ratio between net debt to EBITDA, and then you would go to Q3, and then that goes down to our original covenant, which would be 4.5 times to 1. So, the expectation would be either Q3 of next year, you're back in compliance with the original covenants. As you progress through the year, you just add a quarter of EBITDA and then you multiply it by whatever ratio. So, in Q2, I take Q1 EBITDA plus Q2 EBITDA, add them together and multiply it by two to get an annualized view, and then you test it against that. So, that's really how the covenant will progress. And again, we felt really comfortable that we'll be in compliance with that as we get to Q1.

That's very helpful. There's been a lot of discussion about the 25% capacity returning to the dining room. How should we approach that? Your estimates suggest that you're slightly below that 25% in those stores. As you gain a better understanding of consumer behavior with that 25% capacity, what steps have you taken to possibly achieve more than a 25% sales increase from this new capacity? Can you adjust the model, improve the point of sale, enhance speed of service, or get more innovative to make it possible for that 25% of dining room capacity to potentially exceed a 25% sales lift?

Yes, I think one of the things we've talked about is simplification of our operations, simplification of our menu, working on efficiencies, getting table turns. We want our guests to be comfortable, right. They're happy to be back. So, we've got to understand that as well. But I think the table turns in that environment in a clean and safe environment is going to be important. And as I mentioned earlier, maintaining that off-premises business between third-party delivery, our own delivery network, and carryout. So, that's going to be a crucial part of it as well. We can't forget about that. But I think, Matt, the table turn piece would be the area that we've concentrated on the most.

And then, any change to the menu when you reopen? I assume you've slimmed the menu a little bit for the off-premise only model. How are you bringing the menu back to full menu or not? And that's my last question, thank you.

We have slimmed down for off-premises and as far as menu plans in the future, stay tuned. We spent a lot of time thinking about that. Just stay tuned for different competitive reasons; we don't want to get into it, but we thought a lot about it.

Our next question comes from line of Brian Vaccaro with Raymond James. Please proceed with your question.

Thanks to the convertible debt offering. Chris, what is the cost for you to answer the call spread? And net-net, what are the expected total proceeds do you expect to bring in on the note offer?

Yes, the call spread cost about $17 million, so the net proceeds would be after fees and expenses about $175 million.

Okay, great. And then, I appreciate the weekly sales color that you provided on the U.S. business. Would you be willing to provide an update on the Brazil conference in recent weeks?

Happy to talk about it, but we haven't provided any detail. But the growth has been very similar to the U.S., as people have adapted to the new model. I'm saying growth from where they started. We've had to, they don't really have a carryout business down there. So we've had to teach the Brazilian consumer carryout, and I think the team's done a nice job on that. So we're seeing the same kind of gains down there from where they started in Brazil as we have seen in the U.S.

Much lower base though with the starting point.

And then last one for me, I just want to ask about the franchise side of the business. Could you give a status update on temporary closures either domestically or internationally and maybe some perspective on the franchisee health?

Franchisee health varied by franchise partner. We've had just a handful of closures, not many. And we've been working with our U.S. franchise partners very closely. I think they'll come out of this very strong. We've got a great relationship with them. Internationally, we've also worked closely with our partners. We've been very pleased with some of the leading indicators coming out of Asia. Korea is doing well, for instance, with positive same-store sales growth. So, we will watch that obviously learn from that. So, Brian, very few franchisee closures, and we'll continue to monitor what's going on over in Asia.

Thank you. Our next question comes from the line of Andrew Strelzik with BMO Capital Markets. Please proceed with your question.

You mentioned that you're sharing across the system some of the learnings from the early states, I'm wondering if you could share with us what some of those learnings are? That's number one. And number two, as you're reopening the dining rooms, and maybe restart the advertising at some point. Curious how you're thinking about using value as a call to action? You've moved away from just going on value over the last couple of years. Is that something that maybe you would use more tactically, kind of going forward in this environment? Thanks.

In terms of learning, our top priority is the safety and health of our customers and employees. I believe we are doing well in this area and are considering ways to uphold that. We've discussed aspects like table turns, new items, and customer purchasing trends, as well as how to support our off-premises business. These elements involve various trade-offs that we are actively addressing. Looking ahead to marketing, our digital investments are expected to yield significant returns. We are mindful of how we communicate value while remaining aware of market conditions. However, for competitive reasons, we prefer not to disclose specific strategies at this time. A digital foundation will play a crucial role, and we will strategically invest in marketing efforts that make sense. We have developed robust digital capabilities that we will continue to enhance, and we will monitor the value proposition for consumers closely.

Our next question comes from line of Brett Levy with MKM Partners. Please proceed with your question.

As we're starting to see, even if it's a dim one, a light on the other side of the horizon, how are you thinking about what pace of rolling things back in, your ability to not just manage for today or digital, but to step up the investments on that and on the off-premise? And what would you need to see before you can start to feel that you're comfortable with your liquidity position to start paying down debt to start layering in some incremental costs? And also, where do you think you have the best opportunities to further streamline the business, not just at the unit level, but also at the corporate? Thank you.

Look, we raised the funds that we talked about earlier to make sure we had the liquidity, which we felt very good about all along, but also to make sure we had the dry powder to go on the offensive when we have to. Investing behind our off-premises business, investing behind our restaurants, there'll be a big part of it. And we'll see the sales come back in the restaurants. Chris and the team will do a great job managing our cash flow and our debt paydowns. We'll toggle that back and forth based on what we're seeing in the marketplace. That's the first thing. Secondly, we've learned a lot during this process. We've learned a lot about digital. We've learned a lot about our off-premise business. We've learned a lot about how we can go to market as a company and how we think about our menus going forward. We're going to use all of those learnings to make us an even stronger company as we move forward in 2021 and beyond. That includes our cost structure above the restaurants. We want to continue to examine that. The team did a great job in February, identifying some opportunities. I think we'll look at how the workflows in the Restaurant Support Center, who does the work, how it comes together. We'll continue to examine that. We have a really strong restaurant support center that's doing a great job managing and working with our restaurants. But we'll continue to look at our cost structure as any company would as we move forward.

Okay. Would you be able to share where your dining rewards membership is this quarter?

Yes, it's north to $10 million.

And it has grown during this time, so it's great to see. That's been a powerful program for us and we can leverage it in the future.

And is there anything you can share about just their customer behavior versus the traditional customer behavior? And I'll just jump up the queue and have it.

They are very loyal, and we appreciate them. We will continue to work with them and innovate the program. I am grateful for the investments we've made in delivery, dine rewards, and digital over the years, as they have significantly benefited us and will be important for us going forward.

Thank you. Our next question comes from line of Sharon Zackfia with William Blair. Please proceed with your question.

Hi, good morning, and congratulations on the off-premises growth, I mean, it's been really phenomenal to watch from the outside. I guess I'm curious.

Thanks.

You're welcome. I guess I'm curious as to whether or not you've seen any kind of regional call-outs and how quick the rebound has been? A couple of your brands may have introduced off-premises during this timeframe. I'm wondering if they're going to keep it going forward? And then lastly, as you think about these locations reopening for the dining room, I don't know if you mentioned whether or not you've been able to keep the off-premises volume as the dining rooms have been reopening in terms of the kind of volume increases you've seen.

Sure. For our brands, we talked a lot about Outback and things Carrabba's on off-premises, but Bonefish and Fleming's have taken it from virtually nothing. Bonefish had some; Flemington had zero. I just had to give a shout out to those teams because we know now that we have an off-premises business, especially at Bonefish that we didn't think we had before. The meal bundles and things have been a big success. I really think that's an opportunity for us going forward. So sharing as we open up the dining rooms, we want to keep as much of this off-premises business as possible. We want to be truly multichannel, whether you come to us in the restaurant, for carryout, from our delivery, or through third-party delivery. I think at Bonefish we've seen it. We'll see what happens at Fleming's. The team has done a really nice job there as well. We'll see if that business, especially on the carryout side, is something that's possible as restaurants reopen. Our goal is to continue to grow that off-premises business as dining rooms open up, to keep as much of the share as possible and innovate around it.

And then on the geographic side, I guess, as you would expect, there is a correlation to how sales are impacted to the level of exposure to COVID in the area. So, the sales is performing stronger than, say, the Northeast or the Mid-Atlantic.

Our next question comes from line of Gregory Francfort with Bank of America.

I have a question about rent. Are you paying the full rent, and are you looking for ways to manage that over time? I'm trying to understand your comments. Additionally, in states that have reopened, how are you assessing the effect of dine-in on your off-premise business? Any data on the early signs of changes in off-premise demand compared to dine-in would be helpful. Thank you.

Yes, we hold a significant share of the off-premise business in the current market. This is why our comparisons have evolved as they have, even with a 25% dine-in scenario. As I have mentioned several times during this call, our aim is to expand our off-premises business as we progress and dining rooms reopen. I will now hand it over to Chris to discuss the rent aspect.

Yes, obviously with 900 landlords, every conversation is unique. And as I said, we are having constructive conversations with landlords about deferrals and abatements. I'm not going to, for competitive reasons, get into how much is deferred and how much has abated and when those things play in. I guess the perspective I was giving, though, is, as it relates to our burn rate of $6 million to $8 million, we have built an assumption into that, that we are paying full rent into the burn rate just for your edification, there's no, well, how much is in that burn rate of rent. Full rent is in the burn rate, but there are ongoing conversations about deferrals. The landlords have been very receptive, as we indicated.

I have one more question regarding labor. It appears you haven't furloughed any team members. Does that mean that when all the restaurants are closed, you are still paying some wages to every team member? Additionally, as you work on bringing customers and labor back into the store, have you encountered any challenges in that process?

Yes, I think you've kind of answered the question you asked is, yes, we have been keeping our rosters full and our people paid because when the restaurants initially opened back up, we've got a full train, highly engaged team to come back with very little minimal training and hiring costs. This has been extremely important to us as we open back up. People will look at what we've done, how we've navigated the crisis, but look at for the long-term, how we did it. Having these people available and ready to go and highly engaged is going to help us as we move forward.

Our next question comes from line of Jason. I'm sorry, Jared Garber with Goldman Sachs. Please proceed with your question.

It's Jared on for Katie. Historically, you guys have talked about some thinking about some relocations, especially for Outback. Obviously, maybe some of that's on pause given the current crisis, but just wondering if longer term, are you rethinking that strategy, given the strength in the off-premise business that you've seen recently and maybe that's a way to mitigate some of those lower-quality locations without fully moving them? Thanks.

Yes, I mean, the additional piece of off-premises has helped us really think through what the restaurants are going to look like in the future. It will help us in a relocation program, it will help us with our economics, it will help us with our restaurant volumes, and give us even more optionality to move forward, as we optimize our asset base. It ties back to what was early in the call about going on the offensive as we go forward and really thinking through our asset base and relocations. Before all this happened, we knew that we were getting really strong returns on the relocations. Now, when you layer in the new learning and off-premises opportunities, we can really think through in a very creative way how we take our asset base going forward.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Mr. Deno for any final comments.

Well, we appreciate everybody joining us on the call today. I hope everybody is safe and healthy as we go forward. We look forward to updating you on the portfolio on our next earnings call this summer. Thanks a lot.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.