Thank you, Holly, and good morning, everyone, and thank you for joining us on today's call. Here with me today are Kevin Hockman, Chief Executive Officer and President of Brinker International and President of Chili's, and Micah Ware, Chief Financial Officer. Results for our second quarter were released earlier this morning and are available on our website at brinker.com. As usual, Kevin and Micah will first make prepared comments related to our strategic initiatives and operating performance. Then we will open the call for your questions. Before beginning our comments, I would like to remind everyone of our safe harbor regarding forward-looking statements. During our call, management may discuss certain items which are not based entirely on historical facts, and any such items should be considered forward-looking statements within the meaning of of the Private Securities Litigation Reform Act of 1995. All such statements are subject to risks and uncertainties which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include factors more completely described in this morning's press release and the company's filings with the SEC. And of course, on the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business business, and believes will provide insight into the company's ongoing operations. And with that said, I will turn the call over to Kevin.

Thank you, Kim, and good morning, everyone. Thank you for joining us as we discuss our financial and operating performance for the second quarter, as well as our outlook on the remainder of fiscal 26. Q2 Chili's same-store sales were at plus 8.6%, outpacing the casual dining industry by 680 basis points. This strong result was rolling at plus 31% from last year for a two-year cumulative comp of 43%. This was our 19th consecutive quarter of same-shore sales growth with a three-year cumulative comp of 50% and a four-year comp of 62%. The Chili's turnaround is real. It is sustaining, and we have no intentions of taking our foot off the gas, which means we will continue to be focused on improving our food service and atmosphere as well as continue making Chili's more fun easier and more rewarding for our team members q2 results were driven by our world-class marketing and brand building that brought guests in and continued improvements in food service and atmosphere that brought guests back now just some updates on the Chili's business we talked last quarter about the need to bring back our skillet queso based on guest feedback that reintroduction has been successful we are now selling 20 percent more southwestern queso and the original skillet queso versus the prior to queso lineup in addition our relaunch nachos featuring our signature chicken bacon and house made ranch is now 170 bigger business than the previous nachos with guests loving our new nachos we have also completed our bacon upgrade the thicker bacon strips and our bacon cheeseburger upgrade which now features triple the bacon in the prior burger. That bacon burger upgrade is doing 43% more sales than the prior bacon burger. What's important to take away from these examples is as we upgrade the menu offerings while attracting a new generation of guests, we continue to build bigger, sustainable sales layers in the business. Over the past three years, we have had success with these menu renovations. Crispers, margaritas, burgers, ribs, frozen margs, and now queso and nachos, with more segments still ahead of us to upgrade. Next on our list is our super-premium chicken sandwich lineup, which will launch chain-wide in April with a substantial advertising campaign. Chicken sandwiches is a very large market, with over 80% of people buying them at least once last year, and is by far the biggest segment of all restaurant chicken servings. It has the potential to drive customer traffic, both with new and existing guests. We believe our new chicken sandwich lineup is superior, distinctly on brand, and highly differentiated than what is in the market today. Bold signature flavors unique to Chili's, terrific value with abundance, and a traffic driving opening price point within a three-tier lineup. We'll also be advertising in a big way, leveraging that sharp price point to drive awareness in traffic. The sandwich lineup has done exceptionally well from a mixed standpoint in merchandising-only tests than 200 restaurants, and we expect even bigger numbers when we launch nationally in April with advertising and earned media attention. From an operations perspective, we've also made great progress in Key 2. We successfully eliminated a net total of six menu items, which will continue to make it easier for our teams to serve hot, delicious food more consistently. One of the keys to our success has been staying disciplined on food innovation, which means avoiding launching food-limited time offerings. This allows us to focus our efforts to improve our core offerings, simplify operations, and keep field leader attention on ops fundamentals like hospitality and great food. Avoiding limited time offer distractions to maintain efforts on the core business has continued to drive guest scores. Daily metric we measure, guests with a problem or GWAP, improved the 2.1% versus 2.9% for Q2 last year. For perspective, when we started the turnaround journey over three years ago, we were at about 5% and it's been consistently getting better every quarter as we keep hitting on different fundamentals in the business. We are also now seeing real movement in syndicated external guest perception metrics, which allow us to track not just progress against ourselves, but even more importantly, how we are improving versus our competitive set. When we started this turnaround, third-party syndicated data places at the bottom or near the bottom of our competitive set in all seven of their key metrics that correlate to to future sales growth. In the last quarterly snapshot of these metrics, Chili's is now in the top three of all those metrics, quality, value, service, atmosphere, taste, cleanliness, and overall experience. Yes, there's still room for meaningful gains, but our guests experience progress through our operational improvements is very encouraging. The other important takeaway from this data is where we have repositioned ourselves on value, which allows us a long runway for growth. In the past three years, we have captured value leadership in casual dining and the broader restaurant industry. And while we earned that leadership value position, we were also able to improve restaurant operating margins from 11% to 18% while baking in hundreds of millions of dollars of guest experience investments into the going four-wall economics. The brand repositioning and operational improvements have delivered big results. Chili's was the number one traffic brand in casual dining for the entire 2025 year. And what's even more encouraging is black box data is telling us our per-person check average is still more than $3 less than our direct casual dining competitors and more than $4 less than casual dining as a whole. Simply put, Chili's has been repositioned to win for the long term, and that's exactly what this team is going to do. On the Maggiano's business, we are making progress on the turnaround pillars of food, service, and atmosphere I talked about last quarter. Based on guest feedback, we've brought back Gigi's butter cake, eggplant parmesan, baked ziti, and classic meat sauce. On the value front, we've also increased pasta portions by 20% and have up portions on select other dishes that had opportunities, including our meatball dishes, salads, stuffed shells, and crispy mozzarella. As a result of bigger portions, value scores have improved in the past few months. We did see some sequential improvement in the business during the quarter, and sales beat our internal expectations for the first time in a while. Still lots of work ahead of us on service atmosphere and team culture, but these are encouraging green shoots and small wins. Magiana's is now only 8% of our company sales and 3% of our profit contribution, but it can be a source of growth in the future given the white space opportunities. This is why improving for all economics of the brand and getting momentum back into the business is important. Q2 marked another exceptionally strong quarter for Chili's with continued progress in food, service, and atmosphere. year, guest experience improvements, world-class marketing, a reposition relevant and distinctive Chili's brand, and our value leadership sets us up for a continued market share gains and a long run of profitable growth. We won't big results from Q2 last year with more big results this year, and that's proof that the strategy is working and that it's sustainable. Lastly, I want to recognize our restaurant teams and our home office teams for quickly responding to winter storm fern. I know many of us on this call view the storm through a lens of what it will do to sales or earnings, but on the ground, it's a whole lot more than that. Our restaurant teams have done an excellent job overcoming the challenges of the storm to reopen safely and quickly. Our field facility teams are working tirelessly on restaurant repairs that are needed, and our restaurant support center has been incredibly responsive getting restaurants what they need. Hats off to our VPOs, our directors of operations, our managers, our team members, and our restaurant support center for all that you do to overcome challenges like these. Now I'll hand the call over to Micah to walk you through Fiscal 26 second quarter numbers. Go ahead, Micah.

Thank you, Kevin, and good morning. Brinker successfully comped the comp, delivering another quarter of positive same-store sales growth led by 8.6% growth at Chili's, lacking a 31.4% increase from the prior year. With Fiscal 26 more than halfway complete, we expect to achieve our fifth consecutive year of same-store sales growth and second consecutive year of traffic gains, demonstrating our continued momentum and sustained growth. We have grown our customer base by leaning into our everyday industry-leading value, core menu improvements, and marketing initiatives to position us well in a competitive and challenging environment. And by focusing on the fundamentals of food, service, and atmosphere, we continue to improve operations, bring guests back, and deliver consistent, positive growth. For the second quarter, Brinker reported total revenues of $1.45 billion, an increase of 7% over the prior year, with consolidated comp sales of positive 7.5%. Our adjusted diluted EPS for the quarter was $2.87, up from $2.80 last year. Chile's pop-line sales growth was driven by price of 4.4%, positive traffic of 2.7%, and positive mix of 1.5%. These results were bolstered by the continued success of our Margarita of the Month program, which performed well during all months of the quarter. Notably, we exceeded our expectations in November with what guests in the media coined the Wicked Margaritas, which sold approximately 1.5 million more drinks than a typical margarita of the month. Another call-out for the quarter, Christmas Day traded out of the second quarter into the third quarter, resulting in a favorable comp sales impact of 1.2%. During the Maggiano's, the brand reported comp sales for the quarter of negative 2.4%. As Kevin mentioned, we saw some encouraging progress as the team executes on its Back to Maggiano strategy, which is designed to improve our value proposition, optimize our service model, and ensure our atmosphere is clean and well-maintained. At the brinker level, restaurant operating margin was 18.8% compared to 19.1% in the prior year. A 30 basis points decrease year-over-year, mainly due to Maggiano's sales deleverage and the additional investments needed to help improve that business. However, at Chili's, we saw a 40 basis point increase in restaurant operating margin year-over-year, mainly due to sales leverage partially offset by incremental investments in labor and advertising and higher health and workers' compensation insurance costs due to increased restaurant headcount. Food and beverage for the quarter were unfavorable by 20 basis points year-over-year due to unfavorable menu mix with 0.8% commodity inflation offset by price. Labor for the quarter was favorable 30 basis points year-over-year. Top-line sales growth offset additional investments in labor, higher health insurance costs, and wage rate inflation of approximately 3.3%. Advertising expenses for the quarter were 2.9% of sales and increased 40 basis points year-over-year due to additional weeks on TV. G&A for the quarter came in at 4.1% of total revenue, 20 basis points higher than prior year due to increased restaurant center support resources partially offset by sales leverage. Depreciation and amortization for the quarter came in at 3.8% of total revenues and increased 30 basis points year-over-year due to an increase in our asset base from equipment purchases partially offset by sales leverage. Second quarter adjusted EBITDA was approximately $223.5 million, a 3.6% increase from prior year. The adjusted tax rate for the quarter increased to 18.8%, mainly driven by higher profits, which increased at a greater rate than the offset generated by the FICA tax TIF credit. Capital expenditures for the quarter were approximately $63.7 million driven by capital maintenance spend. As discussed, in 2026, we started our re-image program for Chile. We just completed our first four re-images and will use the learnings to inform our long-term re-image and new unit growth strategy. We expect to complete another 8 to 10 re-images during the balance of this fiscal year before ramping up to 60 to 80 re-images in fiscal 2027. We expect to fully roll out both our re-image and new unit growth programs during fiscal 2028. At Maggiano's, our main focus areas will be guest-facing repairs and maintenance and a smaller-scope re-image program. Our strong pre-cash flow provides sufficient liquidity to maintain our disciplined capital allocation strategy, allowing us to invest in our restaurants and return excess cash to shareholders. In the second quarter, we also repurchased an additional $100 million of common stock under our share repurchase program to support our ongoing commitment to returning capital to shareholders. In terms of our expectations for the balance of the year, as noted in this morning's press release, we're raising our fiscal 2026 guidance, which includes annual revenues in the range of $5.76 billion to $5.83 billion, dollars, adjusted diluted EPS in the range of $10.45 to $10.85, capital expenditures in the range of $250 million to $260 million, and weighted average shares in the range of $44.7 million to $45.2 million. This guidance also includes the negative impact from closures caused by winter storm fern through Tuesday, January 27th, which includes approximately $20 million in reduced revenues and a decrease of $0.15 in adjusted diluted EPS. Prior to the storm, Chili's comps, including the negative holiday slip, were running solidly in the mid-single-digit range, giving us a good glimpse into the health of the base business. Once we get through the negative impacts of the weather, we expect Chile's same-store sales to return to the mid-single-digit range. Additional assumptions underlying our guidance largely remain unchanged. We still anticipate wage inflation in the low single digits and our tax rate to be approximately 19%. Our commodity inflation is now anticipated to be in the low single digits for the fiscal year due to the removal of Brazil-based ground beef tariffs this past quarter and better-than-expected poultry and dairy commodity prices. However, due to rising beef prices, we still expect mid-single-digit inflation for the back half of the year. We remain confident our plans will enable us to lap the upcoming quarters and continue to significantly outperform the industry on sales and traffic at Chili's. In summary, our second quarter results reflect the continued strength of our strategy. Chile's industry-leading everyday value continues to deliver for the guests, not only on overall price, but also on overall experience. As we look ahead, we remain focused on delivering sustainable long-term growth. Our continued momentum and plans for the remainder of this fiscal year give me confidence in our ability to deliver on expectations, and our strong financial position will allow us to continue to invest in the business and return cash to shareholders, unlocking future growth potential. With our comments now complete, I will turn the call back over to Holly to moderate questions. Holly?

Certainly. The floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Your first question for today is from Dennis Geiger with UBS.

Great. Thanks, guys, and congrats on the strong results. First, I just wanted to ask a little bit more on contributors to the strong traffic and sales growth of the quarter. You gave a lot of color. Beyond the Margarita campaign, just curious of any other notable shifts in contributors as we think about three for me and where that was mixing, triple dipper mix, et cetera. Anything to call out there? You know, I'll start.

Go ahead, Micah. Sorry, we're in different locations because of the ice board, but go ahead, Micah.

I'll start with some of the things, and, Kevin, you can fill in some colors. So, you know, as we've talked and we've got it all year, you know, our pricing has been very stable, kind of right in the middle of that 3% to 5% range. What I will say on mix is, yes, we were very, very happy with the performance of the Margarita of the Month, but overall, you know, our mix was still positive. That was driven not only by the margaritas, but, you know, continued success in triple dippers. They were up still year over year, even laughing, the big numbers from prior year, and some appetizer sales, you know, with the new quesos out. So we're not seeing any huge changes. You know, we're still really happy with how our menu is performing, how our sales are going. And, again, our traffic, we were very pleased with the traffic. Throughout the quarter, we had positive traffic, you know, that before the storm was continuing on. So, you know, nothing huge, Dennis, that changed. Kevin, if you want to add in some color to that.

Yeah, I was going to say the same thing with a little bit different angle of the – it's just more of the same. So, we continue to, you know, streamline the menu. We continue to improve operations and make the needed investments to improve the overall guest experience. And then we see that in the internal metrics, and then that allows us to both attract new guests with things like the Three for Me and, you know, the Margarita of the Month program that did really well in November and December, but then also allow us to retain existing guests so we don't see any frequency changes. So we don't see frequency changes in existing guests, and we keep bringing new guests in and they start looking like existing guests pretty quickly in terms of frequency. That's how you sustainably grow over time. So, like, you know, I shared the GWOP metric. Guess what a problem, you know, continuing to hit record lows. You know, our food grade scores went from 68% last year in Q2 to 74% this year. We also saw quarter-on-quarter improvements in food grade, and same thing with intent to return. It was 72% last year. It's almost 78% this year. So you just look across the board, the interometrics continue to get better. And this is what I keep saying. As long as we keep focusing on the fundamentals of casual dining and we are honestly looking in the mirror saying, are we going to be better this year than last year, and we continue to have this world-class marketing, there's no reason why the comp won't continue to grow. So we're just going to – it's going to be kind of a boring quarter, we say, and our new drivers, and it's like, well, they're not new drivers, but they're new things we're doing to drive those drivers. And I couldn't be more proud of the team. Appreciate it, guys.

And then just one more, you guys both gave good color on sort of back half of the year revenue and comp expectations, and I think talked about a strong quarter to date, even with a calendar shift pressure, I believe. Anything else on kind of the back half of the year as it relates to top line expectations? Anything embedded from a stimulus tax rebate perspective? Or, Kevin, anything else to share on some of those, you know, big levers which sound exciting for the back half of the year? Thank you.

Yeah, Dennis, so let me kind of talk about that. So we, like Kevin said, expect more of the same. So we're forecasting for Chili's, you know, solid mid-single-digit comps for the back half of the year. We've talked about pricing. I think, again, you know, mix may moderate a little bit in the back half of the year, just as we can see in Alaska's really big triple-dipper numbers. And then traffic, what I would say is, you know, prior to the storm, we would have expected traffic positive in both Q3 and Q4. Or we may have a little pressure with the storm and the holiday flip on traffic just because of those two events. It could be flat and slightly negative traffic in Q3, but we expect positive traffic in Q4. So really it's more of the same, but that's some of the detailed color into what we expect the same source sales to do over time.

Great. Thank you, guys.

Thanks, Dennis. Your next question is from Chris Ocull with Stiefel.

Thanks. Good morning, guys. Mike, I just want to follow up on that last question. Can you just maybe elaborate on or level set us on the comp cadence that's embedded into the back half of the year guidance?

Yeah. No, it's going to be pretty steady as we go. So, you know, January will have the storm and the holiday flip, but after that I expect it to be very steady mid-single digits. There's not a lot of flips in and out, and the quarters will be very similar to each other is what we expect.

Okay, perfect. And then, Kevin, you guys have successfully used the 1099 anchor to drive the 43% two-year comp, but the barbell strategy relies on guests eventually, I would think, trading up the premium items like the triple dipper and then maybe the new ribs. But as you lap these massive traffic gains, how do you prevent the 1099 price point from becoming a structural ceiling on the pricing power. Is there any long-term risk that you're training your most loyal new guest or your new guest, I guess, to never leave that price point?

Yeah, well, it's something we've talked about for several years now. It's very important for our team to have offerings for all guests because if too much mix gets into the 1099 price point, obviously the math doesn't continue to math. So the first thing that we do is we have what we call the barbell strategy, which we talked about, which is we have good, better, best price tiers, because not every guest wants the cheapest thing on the menu, some somewhat different benefits or different features in the things that they buy. So, like, when we launched a chicken sandwich, when we launched a chicken sandwich, it's not just going to be a hot opening price point that we advertise on TV. We're going to have a chicken sandwich with benefits. We're going to have more premium chicken sandwiches that can take you all the way up to the highest tiers. And then we're going to continue to manage that. So the outcome when you do this is that you keep the 1099 sales mix constant. You don't let it grow too much because that's when the margins can get out of whack. So as long as we continue to bring innovation not just at the 1099 price point, but at other price points that we keep other parts of the menu interesting and we hold the mix in all those parts of the menu, we shouldn't have any issue continuing to advertise 1099. Now, five years from now, I know we might be in a different position. and it's hard to predict health and what will happen with cognitive inflation, et cetera. But because we have such a varied menu and we've done a really good job merchandising and we continue to innovate on higher tiers like ribs and margaritas, et cetera, we're continuing to drive people into that mix. You know, we don't see – we don't have, like, specifics of detail. We don't see, in general, a lot of training up and down the menu. So people kind of gravitate to what they want to gravitate to and they stick with it. So, like, the three-for-me consumer tends to come more often. They actually spend more over the course of a year because they come more often versus higher-priced guests. They don't come as often, but they're worth a lot to us because they spend more when they're there. But, like, you know, I get asked a lot of questions about how people bounce all over the menu, and, you know, you just don't see that much of that.

Makes sense. Congrats on a great quarter, guys.

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

Thanks. Good morning. I had a question on the re-imaging. Is there any one of the prototypes that you're testing that is emerging as the most exciting, perhaps the one that you feel like has very good odds of being the go-to-market option and that can be rolled out quickly and with significant sales lifts? And if so, what can you tell us about the learnings from the re-imaging?

Yeah, good morning, David. Thanks for the question. So, there's two reasons why we're doing these first four. One is to understand the levels of investment and which ones make the most sense. And then the second is to get operational learning so that we don't make the – if there's any mistakes in the first four, we don't make them as we roll them out to the balance of the system. And obviously, we'll continue to learn beyond just these first four. The first thing I would tell you is the guests and the team members actually love all four of the re-image units. And there's a lot of clearing in our system to get that across the system. So that's good. It's too early to, you know, declare victory on sales lists. The initial results look pretty good. We're pretty excited about that. But it's nothing that we would publish and that you could take to the bank. You obviously want to understand more and look at test versus control and all that good stuff. So overall, the first thing is they look like completely different restaurants. And when all you guys are here for our investor day later in the year, you'll be able to tour them. So, we'll make sure we spend time where you can see them firsthand, those first four, and get, you know, get your eyes on them and see that's a marked difference. I mean, basically, the comment I typically hear from the managers is, like, we have a new restaurant, which is really cool to hear because these are really old restaurants that haven't been touched in a while. The second thing that we've learned is that so each of the four have different elements to them, and the good news is the one that has actually the lowest cost is the one that everybody's gravitating towards is the best. So some of the ones that cost a little bit more, they had a little too much done on the inside and they're a little too busy. So we're learning like, hey, less is more in some of the interior units. But things like the bar part of the reimage has been phenomenal. I mean, it literally just makes the whole building feel different, not just the bar area that creates an energy and a vibe. And it is distinctly Chili's. I mean, you go in and you're like, wow, it feels like I'm back in Chili's when it first started, but in a modern way. So that's the second thing we're learning is that we probably don't need all the bells and whistles. Like, for example, a couple of the restaurants have these oversized margarita shakers that we actually pulled from the old, old chilies, and it's something that just feels like it's clutter. It's not really adding versus some of the tile tables that we've added and some of the cheaper fills actually make a bigger impact. So we're going to be obviously focused on the things that make the biggest impact for the lowest cost, so that's a good learning. And then lastly, we're learning a lot about the operational opportunities with rolling them out. So, for example, we're learning there's just a lot of extra dust and a lot of extra work that's coming in that construction. So, we've got to do a better job of, like, masking and taping and tarping, and those are important things to know as we roll out further. We're learning about some of the tile work that we're putting by the bar is actually not needed, and it adds additional expense that's not needed. So just using the tiles on the tabletops, on the exterior, and on the sides of the bar, but not the floor of the bar is making the maximum impact. And then we're also learning about some of the operational opportunities. So, like, for example, we're bringing back tile tables, but we're doing it in a smart way where they're much easier to clean. So, like, the old tile tables that were so cool are really difficult to clean the grout in between the tiles. And so what we're basically doing is a printed tile table that looks three-dimensional, but then has an acrylic top on top of it. We're finding that those are a little hard to clean, not the tile, because that's just a printed unit, but the actual plastic is starting to buckle under the heat of skillets. So that's an example where we're just going to spend a little bit more time getting the right tabletop on that. So that's what we're learning from it is both operationally, how do we make sure there's sound, and then two, what is the right investments. But I will tell you, we are truly bullish about this, and we can't wait for you guys to see what we've done. That's great.

Your next question is from John Ivancoe with JPMorgan.

Oh, hi, thank you. Thank you so much. It's actually a follow-up on a previous question. In terms of, you know, remodels, which, you know, obviously you're planning to accelerate into 27. I think you said 60 to 80, but correct me on that, you know, with potential further acceleration into 20.

John, you're cutting out.

Looks like his line dropped. We'll take our next question from Jeff Farmer.

Yeah, thank you, guys. Just cutting through the weather and all the calendar shifts that the industry is facing, what is your read on casual dining segment trends in December and January? So what's the way I'm trying to ask you guys if you think the demand backdrop is stable? Is it softening? Is it improving? Any color there would be helpful.

Well, it's just like what you guys are seeing. It's mixed, right? Like, you know, December was tougher for the industry, but then January looked really good, and then the weather hit, which kind of stopped that trend. So, I mean, candidly, it's a lot of mixed signals. You know, what I've told our team is just continue to focus on the things that we can control, which is food service and atmosphere, whether the economy gets better and the consumer gets better or worse. Having a better experience is going to win trips, which is what's happened in the last couple of years for our business. So, you know, if the macro gets better, that'll be more tailwind for us. If the macro doesn't get better, we're going to continue to steal market share from those that aren't improving their food service and atmosphere. But to answer your question directly, you know, December didn't look great. January looked better. Weather stopped everything. We'll see what happens when, you know, we get fully out of the weather, whether the strength that we saw in January restarts. But it's similar to what you're seeing.

Okay. And then, Micah, with the updated guidance, can you just sort of level set us on the restaurant-level margin and G&A as a percent of revenue expectation for fiscal 26?

So, you know, looking out into the back half of the year, what I would say is, you know, our restaurant-level margin will probably decrease a little bit in the back half versus what we posted in P2. And really, it's the line I think everyone should look at is, you know, make sure the cost of sales line is going to be pretty similar to what you saw in Q2, maybe a little bit higher. I've talked about the, you know, kind of influx in commodity pricing in the back half. That also, that mid-single digit includes some of those investments we've made in things like bacon and ribs and some, you know, better cut chicken. You know, but with that being said, they're going to be phenomenal margins in the back half, very steady. be similar to what you saw in Q, maybe just a little bit less as we kind of watch through some of those laps year-over-year.

And then G&A real quick.

Oh, G&A is going to be very similar to what you saw, we are 4.1 percent of total revenues in Q2. I expect similar numbers as you move through the fiscal year, very similar to what you saw in Q2.

Thank you.

Your next question is from John Ibencoe with J.P. Morgan.

Hi, thank you so much. Can you hear me?

We can now.

All right, super. You're talking about travel disruptions. I'm doing this from the airport and asked this big long question and was literally just talking to myself. So, thank you for the patience on this. So, the question is actually a follow-up to the remodel question. You know, obviously remodel is an important part of the Chile business. And I think I heard you say, and correct me if I'm wrong, that you're planning 60 to 80 remodels in 27 with a further.

Looks like we've lost his line again. We'll move on to John Tower with Citi.

Hey, good morning. Thanks for taking the questions. I appreciate it. Just a couple, if I may, maybe starting off, I know obviously you're launching the chicken in April with advertising. I believe it's a soft launch now or soon in stores. But I'm curious if you're attacking the marketing side of the equation any differently than what you've done with the previous two product launches on three for me, the two burgers. You know, I know if it's not broke, you might not want to. But is there a different tack you might be taking this go around?

Well, we think that high prices are more relevant than ever. So, you know, every time we think that the consumer is going to get bored of our messaging, like this just keeps coming back up in social media and in the zeitgeist. So, and I think you guys see it all the time, that consumers are really frustrated with high pricing, you know, in lots of different areas, not just restaurants. And so the idea of continuing to attack that head-on with unbeatable value and abundance continues to win for us. So there's no reason why we would change that.

Got it. And then just maybe to the store-level employees and specifically thinking about incentives over time. Obviously, you have a fairly ambitious goal to get to roughly $6 million EVs across the Chile store base over time. I'm just curious how you're thinking about store-level incentives for the managers and where they sit today versus where you might optimally see them going over time.

Yeah, it's something we talk about a lot. You know, we look at, like, the best-in-class competitor, and they are masters of ownership at the general manager level. And part of that is their incentive structure. or they do other things too that we're obviously studying. Right now, we're in the camp of let's get our managers trained so they can be true owners of the business. For years, we started pulling things off of their P&L in effort to make their bonuses more and more fair and control more of what happens in the restaurant. And we've got to unravel some of that so that they actually understand the P&L, understand in the areas that they can improve their bottom line and their top line, and then start rewarding for them once they're trained and have the tools to do that. So the first step has been, number one, what we launched in a new P&L tool as part of our overall Oracle upgrade. That's done and they've been trained on that. Secondly, we're teaching the principles of extreme ownership to our managers. We started with our directors of operation and above, and now we've been rolling that out over to the general managers and the management team inside the restaurant. We're going to do that for at least a year, maybe even a little bit longer before we actually change the incentive structure. I do anticipate that we will change some of the bonus structure for the directors and above before that, so we'll try to roll that out to the directors first and make sure that we got their buy-in and their understanding before we would ever go to the manager level, but we're at least one to two years out from actually changing the incentive structure of the managers.

Got it. Thanks for taking the question.

Your next question is from John Ivanco. Your line is live.

Okay, guys, thank you so much for the patience. We're blaming this on the ice storm, so I'm in the airport, and this one's not going to drop. So the question was on remodels. You know, remodel is obviously a very important part of your story in 27, 28. I think I heard you say 60 to 80 remodels in 27, followed by a greater increase in 28. So just confirm that. And secondly, you know, as we think about new unit development, you know, into 28 and beyond, I mean, that is something that you're planning to accelerate in the Chili's business in 28. And I'm not going to ask you for a TAM at this point on this conference call, But what are we thinking in terms of percent unit growth that's kind of right for the Chili's brand at this part of the brand's life cycle in 28 that maybe can be established for a long term? And, you know, Micah, you know where I'm getting with this question is how we should just think about broad capital intensity in the business in 27 and 28. Is this such an important part of our model? And thank you guys so much for the patience.

So, John, let me start by a lot of pieces to your question. And first, yes, I'll confirm we want to ramp up in 27, fiscal 27, with the 60 to 80 is our current plan. And then the goal in 28 is to get to about 10% of the system, which would get us a little bit over 100. So you did hear that right, and we're very excited about it. Okay, on the new unit growth. And so what I would say is next year, well, you know, this year has been pretty flat with what we've opened versus what we've, you know, some of the leases expiring, et cetera, what we've closed. next year you're not going to see that much of a bump because remember it's an 18 to 24 month cycle so that's from two years ago when we weren't really leaning into new units but what I can tell you with all the progress we've made on building the team and all of the sites that we have at the front end of the funnel that we're putting in I do feel like you're going to see a significant difference in F28 and the new units that were able to post for that year so that That is correct. We haven't communicated an exact target of new unit growth, but it will be in the low single digits, I would say, is something that could be in the realm of expectations for what we can do. So again, that'll be something that we go into more detail on when we get to that investor day and talk about what we think the universe of Chili's could be, what we think that new unit growth cadence will be over time. But we do know that we can build more Chili's and we're really excited about it, especially with the change in the business. The areas of opportunities have opened up for us because our business is so much stronger on where we can build in different areas, different locations. We've learned a ton. So we're really excited about it as we move forward. So I hope that's helpful.

It is. And I guess as we're thinking this point, I mean, do we think that there might be an opportunity long, long term to maybe double the Chili's brand relative to what it is?

Or, you know, I might maybe getting ahead of myself, you know, kind of the question of just thinking about what this brand can be now that it has uh the returns the permission the capital to once again start to expand this footprint again yeah again no i don't i don't know that we're ready to say the numbers i think doubles quite aggressive but yes we think we can build you know more chilies and again more to come the great news is the company has plenty of capital available to do it too so you know that's not a constraint um for us to continue to invest in the business and return to the shareholders so we feel really good about our capital allocation strategy over time and our ability to invest back in the new unit growth and grow some profitable chilies.

All right. Well, I'm really looking forward to the event for you guys to highlight all of your opportunities, so look forward to that. Thanks again for the patience.

Thanks, John.

Your next question is from Brian Harbour with Morgan Stanley.

Yeah, thanks, Morgan.

Micah, just so I'm clear on the food cost comments, are you saying sort of, you know, tariffs is helpful, but look, there's some other things that sort of, you know, offset that. so you're not really changing your outlook for commodities yes no my outlook for commodities you know we did have favorability in the tariffs so it is more favorable than it was last quarter but what I'm saying is I'm reiterating that the back half of the year is going to be in that mid single digits that does include some of the investments we've made in things such as ribs and bacon we make some investments in poultry and so we're just I'm just trying to level set everybody on, you know, commodities will look pretty favorable in the front half. In the back half, it will be that mid-single digit. And then to help guide people on what does that mean, I was just trying to say, hey, you've seen our food and beverage cost in quarter two. I think we'll have a similar number in quarter three as we move forward.

So just trying to help people kind of understand, you know, what would that turn into within, you know, 10 to 20 basis points okay got it thanks and um with sort of the chicken sandwich revamp did you did you change any of the timing at all on sort of the soft launches that still is expected are you is it fair to say you're not kind of um giving yourselves credit for that in your your revenue comments or you know you sort of just view it as one of of the drivers that have been ongoing okay go ahead micah i would say the chicken sandwich what's what's in the guidance is we have it in over 200 restaurants now where we're getting all the learnings the real launch

will be late in april and that's when we'll go on tv and that's really critical for the the chicken sandwich because this is about driving traffic with a very appealing product that we have and so that's that's the timing that's built into the guidance that we gave kevin you can give more color on that.

I mean, the thing to understand is in the 200 restaurants, when you don't advertise it, you're just basically going to be moving mix. You might get a little bit of repeat, but if it's only a three or four month period, it's not going to be a ton of repeat that you get. So you're really just trying to test for, you know, what are consumers saying about the sandwich? Can we execute it with excellence given it's going to drive a lot of mix, the way you merchandise it? What is the feedback that we're getting on the sandwich? but you're really not going to see a major change in the business other than some mixed shifts until you launch the TV advertising and start bringing people in with the sandwich. So I wouldn't read too much in the restaurants that we put in other than it's encouraging. When you see something mixed significantly more and the feedback's really good, that's always a good sign that it's going to do even better when you go on TV. Thank you.

Your next question for today is from Brian Vaccaro with Raymond James. Hi.

Good morning. Kevin, just back to chicken sandwich. Could you remind us just the changes that you've made to quality and the flavor profile? Maybe level set us on where your existing chicken sandwich mix is and just kind of how you frame that potential opportunity. And then more broadly, just what's your latest thinking on the timing for other menu upgrades? Are you still thinking about steaks and salads, maybe moving into fiscal 27? Just curious there.

Yeah, so I'll let Micah answer the exact next question while I give you the update on the platform. So the first thing is the base sandwich, and we had fixed the recipe on that about a year ago where we went to a very focused build that you see in kind of the most popular or the biggest innovation in, I would say, in fast food history or modern history, which is the Popeye's chicken sandwich, which is a very basic build, and we wanted to look at that and learn from that. And so that's what we did about a year ago. You basically have, you know, a brioche bun, a semi-cured pickle, mayonnaise, and a very large hand-breaded chicken breast that we think is incredibly abundant in the category. I mean, I don't have the exact data to say it's the biggest, But when you eat it, you might think it's the biggest. And so that was done. And then we're going to start bringing in some flavor updates to it, which I can't go into the details of, but there'll be a variety of sandwiches in different benefit spaces based on some of the signature flavors that we have, as well as a new flavor that we don't have in the restaurants today that mixed really well when Popeye's launched a sandwich. And then we're going to have a good, better, best tiering of those sandwiches. So we'll have a base sandwich at a hot price point. We'll have a sandwich with benefits at a medium price point. And then we'll have a super premium that will have, you know, like bacon and produce and things that you expect in a super premium sandwich at the super premium tier. And then we're also going to bring some additional sides innovation and dip cup innovation to that lineup to make it even more exciting and more distinctly chili. So it really will look like a completely new lineup to the guests, and it's in areas that we know that consumers are excited about chicken sandwiches, but done in a very unique chilies way, not just in the flavor profiles, but the abundance and value that we think that you're going to get.

And so I'll talk about the mix. Right now the mix is very low, Brian, because we aren't merchandising it on the menu. It's not on TV, so it's just one item on the menu in our handheld section. So very low, but there are big plans for how we merchandise it, how it's going to be on TV. So we do know that there is, you know, big room for mix to grow there. And we do think, again, that the chicken sandwich is designed to be a traffic driver.

All right. That's very helpful. I was going to ask one on the balance sheet as well. Micah, you only have $20 million left on the revolver, I think, and you've got the $350 million notes at $8.25. order, just how are you thinking about the refi opportunity on the notes through calendar 26? And is there an opportunity to maybe move those notes onto the revolver second half of calendar 26 and maybe shave off a few hundred bips on the interest rate?

You know, Brian, right now we don't have that in the works, but we are watching it So if the opportunity arises where we can take out, you know, the bonds early and it makes sense on a revolver and save us some money, we'd absolutely do that. Remember, you know, there's just different aspects of when you do it and the fees you have to pay up front, but it is something we're watching. So right now, I would say we don't have that planned, but we're going to continue to watch All right.

Thank you very much.

Your next question is from Eric Gonzalez with KeyBank.

Thanks for taking the question and congrats on the strong results. I'm just curious about the timing of marketing investments this year.

I know there was an uptick in spend in the second quarter, so if you could just confirm that you stayed in that range of nine to ten million incremental advertising and then how does that look as you get into 3Q and 4Q particularly around the chicken sandwich launch yeah no we did stay in that Eric so we had the biggest increase year-over-year in Q2 so that that did happen and we said that was about 2.9 percent of sales I think the percent of sales will stay you know fairly stable as we move forward the year-over-year increase isn't as much three and four but exactly what we said you know did happen in Q2 okay and then just quickly just regards regarding the winter storm I mean how quickly do you expect the bounce back there and we you know what are your expectations in terms of how long the effects could linger yeah no that is the big question so it was quite a challenge to me we had to quantify the impact of the storm while the storm is still happening and unfolding so that is why I was pretty purposeful in saying you know this is what we know as of tuesday um you know and what the impacts are so that is what we have built into that guidance um you know we'll see there historically we have had some bounce back you know when people get a little bit of cabin fever now you know on the flip side a little caution we lost a friday saturday sunday you know we're in a monday tuesday wednesday when it bounces back so um there could be some upside but what i will say is we don't have a ton of upside built in that. We just kind of have all systems go from Wednesday on. So upside or downside on the storm could still be kind of playing out a little bit. But we think we got the bulk of the impact captured with what I communicated earlier in the $20 million decrease in revenue and the $0.15 to EPS.

Fair enough. Thank you so much.

Your next question is from I'm Christine Cho with Goldman Sachs.

Congrats on the quarter, and thanks for taking my question. In the last call, you mentioned that the under-60K income cohort is your fastest-growing group, contrary to kind of the broader industry trends. Have these trends continued to this quarter, and are there any other observations on spending across various consumer cohorts? And additionally, are you concerned at all that the QSR pricing growth continues to track below the casual dining average and how that would impact the overall category value perception?

Yeah, so from an income cohort standpoint, we didn't see much shifting in the quarter. Like, the low income cohort is no longer the fastest growing, so there was a little bit of shift down and a little bit of shift to the higher income cohorts, but it wasn't anything like that was so So, obvious that would be willing, you know, we should proactively highlight to you guys on the call, so just a little bit. We haven't seen any kind of trade down, like mix has been pretty healthy. So, you know, I would say not really made any major shifts or changes versus last quarter. I know that's a little bit bucking the trend from what you see in the industry, but I also think that we do have industry leading value, which is helping insulate us to some extent. You know, as far as the QSR question that you – the second part of your question, you know, I'd say we still have industry-leading value on TV. You know, we still have – when you look at casual dining timing or renaissance, and you look at our – I mentioned on my prepared comments, when you look at the PPA or per-person average versus our casual dining competitive set, direct competitive set, we're $3 under them, we're $4 under the broader casual dining. So we don't really – we feel like we're really positioned to win regardless of what happens with the macro, between the operational improvements that we've made, where we've positioned ourselves, and then our everyday value, which looks pretty darn good. So, you know, I'm not particularly concerned. You know, I think we get asked that every time, you know, a competitor from Chicago decides to put a $5 meal out there, and we just keep chugging along. And I think it's because when you look at the overall value for what you pay for what you get, But it does feel superior to what's out there, and we're going to continue to deliver that.

Next question for today is from Sarah Senator with Bank of America.

Thank you. Just, I guess, maybe a couple of clarifications. One, Micah, you pointed out that you had, you know, positive mix in terms of the check impact, but I think negative in terms of margins. You just talk about that. I mean, you know, it didn't sound like there was a lot of shift in terms of, you know, consumption or guess kind of choice, but, you know, I don't know if that was maybe a little bit more on the value side. And then also, I'm sorry if I missed it, but, you know, you lowered the CapEx guide. I don't think that's because of the lower kind of cost of remodels. It sounds like those are still in test, but just wanted to maybe understand that too.

Okay.

Yeah, great, Sarah.

So, you know, the, first of all, we'll start with the mix. Yes, mix is positive. I'm a little less positive. One reason that margins went down year over year was, if you remember last year, it was really about the lapping of last year when we accelerated our business, took a huge step change in the business. We weren't able to staff our labor as quickly as we needed to, you know, a year ago, October. So we kind of over-earned in quarter two, which I caution people about, as we were lapping that even coming into this year. So I think that's probably what's in play with the margins more than just the overall health of the margins and the health of the business and the flow through. So, again, that's kind of what's built in the run rate. The same with the restaurant expense. As our restaurants got busier, it took us a little bit to ramp up and get those expenses caught up with kind of the new traffic levels. And, you know, we've continued to invest in the business, and now we're lapping some of that. So I feel really good about the flow through and the margin profile overall. So, you know, it's really strong and really healthy. And if I take a step back and just look at the full year, you know, I got it that I think we can improve restaurant-level margins 30 to 40 basis points.

Even with the impacts of this storm, that could put a little pressure on us.

I still feel very confident in that number on growing the margins over time. So I feel like if there's any variability in the quarter-to-quarter, it's, you know, really back to some timing of expenses or investments and a little bit of seasonality. But I feel really good about margins overall. Great question about CapEx. But, you know, really just taking a look at it at the midpoint of the year, you know, we realize it's not necessarily because re-images are less expensive. We're still finalizing the scope of that. We are doing a few less than we originally planned. I think the bigger nugget in is there is we had a placeholder for maybe a potential new equipment rollout that now, you know, after the teams have moved down a little bit further on that, we realize we aren't going to have a new, big equipment rollout. So we went ahead and updated that in our forecast and just tightened it up a little bit. So, you know, plenty of capital out there. We're just tightening up the forecast.

Okay. Thank you. And then just on the margin, I guess I was referring to COG specifically. You had said it was, I think, 20 basis points unfavorable because of menu.

So that is really, you know, what we're saying is there's a lot of investments into the quality of the food that we're lacking. So ribs is very material investment. We talked about, you know, we were serving one-third ribs and two-thirds. We did the big shift from, you know, imported ribs to domestic ribs. So that's just an example of, you know, we put a lot more of quantity and quality into the cost of sales line. And so that's where I'm just saying, hey, you see kind of a new run rate in cost of sales. It's a combination of, you know, we do have some more. We still have commodity inflation in there, but then the investments we're making into that cost line. And so that's kind of what's hitting there. And if you do mix into some more expensive items, you know, which is fine, that puts a little pressure there. You always have higher penny profit, but, you know, if you're selling a more the more expensive one, there's some more cost of sales associated with that too. Great. Thank you so much. Thank you, Sarah.

Your next question is from Jeff Bernstein with Barclays.

Great. Thank you. Kevin, I was intrigued by your prior comments on the restaurant-level leadership model. I think you mentioned that you have a peer that successfully operates with a market partner, more of a market partner ownership model, more akin to maybe a franchise model, which you know well from past days. So I'm wondering if you could just any more color conceptually about the pros and cons versus the more traditional company-operated manager model that most of the industry uses. because it does sound like maybe you're considering a shift. I know others have talked about the potential to benefit retention, engagement, compensation. Just wondering if there's any more color in terms of how you would implement it. It would seem like that would be a material change to your economic model, but presumably more of an ownership structure for long-term further improvements. So any incremental color would be great. Thank you.

Yeah, hey, good morning, Jeff. So I think conceptually all of the stakeholders are aligned that we want to do something here. Like we believe that when we hear from the managers, they want to have more of a stake and ownership in the company, especially when they see how the company's performed. We believe that it would be a good thing for them to have more ownership over the results, both in terms of their personal compensation as well as just how they run the restaurants. So, I don't think anybody's really debating, like, should we do it? It's really the how, and the challenge for us is when you benchmark the model that you were talking about earlier, they tend to pay lower base salaries, and then they put more into the variable comp, and that puts us in a difficult position because we're not going to lower base salaries and put it in the variable comp, that's not going to be received very So, we've really got to figure out what's the how to do this in a way that is going to work for everybody and not just, you know, hope that in the year that we make the change that people aren't upset about it, because they would be, because you're moving, you know, that you can be confident into something that's more variable. So we've got to figure out a way that wins for everybody and not just on one or two items. So that's what we're going to have to work through. At the same time, we've still got a couple of years where we've just got to continue to build skill and capability in the ability to own the restaurant. So that means building the best team, holding people accountable, making sure that you really are owning your restaurant and the facility. These are new muscles that, especially we haven't asked these guys to do in a while, that we've got to build up over time before we change any incentive structure. So, and I wish it was more simple and we could just flip a switch and kind of replicate the models that we see that work. But we're just starting from a different place.

Thank you.

Your next question is from Andrew Strelzik with BMO. hey good morning thanks for taking the questions um i was wondering if you're seeing the mix of traffic growth shift between new customers and increasing frequency and i guess what i'm trying to think through is you know as you brought back all these new customers over the last couple years as you kind of worked through the brand repositioning you know is the opportunity mix between those two buckets evolving and kind of how you potentially evolve the strategy to to address the two buckets as you as you move forward yeah hey andrew it's kevin um you know i we don't see really a change in what how we're doing this um it's pretty simple it's like number

one continue to have a great experience so that you don't leak guests and so that's what we see on the frequency of existing guests that's not changing and then and then use our world-class marketing and great value offer and great new positioning to drive new guests in and so if you're not leaking guests and you're bringing new guests in and then they quickly are starting to look like existing guests in terms of their frequency pattern, that's a recipe for sustainable growth. So, you know, what I lean on my team is don't change that strategy, but you better have ideas every quarter to get better and better on the experience because that's the flywheel. We know the marketing guys can do it. They're doing it right now. They're continuing to just, you know, really reinvent the industry and what can be done with advertising and marketing and hats off to them. So as long as we continue to improve our experience over time, there's no reason why this run won't stop. So I don't anticipate changing the strategy. It's just making sure that we continue to execute it quarter after quarter so we continue that because the key to this whole thing is having a great experience because that's going to both retain existing guests and stop the leak and be able to attract new guests because of the things that people are saying about our brand. And we're just going to continue to do that.

Okay, that's helpful. And one clarification, last quarter you talked about the earnings drag for Maggiano's. Can you share what that looks like through the back half of the year?

Andrew, that's me. So really just what I would say is in the guidance that I gave, we haven't changed the expectations for Maggiano's very much. And so what we're expecting is their same-store sales will probably be in the negative mid-single-digit range for the back half of the year. So probably just, you know, more of the same on that. So if we get some more green tunes out of Magianos, then I think we can start, you know, improving that. But they're still going to have a drag year-over-year in their margins.

Okay. Thank you very much.

Okay.

Thank you. We have reached the end of the question and answer session, and I will now turn the floor back over to Kim Sanders for closing comments.

And that concludes our call for today. We appreciate everyone joining us and look forward to updating you on our third quarter fiscal 2026 results in April.

Have a wonderful day. Thank you. Bye everyone.

Thank you. This concludes today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.