Earnings Call Transcript - EAT Q3 2024

Operator, Operator

Good day, and welcome to Brinker International's third quarter FY'24 Earnings Call. It is now my pleasure to hand it over to your host, Mika Ware, Vice President of Finance and Investor Relations. Please proceed.

Mika Ware, Vice President of Finance and Investor Relations

Thank you, Holly, and good morning, everyone, and thank you for joining us. Here with me today are Kevin Hochman, our Chief Executive Officer and President; and Joe Taylor, our Chief Financial Officer. Results for our third quarter were released earlier this morning and are available on our website at brinker.com. As usual, Kevin and Joe 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 that are not based entirely on historical facts. Any such items should be considered forward-looking statements within the meaning 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 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 and believes will provide insight into the company's ongoing operations. And with that said, I will turn the call over to Kevin.

Kevin Hochman, CEO

Thanks, Mika, and good morning, everyone. Thank you for joining us as we share results from another quarter of strong progress. The last time we spoke in January, the industry was experiencing challenging weather. We were pleased to see our business immediately bounce back and perform well in February and March. Chili's has been outperforming industry sales by more than 7% and traffic by nearly 4% for the entire quarter. These strong results are driven by the strategy we've been working on for almost 2 years now to improve the guest and team member experience while launching profitable and sustainable traffic-driving initiatives. It is very encouraging from the Q3 results that in February, when we weren't on TV, we continued to outperform the industry, and again in March when we effectively increased media from last year. Our traffic-driving initiatives combined with real operational improvements are creating tailwinds for the business. I am proud of our operators for their focus on the guest experience and the progress they are making. Our main KPI dine-in guest with a problem has dropped to 3.3% this quarter, which is our lowest on record since we began tracking this metric. I want to recognize our 12 operations regional Vice Presidents who have been leading this work from the front. They delivered another quarter of industry-leading manager turnover as well as significant progress on hourly turnover. We know we still have work to do to ensure we deliver consistently great food and hospitality to every guest, as well as to continue to make our team members' jobs easier, more fun, and more rewarding. Those areas will remain a focus for us during the fourth quarter and into next fiscal year. We are encouraged by the progress but are also motivated by the opportunity ahead to raise our standards on the team member and guest experiences to reach the top tier of casual dining restaurant performance. Next, I'd like to talk about progress on our menu and marketing. Let's start with the burger segment, which has both new product news as well as important simplification initiatives hitting the restaurants now. Just yesterday, we launched a new burger, the Big Smasher. It's nearly a 0.5-pound burger with Thousand Island dressing, lettuce, cheese, pickles, and red onions on our delicious brioche bun. This new burger is on our regular menu, but for a limited time, it will be available for $10.99 on 3 For Me as we bring fresh news to our Everyday Value platform. To drive awareness and incremental traffic, we have a fresh way to talk about Chili's unbeatable value. Our social media team has been monitoring consumer conversations about frustration with fast food prices. Through hard-hitting and entertaining ads, we tap into that insight and use fast food as a foil to demonstrate Chili's superior value, and those ads literally started yesterday. I'm also excited about two simplification initiatives bundled with the Big Smasher launch. The first is eliminating our secret sauce burger off our value menu, which helps us manage 3 For Me mix and remove a soft SKU from the pantry. The second simplification is the removal of the double lunch burger, which eliminated the skinny burger patty SKU. We replaced this with a lunch burger that features our existing 7.5-ounce patty SKU. This move gives the guests more meat, slightly lowers our food cost, and simplifies operations. Operators now focus on perfecting burger execution with one product, ensuring consistent quality for every guest. Another initiative that continues to show strength is our advertising's ability to drive traffic. I want to recognize George Felix, our Chili's Chief Marketing Officer, for being named on the 2024 Nation's Restaurant News Power List. The award recognizes George's consumer-centric leadership of our advertising and innovation, as well as the work he and his team are leading to increase the relevance of Chili's. In addition to our national advertising efforts, the team is finding ways for Chili's to show up in unexpected ways and reach new audiences. Our recent NASCAR sponsorship is a great example. NASCAR fans are Chili's fans, and sponsoring popular driver Corey LaJoie's car during the Daytona 500, with all our general managers' names running with Corey on the car's hood, was a big win for our team and Corey's NASCAR fan base. As the marketing team drives traffic into our restaurants, our operations team continues to raise the bar in bringing guests back. This week, as part of our fiscal '25 planning season, we're meeting with our Vice President of Operations to finalize our strategic priorities and choose the fiscal '25 obsession goal. Based on what I've seen over the past 2 years, I have complete confidence that this powerful team will drive meaningful progress in whatever they focus on. To close, it's been a great year so far. The ongoing momentum in our business encourages us that our strategy is working and the investments we're making are strengthening our core business, setting us up for long-term sustainable growth. Before I hand the call over, I want to thank Joe Taylor, as this will be his last earnings call as Brinker's Chief Financial Officer. We have something here called above-the-line recognition. We honor individuals who go above and beyond to drive our strategy and priorities. So just bear with me for 30 seconds, but Joe has been with us for over 20 years. He deserves this. Cheers to you, Joe Taylor, for making every guest count and being accountable. Joe, thank you for your nearly 25 years of leadership and service to this company, for your guidance and patience as I learned this business, and for grooming such a strong leader in Mika, as she takes over in June. Today, we have a stronger financial position with an incredibly talented finance organization, and thanks to your leadership, Brinker's best days are ahead of us. Cheers to you, Joe Taylor, for leaving a legacy of impact on our business. Thank you, and we all stand and clap for Joe. So, I know many of you on the call have worked with Joe for many years, and I thought it was important to acknowledge that in front of all of you. Thank you for giving me the 30 seconds. And with that, I'm going to turn it over to Joe.

Joseph Taylor, CFO

Well, thank you, Kevin, and I appreciate the comments. It's great to have the last call be such a positive one. Good morning to everyone. The results reported in this morning's press release reflect the continued positive progression of our brand's performance and further solidify our belief in the long-term sustainability of our strategy. This quarter included solid year-over-year top-line growth, comp sales well above industry averages, and nicely improved restaurant operating margin. In terms of specific results for the third quarter of fiscal 2024, Brinker reported total revenues of $1.120 billion with consolidated comp sales of positive 3.3%. Our adjusted diluted EPS for the quarter was $1.24. Both brands reported top-line sales growth, with Chili's comps at positive 3.5% for the quarter, with price partially offset by negative mix in traffic. Notably, Chili's delivered positive dine-in traffic for the quarter. Our continued move to deemphasize virtual brands and redirect resources to support our core operations negatively impacted Chili's traffic by approximately 2.5% for the quarter. Additionally, weather had an estimated 1.1% negative impact. Maggiano's reported 1.7% comp sales, driven by positive price and mix, partially offset by negative traffic. Dominique and his team are making great progress in developing the guest experience and menu offerings focused on improving traffic and mix, particularly in the dining room. We look forward to sharing more details in future calls. Now turning to margins, the third quarter saw another meaningful expansion of restaurant operating margin, primarily driven by top-line growth and an improved year-over-year food and beverage cost environment. Restaurant operating margin for the quarter was 14.2%, an 80-basis-point improvement year-over-year. Our food and beverage expense was favorable 170 basis points compared to last year's third quarter, driven by higher price and menu mix. Labor expense as a percent of company sales was favorable 20 basis points compared to the prior year. Top-line growth offset wage rate inflation of approximately 3.7%. We continue to invest in the business during the quarter, reflected by an increase in restaurant expense of 120 basis points versus the prior year. An increase in advertising and greater levels of repair and maintenance spending were the two largest additions to this component of ROM. Improved operating performance positively impacted cash flow this quarter. Third quarter EBITDA was $122 million, bringing our year-to-date level up 31% to $302 million. Improved cash flow generation gives us flexibility to reinvest in our brands while also reducing leverage to strengthen our balance sheet and manage borrowing costs. For the quarter, we recorded approximately $50 million of capital expenditures, focusing on capital improvements to existing restaurants, updating IT systems, reimages at both brands, and new restaurant development. We opened two new restaurants during the quarter, both of which are off to great starts, averaging more than $100,000 in weekly sales, above Chili's brand average. These, along with our new openings earlier in the fiscal year, continue to demonstrate good guest appetite for Chili's in their specific markets. We further repaid $85 million of revolving credit outstanding during the quarter. Our funded debt-to-EBITDA ratio improved to 1.95x at quarter-end. In this morning's press release, we updated specific pieces of our previously provided annual guidance. Brinker's annual total revenues for the current fiscal year are now expected to be in the range of $4.330 billion to $4.350 billion. Capital expenditures are currently on pace to be between $185 million to $195 million for the fiscal year. Our estimate for annual adjusted earnings per share has increased to a range of $3.80 to $4. In closing, our third quarter was successful, not just from a financial perspective, but it also demonstrated our ability to leverage improved restaurant operations, broad-based marketing, and excellent value across various price points to consistently outperform the casual dining sector. I would note the first period of our fourth quarter, which ends tomorrow, is shaping up as a very strong continuation of these themes. We are carrying excellent momentum into the last quarter of our fiscal year and intend to leverage this operating performance and the plans being developed for fiscal year '25. I genuinely believe there are exciting times ahead for our team members and guests that will translate to excellent results for our brand. With our comments now complete, I will turn the call back to Holly to moderate questions that you might have. Holly, take it away.

Operator, Operator

Your first question for today is from Chris O'Cull with Stifel.

Christopher O'Cull, Analyst

Joe, congratulations and best wishes on the next chapter.

Joseph Taylor, CFO

Thank you. Thank you.

Christopher O'Cull, Analyst

Kevin, I know Chili's has seen its unaided brand awareness levels improve. But do you have the data at this point to know what consumer groups are starting to recall the brand more often?

Kevin Hochman, CEO

Yes. We don't have that level of data. Currently, we do know that we're growing in all income demographics right now. When you look across all income profiles, they are all spending more at Chili's, so we feel good about that. From an advertising standpoint, we continue to see good progress on unaided awareness. The bigger thing this quarter that we were excited about is we had our highest level of what's called buzz that we've seen basically since we started tracking this. That's when we ask guests just through a third-party to name a brand they’ve heard good things about in dining; they're saying Chili's more often than ever. That is very encouraging that people are thinking of us positively. A big part of it is what's happening with the dialogue on value that I think you're hearing from some of our competitors. We're showing up really strong at a superior value, complete meal, delivering a better experience than we ever have. I think that's why you're seeing all income demographics grow because everyone wants great value and great service. That's what I can tell you right now. I think we're going to learn more as we continue to tokenize our data, and we're going to get better data to understand specifics, but that is what I can share right now.

Christopher O'Cull, Analyst

Okay. And then the new ad campaign clearly draws a direct comparison of the 3 For Me to the fast food offerings. And based on this morning's conference call, it sounds like McDonald's may be more aggressive with national value platforms or promotions in the coming months. Do you think the 3 For Me is going to be sufficient as a value message to drive traffic? Or will you be able to utilize other means like maybe digital to be more targeted with consumers, with deals? Or do you think that's something that you may need to look at?

Kevin Hochman, CEO

Well, I think the answer is yes. We have to start with ensuring that TV will still be the #1 driver of immediate awareness. I think most marketers know that. We need to continue to stay on TV and keep that message fresh. We launched yesterday with much harder-hitting value messaging. We are using fast food as a foil because everyone is familiar with the fast food experience and pricing. Casual dining is actually a different occasion than fast food. People are trying to have an hour out of their day where they’re having a better experience and they're getting waited on. It's a different occasion. But when you can deliver all that service level at a more attractive price point with superior value and better food, that gets exciting for the guests. That is the intent behind that campaign, and we believe it's going to keep our value fresh. Additionally, we’re going to keep bringing value news into that lineup. The big smasher burger I mentioned earlier is an almost half-pound meat burger, fully dressed, which comes with unlimited chips and salsa, unlimited drink, and fries for $10.99; it's basically unbeatable in fast food and casual dining. We expect to continue driving that with some new news. We have a new chicken sandwich that we reengineered to make it easier to prepare and juicier for the guest, and we plan to promote that in late summer as a way to continue bringing news to 3 For Me. To your point about customized offers, that's what we're trying to do with our CRM program. We finished an 18-month tokenization effort, which we discussed last quarter, and we're building out our database with new tokens. This data helps us build profiles of new and returning guests, allowing us to deliver customized offers. As of now, about 2/3 of our restaurants have the Ziosk platform, and we expect to complete that rollout in the next 2 months. Deeper profiles and more guests provide us the basis to offer tailored communications and promotions, which I believe is a valuable tool compared to paid advertising. You're going to see more of that in the upcoming quarters.

Operator, Operator

Your next question for today is from Jeff Farmer with Gordon Haskett.

Jeffrey Farmer, Analyst

Definitely a big congratulations to Joe. You will be missed. As it relates to the question, your bottom line outperformance continues to outpace your top-line outperformance. I'm just curious if you could point to maybe a couple of drivers that are responsible for that greater-than-expected profit flow-through you've seen over the last couple of quarters?

Joseph Taylor, CFO

Yes. A couple of things, Jeff. First, I think the top line is one of the first drivers I would point to. It creates nice leverage as top-line growth works through the P&L, both within the restaurant operating margin and as you move further down. Top line growth contributes to the flow-through. Throughout the P&L, we've improved our operations, returning to the effective operators we were pre-COVID. Labor, despite investing hours into the process, is getting more efficient. With turnover levels coming down, the muscle memory that we are building helps us run more effectively. In this last quarter, you saw leveraging on our hourly side of the equation continue as our restaurants maintain higher volumes using the same amounts of labor. Although we encounter limiting points as we gradually move up the volume scales, different points add some labor into the equation. We have capacity against the existing labor model that is starting to show. Additionally, inflation levels have begun normalizing to more traditional levels. For example, our hourly wage inflation last quarter was approximately 3.7%, down from the 5-6% we had been experiencing in the previous years, moving closer to the more typical 3-4% range. Those are a couple of the key factors I would highlight for you.

Jeffrey Farmer, Analyst

All helpful. And then one follow-up to that. Is there anything you can share regarding the Big Smasher burger's performance in testing? Additionally, what upgrades might we see on the burger platform in the coming months?

Kevin Hochman, CEO

Yes. We did not formally test the Big Smasher in a market context. We tested it operationally to ensure we knew how to prepare it efficiently. Therefore, we don’t have any formal data to share. What I can tell you is we're encouraged by the buzz around the PR that you're probably observing in social media. The value discussion has intensified. For instance, during our launch yesterday morning, we were the number #1 trending topic on Twitter, the Chili's 3 For Me Smasher burger. This is exciting as we know we're on a topic at the forefront of guest interest, offering a strong value proposition with additional news at a notable price point. We're optimistic for the Big Smasher's impact, and it's crucial we continue introducing news to our value platform along with managing our mix efficiently. I'm proud to say that amidst economic challenges and consumer behavior, our 3 For Me mix has only increased by 0.5 points. That's been modest, allowing us to achieve remarkable gains on margins and bottom line performance.

Operator, Operator

Your next question is from David Palmer with Evercore ISI.

David Palmer, Analyst

It's John calling in for David. We're just curious on labor expense in the quarter. Despite the investments in the company, you leveraged labor in the quarter with units per dollar up only 2.5% year-over-year. How should we think about labor costs going forward?

Mika Ware, Vice President of Finance and Investor Relations

John, it's Mika. One major reason we were able to leverage our labor cost is we have now lapped that initial investment where we had all those incremental hours in. That has built into the base. It's really about the wage rate pressure that's beginning to ease slightly. As Joe mentioned, turnover continues to improve, and our team members are becoming much more productive. These dynamics, including the PPA, are helping us leverage our labor costs. We expect to achieve similar improvements year-over-year in the fourth quarter.

Operator, Operator

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

Brian Vaccaro, Analyst

Joe, congrats on your career. It's been a real pleasure working with you over the years. I just wanted to follow up on an earlier question to start sort of a quick follow-up. Given how important muscle memory and the right teams are, could you provide the current turnover rates for hourly and store managers?

Mika Ware, Vice President of Finance and Investor Relations

Yes. Our manager turnover over the last three months is right around 5%. The hourly turnover number is only 2% above the industry average at this point, with a rolling 3-month average of about 25-26%.

Brian Vaccaro, Analyst

Great. My other question is regarding Chili's comp outperformance, which has continued despite the broader industry backdrop. Could you provide more context on how Chili's gap to the industry has trended throughout the quarter, specifically in March when you began to lap the initial return to TV advertising last year? You've also mentioned seeing longer tails when you're off air – how do you attribute that to your sustained market share gains through calendar '24?

Kevin Hochman, CEO

So Brian, the sales gap by month was we recorded 6.8% in January, with that performance not linked to rolling advertising. In February, we had no advertising in the year, and our gap was 8.5% versus the industry. Then in March, we reported a gap at 6.6% compared to the industry.

Brian Vaccaro, Analyst

Okay, that's very helpful. And on those tails, Kevin, could you refresh our understanding of what's driving the longer tails, if you will, perhaps the snowball effect? I'm imagining improvements in the guest experience you've made, reduced issues like guests with problems and so on. Could you provide some elaboration?

Kevin Hochman, CEO

Yes. We're seeing better promotional lifts with advertising, and the longer tails indicate that when we turn off advertising, Chili's continues to outperform the industry. We believe it's due to ongoing simplifications in the restaurants. Managers frequently share ideas, and we’ve implemented them quarter after quarter. Recently, we've focused on the burger and chicken sandwich launches. For example, we stopped pounding the chicken for our sandwiches, which was a tedious task. We discovered that unpounded chicken is juicier and tastier. Additionally, we revamped the sandwich build process, which now takes place closer to the fry zone, easing pressure and allowing greater throughput. Another example involved our lunch burger, where we eliminated a duplicate patty SKU to streamline operations and reduce waste. These little changes contribute to improved restaurant operations and guest experiences. I anticipate that momentum will continue as we focus on simplifying processes for both our managers and team members while reducing friction for our guests.

Brian Vaccaro, Analyst

That's very helpful. Lastly, I want to inquire about pricing and value in the current environment. Could you clarify what percentage of sales were associated with value during the period? And for 3 For Me, how does the mix look between the $10.99 value versus the higher tiers? Additionally, there’s a new menu expected this quarter; what are your latest thoughts on pricing?

Kevin Hochman, CEO

In terms of our 3 For Me tier, it's about 16.1%, up from 15.5%. This represents that metric every 100 orders. Of those orders, 47% are at the $10.99 price point, while over half — or 53% — are at $14.99 and $16.99 price points. So even though we emphasize the $10.99 offering, more than half of the actual transactions from the value menu come from the higher prices. Regarding checked promotions, it was about 31% in Q2, and it remains as such in Q3, indicating stability in consumer behavior. As for pricing, we introduced a menu yesterday that included a pricing action of approximately 3%. Our strategy is to protect critical price points like the $10.99 offering, as it’s highly effective in our advertising campaigns and appealing to value-seeking guests. We'll also identify opportunities throughout the menu for some price increases where guests might be willing to pay a little more. We've indicated we will moderate pricing in the future, and this action demonstrates that moderation at around 3%. You'll learn more in the next call regarding what fiscal '25 might look like, but for now, we see a good set of pricing actions we can take as we progress.

Joseph Taylor, CFO

Regarding pricing, our recent changes have resulted in the fiscal fourth quarter reflecting levels in the high 7s, and we took incremental pricing in California when we saw the opportunity, which slightly boosted those figures.

Operator, Operator

Your next question is from Andrew Strelzik with BMO.

Andrew Strelzik, Analyst

I wanted to revisit the margin conversation. Now that you've lapped some of the labor investments and advertising investments, is there a way to consider a durable or sustainable level of restaurant margin expansion going forward? I know you’ve mentioned before a mid-teens 15% restaurant margin as achievable. Are your views or insight on that changing?

Joseph Taylor, CFO

Yes. Regarding that, first, it's visible that 15% is attainable. Generally speaking, you should notice higher ROM levels in the third and fourth quarters. We achieved 14.2%, surpassing the 14% benchmark in Q3, and we are aiming for continued upward trends in the fourth quarter. Overall, we expect to steadily leverage top-line growth, fostering an increase of around 20-40 basis points in the annual margins over time. The pace will vary by quarter based on seasonality and volume, but we anticipate an upward trajectory year-over-year.

Andrew Strelzik, Analyst

Great. Can you share your expectations regarding the virtual brand impact you're anticipating in the fourth quarter from a traffic perspective? Additionally, could you touch on what you’re seeing with off-premise operations and the split of the business?

Mika Ware, Vice President of Finance and Investor Relations

The virtual brand headwind will remain similar in the fourth quarter, around 2-2.5%. As for the off-premise business, it accounts for about 26-27% for Chili's, with half of that being attributed to third-party delivery.

Operator, Operator

Your next question for today is from Jon Tower with Citi.

Karen Holthouse, Analyst

It's actually Karen, on for John today. Just two questions for me. I'm not asking for fiscal '25 guidance. I know we're going to have to wait for that. But is there anything you would call out in terms of unique items in 2024 that we should consider for fitting into that longer-term algorithm?

Joseph Taylor, CFO

Karen, there's really nothing unique that I see as systemic needing any major changes.

Karen Holthouse, Analyst

It's been a little while since we discussed future product simplifications and improvements. Are you focused on anything before 2025 now that the burger is in the rearview?

Kevin Hochman, CEO

Yes. You're thinking about that correctly. We just launched the Big Smasher burger. Whenever we introduce a new item, we also focus on operational improvements and simplifications. Currently, we've rolled out burger fundamentals like the smash, sear, and cook time. The Big Smasher utilizes our base 7.5-ounce burger that we use on all entrée burgers, ensuring we grill it at the right temperature with proper bun toasting and buttering. About a year ago, we also initiated a new fry procedure to guarantee our fries are hot, fresh, crispy, and properly seasoned. We've relaunched these standards to ensure we're preparing all burgers correctly alongside the Big Smasher. After burgers, we plan to focus on the fajitas segment. We expect significant upgrades there to launch in late Q2 of '25. This project is substantial, representing over a $200 million business for us. We envision substantial upside potential for enhancing product quality as well as increased pricing power and mix-driving capability.

Operator, Operator

Next question is from Katherine Griffin with Bank of America.

Katherine Griffin, Analyst

First, I wanted to inquire about the mix dynamics at Chili's this quarter. It seems that with mix slightly improving sequentially, your menu merchandising was successful in addressing the negative mix. However, you mentioned that you might see some softening in mix, given the current consumer environment. Could you help clarify how much of the mix in Q3 was influenced by your efforts on menu merchandising versus factors outside of your control?

Joseph Taylor, CFO

Katherine, we're pleased with the direction and improvements seen in mix following the recent menu drop. The menu change was made at the end of January, positively affecting the quarter. While we noticed improvements in mix subsequent to the update, the quarterly numbers don’t fully reflect that because we had January under the old menu. Moving forward, we anticipate a more neutral mix environment as we continue layering new opportunities. A new offering, the Espresso Martini, was launched just a couple of weeks ago, enhancing our mix for weekends. We'll continue exploring ways to optimize merchandising in restaurants and on menus.

Katherine Griffin, Analyst

Great. Lastly, I wanted to know how commodity inflation played out this quarter versus your expectations, and what are your forecasts for the next upcoming quarter?

Mika Ware, Vice President of Finance and Investor Relations

Katherine, our commodity inflation was slightly better than expected. We were essentially flat in Q3. Looking into Q4, we expect it to trend up a little, probably around the 2% range.

Operator, Operator

There appear to be no further questions in the queue. I would like to turn the floor over to Joe Taylor for closing remarks.

Joseph Taylor, CFO

Thanks, Holly. This is my last time to address the group. As Kevin mentioned earlier, this is my final earnings call before passing the CFO baton at the end of our fiscal year in late June. I'd like to share a couple of closing remarks to wrap up. I'm thrilled to pass the baton to Mika, a key leader for the company who brings depth of knowledge and passion to her new position. She's very well-prepared and will be outstanding in the role. To all of our coverage analysts on the call, it's been a pleasure working with you over the past decade, and I will continue to value the relationships forged during that time. Thank you for investing your time to understand our operations, for your insights—whether positive or challenging—and bringing professionalism to the relationship. If you find yourself in Dallas, don’t hesitate to reach out—I’m sure there are stories to retell, meals to share, and possibly some rounds of golf to play. I hope our paths cross in the future. Lastly, I’m grateful for my teammates at Brinker; they’ve made this place special for me and my family over the last two decades. I extend my appreciation to the team members who work tirelessly to lead our restaurants each day. VPOs, DOs, GMs, and all our Chili's and Maggiano's team members, you’ve made a significant impact on guests. It’s been an honor to share your accomplishments in calls like this over the years. Thank you for all you do every day. 25 years brings a wealth of experiences, lasting relationships, and memories that will accompany me in my future endeavors. It has been a privilege and blessing to be part of the history of such a great company. I eagerly anticipate watching and sharing in the many successes that lie ahead for all members of the Brinker team. With that, we are adjourned, and I wish you all a great day. Thank you.

Mika Ware, Vice President of Finance and Investor Relations

Goodbye, everyone. Thank you so much.

Operator, Operator

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.