Bloomin' Brands, Inc. Q3 FY2023 Earnings Call

Good morning, and welcome to the Bloomin' Brands, Inc. Third Quarter 2023 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Tara Kurian, Vice President, Corporate Finance and Investor Relations. Please go ahead.

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 third quarter 2023 earnings release. It can also be found on our website at www.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 appear 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 trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way 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 www.sec.gov. During today's call, we'll provide a brief recap of our financial performance for the fiscal third quarter 2023, an overview of company highlights and current thoughts on Q4 and fiscal 2023 guidance. Once we've completed these remarks, we'll open the call up for questions. With that, I would like to now turn the call over to David Deno.

Well, thank you, Tara, and welcome to everyone listening today. As noted in this morning's earnings release, adjusted Q3 2023 diluted earnings per share was $0.44. This compares to $0.35 in Q3 2022, reflecting a growth of 26% year-over-year. Combined U.S. comp sales were down 50 basis points and traffic was 60 basis points behind the industry. Following Labor Day, sales trends in the casual dining industry softened. From August to September, there was nearly a 300 basis point decline in comparable sales trends. Our brands experienced a similar change in trend. Despite these top-line headwinds, we had 90 basis points of restaurant margin expansion versus last year, driven by our productivity initiatives. As a result, our Q3 profitability remains strong. Moving forward, although the industry landscape has changed from earlier this year, we expect U.S. comp sales to improve sequentially in Q4 from Q3. We have already seen an improvement in October, and this is incorporated within our Q4 guidance. In the long term, we are committed to the strategic priorities that are making us a stronger, leaner operation-centric company. These priorities include: first, driving in-restaurant same-store sales growth, and this is our top priority; second, increasing new restaurant openings while refreshing our existing assets; third, maintaining our off-premises momentum; fourth, becoming a more digitally-driven company; and finally, investing in technology to drive growth while preserving margins. Since 2019, we have made great progress in improving our operating model through simplification efforts and by leveraging investments to improve efficiency. The efforts have resulted in strong margin gains that have sustained despite record inflation. These achievements also provide a strong foundation for the exciting growth ahead, and we have confidence that these priorities will enable us to drive sustainable long-term sales and profit growth. In addition, our investments in the customer experience in both restaurant technology and operational simplification allow us to provide differentiated guest experiences that strengthen our value proposition. Many of these investments have been made across the entire portfolio, but the primary focus has been at Outback. With a strong operating foundation and healthy margins, improving in-restaurant sales and traffic is our top priority. As the economic and consumer landscape continues to evolve, we are making sure we continue to evolve with it. This includes doing the work to ensure we exceed the needs of our existing and future customers. This ongoing effort is always being done through the lens of consumer and customer analytics. A few quarters ago, we discussed our "No Rules, Just Right" campaign that built on Outback's brand equity and heritage. But this is more than just marketing. It's an attitude. It's how we re-energize our restaurants and bring back to our reference at Outback is known for. We'll be spending more on marketing and advertising in Q4 as well as 2024. Although we do not intend to return to pre-pandemic levels, we do believe a higher level of advertising spend is warranted moving forward. Utilizing a blend of television and high-return digital tactics, we believe our increased marketing presence can help build traffic. We will leverage a combination of new product innovation, highlighting our already accessible price points. For example, our current limited-time offering at Outback, the Steak 'N Mate's $16.99 Combo offering provides a great value to the guest in an attractive return. We recognize in the short term that driving traffic growth may be challenged as the consumer is more careful with their discretionary spending. We'll be thoughtful about our approach to discounting in this environment. Another catalyst for growth are the investments we are making to enhance our operations at Outback. At the end of the third quarter, we completed the rollout of our server handheld technology and the advanced grills and ovens. These investments are improving our consistency, overall meal pacing, and guest satisfaction while also providing a cost-saving opportunity for the company. Now our focus is leveraging this technology to further improve the guest experience. This will lead to increased intent to return metrics, which drive additional guest frequency and traffic growth. We are confident in the strategy at Outback and are making the necessary decisions to set up the brand for the long term. We'll remain disciplined in our response in this environment and look forward to updating you on our progress in the future. As it relates to the broader strategic priority for the company, let me first talk about development. We are upgrading our assets through remodeling, relocating, and opening new restaurants, especially Outback. On our remodeling efforts, we are at the beginning of a multi-year effort and remain on track for 100 remodels this year. In terms of relocations, at Outback, we continue to see outsized sales lift with average volumes exceeding $4.7 million per year. The success of our relocation program reinforces the broad consumer appeal of Outback, and there are still another 50 relocation opportunities remaining. The new restaurant pipeline continues to build out back and across the portfolio, and we are seeing good returns on new units. Our development efforts provide a runway for future growth and are a critical part of our strategy. Complementing this strategy is our leading off-premises channel. This business has more than doubled since 2019 and currently represents 25% of our U.S. sales. As pioneers in to-go, we continue to have robust demand and are maintaining strength in third-party delivery. This is a highly incremental occasion and this differentiated offer is profitable. In addition, the success of our catering business, particularly at Carrabba's provides a runway for future growth. Before I turn it over to Chris, I want to comment on a couple of specific businesses that are doing very well. First, Carrabba's had another excellent quarter with comp sales of 3%. The off-premises and catering channels are proving to be very robust. Off-premises is 34% of Carrabba's sales, which includes a strong contribution from our growing catering business. Carrabba's has the perfect menu to meet the demands of this important and growing channel. We launched Carrabba's Bistro earlier this year, which is a lunch-focused catering option featuring a wide variety of sandwiches that represent Carrabba's Italian heritage. This continues to outperform our expectations. Off-premises will continue to remain a large part of the company's future. Additionally, Carrabba's continues to offer innovative product offerings such as the wine dinners and seasonal specials, which highlights the great value and experience that this brand is known for. The strong sales to Carrabba's, combined with productivity initiatives and cost management, mean our financial returns continue to get stronger. Carrabba's has earned the right to grow, and we started to build out a pipeline for future restaurant openings. Next, our international operations are driven by our market-leading business in Brazil. Brazil had another outstanding quarter with significant growth in sales and profits. The Brazil team offers amazing food and exceptional service, and we continue to rapidly expand the business throughout the country. We look forward to capitalizing on our leading position and double our restaurant footprint in the coming years. Importantly, the sales growth initiatives I described are supported by a solid foundation with healthy margins, robust cash flow, and a strong balance sheet. This strength gives us the ability to invest in new unit development, technology enhancements, and asset improvements while meeting our commitments. We remain dedicated to delivering great food and experiences for our guests while building a strong business that will continue to thrive for many years to come. Finally, our results would not be possible without our great teams in the restaurants and our restaurant support center. Thank you for delivering outstanding hospitality and service to our guests. And with that, I'll now turn the call over to Chris, who will provide more detail on Q3 and our thoughts on Q4.

Thanks, Dave, and good morning, everyone. I would like to start by providing a recap of our financial performance for the fiscal third quarter of 2023. Total revenues in Q3 were $1.08 billion, which was up 2% from 2022. This was primarily driven by revenue generated from net restaurant openings, the Brazil tax exemption, as well as favorable foreign exchange translation. Consistent with the broader casual dining industry, we saw a sizable change in traffic trends coming out of Labor Day, and September was softer than expectations. As such, U.S. comparable restaurant sales were down 50 basis points in Q3. Average check was up 4.2% in Q3 versus 2022. As we mentioned on our last call, menu pricing is rolling off, which is translating into lower average check as we move throughout the year. This will continue in Q4 as we do not intend to take significant additional pricing for the remainder of the year. The softer industry backdrop suggests we must remain disciplined on future pricing actions to maintain proper balance on our price-value equation. At approximately 25% of U.S. sales, Q3 off-premises increased 70 basis points from Q2. Importantly, the highly incremental third-party delivery business remains healthy and was flat at 12% of U.S. sales. As it relates to other aspects of our Q3 financial performance, GAAP diluted earnings per share for the quarter was $0.45 versus $0.34 of diluted earnings per share in 2022. Adjusted diluted earnings per share was $0.44 versus $0.35 of adjusted diluted earnings per share in 2022. Adjusted restaurant level operating margins were 14% versus 13.1% last year. Domestically, the benefits from our pricing and productivity initiatives continue to offset inflation. The technology we are putting into our restaurants is having an increasingly positive impact on our margins, and the overall levels of inflation moderated somewhat in Q3 versus the second quarter. As it relates to inflation, commodity inflation was up 2% in Q3. We had favorability in produce, dairy, and seafood, which helped lower the overall inflation levels. We do expect commodities to be closer to 6% in Q4 as we lap some 2022 beef favorability that we were able to realize. We still expect total year inflation to be mid-single digits. Labor inflation was up 4.9%. Labor continues to be in line with our full-year guidance expectations of mid-single digits. Restaurant operating expense inflation was 5.2%. This is consistent with our expectations for the year. Also worth noting as it relates to restaurant margins, international segment restaurant margins were up 130 basis points. This was driven by the continued growth in our Brazil business despite a softer consumer environment. We also continue to benefit from the Brazil tax exemption in Q3. But as a reminder, the Brazil tax benefit will go away starting in the fourth quarter. Total company adjusted operating income margin was 5.3% in Q3 compared to 4.9% in 2022. Depreciation expense was up in Q3, consistent with our increased levels of capital spending and our investments in infrastructure to support growth. Overall, we remain focused on maintaining the progress we have made in margins since 2019. In Q3, we were 300 basis points above our Q3 2019 adjusted operating income margin. Turning to our capital structure. Total debt was $795 million at the end of Q3. Our current balance sheet net leverage ratio was 1.3 times, and our current lease adjusted leverage ratio remains below 3 times. In terms of share repurchases, year-to-date, we have repurchased 2.4 million shares of stock for $61 million through the end of October. We still have $79 million remaining on the new authorization that the Board approved on February 7. The Board also declared a quarterly dividend of $0.24 a share payable on November 29. We believe our free cash flow allocation is balanced, and we'll continue to deploy dollars against additional debt pay down, share repurchases, and our dividend. Now turning to our 2023 and Q4 guidance. First, we are adjusting our full-year 2023 guidance to account for the softer industry backdrop. We expect full-year U.S. comparable restaurant sales to be approximately 1.5% to 2%. This is on a 53-week comparable basis. Adjusted earnings per share are expected to be $2.80 to $2.90. This change in guidance is primarily driven by the reduction in U.S. comp sales. We are lowering our full-year tax rate assumption in conjunction with the lowered earnings to be between 10% and 11%. Capital expenditures are now expected to be between $260 million and $280 million as we've been able to pull forward costs associated with 2024 projects. All other metrics remain the same as we communicated during our February 16 earnings release. As it relates to the fourth quarter, trends in October have improved from the September softness. As such, we expect U.S. comparable restaurant sales to be flat to 1%. This reflects a 14-week to 14-week comparison. We expect Q4 adjusted earnings per share to be between $0.64 and $0.74. In summary, we successfully navigated a challenging environment in Q3. We will remain disciplined in executing against our strategy in Q4, and we will emerge a better, stronger operations-focused company. And with that, we'll open up the call for questions.

The first question comes from Jeffrey Bernstein with Barclays. Please go ahead.

Great. Thank you very much. Two questions. The first one, Dave, you mentioned comp slowdown, I guess, post Labor Day, but perhaps maybe a little bit of a bounce back in October. I'm just wondering if you can maybe assess what you attribute that to. I feel like we've heard three different theories: one just being the consumer headwinds that are finally taking hold, which perhaps led to that slowdown in September. But then the bounce back being a return to more seasonality versus just the fact that everyone is lapping price and therefore, the comp is optically slowing. So I'm just wondering how you think about that slowdown and then modest recovery. Is it really the consumer is a lot weaker now? Or would you attribute it more to seasonality and therefore, we're in a better place with the consumer still in relatively good shape?

Hey, hi. Good morning. We view it primarily as seasonality as we look at just the history. Obviously, we've got to keep track of various macro headwinds that are out there, student loan repayments, interest rates, et cetera. But there's some seasonality there. But also importantly, what we're doing as a company, right, and the offers that we have and what we're doing. And we talked about the uptick in September, and we feel good about November and December as well, and that's in our guidance. So we think the consumer is in a decent spot, but we think it's primarily a return to seasonality looking historically.

Got it. So when you say the softer industry backdrop to close the year, it's not so much the consumer for sale, although you're watching it, but it was just more like seasonality that led to that dip in September rather than some sort of consumer weakness?

We're watching the consumer very closely. But certainly, seasonality in September is what we primarily think. And as we look at going forward for the rest of the quarter, we feel good about what our programs and where we're going to stand, and we've tried to incorporate that in our guidance, that bounce back.

Understood. And then could we just directionally look out to next year? I think Chris, you said that your guidance for commodities and labor and restaurant expenses this year were all kind of mid-single digit and you took some pricing to mitigate that. But how do you think about that going into next year? One, would you expect inflation to maybe moderate across those lines, even if you don't have specific guidance? And how you think of that relative to menu pricing? Because if there is a slow consumer backdrop, some would say don't take enough price to fully offset the inflation, maybe take a hit to margin, but preserve traffic. So how do you think about that theoretically in terms of directional inflation for next year and how you think about price? Will you offset the inflation or let it hit the margin in the short term?

Yes, good morning, Jeff, conceptually, our formula is pricing plus productivity offsets inflation. I think that candidly, it's probably a little early to speculate on where inflation is going to level out next year. Obviously, we've talked about this in prior years. We don't finalize our beef outlook until December, so it's probably too early to give us a read on 2024 commodities. But look, anecdotally, outside of beef, things are looking pretty rational across the basket, which I think is a good sign. Beef is a little bit of an unknown. We're still seeing the same information as everyone else out there, overall beef production remains a challenge. But other than that, there isn't too much to say at this point other than we, as a company, have repeatedly shown the ability to navigate these markets as good as anyone else out there. So we'll monitor that. We'll be sure that we have productivity initiatives in place because we do have a good amount of rollover from our productivity that we put in place this year. And we've got a lot of new ideas for next year potentially as well that can help offset. And what that does is that does reduce the need to take as much pricing as you would normally need to take to offset that inflation because we're obviously pretty mindful of where the consumer is. And we do believe that going in with a mindset to keep the pricing as low as possible is the right place to be. Now in terms of labor and how that plays in, look, labor has been pretty consistently inflationary for a number of years now. Now look, it's come down a little bit. As the year progressed, I think every quarter, it's come down a little bit from where it was, certainly where it was last year. But look, it wouldn't surprise me at all if we're still talking in that low single to mid-single-digit kind of inflation range just sort of into perpetuity.

Jeff, just one thing I want to add. We've been really careful about our price increases. If you look at our comp breakdown, we've got a 4% change in PPA in Q3. And that's pretty disciplined versus what's going on elsewhere in the industry. So I think we're really trying to make sure that our price-value equation as we continue to improve service and food, especially at Outback, comes together to help grow traffic.

Well, and just to piggyback off of that, if you look at our Q4 guide, that does imply that your check average is going to be in that 2.5% to call it, 3% range, which again, as we've indicated, we do expect that check average to tick down as the year progresses, and we're going to see that again in Q4.

Understood. Thank you.

The next question comes from Alex Slagle with Jefferies. Please go ahead.

All right. Thanks. Good morning. As you look across your brands, and think about what it really takes to win market share in casual dining and drive traffic outperformance, Carrabba's performance really stands out. And I'm curious how much of that is related to the specific category dynamics versus more fundamental execution elements. And to the degree there are executional aspects that are driving that success? Are there bigger, more impactful actions that you think you need to take at Outback to deliver the kind of experience that translates into more visible traffic share gains? I know some of that will come still with the equipment and technology recently deployed, but just interested in your thoughts there.

Good morning. I'll start with Outback and then we'll move to Carrabba's. If you look at Outback and traffic, there are three or four things that are crucial. And the very first thing, which is our top priority is our restaurant operations and leveraging our technology investment and providing that great customer experience with very interesting food and service. So that's job one. Our operating metrics are improving, and we're leveraging our technology, and we'll continue to stay razor-focused because that's a big way of growing sales at Outback. We are going to spend more on media because we've got some really great ideas that we like. And you'll see that in Q4, and we'll see that going into 2024. Chris has talked about our initiatives and productivity to help pay for some of that as we look to do the magic and grow traffic and preserve margins. We want to make sure that we remodel and update our Outback restaurants to make sure that the consumer is getting that type of experience. We talked about our remodel program. And then finally, as we talked earlier about our price-value equation and being very mindful about our price increase. And then we've got a really great off-premises business that we've got to continue to grow on leverage. Carrabba's is just doing extremely well on the off-premises business, especially, but also in some of the in-restaurant experiences. Their margins are improving. And like I mentioned in the script, they earned the right to grow, and we're looking to build that pipeline as we move forward. So Carrabba's has done a great job. I think what's helped them also is that they have a really strong off-premises business. That doesn't mean that they're not focusing on in-restaurant dining, but they have a really strong off-premises business that they're continuing to leverage.

Thanks. And I have a follow-up on the other restaurant operating expense line. It was up quite a bit this quarter and it feels like it's one place that has seen less of a relative improvement over the years versus the peers and relative to the big gains you've made in food and labor, and realize much of this has to do with your ability to drive volumes and leverage here. But are there opportunities to explore to be more efficient or to better leverage your scale here?

I think absolutely. Certainly, the productivity initiatives that we have in place this year have been highly focused on cost of goods sold and labor, not as much focused on the restaurant operating expense line. But I think the areas such as to-go packaging supplies, things like that are areas where you could tap into and potentially get more efficiency on the restaurant line. And then, again, I think that to your point, that this quarter in particular, it was more just a product that we didn't have the same level of productivity in that line as you saw in COGS and labor. And that's why we weren't able to leverage that line as effectively as we were the other lines. And we also had a tick up a little bit in marketing.

The next question comes from Sharon Zackfia with William Blair. Please go ahead.

Hi, good morning. I know you've been seeing negative mix shift for a number of reasons. I'm curious if you started to see that abate or a level off in the third quarter or into the fourth quarter. And then as you're thinking about guidance for this quarter, I know you didn't quantify how October is doing, but I'm very cognizant of you lapping Elliott later in the quarter. So does the guidance take into account kind of a potential uplift as you lap Elliott, or are you just kind of putting guidance out there that's similar to where the current trend is?

Yes. So I'll start with the mix piece, and then we'll move on to the traffic assumptions for Q4. Menu mix was down as you start with Q3, it was down a little over 2% in the quarter. And that's pretty consistent with what we saw in Q2. There's a piece of that we've talked about. We think is consumer trade, app mix, and alcohol mix are a bit lower. But the majority of that negative mix has to do with revenue center shifts, which have been engineered, right? So we know these areas such as catering, et cetera, they carry a lower check average, which has been highly influencing the mix in our numbers. Now the good news is that you start to transition to Q4, we get the benefit of starting to lap some of the negative mix trends that we started to experience late last year. So as such, I do think we expect mix to moderate some in Q4. It will still be down, but probably down closer to the 1% to 1.5% range versus the 2% range that you've seen in the last couple of quarters. Now as it relates to traffic and the traffic assumptions and what would be embedded in the guide, I think, look, so the way to think about it is, first, we've seen the improved trends in October from where we were in September. That's built in. Second, we're lapping a fairly soft November from last year, which we did call out on our Q4 call. We do get the benefit of lapping that. So that's built into the guidance as well. Third, there is an increased marketing presence that Dave talked about. We're not going to give the exact dollar amount for competitive reasons, but that is also built into the guide. And there is a favorable holiday shift, right, from the timing of the Christmas holiday. It works in our favor. And why that's a little more impactful for us than maybe some others are that our brands do tend to skew a little more special occasion. So that is going to have a little more of a positive impact in Q4 than maybe it might for some others. In terms of the Winter Storm Elliott, I think our approach is we can't really predict weather. So we know we're going to be lapping Winter Storm Elliott in Q4, but that's really not contemplated extensively in the guide because it's just as likely that you're going to have some things go the other way as well.

The next question comes from John Ivankoe with JPMorgan. Please go ahead.

Hi, thank you. There's, I guess, a lot of discussion about kind of taking Outback as a brand back to its may be peak, which we could argue maybe was in the early to mid-90s, I mean, where it really was a very different brand, very high average unit volumes dinner-only, in some cases, three hours kind of lines. I mean it was a concept that really had a lot of excitement in just like the American populace including your own staff. And obviously, "No Rules, Just Right" is kind of part of that. And I understand that you kind of want to bring Outback back to some of that energy and even bring the Outback U.S. business maybe back to what Brazil is today and presumably will continue to be. So, long set up to the question. Now maybe I'm embarrassed to say, but I do remember that in the mid-90s starting as an associate. And Outback was always a transaction-driven model at that point. In other words, the money was not really made on margin. It was just made on pure customer counts as the exceptional value that was given to customers and being dinner-only, of course, the PPA was higher and higher alcohol mix and some other things, and it was a higher-margin business than being for lunch. So the question that I'm asking is, do we have an opportunity to kind of get back to that transaction-driven model? And if so, might major price investments kind of be made at the Outback business as you basically sacrifice gross margin and you sacrifice kind of your prime costs in order to just bring more customers to get back into the store over time? In other words, do we have an opportunity for maybe doing kind of a major brand and price reset of just kind of reestablishing Outback more from a perception of value for the customer that arguably it was 25 years ago? And hopefully, it's an okay question, Dave. Thank you.

I think clearly, John, we agree with you on getting the reference fund service into the business, and we're working very hard to do just that. And we talked on prior calls that one of our leading executive in Brazil is here and to help with our marketing efforts, and he's doing a fabulous job here. So that's part one. Part two is it's the service and food elements that are going to win the day for us. And so making sure our service metrics, you've seen the investment in our food, John. We're investing in remodels. We're going to be very, very, very conscious of price changes at Outback, which we talked about earlier in the call today. So getting that price value back. And price value is not just price, it's the value you provide to customers in service and food while being very thoughtful about the type of price increases you take. Now if you look at within the menu itself, there are some really attractive price points like combo meals and like the offer we're doing right now, our Steak 'N Mate Combo. So I think if we bring back the fun in their reference as we continue to do that, continue to improve our service levels, we've invested in the food. We've invested in technology. We're investing in our assets. We can move forward and push forward with transactions. Now as far as lunch goes, that's a very important part of our business, and I think we'll continue to offer that. But on the dinner occasion, that's exactly where we're going. Yeah, thank you, John.

The next question comes from Jeff Farmer with Gordon Haskett. Please go ahead.

Hi, thank you. This is Katherine Griffin on for Sara. First, I wanted to ask just about the kind of casual dining, maybe Italian category specifically. And as it relates to Carrabba's, just can you talk about any sort of additional sales layers, whether dayparts, menu items that you're contemplating in order to catch up with some of the public company peers that seem to be outpacing the brand? Thank you.

I believe Carrabba's is performing quite well. We have significant potential for development. However, we need to be cautious about adding complexity to the menu in our restaurants to maintain and enhance our service. There is an opportunity for us to improve our operating metrics and a robust off-premises business. Additionally, our catering business presents an extra sales layer, as we can prepare food in advance for the lunch service. We are also focused on continued innovation at Carrabba's. Our strong off-premises performance and the new locations we plan to open will contribute to our growth. Overall, Carrabba's is doing well and is a strong growth driver for us moving forward.

Okay, thank you. And then I guess maybe just a follow-up then on Carrabba's. Just as we think about sort of the return to normal seasonality trends, what does that mean in terms of your expectations for Carrabba's catering business this holiday season?

That is certainly our hope. We've tried to incorporate that in our guidance, but we are very optimistic about the catering business and off-premises sales at Carrabba's. We've seen fantastic sales levels. It's still early, so I don't want to get ahead of myself, but the team has done an excellent job in growing that business.

The next question comes from Brian Vaccaro with Raymond James. Please go ahead.

Hi. Thanks, and good morning. I guess I wanted to start on Outback specifically. And it seems like the brand's traffic relative to industry trends softened a bit in the third quarter. I guess it depends on what indices you want to compare to. But would you agree with that assessment? And if so, I guess curious what you would attribute that to? And can you also just clarify on October? It seems like the year-on-year casual dining comps have improved by, say, roughly 300 basis points or so versus September. Has Outback seen a similar level of sequential improvement versus September?

I will address the second question. We prefer not to discuss monthly comparisons specifically. However, we have observed a positive trend in October, which is reflected in our guidance. Regarding Outback, we need to be cautious in managing the brand for the long term, as it competes with other companies that have implemented significant discounting and promotions. We do not intend to offer these deep discounts to attract customers. Our focus is on enhancing service quality, providing excellent food at a reasonable price, and presenting appealing limited-time offers like the one currently available. Nonetheless, pursuing deep discounts for short-term objectives does not seem practical. We aim to concentrate on the strategies discussed today.

Those are all the questions we have for today. I would like to turn the conference back over to David Deno for any closing remarks.

Thank you, everyone. Thank you for attending the call today, and we look forward to talking to you on our Q4 call. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.