Greetings, and welcome to the Darden Restaurants, Inc. Q3 Fiscal Year 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Courtney Aquilla, Senior Director of Finance and Investor Relations.

Thank you, Kevin. Good morning, everyone, and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's President and CEO; and Raj Vennam, CFO. As a reminder, comments made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Those risks are described in the company's press release, which was distributed this morning and in its filings with the Securities and Exchange Commission. We are simultaneously broadcasting a presentation during this call, which is posted in the Investor Relations section of our website at darden.com. Today's discussions and presentation include certain non-GAAP measurements, and reconciliations of these measurements are included in the presentation. Looking ahead, we plan to release fiscal 2025 fourth quarter earnings on Friday, June 20, before the market opens, followed by a conference call. During today's call, all references to industry results refer to the Black Box Intelligence casual dining benchmark, excluding Darden. During our fiscal third quarter, average same restaurant sales for the industry grew by 0.9% and average same restaurant guest counts decreased 1.2%. Additionally, due to a significant divergence between average and median results, we are sharing that the median same restaurant sales for the industry decreased 2.3%, and median same restaurant guest counts decreased 4.2%. This represents the largest disparity between average and median observed in recent years. This morning, Rick will share some brief remarks on the quarter, and Raj will provide details on our financial results and an update to our fiscal 2025 financial outlook. Now I will turn the call over to Rick.

Thank you, Courtney. And good morning, everyone. Overall, I am pleased with our performance this quarter and proud of how our teams managed their business and controlled what they could control. Raj will share specifics, but when you exclude weather impacts, which were even greater than last year's challenging weather, same restaurant sales at all four of our segments were positive. Our ability to deliver profitable sales growth in this challenging environment is a testament to the strength of our business model and adherence to our proven strategy, which is anchored in our four competitive advantages and our restaurant team's commitment to being brilliant with the basics. Several of our brands set sales records during the Christmas and New Year's holidays as well as on Valentine's Day, which reinforces the strength of our portfolio and the guest loyalty our teams work so hard to earn. During the quarter, Olive Garden launched an updated menu featuring fan favorites, Steak Gorgonzola Alfredo and Stuffed Chicken Marsala, the two most requested entrees that Olive Garden fans asked to bring back. In January, Olive Garden's marketing featured the return of these favorites along with Four-Cheese Manicotti for just $12.99, plus a three meat manicotti for a limited time. During the six weeks fan favorites were on air, Olive Garden's base traffic and sales trends improved significantly. They also experienced high levels of social media engagement, while preference for both items was strong and grew throughout the duration of the offer. The Olive Garden team continues to use news to appeal to core guests, as well as value seekers in this environment. For the first time since before COVID, they are bringing back their signature Buy One, Take One limited time offer. With a price starting at $14.99, guests choose from seven entrees for their dining experience and then take a second entree home. This has historically been a high traffic driving promotion for Olive Garden. Their eClub members are enjoying early access to this offer this week, and it will be available to everyone starting on Monday. In the first week of February, Olive Garden completed their rollout of Uber Direct, making delivery available in all restaurants except the six locations that cannot offer curbside to go. Our partnership with Uber Direct strengthens Olive Garden's ability to value their guest time by bringing their favorite dishes directly to their doorstep using Olive Garden's online ordering platform and leveraging Uber's delivery network. Additionally, delivery provides Olive Garden with a meaningful sales-building opportunity over time. Without any marketing support during the quarter, the volume of delivery orders grew week to week, while maintaining a higher check average than curbside pickup orders. In the fourth quarter, the Olive Garden team started to drive awareness of delivery with modest digital activity and will fully leverage their earned and owned channels to target their biggest fans. This will ensure a smooth transition for the newly launched restaurants and establish a baseline from which they will measure future marketing efforts. They are targeting the end of this fiscal year for a more expansive awareness-building campaign, including TV advertising with a compelling and memorable offer partially funded by Uber. We are pleased with the success of the rollout of Uber Direct at Olive Garden. We heard from the operators how seamless it was, and just this week we began to pilot at Cheddar's Scratch Kitchen. The Cheddar's team is currently testing it in 10 locations with a plan to deploy it more broadly across their system. At LongHorn Steak House, strict adherence to their strategy rooted in quality, simplicity, and culture continues to drive their momentum. The restaurant teams focused on execution to ensure every item they serve meets their high quality standards. This includes having industry leading specifications and ensuring they perfectly season and grill every steak served to their guests. This level of focus continues to pay off, resulting in an all-time high stakes real correctly score in the third quarter. LongHorn's people bring their strategy to life in their restaurants, and the Grill Master Legends program is an excellent example of the intersection of quality and culture. The program celebrates extraordinary team members, who have grilled more than 1 million steaks over the course of their career, which typically takes more than 20-years to accomplish. LongHorn leadership recognizes these legends with a surprise party in their restaurant that includes their family, friends, and loyal guests. During the third quarter, they inducted five more grill masters into this exclusive club, bringing the total to 30. To further build on their leadership and food quality, LongHorn is bringing back grilled lamb chops and fire-grilled corn during the fourth quarter. These two guest favorites, along with last year's viral sensation, Parmesan Crusted Lamb Chops, will be featured for a limited time. Successfully opening new restaurants is a key part of our ability to create value for our shareholders and help our brands reach their potential. Working with our development team, we are testing new, smaller prototypes for some of our brands. These prototypes help lower construction costs and enable the brands to build out their new restaurant pipelines by considering sites that would have been too small in the past, ultimately accelerating new restaurant openings. During the quarter, Yard House and Cheddar's both opened these prototypes and they are performing at or above expectations. Each one is roughly 20% smaller and costs approximately 15% less to build than their legacy restaurant prototype. They also preserve the essence of the brand. For example, while it's significantly smaller, the new Yard House prototype still features their full menu and offers 90 different beers on tap. Now let me provide a quick update on Chuy's. The planning phase of the integration is complete and the actual work is underway. On Monday, Chuy's will convert to our human resources platform, which includes our people management systems, payroll, and benefits. Our platform streamlines key day-to-day activities, which improves efficiency and allows managers to spend more time focused on running their restaurant. The next major milestone will be supply chain transitions that will take place in phases beginning in June, followed by the point of sale transition starting in late summer. Integration is never easy, and I am proud of how the entire Chuy's team has remained focused on executing at a high level while adapting to change. Every day we work in pursuit of our shared purpose to nourish and delight everyone we serve. One of the ways we do this for our team members and their families is through our next course scholarship program. Recently, the Darden Foundation awarded 98 post-secondary education scholarships worth $3,000 each to the children of Darden team members. This is the third year of the program, and over that time we have awarded nearly 300 scholarships, helping team members and their families across the country. To wrap up, I'm proud of the focus and commitment our teams continue to display. On behalf of our leadership team and the Board of Directors, I want to thank all of our team members for everything you do to nourish and delight our guests and each other. Now I will turn it over to Raj.

Thank you, Rick, and good morning, everyone. Third quarter earnings results were in line with our expectations, even though the top line was impacted by unfavorable weather. The quarter started with a negative gap to the industry average in December, but turned positive in January and February, with both months exceeding the industry benchmark by well over 100 basis points. Winter weather and Thanksgiving holidays shift into the third quarter negatively impacted same restaurant sales for the quarter by approximately 100 basis points and 90 basis points respectively. As a reminder, the Thanksgiving shift helped our fine dining brands and negatively impacted casual dining. After adjusting for these impacts, our same restaurant sales were 2.6% for the quarter, a sequential improvement from prior quarters. For the first three weeks of the fourth quarter, we're seeing further improvement in our sales trends. Overall, our teams continue to do a great job managing the business through the volatility created by weather. In the third quarter, we generated $3.2 billion of total sales, 6% higher than last year, driven by same restaurant sales growth of 0.7%, the acquisition of 103 Chuy's restaurants, and the addition of 40 net new restaurants. Both our same restaurant sales and same restaurant guest counts for the quarter were in the top quartile of the industry. Adjusted diluted net earnings per share from continuing operations of $2.80 were 6.9% higher than last year. We generated $559 million of adjusted EBITDA and returned $217 million to our shareholders by paying $164 million in dividends and $53 million in share repurchases. Now looking at our adjusted margin analysis, compared to last year, food and beverage expenses were 70 basis points lower, driven by pricing leverage as commodities inflation was less than 0.5% with almost all categories better than our expectations. Restaurant labor was flat with productivity improvements fully offsetting the impact of pricing below total labor inflation of approximately 3.5%. Restaurant expenses were 20 basis points higher driven by the brand mix with the addition of Chuy's. Marketing expenses were 10 basis points higher, consistent with our plan. Our restaurant level EBITDA of 21.1% for the quarter was 50 basis points higher than last year. Adjusted G&A expenses as a percent of sales were flat to last year. Interest expense increased 20 basis points driven by the financing expenses related to the Chuy's acquisition. And our adjusted effective tax rate for the quarter was 13.4%. In total, our adjusted earnings from continuing operations were $330 million, which was 10.5% of sales. In the third quarter, all of our segments grew total sales and segment profit margin. Total sales for Olive Garden increased by 1.5%, driven by same restaurant sales growth of 0.6%. Olive Garden's gap to the industry benchmarks increased significantly following the launch of fan favorites limited time offer outperforming the industry benchmarks by 180 basis points in January and 240 basis points in February. They are maintaining their momentum through the first three weeks of March. Olive Garden continues to have strong segment profit margin delivering 23% for the quarter, which is 50 basis points higher than last year. At LongHorn, total sales increased 5.1% driven by same restaurant sales growth of 2.6% and the addition of 14 net new restaurants. LongHorn's same restaurant sales growth adjusted for the Thanksgiving shift and weather was 5%, a strong performance in what is traditionally their highest volume quarter. Through the first three weeks of March, LongHorn has seen strong traffic and same restaurant sales growth, further increasing their positive gap to the industry. Segment profit margin for the third quarter was 19.4%, 70 basis points above last year. Total sales at fine dining segment increased 3.3%, though the same restaurant sales were negative 0.8% for the quarter. Thanksgiving is a busy day for our fine dining brands, and the shift of the holiday from the second quarter last year into the third quarter this year led to a positive sales impact that was mostly offset by the negative weather impacts during the quarter. Adjusted for holiday shift and weather impacts, fine dining same restaurant sales decreased approximately 1%, which continues the sequential improvement from prior quarters. Fine dining segment profit margin of 22.3% improved 50 basis points from last year. The other business segment sales increased 20.2%, primarily driven by the acquisition of Chuy's. Segment profit margin of 15.4% was 50 basis points better than last year. Turning to our financial outlook for fiscal 2025, we've updated two items in our guidance to reflect our year-to-date results and expectations for the fourth quarter. We now expect 118.3 million diluted average shares outstanding for the year and adjusted diluted net earnings per share of $9.45 to $9.52, which excludes approximately $47 million of pre-tax transaction and integration related costs. All other items remain unchanged. For the fourth quarter specifically, our annual outlook implies total sales of $3.23 billion to $3.26 billion. Same restaurant sales grew above 3% and adjusted diluted net earnings per share between $2.88 and $2.95. Now looking forward into fiscal ‘26, we wanted to provide our thoughts on a few items. First, we plan to open between 60 and 65 new restaurants. We expect to spend between $375 million to $400 million of capital for new restaurants and $300 million to $325 million of capital related to ongoing restaurant maintenance, refresh and technologies. We anticipate an effective tax rate between 13% and 13.5% for fiscal 2026. And finally, fiscal 2026 will include a 53rd week, contributing approximately $0.20 in additional diluted net earnings per share. In closing, I want to commend our teams for their outstanding efforts in serving our guests. Their dedication is reflected in the strong financial results we delivered. We remain confident in our strategy and the strength of our business model, which continues to drive our success. Now, we'll open it up for questions.

Thank you. We’ll now be conducting a question-and-answer session. Our first question is coming from Jon Tower from Citi. Your line is now live.

Great, thanks for taking the question and just curious, I appreciate all the color in the quarter to-date across the brands. I'm curious if you could maybe speak to whether you believe that the improvement you're seeing is more related to your own brands or the industry and specifically you know you'd mentioned on the last earnings call that you'd started to see improvement in visits and guests making between 50,000 to 100,000 a year. I'm just curious how that played out in your fiscal third quarter, and perhaps what's happening quarter-to-date to the extent you can provide some color?

Hey, Jon. Quarter-to-date, I'm really pleased with the performance of our brands. Olive Garden and LongHorn have continued to perform well, and the rest of our brands are continually improving their performance without commenting directly on what's going on with the rest of the industry. It's only three weeks into our quarter, but we feel pretty good about where we are. And that's reflected in our guidance of above 3% same restaurant sales growth for Darden. As it relates to the consumer between 50,000 and 100,000, it's not growing quite as much as it was before, but it's still growing when you adjust for weather. Outside of across all income groups, adjusting for weather, the only income group that was negative across our casual brands was below $50,000. All of Darden’s were positive when you adjust out that bad weather this quarter.

Great. Thanks for taking the question.

Thank you. The next question is coming from David Palmer from Evercore ISI. Your line is now live.

Thanks. Just to follow-up on that, to what degree do you think there was a flu impact in the quarter? But then separately, when it comes to casual dining, one of the things we're noticing is it's holding up remarkably well, given what we're seeing in other segments within restaurants. I don't know if you're noticing that in your own insights work and thinking about reasons for that. I mean, I'm not sure we can make too much sense of it? And then lastly, I’d just wanted to ask you about your plans on M&A. Are they shifting now that you're further along with roots and seeing what's happening with perhaps some valuations elsewhere? Thank you.

Sure, David, I'll try to address all aspects of your question. Regarding the impact of the flu, we don’t specifically monitor temperature for individuals; however, we do assess community climate data. Consequently, I can't definitively say whether the flu had a significant effect. It’s possible it did, but I believe the weather had a more substantial impact compared to the previous year. When considering consumers and casual dining trends, casual dining seems to be performing slightly better than some other segments. Dining out remains the primary category where consumers indulge and treat themselves, particularly in casual and fine dining compared to other segments. Therefore, that could be a contributing factor. We will continue to prioritize providing an excellent experience and delivering value to our guests, especially those who dine in our restaurants. As for M&A, we are in the early stages of integrating Chuy's. As always, we will engage with our board to determine the best ways to utilize our capital, with a continued focus on the Chuy's integration.

Thank you.

Thank you. Next question today is coming from Eric Gonzalez from KeyBanc Capital Markets. Your line is now live.

Hi. Thanks for taking the question. Maybe a quick one on the Uber partnership. I think you mentioned at the end of the fiscal year you'd be launching a more expansive awareness campaign that included TV advertising. I know you said it would be partially funded by Uber, but can you level set our expectations on whether we should expect a meaningful uptick in advertising spend? And regarding Uber's contributions, I'm sure you don't want to give specifics, but I was wondering how long that subsidy will last?

Eric, I will say, we're funding more of the total spend for that advertising than Uber is, but Uber is funding quite a bit of it. I wouldn't say it's a hugely meaningful impact on advertising for the quarter. It's really the last couple of weeks of the quarter, and we expect it to last just a few weeks, and then we'll continue to see what we're going to do going forward. And everything that I just told you is contemplated in our guidance for the quarter. And Raj will probably talk about the marketing spend in total for the quarter.

Yes, Eric, I think we're still going to fall within that 10 to 20 basis points for marketing spend like we talked about in terms of year-over-year growth.

Is there anything you can tell us about '26 and the implications there?

I think we're still early for '26, I think what we said, you know, if we go back to the comments we made along the way with respect to marketing over time, we would expect it to grow, but at a measured pace, because we're going to be very deliberate and we're going to just make sure that as we invest in marketing, that's actually getting a return on investment. And we feel like we have, you know, over the last year 1.5, 2 years, even further improved our analytics around it and effectiveness of media. So maybe sometimes we may not need to spend as much dollars to get the same impact, because we're continuing to get better at more efficient and effective media.

Great. Thank you.

Thank you. Next question is coming from Brian Bittner from Oppenheimer. Your line is now live.

Thanks, good morning. Raj, as it relates to the EPS guidance for the fourth quarter, the range implied, I think based on our math, it seems to imply a slavish operating margin. So is that correct? And if so, it just seems a tad conservative with the comp sales being over 3%. So can you unpack the operating margins in the fourth quarter for us a little bit more?

Sure, Brian. So it's a great question. Let me start by really pointing out the biggest dynamic shift. The big dynamic here is that Q4, our inflation, overall inflation is going to be, we expect it to be about 3%. If you look at the first three quarters, our overall inflation was in the low-2s. It was basically 2% to 2.2% range. So this is a big step up in that. Part of it is just a function of what we're wrapping on, but our pricing is still below 3%. So we actually have this different dynamic. So yes, that's really the big driver. And your interpretation is right in terms of operating profit not growing materially year-over-year.

Okay. And just my follow-ups on Olive Garden delivery, last time you spoke with us you talked about delivery mixing as about a percent and a half of sales in the initial pilot units. Of course, that was with no marketing support. Now you have delivery fully rolled out across your asset base. Can you update us on any additional learnings and/or surprises, particularly now that you have some digital marketing support, just any incremental update on that would be awesome. Thanks.

Yes, Brian, I want to emphasize that we are still in the early stages of our delivery initiative, but we're very pleased with how the pilot and rollout are progressing. As I mentioned earlier, in the initial pilot restaurants, the number of weekly orders has significantly increased, now about double what it was when we began. The other restaurants not included in the pilot are showing a similar trend. By the end of the third quarter, our pilot restaurants had delivery making up around 2.5% of their sales, with the other locations following suit. We also began some marketing efforts by reaching out to our eClubs with messages about Olive Garden delivery, without any special offers. This has led to a good response, helping the non-pilot restaurants catch up more quickly and nearing the performance of the pilot restaurants. We are very positive about the communication strategies and the direction of our delivery operations. Additionally, our operators have mentioned that the process is very seamless for them. Our partnership with Uber allows us to effectively manage curbside to go, where an Uber driver picks up the food instead of the guest, making it a smooth experience for our operators. Overall, we feel very confident about our delivery operations.

Great. Thank you.

Thank you. Next question today is coming from Sara Senatore from Bank of America. Your line is now live.

Great. Thank you very much. I guess two questions, one sort of a follow-up. The first is if you could just talk about bringing back the Buy One, Take One. Is that a response to something you're seeing in the operating competitive environment or I think in the past recently you've talked about just kind of increasing the pace of news? So just try to understand if things have changed and that's what's prompted that? And then my second question is actually, maybe not a follow-up, it's about the new prototypes for some of these other businesses. I know you said that they were performing above plan, but are the volumes consistent with the standard larger prototypes? It was just as we think about accelerating unit growth, does that translate into a consistent level of accelerating revenue growth? Thanks.

Yes, Sara. I would say for Buy One, Take One, you know, when we eliminated promotions, what we said was we wanted to eliminate promotions that were at a deep discount, that were hard to execute, that added new menu items, and did all of those other things that made it really more challenging for our restaurants. And, you know, when we brought back the Never-ending Pasta Bowl, we brought it back in a little bit of a different construct. We had a little bit of a different price point on it than we had before, so it wasn't a deep discount. It still was brand building, because it was talking about abundance, which is one of Olive Garden's advantages. And it wasn't a bunch of new items. So it was items that we already have on our menu and we just gave consumers a reason to come in. And that we kind of took that forward to Buy One, Take One, which has been historically our second best traffic driving promotion. So it fits all of our filters where in the past Buy One, Take One, didn't. It was at a deep discount. We added new items to do that. And so this time, we're bringing back Buy One, Take One, with really core menu items as the buy one and our $6 take home items as the take one at a price point that's not at a huge discount, but it's at a limited time, which is what we want our guests to want to come in. So as we were doing all of our core menu advertising, that was great to build the brand, but in an environment that guests want a reason to come in more quickly, that's where the limited time came. So nothing dramatically has changed in our strategy, and it really wasn't because of things going out in the marketplace. We just believe that this was the right way to communicate our brand that fits all of our filters. And in another interesting way, it gets people to remember that we've got this $6 take home. It just so happens that you get it free on the Buy One, Take One, but it kind of gives people thoughts in the future on the take home. In regards to the new prototypes, again, really early, when we open those prototypes, when we open the restaurants, they're doing significant traffic and significant sales. So we know that they can do the same kind of sales and traffic that an existing restaurant does. So it's not the size of the restaurant that will do anything. So these restaurants are opening very strongly. And partly because, you know, for example, at Yard House, we have almost the same number of tables in this Yard House as we do in others. We just have a few fewer seats, because some of those Yard Houses have a lot of eight-top booths that don't really get utilized very well. So that and they take up a lot of space. So if we eliminate some of the eight-top booths to make them even six tops or four tops that are bigger four tops, we still get roughly the same number of tables, but with fewer seats and the seats weren't being utilized before. Still has a big bar, still has 90 beers on tap, and still has a kitchen that's a little smaller, because of some things that we did in kitchen design. So we feel really good about the prototypes and their sales-driving ability.

Thank you. Very helpful insights. Appreciate it.

Thank you. Next question is coming in from Brian Harbour from Morgan Stanley. Your line is now live.

Yes, thanks. Good morning, guys. The Olive Garden sales momentum you talked about, Rick, I mean, you cited the Uber mix for some of the pilot stores, but is that a material part of it yet for the overall system, would you attribute it more to just some of the menu news so far? I mean, how would you kind of characterize what has driven Olive Garden in recent months?

Yes, Brian, I would characterize it more about the menu news than the delivery, especially in the quarter, because our delivery rollout started, you know, January ended in February, so it wasn't even in most of restaurants in December, and Olive Garden had a pretty strong December. So we believe it's more based on the menu and bringing back those two fan favorites with an addition of Manicotti at a starting price point. The two fan favorites were very well received and continued to grow preference, as I mentioned. Now, I will also say, in delivery, as I mentioned, the pilot restaurants ended the quarter around 2.5% of sales in delivery. And the other restaurants got pretty close to that as we jumped in the marketing, but that didn't happen until Q4.

Okay, great. Thanks. Raj, can you talk a little bit more about inflation and just, I guess, I was surprised that sort of on the food side that was still favorable in the quarter. We have seen some items move back up, but what specifically is driving in the fourth quarter? How does that kind of shape how you think about as we enter '26? I know you're not going to talk about that yet, but are you seeing pretty stable labor inflation? Do you think that could perhaps ease a bit, or where are we on that front?

So, Brian, the main factor influencing inflation, as you mentioned earlier, was the shift in commodities. Looking at the first three quarters of the year, chicken and seafood were slightly deflationary, but they are expected to be inflationary in Q4. Our supply chain team has effectively secured favorable contracts; we continue to purchase chicken significantly below market rates, with our contracts being considerably better than the market. This is what's created a disconnect between market prices and the inflation we're observing at the Darden level. Regarding labor, it has remained relatively stable. Over the last two quarters, it has averaged about 3.5%, which is a notable improvement compared to a couple of years ago. Labor inflation has decreased considerably and stabilized in the mid-3s. Historically, prior to COVID, our labor inflation was also in that mid-3s range. We’re pleased to see it stabilize, and we do not anticipate drastic changes in either direction at this time. We are familiar with operating at this level. It's too early to provide insights on fiscal '26 commodities; we will share more in June.

Great, thank you.

Thank you. Next question today is coming from Dennis Geiger from UBS. Your line is now live.

Great, thanks guys. Rick, I wanted to ask a little bit more on value at Olive Garden and specifically maybe the customer value scores for the brand if you've seen any kind of notable uptake just in recent months as you kind of leaned in on some attractive price points on new items, et cetera? Anything to highlight there, especially in the environment that we're in?

Yes, Dennis, the value at Olive Garden has generally increased over time and continues to improve. It didn't experience a sudden jump when we introduced the Manicotti at $12.99. However, we are seeing our value scores get better. It's important to remember that value isn't solely about price; it's also about the overall dining experience. Our value scores have been rising despite higher pricing due to inflation because we are enhancing operations in our restaurants. Guests are perceiving greater value in our unlimited first course, and as we promote this and provide it more frequently, the value ratings improve even more.

That's helpful. And then just on Uber, just anything on incrementality, recognizing it's very early days, but have you kind of observed anything or have any additional thoughts maybe on what incrementality may look like, even though it's early days? Thank you.

Yes, Dennis, you mentioned it's early, and I agree. It is still early. However, we have been observing an incrementality of about 40% to 50% without substantial awareness advertising. I should add that this is factored into our guidance, but it's in the range of 40% to 50%.

Great. That's very helpful. And then just on the labor side, just curious if you can comment a little bit on availability, if you've seen any changes in availability and the ability to hire new team members recently. Has anything changed on that front? Thanks.

Nothing's changed on that front. We've got a great employment proposition and people want to come to work for us. So nothing's really changed yet.

Thank you. Next question is coming from Jeffrey Bernstein from Barclays. Your line is now live.

Great. Thank you very much. Rick, I was just wondering if you could give some bigger picture perspective. I mean, there's been concerns that the inclement weather and the holiday shifts the last few months may be masked a slowdown in underlying consumer spending, which I don't think would surprise too many people with consumer confidence falling. And historically, that's closely correlated to restaurant sales. But to the contrary, I think it's encouraging to hear you noted continued improvement in March. I'm just wondering broadly for yourselves or the industry, why do you think that is? It seems like there's lots of noise, lots of headlines, D.C. and otherwise, that would have been a headwind for the industry. And I think most were bracing for that type of commentary from you guys. So I was wondering why you think trends have actually gotten better more broadly? And then I had one follow-up.

Yes, Jeff. We see and hear the same concerns about consumers feeling less optimistic. However, as we transition from the third quarter to the fourth quarter, our expectations for Q4 remain steady. Despite consumers expressing a decline in optimism, we haven't observed a significant impact on dining out. Changes in consumer sentiment haven't directly affected spending patterns. As long as incomes continue to rise and outstrip inflation, spending is likely to continue, especially where consumers feel they get good value and an enjoyable experience. Dining out remains a top choice for consumers looking to treat themselves, so if they are feeling restless, they may choose to splurge. We will keep focusing on providing an excellent experience and value for our guests. There has been a slight pullback among guests earning below $50,000, indicating that some consumers are feeling the pinch, but I believe much of what we saw in the third quarter was more related to weather than any other factors.

Understood. And then just on the Fine Dining segment, once again, well ahead of expectation. Do you see that coming from any particular brand? Or what does that tell you about the high-end and corporate consumer spending relative to the other income brackets? Is there anything unusual to note there? Or is that just a rebound perhaps on the higher income?

Yes, Jeff, I want to mention that we were somewhat pleasantly surprised by the performance of Fine Dining in the third quarter. We observed that consumers were inclined to spend more during the holiday season at Fine Dining across our brands. However, we are now experiencing more consistent check management after the holidays. So, we are not ready to declare success for Fine Dining yet, as it remains weak.

Thank you. Next question today is coming from Jim Salera from Stephens. Your line is now live.

Hi, thanks for the question. I wanted to go back to the quarter performance sales mix for the $12.99 price point given the addition of the Manicotti LTO that, I think, competed with some of the premium-priced LTOs you also introduced. I wanted to see how that impacted sales mix.

Jim, the $12.99 was actually pretty low mix compared to the higher-priced items. I would say it was in the low single-digit percent of sales.

Okay. So that went down a bit. I think it was around 10% in the past. So you had the consumer shift up a little bit. Is that the right way to look at it?

To clarify, you were referring to the CYO at $12.99 and the Manicotti at $12.99. The CYO is indeed still within that 9% to 10% range.

All right. And then on the $14.99 promotion, could you remind us how that's comparing to what was in the marketplace last year? And what gives you confidence that, that $14.99 is the right price point for that promotion?

Yes. Last year, we didn't promote anything with a limited time or specific price point. I believe we were focused on equity advertising, possibly for Sauces of Soul, discussing our sauces. There were no promotions intended to encourage customers to visit our restaurant last year.

Thank you. Next question is coming from Brian Vaccaro from Raymond James. Your line is now live.

Hi, thanks and good morning. I just wanted to piggyback on Jeff's question just about the average versus median performance. And I guess if we can, if we could set aside the impact of the big outlier, do you think we're also seeing a broader widening between the winners and losers in the category? And if so, I'm curious what do you contribute that to? I'm kind of just thinking about the question of are the benefits of consistently delivering a good experience sort of snowballing with the consumer? Or is there any evidence that the underperforming players are cutting even deeper and sort of on that kind of negative feedback loop? Or maybe there's something to mention on sort of the change versus independents front? And I have a quick follow-up.

Sure, Brian. Let me share what I can. Starting with the chains, we've always maintained that those chains that perform well continue to succeed. Regardless of the environment, operational execution is key. While effective marketing and promotions may provide short-term boosts, true winners must excel in their core operations. There is a clear divide: some brands are performing exceptionally well, and we believe our brands fall into that successful category. Conversely, those that are not executing effectively are likely facing more challenges, and we've noticed a growing disparity as consumers become increasingly selective. Regarding chains versus independents, the significant point is that when analyzing the full-service restaurant consumer price index, chains generally set lower prices compared to full-service restaurants. This indicates that independents are likely pricing their offerings higher, which could affect their success. Overall, independent restaurants are losing market share to chains, partly due to this pricing gap.

Just back on the fiscal fourth quarter guidance as well. I just don't want to get too prescriptive on the March trend, but I guess as you think about the next few months, is there anything we should be mindful of as it relates to comparisons or calendar shifts? Or any other context you wanted to put around kind of how you came up with the above 3%? And I understand it's a choppy volatile environment, there's a lot of uncertainty, maybe it's just conservatism. But just any incremental color on that fiscal fourth quarter guide. Thanks again.

I keep muting my microphone. Hey Brian, it's Rick. In the fourth quarter, when I was responding to a couple of questions earlier, I was actually referencing the third quarter year-over-year. For Q4, we had a Create Your Own Pasta promotion at $13.49 last year, compared to Buy One, Take One this year. I apologize for the confusion. It wasn't really a big promotional event since it was our standard price. So, it wasn't a significant driving promotion; it was more about communicating our great value. The comparisons this year are somewhat different, as we have something that's not necessarily a menu item with a major promotion like we had in the past. Regarding LongHorn, they are running essentially the same promotions as last year. We believe that our Buy One, Take One and delivery initiatives are part of the reason we expect to see above a 3% comp for Q4.

Thanks very much.

Thank you. Next question is coming from Christine Cho from Goldman Sachs. Your line is now live.

Great. Thank you for the opportunity. So I had a quick follow-up on the Buy One, Take One deal. So could you remind us the impact the deal had on traffic or check size five years ago when you last ran the promotion? And if successful, would this be something you would consider on a more longer-term basis or consider rolling out in some of your other brands as well? Thank you.

Hey Christine, the last time we ran it was before COVID, and it was self-referential in terms of promotion. This is a strategy we have a lot of experience with, and I can say it's our second best promotion for driving guest traffic. However, the current environment is very different from what it was then, so I'm not sure we can directly compare the guest count impact. Also, last time it was offered at a deep discount, whereas now the situation is different. As for other brands, Olive Garden already has the $6 take-home deal, which doesn't significantly affect their operations. When we consider promotions, we want to ensure they enhance brand equity. The Buy One, Take One promotion enhances Olive Garden's image of abundance, and it's straightforward to implement. It's similar to what we already do with take-home items but does not involve a deep discount now. If we were to implement something like that in our other brands, it might not align with those criteria.

Thank you.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further closing comments.

That concludes our call. I want to remind you that we plan to release fourth quarter results on Friday, June 20, before the market opens with the conference call to follow. Thank you so much for participating on today's call.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.