Darden Restaurants Inc Q3 FY2026 Earnings Call

Hello, and welcome to the Darden Fiscal Year 2026 Third Quarter Earnings Call. Your line has been placed on listen-only until the question-and-answer session. To ask a question, you may press star 1 on your touch-tone phone, and we ask you to please ask one question, one follow-up, and return to the queue. This conference is being recorded. If you have any objections, please disconnect at this time. I will now turn the call over to Ms. Courtney Aquila. Thank you. You may begin.

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 Vanam's 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. A supplemental materials presentation containing information shared on today's call is available on the Financials tab in the Investors section of our website at Darden.com. Today's discussion includes certain non-GAAP measurements, and reconciliations of these measurements are included in that presentation. Looking ahead, we plan to release fiscal 2026 fourth quarter earnings on Thursday, June 25th, 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 the fiscal third quarter, average same-restaurant sales for the industry decreased 1.2%, and average same-restaurant guest counts decreased 3%. Additionally, median same-restaurant sales for the industry increased 0.6%, and median same-restaurant guest counts decreased 2.9%. This morning, Rick will share some brief remarks on the quarter, and Raj will provide details on our third-quarter financial performance and share our updated fiscal 2026 financial outlook. Now, I will turn the call over to Rick.

Thank you, Courtney. Good morning, everyone. We had a very strong quarter. We generated $3.3 billion of total sales, 5.9% higher than last year, driven by same-restaurant sales growth of 4.2%. We've been consistently outperforming industry same-restaurant sales, and this quarter our gap widened as each of our four largest brands exceeded the industry by more than 400 basis points. All of our segments delivered positive same-restaurant sales as our restaurant teams continued to be brilliant with the basics, once again leading to impressive guest satisfaction scores. Our restaurant team's ability to consistently deliver exceptional guest experiences is enabled by historically high team member and manager retention levels that we are seeing across our businesses. We began the quarter with very strong holiday sales, and several of our brands generated record Valentine's Day sales, reinforcing that guests choose the brands they trust for these special occasions. We also opened 16 new restaurants during the quarter, and we remain confident in our ability to deliver our planned openings for the fiscal year. Olive Garden delivered positive same-restaurant sales of 3.2% for the quarter, driven by strong operational execution, even with three fewer weeks of price-pointed promotions than last year. The restaurant teams are focused on ensuring every guest is offered a free refill on breadsticks and soup or salad. This led to a new all-time high guest satisfaction score for service and matched their all-time high for overall guest satisfaction. In January, Olive Garden completed the rollout of the lighter portion section of their menu, adding seven more dishes under $15. This platform provides their guests with more choice by offering additional smaller portions of popular dishes at a lower price and is offered in addition to the Olive Garden's regular portion sizes. Since these are existing menu items, there is minimal operational complexity, and the restaurant teams can execute at a high level. The lighter portion section of the menu is clearly resonating with our guests and their restaurant teams. In February, fan favorites returned with four cheese manicotti for a limited time, starting at $12.99. Olive Garden also reintroduced two past favorites, ravioli di portobello and braised beef tortelloni, meeting strong guest affinity for familiar, craveable dishes. Building on last year's successful reintroduction, Olive Garden recently launched Buy One, Take One and is extending the offer for one additional week versus last year. With the same starting-out price point of $14.99, guests can choose one entree for their dine-in experience and then take a second entree home. To give guests even more reasons to enjoy it, this year's offer features a new rigatoni a la vodka entree for a limited time. Olive Garden is supporting buy-one-take-one with increased media. At Longhorn Steakhouse, strict adherence to their strategy, rooted in quality, simplicity, and culture, continues to drive their momentum as they delivered same restaurant sales growth of 7.2%. The Longhorn team is deeply committed to ensuring every item they serve meets their high-quality standards. Already this year, they have recertified every manager on their culinary standards, and, during the quarter, their directors of operations completed hands-on culinary training in order to expertly assess and coach the behaviors that drive consistent execution. Longhorn's people bring the brand to life in their restaurants, and their culture remains a clear differentiator in earning strong team member loyalty, which in turn helps drive guest loyalty. During the quarter, Longhorn was recognized as one of the best places to work by Glassdoor. This award is particularly meaningful as winners are determined solely based on the feedback provided by team members. Longhorn also celebrated five new grill master legends during the quarter. This program is a great example of the intersection of quality and culture, celebrating team members who have each grilled more than one million steaks over the course of their career, a milestone that typically takes more than 20 years to reach. Same restaurant sales for the fine dining segment grew 2.1% for the quarter. All three brands in this segment delivered positive same-restaurant sales, driven by strong private dining sales growth at the Capital Grill and A.V.s and the continued success of the three-course fixed-price menu at Ruth's Chris Steakhouse. Within our other business segment, same-restaurant sales grew 3.9% during the quarter, driven by very strong performance at Yardhouse and positive same-restaurant sales at Shutter Scratch Kitchen and Seasons 52. The Yardhouse team has done a great job of leveraging their competitive advantages of a socially energized bar and distinctive culinary offerings with broad appeal to drive strong demand for Yard House as a social gathering space. During the quarter, more than half their restaurants set new daily sales records on Valentine's Day. At Cheddar's, the team remains focused on strengthening their competitive advantages of wow price and speed. During the quarter, they maintain their number one ranking for affordability among major casual dining brands within Technomic's industry tacking tool. I am proud of our performance this quarter and confident in our ability to build on our sales momentum. We remain focused on executing our proven strategy, enabling us to grow sales, increase market share, and make meaningful investments in our business while returning capital to shareholders. We also continue to work in our 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 NextCore scholarship program. Next month, the Darden Foundation will award more than 90 post-secondary education scholarships worth $3,000 each to the children of Darden team members. This is the fourth year of the program, and over that time, we have awarded more than $1 million worth of scholarships, helping them reach their educational goals. Finally, I want to thank our team members for their continued hard work and dedication to creating memorable experiences for our guests every day. On behalf of our leadership team and the Board of Directors, thank you for everything you do. Now I'll turn it over to Rush.

Thank you, Rick, and good morning, everyone. As Rick mentioned, in the third quarter, we generated $3.3 billion of total sales, 5.9% higher than last year, driven by same restaurant sales growth of 4.2% and the addition of 31 net new restaurants. Our same restaurant sales exceeded the industry benchmark by 540 basis points during the quarter. Our sales momentum was strong throughout the quarter as we further expanded our positive gap to the industry. Winter weather negatively impacted same-restaurant sales by approximately 100 basis points for the quarter, with more than 40% of our restaurants having to close temporarily in January during winter storm fern. Same-restaurant sales adjusted for weather were greater than 5%, a strong performance in what is traditionally a high-volume quarter. Overall, our teams did a great job managing the business through the volatility created by Weller. Third quarter earnings were in line with our expectations, delivering mid-single-digit earnings per share growth. Adjusted diluted net earnings per share from continuing operations of $2.95 were 5.4% higher than last year. We generated $579 million of adjusted EBITDA and returned $300 million to our shareholders this quarter by paying $173 million in dividend and repurchasing $127 million in share. Now looking at our adjusted margin analysis compared to last year, food and beverage expenses were 50 basis points higher primarily due to elevated beef costs driving total commodities inflation of approximately 5% for the quarter. Restaurant labor was 20 basis points lower driven by productivity improvement as pricing was in line with total labor inflation of 3.3%. Marketing expenses were 10 basis points higher consistent with our expectations due to incremental marketing activity. Restaurant expenses were 10 basis points lower due to sales leverage. This resulted in restaurant-level EBITDA of 21%, 30 basis points lower than last year, as our pricing was 40 basis points below inflation. Adjusted G&A expenses were flat to last year. Leverage from sales growth was offset by 20 basis points of unfavorable mark-to-market expenses on our deferred compensation. Due to the way we hedge mark-to-market expense, this unfavorability is fully offset in taxes. As a result, our adjusted effective tax rate of 12.1% was 130 basis points lower than last year. We generated $341 million in adjusted earnings from continuing operations, which was 10.2% of sales. Looking at our segments, all segments grew sales and segment profit dollars for the quarter, driven by positive same-restaurant sales. As Rick mentioned, we continue to make meaningful investments in the business, such as the lighter portion section of the Olive Garden menu. This, along with our measured approach in reacting to elevated beef costs, resulted in headwind to segment profit margin for the quarter relative to last year. Total sales for Olive Garden increased by 4.7%, driven by strong same-restaurant sales growth, as well as the addition of 17 net new restaurants. The sales momentum continued from prior quarters with same-restaurant sales that outperformed the industry benchmark by 440 basis points. Olive Garden delivered a strong segment profit margin of 23% for the quarter, which was only 10 basis points below last year. This includes approximately 40 basis points of margin investment related to the addition of the lighter portion section of the menu and the impact of delivery fees. At Longhorn, total sales increased 11.2%, driven by same-restaurant sales growth of 7.2% and the addition of 22 net new restaurants. A sustained sales and traffic outperformance resulted in same-restaurant sales exceeding the industry benchmark by 840 basis points and same-restaurant traffic exceeding by 640 basis points. The Longhorn team remains focused on their strategy, driving strong results, delivering segment profit margin of 18.6% despite elevated beef costs. Total sales at fine dining segment increased 4.3%, driven by positive same restaurant sales of 2.1%, and the addition of two net new restaurants. Their segment profit margin of 22% was 50 basis points lower than last year. The other business segment sales increased 3.2%, with positive same restaurant sales of 3.9%, partially offset by the permanent closure of Bahama Breeze restaurants. Segment profit margin of 15.6% was flat to last year. Turning to our financial outlook for fiscal 2026, we've updated our guidance to reflect year-to-date results and expectations for the fourth quarter. We now expect total sales growth for the year of approximately 9.5%, same restaurant sales growth of approximately 4.5%, approximately 70 new restaurant openings, commodities inflation of approximately 4%, an effective tax rate of approximately 12.5%, and adjusted diluted net earnings per share of $10.57 to $10.67, including approximately 25 cents related to the addition of 53rd weeks. For the fourth quarter specifically, our annual outlook implies total sales growth of 13% to 14.5%, which includes the extra fiscal week. Same restaurant sales growth of 3.5% to 5% incorporates the strong trends we have seen through the first three weeks of March. We expect adjusted diluted net earnings per share between $3.59 and $3.69. As previously announced, we've completed the exploration of strategic alternatives for the Bahama Breeze brand and determined that 14 locations will permanently close and the remaining 14 will be converted to other Darden brands over the next 12 to 18 months. We believe the conversion locations are great sites that will benefit several of the brands in our portfolio. Our team members remain a priority throughout this process. A majority of team members, including more than 70% of managers who are impacted by the permanent closures, have already been placed in new roles within the Darden portfolio. Additionally, we intend to keep the restaurant teams from the conversion locations with the new brand or other Darden brands. We do not expect these actions to have a material impact on our financial results. Now, looking forward to fiscal 2027, I would like to provide our thoughts on a few items. First, we expect to open between 75 and 80 new restaurants in addition to converting 14 Bahama Breeze locations to other Darden brands. Next, we expect to spend approximately $850 million of capital on the following. Approximately $475 million for new restaurants, approximately $25 million for the 14 Bahama Breeze conversions, and approximately $350 million related to ongoing restaurant maintenance, refresh, and technology. Finally, we anticipate an effective tax rate of approximately 13.5% for fiscal 2027, and total interest expense of approximately $200 million. 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 deliver and our continued outperformance to the industry. We remain confident in our ability to grow sales, manage costs, and deliver value to our guests and shareholders. Now we'll take your questions.

Thank you. And I'll be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. If you'd like to remove your question from the queue, please press star 2. A confirmation tone will indicate your line is in the question queue. And as a reminder, we ask you to please ask one question and one follow-up, then return to the queue. Our first question today is coming from Brian Bittner from Oppenheimer. Your line is now live.

Thank you. Good morning. Just as it relates to your same-store sales guidance, the implied outlook for the fourth quarter is that 3.5% to 5% range, which is very impressive. And that's happening despite much tougher comparisons, I think, of nearly 400 basis points in the fourth quarter. I think investors in general have been pretty worried about this multi-quarter stretch of tougher comparisons upcoming. So can you help us understand what you believe is driving the ability to lap these, so far at least, with such ease, particularly at Olive Garden?

Good morning, Brian. Let me start. And, you know, so let's, as we look at guidance for next year, this is, you know, I think people are looking at this, you know, quarter to quarter, tougher comparisons towards this last year. But the way we think about it is what are the drivers of the business? and how do we build, you know, continue to build growth or gain growth over time through the initiatives we have. And I think we've shown that over time we achieve what we commit to. We've been able to get, you know, show that we can grow. And so as we look at specifically with respect to Olive Garden last year, you said it's a tougher comparison, but if you think about the drivers of growth last year were primarily true, two. One was buy-one-take-one returning for the first time since COVID, and second was the first-party delivery. Well, guess what? Those two are still in place today. And we are extending our buy-one-take-one by an additional week, and Rick mentioned we're also supporting that with additional media. So, you know, we build a plan and we build an estimate based on the initiatives we have in place, taking into consideration the macro factors, and I think we feel good about what we're guiding here.

And I don't know if you want to. Thanks for that, Raj. And just my quick follow up is just related to the relationship of pricing and inflation. Can you talk about that as we're moving forward into fourth quarter and then into 2027? I know you're not giving exact guidance, obviously, for next year yet. But, you know, you had some pretty meaningful gaps in that dynamic throughout this year, which seem to be narrowing now. So maybe you can just put some color on that

for us? Yeah, Brian, look, I think we've had a pretty, you know, big underpricing of inflation through the first three quarters. As we get to Q4, we expect our pricing to catch up to inflation. We expect inflation to be, overall inflation to be in the mid-threes and our pricing to be in that mid-threes. And I think if you look at our implied guide for Q4, you can see the power of that, right? When we start coming close to pricing close to inflation, you see the margins grow. meaningfully, and that's what you're seeing in the implied guidance for the fourth quarter. We'll share more about next year, but I think the way to think about it is we've given ourselves a lot of flexibility by underpricing inflation over several years, and we feel like we have, across the industry when you look at it, we have more power than anybody else in terms of being able to price to cover inflation. It's more of how we choose to run the business, and we've always been focused on long-term, and I think, you know, to the extent we're achieving our long-term framework of 10% to 15% TSR by pricing, you know, by not having to price as much, then we do that. But I think, you know, you'll hear more in the June call, but our framework calls for 10% to 15%, and that's what we aim to deliver. Thank you. Next question is coming from

David Palmer from Evercore ISI. Your line is now live. Thanks. You know, a quick question and a

follow-up, how would you generally explain the same-store sales growth gap between Longhorn and Olive Garden? Is that really simply about the energy around protein and perhaps a little bit of the underpricing of beef costs lately? Or do you think there's something else that would explain the gap that we see between those two brands in terms of comps? Yeah, David, I'll start by saying

Longhorn has been on a very long path to continue to improve their business, to make sure that the guests get a great quality product every day, and you heard that in some of the prepared remarks. They've also significantly underpriced beef costs in the grocery store over time. So the guests are getting an amazing value when they go to Longhorn to eat. They've also done an amazing – going back to the quality, they've done an amazing job in cooking their steaks. Guests want to come to a restaurant and if you can't cook a great steak, why are you open? And Longhorn cooks a great steak very close to 100% of the time. And when they don't, they take care of the guest. So the gap between Olive Garden and Longhorn, it's going to fluctuate. And this quarter, Longhorn had to get a little bit more pricing than Olive Garden did. They had a little bit more traffic growth than Olive Garden did. They also, you know, weren't – I'm not sure they were impacted quite as much by the weather as Olive Garden was. But so as you think about all of those things, you know, we don't worry about one brand outperforming another brand. We have a portfolio of great brands, and there's going to be quarters that one brand outperforms another one, just like we generally outperform the industry. So we're very pleased with both of our brands, both Olive Garden and Longhorn, and the performance they've had. But I think those can explain some of the big differences. And if Faraj wants to add anything else.

No, the only thing I'll just add is, as Rick mentioned, we also manage the brands differently. Some of the things we do are depending on how we look at our performance across the portfolio. So there were three fewer weeks of price-pointed promotion at Olive Garden, and that's a decision we made because of how strong we felt the quarter was going to be. And that alone is probably about 100 basis points impact to Olive Garden's comps.

That's helpful stuff. Do you see the gap between those two brands growing? I mean, you just called out something of a reason why it might narrow, but we see the comparisons getting tougher for Olive Garden. So I know that there's going to be concern that that growth gap will widen against the tougher comparisons. Do you see that gap widening or perhaps narrowing off of some of those artificial hurts that happened in the last quarter? And I'll pass it on.

Well, David, again, you know, we're not as concerned with the gap widening or narrowing in our brands as long as the brands continue to grow. And Olive Garden, the important gap widening for us is Olive Garden's gap to the industry. And Olive Garden's gap to the industry widened in our third quarter. Longhorn's gap widened even more. In the long run, though, you know, law of large numbers, Olive Garden and Longhorn will probably converge over time. I can't say it's going to happen in Q4. I can't say it's going to happen next year. But over time, you know, as long as we're not doing anything significantly different in promotional cadence or other things, you would expect those gaps to narrow a little bit. But maybe Longhorn will be above Olive Garden for a while. We just can't tell you exactly when that will converge.

Thank you. Next question today is coming from Lauren Sitterman from Deutsche Bank. Your mind is now live.

Thanks a lot. Congrats on the quarter. I'm going to start with just the increasing gas prices. It sounds like you really haven't seen much of an impact given the quarter-to-date strength, but any thoughts on whether there could be a delayed reaction from consumers and any color on what you've seen historically with high gas prices and how that's impacted different brands?

yeah lauren um as quite a few of you have written the data doesn't show a really strong correlation between gas prices and restaurant spending i would say historically higher gas prices had more of an impact on durable goods and less of an impact on services and and i've been through a number of these cycles i don't know how many when there's a sudden and significant price increase in gas there can be a brief pullback but that's usually in a few weeks. And if you recall, the sudden increase in gas prices were a couple of weeks ago. So, you know, and we still had a pretty darn good quarter. The biggest driver we see in traffic for restaurants is GDP. So if gas prices remain high for a long period of time and make a big impact to GDP, there may be some softness. But in general, we're not too worried about gas prices, and we'll be able to react however we need to if they stay really high for a while.

Great. Thank you for that. And just a follow-up on the Q4 guide, the 3.5% to 5%, it's a fairly wide range. Any color on what you're embedding through the rest of this quarter? I know there's a lot of moving pieces just trying to understand high end versus low end versus current trend. Thank you.

Yeah, Lauren, I think it's just, look, you know, what we're trying to embed is just there's just still some uncertainty and the range is and you know is there to kind of capture that that level of uncertainty uh you know but the you know we we feel like we're in a good place quarter today and that's taken into consideration but we're also taking into consideration some you know just the just the environment out there and just trying to make sure that we don't you know we don't uh you know we don't over promise so we're just trying to make sure that we're being thoughtful and taking into consideration all the factors that are out there.

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

Hi. Thank you so much. I would like to discuss beef prices, particularly as we look ahead to FY27. I think last call you've mentioned you're starting to see some green shoots, but seems spot prices are still trending upwards and news of the strike also seems to be an incremental headwind. Could you kind of share your directional thoughts on these and your locked-in rates for

the next few quarters ahead? Thank you. Hey, Christine. So let me start by saying, look, as far as fiscal 2027, we want to wait till June to provide more specifics. But, you know, I can tell you for Q4, we have 85% fixed price coverage. So we have actually, this is really pretty strong coverage relative to recent past. We haven't been able to cover that much in the last several years. So that's a good thing. The other thing is we are starting to see some willingness from suppliers to contract further. So we have started to lock in some things for fiscal 27, probably well ahead of where we would have been a year ago or the last few years with respect to the next year. But I would want to wait until June to really share more specifics. Now, the other thing around the price, look, there are a lot of dynamics in terms of happening on the supply side. And, you know, so we're not expecting things to get significantly better on the supply side. But, look, there's still double-digit demand destruction that we're seeing even in February in retail, right? So I think ultimately where it lands will depend on what happens with demand as prices go up.

Thank you so much. I'd like to also circle back on the lighter portion menu rollout at Ellis Garden. Any color on how the incident rates trended since the launch, and is the mix in fact kind of tracking in line with your expectations? Also, any new learnings on the guests that are choosing these items? Does the uptake appear primarily value-driven or more kind of health-serve GLP ones motivated? Thank you.

Hey, Christine. I would say we finished the launch in mid-January of this year with the rest of the divisions going live, and those divisions are seeing kind of the same trends as the divisions that we launched earlier. The good news is we're seeing increased frequency in the guests that are ordering these lighter portions. We're seeing huge value scores and huge scores for portion size. So it's a combination of many things. We do know that the Olive Garden menu has abundant portions, and abundant means different things to different people. And so when you get as much soup or salad as you want and as many breadsticks as you want, a lighter portion may be all that you're looking for. Whether it's GLP-1 related or not, I don't think it's just GLP-1s. I think a lot of people want smaller portions if you get all these other things. And as I said, portion size ratings have gone up significantly and value ratings have gone up significantly for those items. And we have seen increased frequency in the guests that are ordering it. It's a significant increase in frequency. Last I'll say is a lot of the preference is happening at the weekend lunch when we don't have a lunch menu. So there's a good reason for this lighter portion menu. Finally, the mix impact is about what we thought it would be. And Raj mentioned what the margin impact of the mix was, but the mix impact is about where we thought when we first launched the menu.

Thank you. The next question today is coming from Chris Carroll from KeyBank Capital Market. Your line is now live.

Hi. Good morning. So how should we think about marketing expense now in the 4Q in the context of the updated guidance you provided this morning? And I presume you'll wait to provide any detail on marketing expense for fiscal 27 in June. But any thoughts on how you're thinking about marketing at a higher level here in a potentially more volatile macro backdrop would be helpful.

Yeah, Chris, I think we've been very clear throughout the year that we expect marketing to be within 10 basis points as a percent of sales last year. And, you know, that's really how we're looking at it because, you know, one of the things we had this year that we mentioned along the calls was we had an RFP for MediaBuy that translated into meaningful cost saves, actually, you know, north of 10 basis points as a percent of sales. So that's actually going, you know, helping us increase marketing activity, even in quarters where you don't see a growth as a percent of sales, we're actually buying more because we have those savings to help. Okay, got it. Thank

you. And then I guess maybe to give Olive Garden a little bit of a break here, but you know, maybe changing directions a little bit. Can you comment on the improvement that you saw in the fine dining segment? How are you thinking about the segment going forward? And how much of a benefit to the comp in the quarter was from the strong valentine's day that you mentioned as we mentioned fine dining

all three brands all three fine dining brands were positive same restaurant sales in the quarter you know it wasn't just driven by valentine's day i don't even think that would be a meaningful maybe tens of basis points for the whole quarter for valentine's day uh we had a we had a really good um private dine as we mentioned for cap grill and and edvs and i will say this three course price fix menu for for Ruth's Chris is really resonating you know we ran it for I think five or six weeks this year this quarter and it's resonating with guests we're seeing guests that were lapsed to Ruth's Chris come back and we're seeing guests that have ordered that come back so we think this is a good a good platform for them and we're really pleased with the fact that fine dining all the brands and fine dining were positive this quarter it's been a little bit of time since that's happened and uh and you know we can't tell you what we think going forward uh but everything we have is contemplated on our guide and uh you know our guide is a pretty strong guide so i would think that fine dining would be doing okay in the fourth quarter the next question

today is coming from shara senator from back of america your line is now live we quick uh housekeeping

i didn't i don't i think i missed it can you um run through the price and mix uh that were in the in the traffic and maybe I'm sorry in this comp and maybe give a little bit of color on I think you mentioned a Longhorn had more price than Olive Garden but just how the brands compared to the the average yes Sarah so at the Darden

level our comps were four to our pricing our check growth was three and a half pricing was basically three four so I think of ten basis points of positive mix when you look at Olive Garden their pricing was two eight but they also had catering help a catering group by about 130 basis points which we don't know we don't count as traffic but that's really for all practical purposes that is increasing traffic so if you take that into consideration their traffic was up basically 100 basis points and then they had some investment like we talked about the investment in lighter portions impacted the check by roughly 60 basis points. Uber fees helped a little bit with about 50. So, I mean, the way we look at it is Olive Garden's comps, while the traffic we print might be negative 0.4, when you add back the weather and the catering, that's basically a positive two comp on traffic. And for Longhorn, yeah, for Longhorn, the same restaurant sales of 7.2 included traffic of 3.3 and the check growth of 3.9. Pricing was 4.4, so they had a negative mix of 50 basis points.

Okay, thank you. That's very helpful. And then I guess just in terms of, you know, the decision to run, you know, fewer weeks of price point and promotions, as you said, you may be 100 basis points, but then this quarter running an extra week of the buy one, take one, and supporting it with more marketing, you know, presumably everything, all those things were planned well in advance, but I just wanted to kind of confirm that because I wasn't sure if the decision to go from fewer weeks last quarter to one more week this quarter indicated something about kind of the promotional intensity or what the results were versus your expectation, just trying to kind of reconcile those two decisions. Or maybe it's just tougher compares or something else entirely, but just curious about that.

Yes, Sarah. You know, we can't, I would say as big as Olive Garden is, we can't move on a real big dime here. We had planned both of those things. quite a while ago. So we had planned running fewer price-pointed weeks in Q3 and planned on adding a week to buy one, take one in Q4 well early in this fiscal year, maybe even before the fiscal year started. And the reason that we moved the three weeks out, we eliminated a promotion in the third quarter because we believed that weather would get back to a normal five-year average, and so we'd have some weather tailwinds for us this quarter while there were headwinds, so that was just something that happened, and Raj kind of mentioned what would have happened if there wasn't that kind of weather headwind. We would have had a two-comp in traffic, so we plan these long, long time ahead of time. This is not a reaction to promotional intensity anywhere else. If you recall, when we added Never and Impossible, we came back, I think it was seven weeks, maybe eight weeks. And then within a year or two, it was up to 12. So that was a decision and a plan decision we made. I can't tell you the buy one, take one will get to 12 weeks, but I can tell you that when we launched buy one, take one last year, we never intended it to be as short as it was.

The next question today is coming from John Tower from City. Your line is now live.

Hey, thanks for taking the questions. But maybe starting, could you dig into the delivery at Olive Garden during the quarter? I think you've been running about 4% mix last period. You know, did much change, and going forward, how are you thinking about pulsing it as you're moving into the fourth quarter? Obviously, there's a different macro dynamic happening right now, and that's a higher price – well, not a higher – there's the delivery fees on top of it. So I'm just curious if there's going to be a brighter spotlight on that relative to previous quarters.

Yeah, John, a couple of things. Uber was 4.7% of sales for Q3. Now, we did do some media support. So when we took that four-week promotion out, so three weeks less price pointed, we took that one out in January. We replaced it with just a delivery message that had no offer. It was just, hey, Olive Garden delivers. And then in February, we added an offer to the Olive Garden delivery, to free delivery like we did last year. and so you know last year in q3 we were roughly 0.8 in delivery last year in q4 we're three and a half so you saw that big jump when we started marketing delivery in q4 so i would say that in q4 this year i'm not going to tell you if we're going to do marketing and marketing for delivery but if we do it'd be a secondary message and i would think that the the jump in delivery from Q3 this year to Q3 last year won't be the same in Q4 because that's when we had the big spike. But we still believe that delivery should be a little bit higher than last year.

Great. And maybe, you know, obviously it sounds like the lighter fare or lighter portion menu at Olive Garden sounds like it's a pretty good success early on. I'm just curious, as you're looking across the rest of your brands, I know each one's a little bit different, but is that an opportunity to bring to other brands within the portfolio or are the guests just a little bit different?

Yeah, we've said this before. I think Longhorn has done some of this already. Longhorn did this at lunch years ago, and lunch is growing pretty fast with a good lunch platform, smaller items, sandwiches, et cetera, that's grown over time. and they already have different sizes of some steaks so if you think about their filet they've got two different sizes of filet they got sirloins um you know they've got two different kind of ribeyes one's bone in one's not they've got different sizes for chicken different sizes for salmon so they kind of have a lot of that already but they are looking at other things that they can do to to bring portions uh that that might not be as big for people that don't want such a big portion. The same thing with Ruth's Chris. If you think about the price-fix menu at Ruth's Chris, it's one of their smaller fillets, et cetera. So we have opportunities in all of our brands to look at something like this. It might not be as broad as we do at Olive Garden because most of these menus and other brands have kind of variety of size.

Thank you, Oregon. The next question today is coming from Brian Harbour from Morgan Stanley. Your line is now live.

Yeah, thanks. Good morning, guys. I guess maybe I'll just ask the income cohort question, anything, you know, that you'd call out about income bans that may have shifted in the quarter, and also, you know, in fine dining, is there any group that you think has kind of come back more?

Hey, Brian. So from an income perspective, what we're seeing is there is growth across all households with income above $50K, and the biggest growth is coming from households over $150K. That's just generally what we're seeing across all brands. As we look at fine dining, we're seeing decent growth as we start to go above $150K as well, but $200K plus is where we're seeing the most growth, and that's where we see even bigger disparity between the below $75K, below $100K, and then the above $150K.

Okay, got it. Thanks. Raj, just directionally, so it's still your expectation, I think, that food cost pressure kind of continues to diminish a bit into the fourth quarter, I guess. Also, is there any reason that with the sales you're doing, there wouldn't be a little bit more leverage on the other restaurant expenses at this point?

Well, I think we would expect to get some – I mean, look, let me step back. I don't, you know, I hate for us to talk about a specific line item in the P&L because there are multiple variables that can play a role in where we land for the end of the quarter. But as we look at the business, the guidance that we provided for the fourth quarter implies margin growth. And we're going to get it from probably, at this point, probably pretty much every line on the P&L, but it doesn't have to end up that way. we're okay. Ultimately, we look at what's the bottom line, right? I think we're going to show each growth, each margin growth. Thank you. Our next question is coming from Jeffrey Bernstein

from Barclays. Your line is now live. Great. Thank you very much. First question is just on the fiscal 26 guidance. I know there's only one quarter remaining, but you raised the total revenue growth guidance. You raised the comp and the unit growth guidance. But X the incremental nickel, I guess, from the 53rd week, seems like the implied fourth quarter EPS guidance is still somewhat in line with the street. I'm just wondering how you think about maybe what's preventing the greater EPS upside, especially as total inflation guidance seems to be unchanged, just trying to get a sense for how you think about that going from the top line to the bottom line as we think about at least the upcoming quarter. Hey, Jeff, look, we are not, I don't want to

explain the streets model, right? I'm focused on what we built as a plan. And if you look at our initial guidance at the beginning of the year, we said our guidance was $10.50 to $10.70. And as we got through the year, our inflation was a lot higher than we thought, and we didn't price for all of it. But we had better comps than we thought in the plan. And so we took up comps reflect that. But ultimately, we're still delivering on the higher end. If you take the midpoint of it, it's higher than the midpoint of what we had initially guided. The delta on the 53rd week is just a function of, you know, we had approximately 20 cents, and now we're saying approximately 25. You know, if you think about, you know, how the rounding works, a couple of pennies could make it approximately 20 versus approximately 25. So don't read this as a five percent delta, it could be one to two pennies because of how it rounds. And that's why we said approximately. So I'll leave it at that. Got it. So it sounds like greater comp, greater

inflation, net net, still a strong earnings year. And then as I think about that going into next year, I appreciate the color on the unit growth and the CapEx spend, but maybe more broadly speaking, and I know it's just directionally at this point, but maybe you mentioned it earlier, Is it fair to assume you think fiscal 27 growth in line with your long-term algo? It seems like you're entering fiscal 27 with comps above kind of the one-and-a-half to three-and-a-half long-term target. Maybe you could share the current annual EPS sensitivity to an incremental point of comp. Any color, at least directionally, on how we should think about fiscal 27 versus the long-term would be great.

Well, Jeff, I'd say, you know, we'll share more about fiscal 27 later, but I think what we're targeting is trying to stay in that frame or at least achieve what we said is part of the framework, so 1.5% to 3.5% for comps and 3% to 4% for new restaurant growth. And as you look at the initial indication for fiscal 27, excluding the Baham of Ries impact, we would expect it to be in that range of 3% to 4% for new unit growth contribution. And then part of that framework is each margin flat to positive, 20 basis points, to get us to that EPS growth plus dividend yield of 10 to 15. And I think that's kind of what we would plan for. Any given year, it might be a little bit different, but that's what we target long-term. At this point, I don't see a reason why we wouldn't be there, but we'll give you an update in June.

Thank you. Our next question today is coming from Jim Solera from Steven. Your line is now live.

Good morning, guys. Thanks for taking our question. Raj, earlier you had talked about double-digit demand destruction at retail for beef, and I can't help but draw a line between the strong results at Longhorn and then that commentary. Are you able to give us any context? Are you seeing consumers who forego buying beef at the grocery store then showing up at Longhorn in a way that's actually a tailwind to your traffic at Longhorn because they're nervous about preparing it, so they show up to have you prepared for them?

instead hey jen this is rick um you know in in times of high beef prices in the grocery store you generally see a little bit more a consumer going to a restaurant to get their get their steak when a consumer has to has to cook a very expensive steak at home and they mess it up they still have to eat it when a consumer goes to a restaurant and orders a steak and we mess it up we eat it and they still eat a great steak so i think that's part of the reason but i can't tell you that we have data to say that a consumer says, you know, I saw this price in a grocery store. I decided not to do it. I'm going to go to Longhorn instead. I mean, we've got great data. We've got the best data and insights in the space, but we don't ask our guests that question, so we don't

know. And then maybe one follow-up question, given the traffic outperformance for the Darden as a whole relative to the industry. How much of that is incremental frequency from existing guests who were just satisfied with, you know, the menu innovation and some of the portion size offerings versus you winning share from other peers within the group?

Yeah, look, we're getting from both. When we look at our frequency, we are seeing frequency increase across the portfolio from the guests, but we're also getting new guests. So it's a combination of that. But, you know, the data that we look at probably shows that it's a little bit more from increased frequency, you know, call it 60-40, I guess, or 65-35 in that range.

Thank you. Our next question today is coming from Andrew Charles from TD Cowan. Your mind is now live.

Great. Rick, catering at Olive Garden continues to grow pretty nicely, despite lapping several quarters since the large growth began. So what do you attribute that to?

Hey, Andrew. Growth at Olive Garden is about execution. So I don't remember – I didn't hear your very first word. So I want to make sure I'm answering what growth you're talking about at Olive Garden.

It was catering.

Catering growth. Oh, catering growth, you know, it's a great deal at Olive Garden. And we do an amazing job at getting it to the guest at the exact time they want it. And we have a good digital platform to do it. So catering is a very strong support for us, and it's probably one of the best values at Olive Garden. And, you know, and then we have a delivery part of catering that we do our self-delivery. It's our highest rated part of anything we do at Olive Garden. So what guests want for catering is they want to make sure they get the food that they ordered, they get it on time, and it's a great value. And Olive Garden checks all three boxes every time.

And then, Raj, is it fair to assume that a good portion of the converted Bahama Breezes will be Olive Garden, just given similar square footage combined as well as Olive Garden is one of your highest ROIC brands for new stores?

Yeah, Andrew, this is Rick. I wouldn't say it's fair to assume that most of the conversions will be Olive Garden. There's 14 conversions. Olive Garden is pretty much almost everywhere Bahama Breeze is. So I would say it's fair to assume that the fewest, that Olive Garden will have a couple maybe, but they won't have a lot of them.

Thank you. Our next question is coming from David Tarantino from Baird. Your line is now live.

Hi. Good morning. First, a clarification on Raj's comments about next year and the total shareholder return being in line with your normal framework. Are you adjusting for the lapping of the 53rd week, or maybe you don't need to adjust and still hit that target range? But I guess could you clarify whether we should be making any adjustments to your comment?

Yeah, David, I would say we always look at it on a 52 to 52 because that's the right comparison, you know. But, you know, what is the 53rd? What is it going to look like? I mean, you'll find out in June. I mean, at this point, you know, long term, it's really 52 to 52 is the right comparison.

Thank you. And I guess my real question, Raj, is about the commodity cost outlook. Look, I appreciate you don't want to give specifics for next year, but just wondering directionally if the spike in oil prices and intense distribution costs is going to have any material impact on the outlook for commodity costs for you and for the industry for that matter. And I guess you would probably have a competitive advantage with your supply chain, but just any thoughts on that topic would be helpful.

David, I don't want to speculate, but if you look at where we are expecting the inflation for commodities for this year to be, which is 4%, our thinking from where we're sitting now for next year directionally should be better than that, even with some of the recent news, but we'll provide an update in June.

Thank you. Our next question is coming from Danilo Gordrulo from Burns Senior Line is now live.

Thank you. Vic, I was wondering if you can elaborate more on the turnover rate being particularly Is that a function of what you're doing, where you are in the market, or is that something that you're seeing across the board for the industry? And was that the primary driver for the labor productivity improvement that you've seen this quarter? And if that's the case, for how long do you expect the low turnover to last?

Yeah, Danilo, I would say our turnover, our retention has continued to outpace the industry. Ours is getting better faster than the industry is. And I would attribute that to a great employment proposition that we provide. We give our team members opportunities to grow, and that gives them a chance to come into the industry and get life-changing manager jobs and above. And so almost all of our brands are at record turnover levels, and the ones that aren't are pretty darn close. And the industry data is getting a little bit better. So when we think about labor, low turnover helps labor costs because you've got more productive employees doing the job. You've got less need to hire and train. We do still train, but we train them, cross-train them, but we spend less money on new hire training. So that should help us. As long as we keep our turnovers moving in the right direction, then our labor productivity should get slightly better. We may invest some of that. As we mentioned, we always find ways to invest in the guest. And if we get some things that are much better than we would expect, we would probably give some of that back to the consumer in the form of either better service or better pricing or better food.

Thank you. And then from Raj's comments earlier, one could infer that maybe 2027 could be more elevated pricing versus 2026, a little bit above inflation perhaps. And historically, you know, with pricing above inflation, you know, the gas count could be more reused. And so I'm wondering what kind of initiative, even at a high level, do you think you could be deploying in 2027 to perhaps counterbalance this and still have a gas-driven growth for your brands?

Daniel, I think let me start and then maybe Rick can add to that. So I don't want to signal anything specific to 2027 with respect to pricing versus inflation. What we're talking about is we've given ourselves a lot of room over the last, essentially since COVID, by underpricing the full-service CPI by almost 1,200 basis points, even grocery by 400 basis points. And, you know, and so we feel like if we need to take price, we can take it and we can be smart about it without impacting the guests. That's part of the reason being cumulatively we're in a much better place. Our relative value position is really strong. So we don't necessarily think if there is a year where we take a little bit more or actually in line with price, that all of a sudden that becomes a headwind to Gascon. That's not how we view it.

And Danilo, I would add to that, even if we priced out inflation and we anticipate commodities being a little bit better, over time, then it wouldn't be a huge price for next year if we do that. But I would also add that, again, we keep investing in our team, in our product, in what we serve to the guest. I would say that those investments build on themselves over time and guests notice the value that they get. Our brands, most of our brands are at record high guest satisfaction, record high affordability, record high values for those brands. So I would say that we've got just continued operational execution. And as we've said, you know, we'll continue to look at our media spend and become more effective with that media spend but still increase slightly. Like we've said, about 10 basis points or so. We'll probably do the same thing next year. Could be even more. So depending on how impactful that marketing spend is. So we should have some things that help counterbalance anything we do with price. But as Raj said, we don't think what we would do at price would be a tremendous drawdown to the guest count.

Thank you. Our next question today is coming from Gregory Frankfurt from Guggenheim Partners. Your line is now live. Hey, Rick.

This may be a little bit out of left field, but I'm curious your thoughts on some of these AI tools that are coming on, how much you're using them at corporate, what that's unlocking for you from an analytics perspective, just any thoughts on kind of what may be changing inside your business with what's going on.

Yeah, Greg, not quite out of left field, you know, but I'm going to start. Anything about AI to say that at the core, we are and we always will be a hospitality-driven company, which means you need people. So we're a people-focused business, so we're going to need them. But our team's doing an incredible job every day. What we're using AI, machine learning for is to give our team member, our guests, our managers, I'm sorry, our managers a much better forecast of their business so they can schedule better. Plus we're using tools to that to make them write better schedules. They can order food better because the best thing you can do as a manager is to have a great forecast so you can staff your restaurant right and have the right amount of food. That said, we're doing things here in the support center to improve on tasks that are repetitive, using AI to start projects faster, to get things done faster. But we have yet to take any jobs out because of AI. We've got 200,000 employees in this company, and only about 1,000 of them work here. The other 200,000 work in the restaurant, and I would say we're probably not going to lose any team members in the restaurant because of AI. We're going to make their jobs better. We're going to make the guest experience better. But I would say that ultimately the approach for AI for us is about amplifying the expertise for our people, not replacing them, as I said. It helps us deliver on exceptional service, and that's what we'll keep doing. And the last I'll say is we've got a great team in IT here, over 200 people strong, and they're using it to write code faster, to get a lot of savings in what they do so that we can have more tools for our teams at a faster pace. And even some things that we've been looking to do for years that we were struggling to get done, AI is getting it done a lot faster. So that's where you're going to see the benefit of AI, but you probably won't see it specifically because it's not going to be necessarily so guess-forward.

Thanks for the perspective.

The next question is coming from Jeff Farmer from Gordon Haskett. Your line is now live.

Thanks. You guys mentioned that Uber was, I think, roughly 4.7% of mix at Olive Garden. But I am curious, in terms of the concepts, total off-premise mix, so including to-go and catering?

Yeah, Jeff, I think we're 29%. And that's about three points higher than last year. Last year was 26. Nicole, Q3 is typically high off-premise because of catering we talked about earlier and just generally high off-premise quarter.

Okay. And then just same question for Longhorn, off-premise mix?

I think Longhorn was 15% for the quarter, which was a point higher than last year.

Okay. Thank you, guys.

Thank you. Next question is coming from Dennis Cocker from UBS. UBS, your line is now live.

Great. Thanks, guys. I'm curious about any updated thoughts on tax rebates, stimulus benefits, or kind of any latest expectation you have based on anything you've observed so far to date.

Yeah, Dennis, it's still a little early. Most of the refunds are going to happen in basically March and April, but we did see some of the refunds coming in in February. We know that per recipient the tax refunds are higher. But I will say everything we know is contemplating our guidance. The last thing I'll say is we do know that when checks drop, we see the impact. And we had some of that impact in February, but it was pretty small amounts in February.

Great. And then just quick on the operational stuff and that speed of service initiative, which I know is longer term in nature. I feel like I've observed it in the Olive Garden. Just curious if any update to share there and kind of where the guest and the employee

feedback is, if anything to share? Well, I'm glad you've experienced it at the Olive Garden. They've really started to make a good push on it in Q3 of this, in this year's Q3. And they're doing some things in different restaurants to test initiatives to get the roadblocks out of the way for speed. And I would say that at Olive Garden, there's 50,000 servers. And so how do you convince 50,000 people that they have to change the way they do things and then help give them the tools to do that. And they don't have to be technology tools. It's how do you get the soup salad and breadsticks out faster, so the first course out faster? How do you ensure that you give the guests the speed and the pace that they want? Olive Garden's making some moves, and I think those moves are going to get even bigger in the upcoming quarters. And our other brands are following suit. Olive Garden's moving a little bit earlier, but the other brands are going to get there. And our goal is to get this experience in the time that the guests believe is ideal. And right now, the ideal time is a little bit faster than what all of casual dining is doing. And it's a little bit faster than where we are. So we're going to get to the ideal time. It's just going to take a while. And the guest impact of that will be seen two different ways. In the short term, it's going to be better throughput on the high volume days. In the long term, it's going to be guests coming for us for occasions they weren't coming before. And that second one is long term, and it's going to take a while. It's going to take time for the guests to realize that, hey, I've got 45 minutes to go to lunch, but in total, and I need to get in and out of there in 30, can I do it? If they don't believe they can do it today, I want them to believe they can do it in a few years. And when they can, they're going to come back a lot more often. And I just used lunch as an example. It's not just

about lunch. Thank you. Our next question is coming from Andrew Strelzik from BMO Capital Market. Your line is now live. Hey, thanks for taking the question.

Apologies if I missed this, but you lowered the commodity inflation guidance from four to five down to four. What was the driver of that within the basket? And was that more 3Q related or 4Q related, and then I guess related to that, you know, keeping the overall inflation at three and a half, was there anything as an offset to the lower commodity inflation, or is that just kind

of rounding? Yeah, Andrew, it's really rounding because we see approximately three and a half, but as we look at, you know, when you look at commodities specifically, there was some favorability. Most of the favorability that we have was the prior estimate is in beef. I think we expected Q4 to be more in the double-digit range, and it ended up being high single digits, and we had some offset on the favorable dairy that's helping partially offset. So, I would say those are the two drivers in terms of the change. Again, we're talking about tensor basis points of change because we were saying, I think, earlier four to four and

half and another approximately four. Okay. And then with the step up in new units for next year, I know it's only, you know, a handful incrementally, but should we assume that most of those are Olive Garden and Longhorn, or is that a little more broad-based, anything to call out

there? Thank you. Yeah, it's a little bit more. As we look at 75 to 80, I'd say 50 to 55 is going to come from those two brands, but then, you know, probably, you know, mid-single digits for the rest of the brands, as you look at, I say, Yardhouse, Chatterth, and Chewy's will probably all have mid-single-digit unit growth, number of units, and then the rest will come from fine dining.

Yeah, Andrew, and I would add that over the long term, you should see over time, not right away, you should see more of our growth as a percent growth coming from the smaller brands. So you think about Chewy's, you think about Yardhouse, you think about Cheddar's. They've got to be at the higher end of our framework or more because Olive Garden is going to be within that framework somewhere, probably at the lower end. So in order for us to get to that framework and to get a more balanced portfolio, those other brands are going to grow faster over the long term is what we said. So in the first few years in that, Olive Garden is going to drive some of the growth.

Thank you. Our next question today is coming from Johnny Vanko from J.P. Morgan. Your line is now live.

Hi, thank you so much. The question is on operations. And, you know, obviously, you know, perfect isn't possible in the real world. So I wanted to see the percentage of restaurants that you thought were operationally excellent today. And, you know, and I think the, you know, the converse of that is the percentage of restaurants that you may have an opportunity to significantly improve your operational improvement, especially as the labor market might be more willing for you to do so.

Hey, John. I can't give you an exact number here, but let's just use the 80-20 rule. You know, I would say 80% of the restaurants are operating in a great, great, and maybe 20 have some room to improve. It's probably less than that. I will say that our dissatisfaction, which we measure guest satisfaction, but our dissatisfaction at our brands are pretty much at all-time lows. So, and I'm talking about low single-digit dissats in our big brands. And that is pretty amazing when you consider where dissatisfaction rates can be in casual dining and any dining or any service.

Yeah, definitely. And yeah, listen, some people aren't going to be happy with perfect, so low single digits is very good. Let me ask you a separate question in the interest of time. Greg asked about AI, and I think specifically on a corporate level. You know, you mentioned having AI-driven forecasts for general managers, but within quick service, a number of these different companies are talking about, you know, basically assistance for the general manager to help them do their jobs better even beyond forecasting, you know, labor allocation, food prep, what have you. Does that make sense, you know, for casual dining broadly? Does that make sense for Darden, and is that something you might be working on and see as an opportunity?

Absolutely, John. And I did mention that it's a forecasting, but it is about food prep and labor management and other things. So we have – I probably didn't put it all in there, but it's all part of that. And I think whatever we can do to make the general manager and the restaurant manager's job easier, to get them out of the office and with our guests and with our team members is what AI can help do. You know, what I did say is we won't have it to our guests are actually seeing it in their face. but we're using a lot of that stuff already.

Our next question is coming from Brian Vaccaro from Raymond James. Your line is now live.

Okay, okay, great. So, yeah, just a question on the casual dining segment, and it's pretty striking how your outperformance gap has widened significantly in recent quarters. So maybe you can just talk about this widening gap between the winners and losers in the segment, and are you starting to see a tick up in closures or think we might be on the precipice of seeing something like that? just any broader thoughts on this widening gap hey brian uh i would say i'm really pleased that

our gap that gap keeps widening there are winners and losers in every industry um and you know especially in categories like ours which aren't super high growth categories there's always going to be winners and losers and we plan to be winners are we seeing a lot more closings i wouldn't say we're seeing more closings we're seeing some bankruptcies but that generally happens over time we've been on the precipice of a big a big closing for years and maybe one day it'll happen i just don't know i don't know what other companies are thinking about in their in their plans in the future but you know restaurants that have had individual restaurants that continue to lose margin and continue to lose traffic eventually they can't pay their rent so some of those will close and will you know the good brands will kind of pick up the slack and add restaurants but we're just going to keep performing the way we have no matter what the situation is out there and if restaurants close

we'll be the beneficiaries all right that's helpful and then last quick one just Raj sorry if I missed it but where do you see your G&A shaking out for the year in your updated guidance thanks again yeah Brian I think we're still

looking at approximately $500 million for the full year. Q4, that implies, you know, higher, heavier G&A in Q4 for a couple reasons. One, we have an extra week, call it that's roughly $10 million. And because of the growth we have, the most of the growth, you know, as you look at year over year growth on sales and earnings, we have pretty strong growth implied, especially on earnings in Q4, and so that leads to higher incentive comp. And so between those two, I think Q4 is probably, you're thinking roughly about

$30 million higher than Q3. We've reached the end of our question and answer session. I'd like to turn the floor back over to Courtney for any further or closing comments. This concludes

our call. I want to remind you that we plan to release fourth quarter results on Thursday, June 25th before the market opens with the conference call to follow. Thanks for participating. Thank you. That does

This concludes today's teleconference webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.