Q2 2020 Earnings Call
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I would now like to turn the call over to Mr., Kevin Kalakaua.
You may begin.
Thank you Carol good morning, everyone and thank you for participating on today's call.
Joining me on the call today are gene lead Darden, CEO and rig Cardenas CFO as a reminder comments made during this call will include forward looking statements as defined private Securities Litigation Reform Act of 1995.
These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. Those risks are described in the company's press release, which was distributed this morning, and its filings with Securities and Exchange Commission.
We are simultaneously broadcasting and presentation. During this call, which is posted in the Investor Relations section of our web site at Darden Dotcom today's discussion and presentation includes certain non-GAAP measurements and reconciliations of these measurements are included in the presentation.
We print the plan to release fiscal 2023rd quarter earnings on March 19th before the market opens followed by a conference call.
This morning gene will share some brief remarks about the quarterly performance in business highlights.
And then work will provide more detail on our financial results from the second quarter.
As a reminder, all references to the industry benchmark during today's call referred to estimated navtrak, excluding darden, specifically olive garden in Longhorn Steakhouse.
During our fiscal second quarter industry total sales growth was 1.2%.
Industries same restaurant sales increased 0.3% and industry same restaurant guest counts decreased 2.3%.
Now I'll turn the call over the gene. Thank you, Kevin and good morning, everyone.
As you see from a press release. This morning, we had a good quarter total sales from continuing operations were 2.6 billion an increase of 4.2% same restaurant sales increased 2% and adjusted diluted net earnings per share $1.12.
Looking at the industry overall, we continue to see that consumers are willing to visit brands with compelling value and strong in restaurant execution.
That's why we remain relentlessly focused on executing or back to basics operating philosophy anchored in food service and atmosphere and supported with integrated marketing that resonates with our guess.
We also continue to strengthen and leverage our poor competitive advantages one of those advantages is our results oriented culture admits record low unemployment I am proud to see our retention rates continue to improve we have a compelling employment proposition and our ability to retain and staff our restaurant with.
The right people is an important driver of our success.
Turning to brand highlights for the quarter Olive garden delivered its 21st consecutive quarter same restaurant sales growth.
Total sales grew 2.6% driven by same restaurant sales growth of 1.5% and 1.1% growth from new restaurants.
Olive garden outperformed the industry benchmark and same restaurant sales and traffic by 120 basis points and 110 basis points respectively.
As a reminder, olive garden had a difficult promotional raptor start the quarter with Zanja me a comping over by one take one for the first four weeks.
Additionally, we made some changes to our promotional messaging and we reduced marketing spending as a result, we had to make up some ground from negative same restaurant sales at the beginning of the quarter.
Sales trends improved as we move into never any possible with more comparable marketing spend.
The olive garden team continues to focus on operational execution convenience and everyday value.
Delivering exceptional guest experiences remain a key priority for the restaurant teams.
Oh Garden also continue to meet their guests need for convenience as off premise sales grew 17% during the quarter driven by strong preference for $5 take home offer.
For the quarter off premise sales represented 17% of total sales.
Digital sales grew approximately 33% and represented 38% of total to go sales.
Finally, as we noted last quarter Olive garden introduce a new weekday lunch menu with 21 options under $10 to strengthen everyday value.
This platform continues to perform well and as seating seeing meaningful improvements in lunch sales trends.
Overall, I'm pleased with olive garden's performance they have the right strategy in place and I'm confident that they will continue to make the appropriate investments and execute at a high level, which will enable them to continue to grow market share.
Longhorn Steakhouse had an outstanding quarter total sales grew 8.4% driven by 1.7% growth from new restaurants same restaurant sales growth of 6.7% brands 27th consecutive quarter same restaurant sales growth.
Longhorn outperformed the industry benchmark in same restaurant sales and traffic by 640 basis points and 550 basis points respectively.
Longhorns performance as a result of adhering to their long term strategy of investing in the quality of the guest experience simplifying operations to drive execution and leveraging their unique culture to increase team member engagement.
Over the last four years. The team has made significant investments in this strategy and those investments continue to pay off.
During the quarter they introduced several enhancements to existing core menu items to further strengthen the quality of the food and beverage.
And in order to tell their quality story more effectively.
Longhorn team evolve their award winning you can't fix take advertising campaign to better communicate their expertise and showcased or high quality Stakes.
The overall longhorn experience is a key differentiator and their distinctive relevant advertising continues to resonate with guest.
Long haul with design is a very simple business and the operations team has done an excellent job of finding opportunities to simplify to drive execution.
During the quarter they implemented a number of ideas that were the result of direct feedback from restaurant teams.
Additionally, a renewed focus on execution standards led to improved throughput during the busiest weekend hours this quarter.
And finally longhorn continues to leverage the biggest competitor advantage their unique culture.
Manager retention reached another all time high during the quarter and Ali hourly retention rates remained at industry leading levels.
This high level of engagement is further evidenced by the fact that Longhorns guest satisfaction rating for the quarter reached record levels across all key metrics.
I'm extremely proud of the discipline the longhorn leadership team brings to the business and I'm confident that adhering to their long term strategy will continue to drive their momentum.
Hi, just scratched kitchen pull sales increased 4.2% driven by sales growth, new restaurants, a 5.4% and partially offset by same restaurant sales decline of 1.2%.
We continue to see improvement Cheddars, HR and operations metrics, which we know are foundational elements of running great restaurants.
Encouraged by these trends knowing that the restaurants that have made these improvements are operating successfully.
Overall staffing levels for manager and team members remained strong during the quarter and retention levels continue to move into right direction.
Ali turnover improved by nearly 20 points compared to last year and management turnover showed meaningful improvement as well.
From an operations perspective charters is a high volume business that requires efficient throughput one of the key operations metrics. The team focused on during the quarter was speed of service and they saw significant improvement versus last year.
In fact, they saw strong improvement in the guest experience across all key metrics compared to last year.
In addition to strengthening HR and offering operating fundamentals. The team also work to improve the appeal of the amazing value charters office in October they began providing every guest within most craveable and higher highest rated menu item the honey butter croissants.
This is an element of guest service that we identified as an opportunity when we acquired the brand.
Providing every guest with a warm honey Burke with font reinforces the while valued shutters provides.
After making the necessary operational adjustments to facilitate this new step of service.
And given the overall improvements in the up the operations teams have made this was the right Tom to roll it out.
And the response from the guest and team members has been very positive.
As I shared on on the last call. This quarter. The charters team increased their working media spend and conducted numerous test in the orange using a variety of marketing channels to drive to drive awareness and trial.
They are in the early stages of this learning and still have a lot of work to do.
They will continue invest the time effort and resources in order to determine the most effective way to market the brand in the future.
Well I am encouraged by the results were seeing the work at shutters is far from over.
Teams working on the right priorities and I'm confident they're moving in the right direction.
And finally, the holidays the busiest time the year for our restaurant teams as they delight, our guest and help create lasting holiday memories.
This time of year is also a great remind you that being of service at the heart of our business.
We embrace a higher purpose of enhancing People's lives, which is why we serve with purpose to delight our guest support our team members and make a better tomorrow.
One of the ways, we're working to make a better tomorrow is through our harvest program.
One of these households in our country live without consistent access to food.
To help flight hunger every one of our restaurants donate surplus food to local food banks and nonprofits in their communities on a weekly basis.
More than 150 million pounds of food has been donated through this program.
Thats the equivalent of nearly 96 million meals.
The impact of all of our harvest program takes on at this added significant during the holidays and I'm. So proud of the passion our team members have four.
On behalf of the management team and the board of directors I want to thank our 185000 team members for everything you do to serve our guest and communities, which all of you a wonderful holiday season, now I'll turn it over to Rick.
Thank you Jane and good morning, everyone.
We had another good quarter with second quarter total sales growth of 4.2% driven by 2.2% growth from the addition of 37 net new restaurants.
And same restaurant sales growth of 2%.
As I mentioned in last quarter's call same restaurant sales benefited by about 80 basis points this quarter driven by two factors.
First an increase of approximately 100 basis points due to Thanksgiving moving from the second quarter in fiscal 2019 into the third quarter in fiscal 2020.
As a reminder, the third quarter should see a corresponding decrease to same restaurant sales because of this shift.
And second approximately 20 basis points of headwind due to the impact of Hurricane Dorian early in the second quarter.
Second quarter adjusted diluted net earnings per share from continuing operations were $1.12 an increase of 21.7% from last year's diluted net earnings per share.
We paid $108 million in dividends and repurchased $136 million in shares returning over $240 million to our shareholders. This quarter.
Additionally, this quarter, we had 91 cents of adjustments to our reported diluted net earnings per share.
This was primarily the result of a $147 million pre tax charge related to the termination of our primary non contributory defined benefit pension plan.
Most of which was noncash.
The termination of this plan and the anticipated expense was previously communicated in our fiscal 2019 Form 10-K .
Now turning to our detailed margin results.
Food and beverage costs were 20 basis points favorable to last year as pricing of just over 2% and continued cost savings initiatives offset commodity inflation of approximately 1.7% and continued investments.
Second quarter restaurant labor was unfavorable 10 basis points to last year.
Total labor inflation, and 4% was offset by pricing check mix and productivity improvement in new and existing restaurants.
We continue to manage labor well in this environment given the heightened inflationary pressures we still face.
Marketing expense was 30 basis points unfavorable to last year approximately 40% of this was related to longhorn marketing timing shift from the first to the second quarter and the remainder was driven by increased media spending in our other segment primarily cheddars.
As a result restaurant level EBITDA margin of six point, 16.5% with 20 basis points lower than last year.
General and administrative expense was 40 basis points better than last year, as we wrapped on higher incentive expense and sales leverage.
Our second quarter effective tax rate of 5.9% was favorably impacted by the resolution of prior years tax projects that were contemplated in our earlier guidance.
Excluding these projects our effective tax rate would have been closer to 11% for the quarter.
All of this culminated in adjusted earnings after tax margin of 6.7% 90 basis points higher than last year.
Turning to our segment performance.
All of Garden grew sales and profit in the quarter driven by positive same restaurant sales and net new restaurant growth.
Segment profit margin increased by 20 basis points by leveraging the same restaurant sales growth and managing cost effectively.
Longhorn also grew sales and segment profit in the quarter driven by positive same restaurant sales and net new restaurant growth.
However segment profit margin decreased 20 basis points, primarily due to the marketing timing shift I mentioned earlier, which increased marketing as a percent of sales in the quarter for longhorn.
In addition, longhorn continue to have slightly elevated beef inflation, while making continued investments during the quarter.
Fine dining segment grew sales and profit in the quarter as well driven by positive same restaurant sales and net new restaurant growth.
Segment profit margin decrease versus last year 10 basis points due to higher preopening expense and inefficiencies related to our four new restaurants opened year to date.
Sales for our other business segment grew 3.5% driven by net new restaurants. Both segment profit dollars end margin decreased this quarter due to incremental marketing expense, primarily a cheddars and margin deleverage from negative same restaurant sales growth.
As you saw in the press release. This morning, we reiterated all aspects of our fiscal 2020 outlook.
As we look forward to the second half of fiscal 2020, we feel confident in our ability to achieve same restaurant sales between 1% to 2% for the year, resulting in adjusted diluted net earnings per share of between 6030 cents and $6.45.
Finally, beginning in the first quarter of fiscal 2021, we will modify the reporting of same restaurant sales to align with our four reportable business segments.
Olive garden, Longhorn Steakhouse fine dining and other business.
This change will better align the current reporting of segment profit with reportable segment sales growth metrics.
Before I close I'd like to wish all of our 185000 team members and each of you a safe and happy holiday season.
And with that will take your questions.
As a reminder, in order to ask your question. Please press star followed by the number one on your telephone keypad.
We ask that you limit yourself to one question and one follow up and re queue for any additional questions.
Our first question comes from Brian Bittner from Oppenheimer. Please go ahead.
Thank you good morning, guys.
My question is just on olive garden, the slowdown in comps in the quarter it seems like.
You are saying this is mostly related to tough promotion tough marketing compares since early on in the quarter.
Have you seen performance in the business improve.
To have the confidence to say that these issues R&D transitory at olive garden, and maybe even that they're behind you.
Well I think we are pretty clear on on.
How sales Neil performed throughout the quarter on we definitely had a tough Rob and I think that we signaled that at the end the first quarter debt Lasagna EMEA wasn't performing as well as we had hoped we pulled the promotional advertising for that that promotion and we focus.
On the introduction of $5 take homes.
I did say as I stated does we introduced Neverending pasta Bowl.
And had comparable marketing trends trends improved.
Throughout the quarter and I would say is how we feel about the businesses is really in how we we think about our guidance for the year Weve.
Come back out and reconfirmed our guidance and we feel as though that that business continues to perform well continue to take market share.
In the industry and we're we're comfortable with where we're at.
Thank you Jim.
Our next question comes from Sara Senatore from Bernstein. Please go ahead.
Hi, Thank you I just wanted to ask sort of a bigger picture question about the brands to the it's sort of looks to me like your long Warren and Cheddars.
You made investments behind marketing or value and you saw real improvement on the top line and I know you talked about the cap lapse from olive garden and that affected the margins are better started.
And then she has a different trade off so do you have an opportunity to push a little bit harder on value for.
I'll, let garden, maybe everywhere level load it through the quarter and when you think about how you value those trade off so maybe lower margin, but great. Tom said at Longhorn for example, and how do you think about that tradeoff generally and then perhaps with each of the branch. Thank you. That's a great question, Sarah we did know that long long.
It was performing really well throughout the quarter.
And we made the decision.
Not to push extra TRP use to into olive garden to try to make up for the the slowest start we had in the quarter.
We have levers to pull if we need to and we chose not to pull them and decide to let the quarter play out the way it did and that's the that's the beauty of the portfolio. We knew that we had really great strength in longhorn and we didnt up the marketing spend we actually spent less money in advertise.
The thing and then marketing in the second quarter than we did the prior year. So.
I think we I think that's we have always pull back and say what's going on in the business.
I do think is we.
As we do go forward, we will continue to look at.
How we.
Use value in olive garden.
To drive same restaurant sales, but also compete effectively against our competitors and we will have to continue to watch what our competitors are doing and we'll have to match that intensity.
All of Garden is when you look at what olive garden's accomplished over the last four years, it's incredibly impressive.
And we believe that it is positioned to continue to dominate.
In casual dining and I believe we have more leverage them most the pulled to support that business.
Thank you.
Our next question comes from John Glass from Morgan Stanley . Please go ahead.
Thanks, Thanks, very much if I could just follow up on longhorn maybe I missed just what the combination of things were that really drove that material acceleration, but can you just revisit that specifically and it sounds like some incremental marketing or something changing the promotional environment and to me, it's approaching with advertising environment. How sustainable is that there was that you pull it forward suchy.
Can't maybe replicate it.
In future quarters or is this a new run rate of advertising promotional. So we should think about this is maybe you've taken a permanent step up in that brand from a sales perspective.
John We had we had two extra weeks of media in the quarter you saw that new restaurant level expenses I wouldn't give that a lot of.
A lot of the credence for the for the increase in same restaurant sales.
I think long I think though as I said longhorn team has been investing this business for four years.
Every state today is bigger or better than it was four years ago.
They have invested in the bread service they've invested in many other aspects of the overall operation, but I think the most unique thing about longhorn in this environment.
Is that it is a smaller box with less employees than the average casual dining restaurant.
Their ability to attract a top quality employee train them, well and retain them well I believe allow enables them to execute at a higher level and if I was a point to one thing that is driving that business. It's that that single attribute right there to answer your.
A question is this a sustainable trend I.
I don't know I know I'm all I know as this team has made has a great discipline for four years made a lot. It really good investments and I believe that they continue to do the right right things every single day for their team members and their guests and again, it's a unique operation because it's much smaller inside of smaller base.
Thanks, and they deliver at a high level and it all came together this quarter combined with a couple extra weeks of media and they had a great quarter.
Thank you Thats very helpful and Rick just on the commodity specifically beef I know you talked about where inflation is and you've given us or your coverage through at least may and thinking about low single digits, but has anything changed on the margin or you incrementally more concerned about particularly proteins. As you think about calendar 220 in total and is this.
We spent a lot of noise and incremental discussion in the marketplace round AOCF and how that may impact protein pricing.
Yes, John we still feel comfortable of our of our guidance for total commodity inflation of 1% to 2% we were a little higher at the higher into that range of 1.7%. This quarter a couple of things on beef, we're really not seeing significant changes to what we thought we'd be in the beef market. The only we're seeing from Azf right now.
Now as we said a couple of quarters ago.
We only have about 2% of our port.
Of our bias pork, but there could be an impact 18 months from now in the into overall proteins. We are seeing a little bit in ground beef right now but were covered for the year on ground beef.
So we still feel really good about where we are.
Chicken, we're starting to see a little bit of inflation, but again were covered for that as well.
Thank you.
Our next question comes from the line as David Tarantino from Baird. Please go ahead.
Hi, good morning.
I'm wondering.
Just related to sort of the strategy on advertising and media heading into the election year.
Normally we see media costs.
Increase.
And just wondering gene how the brands.
Planning to manage through that type of environment.
Expect any differences there.
Great question, David I think what will foot will continue to focus on non on nonworking media spend to see.
How much weaken pulled that down to help offset the inflation.
But we will try to spend from media standpoint at the same levels.
Without increasing the overall spend.
For the brand now I think as you know.
As you get around the elections express when you're doing a lot of national stuff and some spot television you can get bumped.
And try and make sure that we get our full complement of advertising as as we move into the last six months prior to the election, depending on the marketplace.
We'll be a challenge, but we will try to work around that we've got other levers that we can pull social we got TDR size. We got some other things that we can do to help offset that if we're not getting our full complement of advertising.
But we will continue to work and focus on making sure our or as lean as we possibly can be on our non working so that we can.
Maybe shift a little bit more of that into working to offset the inflation.
Great and then and then Rick just quick one on the margins I think theres been several quarters in a row of.
Productivity and mix cited as a pretty nice offset to the labor inflation, you're seeing I'm, just wondering what the sustainability of that looks like and weather.
We're starting to lap that at any point in the next few quarters.
Hey, Jeff a couple of things one we've we've said quite a few times that we don't expect to have.
Labour approach labor below last year for quite awhile as can keep inflation and so this quarter played out were about 10 basis points lower than last year and labor.
The productivity if you remember a lot of that started with new restaurants last year. So around the third quarter and we started to see a little bit of an increase in productivity from new restaurants that should start lapping itself Im so we still feel pretty good about managing our labor well the way based on inflation, what's going on now.
And we've all contemplated that in that are in our guidance of 1% to 2% total inflation.
Great. Thank you Im sorry, about two and I'm, sorry, two and half percent total inflation.
Thank you.
Our next question comes from Jeff Bernstein from Barclays. Please go ahead.
Great. Thank you very much that two questions as well first one gene you mentioned.
Watching your competitors closely I'm just wondering in that vein as you think about casual dining broadly do you think maybe you're seeing an increased promotional activity and.
Maybe that would change your marketing approach in the back half of your fiscal 2000 or whether it's in response to what competitors doing or whether you feel the need to be a leader in terms of being more promotional or a change in your promotional cadence any thoughts on the industry broadly would be great.
Yes, I think what we're seeing in the industry is that theres more there's more pressure on some promotional constructs that now become.
Permanent parts of menus.
You got a big a big competitor out there that that stated they're going to be continue to be very very aggressive.
But I continue to look at.
Well I look at map in Black bauxite continue to look at the check average.
Growing.
North of 2.5%, so the consumers still paying 2.5% plus or plus more.
So I think that you've got out we've got to stay on top of what's happening in the industry, we need to make sure that we're offering value.
In our large brands.
Across the platform so some value in price some value in portion on as we try to attract and talk to each each and all that all the different constituencies we have for consumers.
I would say that olive garden is the value leader and.
We need to stay focused on making sure that we have the appropriate price point for all consumers that want to use olive garden.
And and I think that we have the ability to to lead in that not just follow.
Got it and my follow up is just as we think about the fiscal 20 outlook. Rick you mentioned guidance unchanged and let's now the first two quarters of this year and it seems like its contrary to past practice of thinking of Darden as guiding conservatively and more from the not beating and raising so I'm. Just wondering if maybe you entered this year guiding more aggressively for the year.
Or maybe fundamentals at ease relative to your expectation a little bit I'm, just wondering if maybe a little more cautious as we move through or into the back half of the fiscal year, what might have changed relative to historical practice of being able to to beat the conservative start to the your guidance.
Yes, Jeff every every year at the beginning of the year. When we guide we guide what we think is appropriate and we adjust as things play out and things have been playing out exactly as we thought.
Which is why we havent changed our guide in the past things have been a little bit better than we what we thought in the beginning of the year. So thats, how weve adjusted up but I Wouldnt say that we are we were more aggressive in this year's guide than we have in the past we use the same philosophy that we always have.
It just happens at the first quarter and the second quarter did outperform what we thought as much as it has in the prior years. That's why we didn't raise our raise our performance and we still have coming into the back half of this fiscal year.
Chances of weather chances of election, and everything else is going on.
In talking about.
The consumers, having other things to think about so again, we didnt change anything the way we've done things in the past and we feel pretty good about where our guide is right now.
Great. Thank you very much.
Our next question comes from Chris Carl from RBC Capital markets. Please go ahead.
Hi, good morning, Thanks for taking the questions. So I'm curious to hear your current thinking in the off premise opportunity and in particular, how the performance of the five dollar take home offer.
And the sequential acceleration in off premise growth may impact your thought process on off premise strategy today. Thanks.
I think that $5 take home has been a great addition to the off premise menu for Olive garden, it's it's been well receive from comply consumers.
We will continue to evolve that platform over time, we think this continued upside there as we focus on off premise.
Our biggest initiative is to improve the convenience for our consumer we go back to we know the two most important things are on time and accurate.
And as we continue to grow this business, we focus on those two things with the addition of ensuring that we have the right capabilities in each one of our restaurants, we're investing capital dollars into our restaurants to ensure that we have the space and the right equipment to handle the handle the addition.
No demand.
And that's a big thatll be a big effort over the next 12 to 18 months.
And were and we think that we can can take a little more friction out for the consumer.
This is a very highly rated experience for our consumer.
And we'll continue to focus on executing at a high level as long as a consumer demand is still there. We think this opportunity to grow at grow this space.
And I'm really excited about what we're doing but more importantly, what excites me about what we're doing from an off from the standpoint is the quality of the experience and the quality of the product that's leaving our restaurant and I believe that's why our business continues to grow.
Great. Thank you.
Our next question comes from will Slabaugh from Stephens. Please go ahead.
Thanks, guys. Good question on shutters.
You are not where you want to be quite yet, but it was nice improvement from what we've seen and you mentioned some improve turnover and customer metrics that but there was something else I was wondering if you might 0.2 in the quarter that helped improve it to your trend I think over 400 basis points. So would love to hear your thoughts there.
Yes.
Bottom line is that we're operating better we've got more stability.
I'm starting to see a culture develop inside at shutters for the first time, one culture rights you go back to when we did the acquisition. We are these three distinct cultures and for the first Tom I'm feeling like we're we're cheddars of one and.
That all along this is not a brand issue. This is an operations issue and I think our teams are making significant progress and we got stability is in a lot of places for the first time and we ended this is the beginning of a journey.
But look at the power along when will we have this stability and what we're able to accomplish.
Getting 20 points a reduction in employee turnover is huge and I think we can do I think we can continue to do that again and so thats. What that's really what's got me excited I think we're just doing a better job I had lunch and Cheddars. This week. It was fantastic Where's the best experience of a hadnott shutters and so.
So I mean Thats why I think we're starting to make improvement this still as I said this still.
Package in the company, where we don't have that stability yet we don't have the tenure and we haven't developed at culture, but we're in a much better path.
Okay. Thank you.
Our next question comes from Gregory Francfort from Bank of America. Please go ahead.
Hey, Thanks. Thanks for the question I just had two in the first one was on.
Jay you mentioned turnover at Longhorn can you maybe frame that up versus either the industry or versus maybe its historical levels is it down is it just maybe up less than the industry is I guess what was the commentary meant to suggest and then the other question I was on off premise. It's it's been I think a couple of years since.
John you've given some thoughts on the competitive pushing to off premise and.
I think a few of your competitors have gone into third party partnerships grabbed a few points of sales, but the profitably is becoming more of a focus can you maybe give where your updated thoughts are on on third party delivery, particularly small order. Thanks.
When I look at Longhorn I would just stated management turnover is sub 15% and it's it's less than 10% the managing partner level, which is very very important.
And I think compared to industry of mid Thirtys I mean, we're you know thats just its industry, leading its leading incited darden, we have tremendous tenure, there and most import we have tremendous pride.
And in that business and so that's a big thing employee turnover is in the low sixtys, that's looking much more like one of our upscale businesses.
And so you can do so many different things think about the the lack of training costs still we have in that business and the rest of our businesses because we're so far below the industry, but especially that one there.
And then I think that really leads to to great operations, and and I think thats whats been driving.
Off premise, our our position hasn't trained changed on off premise with the last mile delivery.
We believe today, we want to control the experience.
We do have off premise last mile delivery in olive garden, again, I'll remind everybody $75 above $75 and if you let us if you call it and before five o'clock the night before we will deliver.
Thats, a big business, it's a growing business for us we've got an average check in the in the three hundreds Dutch business, it's really worth chasing and doing.
So we're in it and our own way.
But as I think as we think about it as a team we really like controlling that that experience and we get back to those two most those two critical aspects that consumers looking for on time.
Inaccurate.
And we control those when we control.
The overall experience so our position on the last mile delivery.
Companies has not changed.
Thank you.
Our next question comes from Denis Gallagher.
Please go ahead.
Thank you gene just wanted to ask a bit more about olive garden looking ahead, good to hear that that the trends accelerated through the quarter.
But just wondering if you could talk a bit more about contributions from key drivers going forward to continue to support. This outperformance you talked quite a bit about off premise there anything more kind of on the strength of the operational execution, how impactful that can continue to be the lunch gains you mentioned thinking thinking ahead.
Promotional dry powder.
Thoughts on the innovation pipeline and just kind of anything else.
Kind of continue to support the outperformance that you've seen.
For quite some time now thanks.
I think I think off premise well off premise will continue to be a driver.
I think the $5 take home.
Form will continue to attend continue to be a strong driver. There is lot innovation that we can still doing that platform.
I think that.
You know we've got other platforms out there that will continue to strengthen whether it's by when take on Neverending Pasta Bowl.
I think that the promotional pipeline continues to be strong.
And I think that I want to pivot back to I think that this is an important time that we focus on running great restaurants in staffing is the most critical thing that we face today and this employment environment and so we need to make sure that our olive garden's remain staff with great Pete.
I will.
We continue to focus on improving our employment proposition. These are high volume restaurants, and we and I think that we win if we have the best people inside the box.
Comparable with our ability to create a strategy to continue the momentum and I think their drivers out there.
Great. Thank you.
Our next question comes from Brett Levy from MKM Partners. Please go ahead. Thank you good morning, everyone.
First I guess can you share a little bit more off on the granularity of calendar shift was that 100 basis points largely split.
Then layer was that.
Did you see any major shift among brands and then also.
Did you see anything within the Regionality and then.
No you don't like to give inter quarter type updates and I know you talked about how you had a softer start to the quarter, but.
Strengthened throughout.
Is it possible to quantify what the market share gains were versus on the gap later in the quarter versus earlier.
And then finally is there anything that you saw fundamentally operationally at olive garden from a score relation.
Guest satisfaction.
Quantifying the turnover that can help.
Substantiate and support.
Just to the dominant position that the brand is generally and thank you.
Hey, Brett a trick.
In regards to the calendar shift lot of questions here, but in regards to the calendar shift.
They impacted different it impacted brand differently. So the casual brands were impacted favorably.
In general and the finer dining brands were impacted unfavorably in general and each brand was impacted a little differently.
With and the casual brand shatters, having the smallest positive impact.
The regionality of that really wasn't that different so it's basically account Thanksgiving shift was was no different in one region in another the only regionality would be weather.
As it in market share gap for the quarter by month, where we don't really want to get into the change in share gap by month other than what Jean said about olive garden being negative in the first month and having to dig out of that a little bit to get to be positive for the quarter.
And then on an operating metrics for Olive garden, specifically their operating metrics are at all time highs so they're guest satisfaction.
A lot of their different metrics operationally, our all time highs and they were at all time highs for every month of the quarter.
So hopefully that answers those questions, but thanks Brett.
Great. Thank you.
Our next question comes from Nicole Miller from Piper Jaffray. Please go ahead.
Thank you good morning, there's a lot of discussion around value proposition and olive garden.
Wondering when you do see the value proposition.
How you look out your land your perspective.
One way or another and Youve in Europe , and the buying Ryan's does that show up in a demographic shifts.
It does every demographic why or why you have a same way.
Do you see some more or less sensitive to the higher.
Well I think that Nicola.
It's an interesting question I think that for some of our consumer because it's such a broad audience. Some of our consume used values a lot more about what they pay.
From a dollar standpoint, and they're looking for that entry level price point for some of our consumers values more about portion size compared to price.
And so we try to find value for for everybody a little bit differently and I think you have to in a brand that has such broad appeal you. After you have to have.
Value and everything is just which which part of this is important the numerator denominator.
We know that Theres, a guest base inside out of all of garden that if that play that price plays a very important part of their decision, making and we have to have an offer out there.
A lot of the time, so they will come to us if they don't have an offer they will go someplace else, we know that through our token analysis.
But we also know that.
There are folks out there that look at value on say chicken Alfredo when we increased the size of the portion of chicken a value scores went way up and that was very important to them, but thats. The phone entry level price point in olive garden, and so we've got to think across a broad spectrum and define value different for east each opportunity but.
We have to have some than for that consumer that is very deal oriented. We know we have to have that out thats something out there most of the time.
That's very helpful. I was thinking about it in that kind of bigger bottle.
Looking forward context of how do you feel sick value. So I think.
You could remind us the the.
For the prime casual dining at Olive garden years, all around the 40 years old age.
Plenty of population is getting ready to peak in Fyfourteen and not age demographic cohort is it too early for olive garden to be thinking about how to.
To benefit from that are really just actually naturally have not changed.
Yeah, I mean, the prime Prime demographic is 35 to 55 for Olive garden.
And we've talked about the fact that.
Population for the prime dining out years are going to can start to grow and continue to grow for awhile.
I would say when we think about millennials.
I think the one thing that millennials have all socio economic.
Background like to do is.
Have a lot of choice they they like to build their own meal Thats work achieved emeas works, so well for that that cohort.
But I would tell you that.
Millennials that or are lower incomes are looking for value just the way other groups look for value at the at that point in time and I think we have to be careful with gross generalizations of this cohort as they transition into.
The next phase of their life.
We over index with millennials. This is a very millennial friendly brand. It is very very social brand.
And I'll tell you that millennials love the value of Olive garden, because they can stretch their dollars.
Thank you.
Our next question comes from Andrew Strelzik from BMO capital markets. Please go ahead.
Hi, Good morning, this is actually going on for Andrew today.
Sort of mixed performance across some of the Polish casuals were trends have been a bit more challenge recently, you talked about some of the incremental marketing spend that shutters and longhorn, but I know last quarter. You also spoke about potentially adding some marketing spend around sort of smaller portfolio brands as well. So you end up doing that and if you did can you just kind of give us an update and how those initial.
Those are performing and how you think it will work given the lack of national scale.
I think the brand that we made the most progress in was a yard house mean yard house was positive before the Thanksgiving shift.
So we are very we're very pleased to to see that.
And.
So we'll continue to find ways to try to.
Use.
Digital to promote these brands, we're doing a lot of test and learn in those brands also to try to try to be effective.
Well, we're we're trying to make progress we're making progress.
In all those brands I would say that.
Seasons, as Rick alluded to seasons was the most impacted by the holiday switch.
I think we're making progress in that business.
Great. Thank you.
Our next question comes from Chris Ocull from Stifel. Please go ahead.
Yes. Thanks, good morning gene into the company and indicated Cheddars should be testing sleaze, various marketing initiatives, but did these test having material impact on the cost performance during the quarter and when do you think we could see some of these tests being implemented more broadly.
I think they have I don't if they had a meaningful impact I mean, they had some sort of impact on the quarter I.
I would tell you that this we're testing some of this activity on a very small scale trying to get an understanding of what Ken what can move the.
The needle.
I would say that this is this is an evolution.
I think the.
We need to continue to use a club.
New store development backfill strategies that we can become more efficient and some more markets.
Really make some of this stuff pay out a little bit more positively.
So I don't know I can't give you the time to say Hey, This is one where we think we're going to have this all all figured out I will also add that.
In the digital World today is very very dynamic and.
I think test and learn in digital is going to be something that companies are going to be doing forever. Because it continues to be new avenues in new channels in which you can get to your consumer.
And that audience is very fickle today compared to what it used to be with with them.
Spot TV, so I think test and learn is is going to be part of our vernacular for for a long time.
Okay Thats, great and then I know you mentioned olive garden's comps improved during the quarter, but I'm curious whether the check benefit from this $5 take home with somewhat negated by the Neverending Pasta Bowl promotion.
Chris This is Rick the a the check benefit from the five dollar take home was not negated by by the any PB never any possible. It was really the lunch investment that we made.
Earlier in this fiscal year that drove our check down.
If you think about olive garden check olive garden's check grew by 2.7% for the quarter, 2% of that was pricing.
About 80 basis points with catering and everything else washed. So you think about the 80 basis points of catering you can think about that like guest count since we don't talk about we don't give them credit for guests, but to answer your question no five dollar take them was not offset by any BP.
Okay, great. Thanks, guys.
Our next question comes from Peters from BTG. Please go ahead.
Great. Thanks.
I just wanted to come back to this conversation I think several quarters ago on loyalty.
Hey, guys.
You test in place.
Sure.
10% of your stores.
Yes.
Yes, It does something you plan to.
Forward with the war.
Just just an update on.
Hey, Peter.
So we're still testing there's really no further update we're continue analyze the results.
But at this point in time, we're just in the same 10% and we'll continue to watch how that that's maturing.
For a particular before we decide whether to adjust scrap it all together or forward.
No I think that we want to continue to see if there's if theres something there I mean, we're.
Or trying to value of the first party, what's what's the first party data worth to us.
And how much can we move sales.
With a loyalty program.
We're trying to get that read and again. These are these this is a very very very big decision. One that's very difficult to undo on so we have to have a high high confidence level.
But this is the correct path to go go down and at this point, where we're not we're not at that level yet.
Great. Thank you very much.
Our next question comes from Jeff Farmer from Gordon Hastings. Please go ahead.
Great. Thanks on the June earnings call I believe you commented that your concepts. We're seeing some you described it as day to day week to week sales volatility.
Im just curious if that volatility has continued and if it has what that might signal about the consumer and their demand for casual dining more broadly.
Yes, I mean, I think it's you know we've got.
We've had some huge calendar swings so I think the volatility on a comparative basis.
Is still there.
I think the environment is a little bit better than it has been in a while I think the.
Employment still strong.
Confidences is rebounding I think the near term risk of a recession has receded.
So I feel pretty good about the overall environment right now.
And.
No I don't think that us as a team we get too worried about day to day week to week in volatility I mean, it's still there.
There's volatility around what your competitors are doing and what we're doing and.
No we're not.
We're cognizant of trying to match promotional weeks.
But we've had much we've been much more willing to make longer term decisions and let there be a little bit of volatility week to week with our with our marketing activities such made some tough somebody that makes a little harder to read in the short term in the long term it all works out.
And then just as a follow up on terms of some of the volatility that you're seeing with the consumer demand side. Despite incredibly strong consumer metrics that sort of breakdown and very strong relationship historically, meaning if you saw a good consumer trends could see good consumer health metrics, you typically saw pretty nice casual dining same store sales you guys.
Did that had softened up a little bit any further comment on that I think it's my wife, a real brief comment on that this this marketplace is going to be defined by winners and losers.
If you have a strong value proposition and you're executing at a high level and that execution is going to be driven by your employment proposition in this environment, attracting retaining great employees has never been more difficult than those that can do that with a strong value proposition are going to win.
Helpful. Thank you.
Our next question comes from Catherines already from Goldman Sachs. Please go ahead.
Great. Thank you I am I wanted to touch a little bit on the off premise at Olive garden.
You know you're talking about overall on sales starting the quarter pretty soft and then improving did you see similar trends in Opana, ER, especially kind of when you take away the five dollar take home.
But as you say kind of focused on.
The traffic that you're seeing some people, placing order anything outside Pn added time, 75, dollar and higher and threshold and could you see softness there any beginning at the quarter and not improve our without this has behaving differently.
You get and getting a little too granular, they're all I would say is that our our delivery program continues to continues to grow at a good good pace.
And.
When we're doing neverending pasta Bowl, that's not a great time, not one of our best periods for off premise.
That's just not a promotional item that lends itself to that.
But overall I would just say that you know facilitate cones was was a big big piece of what we have for new offering you've got people excited but our overall off premise business continues to grow with consumer demand.
And I'm not going to get into a much more detailed than that.
Okay. Thank you and then you gave some good color around 100 basis point benefit from the Thanksgiving shaft Bison brand.
But curious if you would help us understand a little bit more with it olive garden benefited more then longhorn or was that benefit kind of equally split.
Okay, that's Rick the Olive garden Longhorn were pretty similar in benefit for the for the Thanksgiving shift.
Alright, thank you.
Our next question comes from John I haven't go from JP Morgan. Please go ahead.
Thank you.
I heard your comments that you made on.
You know obviously some of the upscale brands actually being hurt by Thanksgiving, but could you talked about are there any other common themes in upscale that desert.
Noteworthy at this point and I guess gene wouldn't you expect the upscale brands to actually be performing better.
Today for where we are the economic cycle and we are the stock market. For example, and there is there anything darden can do self help to improve those.
Yes, I mean, let's think.
Thanksgiving has turned into one of the biggest days and upscale and they didn't have that in the and the second quarter. So.
I think that I think these upscale brands are performing really well I mean, we have.
We have two of of the best upscale brands out there today very high volume of capital grille, and Eddie V's and they continue to perform a.
Hi levels I.
I'm excited about what they have going forward.
As I've said before I think their books look good through the holidays. These are exciting businesses and I'm very pleased with their overall performance.
And I may have missed the number how big the Kelly.
And your shift actually was there in the second quarter and you could you also comment on some of the brand's between olive garden in longhorn and the truth fine dining brands.
Hey, John It's Rick the calendar shift for Darden was a 100 basis points favorable as I said on the call.
The casual brands were benefited by that and the upscale fine dining brands were hurt.
And the upscale fine dining brands were hurt more than the casual dining brands were helped but the casual dining brands are bigger that's why we're at about on a basis point, Okay. All right understood. Thanks for that and then and then the out the brands in the middle.
They weren't really many brands in the middle Weve pretty got in pretty much have casual I also mentioned that cheddars with the least benefited of the casual brands.
And again everything is fine dining that takes reservations was hurt.
Okay. Thank you for that but also like when we talk about yard House. For example, we talked about Bahama Breeze, even seasons 52.
Again, these are higher ticket brands and olive garden in Longhorn one late you actually affect us consumer would trade up to those brands in the current economic environment current stock market or is there anything as you kind of look at what.
It Darden can do.
Self-help basis to kind of improve those businesses is there anything that we should be considering obviously the brand and itself is that big but together certainly they are.
Yeah, John I think we've talked about in the past I think that these these brands or in some of the best retail trade areas in the United States. They continue to face competitive intrusion.
And you have to you have to you have to fight the competitive intrusion off.
This small enough for one or one or two restaurants being down a significant number can have an impact on the overall overall business.
As I said I'm pleased with the trends in yard house.
I.
Seasons, or Weve, where make we're making progress in seasons.
We've been able to pull out of law a lot of the discounting that was happening in that business, which we believe was a good long term decision. That's that's put it that's had an impact on the headline number.
Tom or Breeze, we've had some.
Competitive intrusion, we've also cannibalized ourselves in our biggest market Orlando opening up a couple of restaurants that have had an impact on the overall system.
And we know those we noticed market well those are places, where we want to have restaurants, but right now there's been some cannibalization I don't really pay a whole lot of attention to.
Some of those topline numbers I pay a lot of attention to the individual restaurants in each in each group and I understand how they're performing.
These are well positioned brands continue to perform well.
But they're in the best traders in America, and they're facing they're facing competition.
Thank you.
Our next question comes from Matt Difrisco from Guggenheim Partners. Please go ahead.
Thank you just a little bit of a different track here I guess on growth a lot of people always look at sort of these smaller brands charters and others to be the growth vehicle, but longhorn is one that really you've done a tremendous turnaround on the margin side.
Position for a little bit better growth ahead, I think you're maybe eight net stores you've added over the last 12 months seems a little low you are only in about 13 or 14 states. So there's certainly a lot more.
Room for growth Im just curious what has been the governor to that and why can't that brand go back to its growth your days and could that be on the cost of ahead.
Well I think that this there is a growth opportunity with longhorn and when we're concentrating on on entering new territory slowly.
And what we're focused on trying to backfill where we have opportunities.
We think the governor to growth is the human to human capital.
This is.
This is a brand that.
Is it.
Is very important how we develop our culture in how we run it but we are in a path that do 15 to 20 this year.
Which is pretty good pretty good number.
We have been.
We haven't opened up any long weren't in California.
That's really the the last big territory of available to US we're going to open up a restaurant. This spring in California see how the brand is received to open a few more and we will support will support that.
But we're we're we're very pleased with this and I love the can control growth.
Because to me that's debts.
That's where we're in we're in 43 state side on the where where you got your your number from I'm, sorry, with more than 43 states today.
Over 500 units closing on $2 billion brand.
Going to continue to grow this this brent as growth opportunity, we're going to grow it responsibly.
Sorry about that we're seeing you have an average of 13 in a state that's what we're saying.
Just to also I guess, we've been checking a lot in a lot of these smaller brands have been closing down is there that opportunity. When you look at where you would grow longhorn does it have to be necessarily a a new side or are there opportunities maybe more in this.
Economic cycle, where you could sort of take over an existing restaurants that are just one belly up in its sitting next to a couple of olive garden's or in a market with a couple of all guards, where you can get some synergies we look at as we look at every real estate opportunity is what is that what is the best way. We will will if the building has a good enough structure will do a re.
We have we've done a few of those if it if we don't believe the building has the structure to to really be a b a good place for longhorn over 30 years.
Then, we'll we'll blow it will will tear down but each each individual site is evaluated with what through an economic London say, which is the best economic outcome for the investment.
Excellent. Thanks, so much.
Our next question comes from Stephen Anderson from Maxim Group. Please go ahead.
Yes, the good morning, I Wasnt Paula view on the op off premise opportunity.
Only add that centers.
That being built out a good infrastructure over at Olive garden and at Longhorn just let's see what's your thoughts are as soon as you build out your marketing capabilities at Cheddars, what roll off premise will play and online mobile ordering will play there.
Yes, Stephen good question.
We have not had any emphasis on improving our off premise sales in shutters. We believe this to be a big opportunity and as an opportunity that we will tackle over the next six to 18 months.
We need to go back and we need to develop good processes understand what the Kate Wendt will develop good capabilities implement online ordering which is not accessible today.
All those things are an off our growth opportunity and they're all all be sequenced in when we believe we have the right.
Operational capabilities to handle it but you have identified a future growth vehicle FERC shutters.
Thank you.
Our next question comes from Jake Bartlett from Suntrust. Please go ahead.
Great. Thanks for taking the question.
What was the second quarter of last year that you talked about more explicitly about pulling back on incentives you that they've consumer was strong enough you wouldn't kind of have that your your pocket if the economy got got worse.
Where do you stand on incentives have you kick that up.
Since the second quarter of last year, how do you think your approach on on incentives for consumers are is going to be going forward. This year.
Yeah, I believe that you'll see us use that lever appropriately.
We have been in the marketplace testing some new offers with some relatively short.
Exploration time to see how the how they.
All the consumer reacts to them.
It is just one one piece of our overall tool kit.
To drive the business now we again, we have identified as we pulled out.
Oh and slowed down our TV eyes over last year. There is a consumer out there that will only visit our restaurants. When we have have an incentive out there. So we need we've learned that we need to have something out there for this consumer.
And we'll continue to we talk about one of one of our focus as we talk about back to basics is our integrated marketing approach and this is this is part of our integrated marketing poach is how do we use TD eyes, how do we use other other discounts or incentives and combined with what we're doing on it.
On a promotional level too we always think about those in unison. So it is another lever that we can pull.
I will say for those set that do.
Look at our frequency.
I would urge you not to look at that nice solution. Because there are other parts of our our media spend to have a lot more impact.
Then our TV I spend primarily how many total rating points, we have in the marketplace.
Great and then second question is on acquisitions in.
One is you just see if you could talk about your appetite for kind of continuing acquisitions. It's been just almost two years since acquiring cheddars, but also the environment, whether you're seeing.
Some smaller chains kind of under more pressure given the kind of scale benefits that with technology and some inflation that's going on so so one your appetite in the second because if the environment for for acquisitions out there that you're seeing.
<unk>.
Probably dogs out a little bit and give you. The standard answer that will will continue the to evaluate our current portfolio and evaluate the opportunities to add to the portfolio as you know where you know.
We continue to look at.
The opportunities out there we continue to look at the opportunities internally and we'll continue to have those discussions with our management team in our in our board and.
While we're doing that we're going to focus on running the great brands that we have.
Great appreciate it.
Our next question comes from John Tower from Wells Fargo. Please go ahead.
Thanks, and happy holidays, just just a quick one from me said so based on our work it looks like you're off premise business at Olive garden was greater than 100% of the comp growth in the period.
And I believe that off premise offers like catering at $5 take homes only show up in the mix and not traffic and I think Ricky it on an earlier that lunch might have drove down mix a little bit in the period, but I'm curious if you could expand upon the thought that.
How maybe these to go businesses are cannibalizing potential future visits or maybe you can give us some comfort that it isn't happening in the market.
Yeah, I don't think we don't we don't believe that they're cannibalizing future visits.
I mean, obviously I think that people make a choice not going to eat in or eat out Tonight, and we want to be in both those both those decision sets you know I go back inside the quarter and say we started off we had we had a great promotion last year with by when take one.
And we had a promotion that was weaker I think it's important that we're sitting here today admitting that we didn't hit the Mark will lasagna midyear, we put in we pulled off the promotional advertising to support that I'm not everything that we're going to do is going to work, but you got it. We know we recognized that this wasn't something wasn't right with it and we.
Didnt put the promotional dollars behind it.
And we pivoted.
And I think that you know that put us in a hole in the quarter and we decided to us let it play out.
And that's primarily because we had we had longhorn doing doing well.
So I don't I think that I look at it is all one big pool, and we've been saying phase, we're going to try to feed people olive garden, where and when they want it.
And I think that we're doing a great job with that and I'm excited about what we've done at launch.
We've definitely improve that trend, we're competing more effectively.
And we'll have I believe into the future will have to make strategic adjustments to compete more effectively at dinner too.
You constantly evolving in this business you not staying still and so I'm confident our team I'm confident in our insights.
And all I want to do is still olive garden food to some anybody that wants to any anywhere they want it.
And then just following up on the promotional NIST hit or hit and Miss in this quarter was there anything different about the testing process.
On this promotion relative to cast past testing that might have.
Altered the go to market or seeing.
Or what really played out in the market versus what you guys were seeing a test.
No I think that.
You to improve testing environments is small and it's always different than a macro test. So that we're not sure what are what else was going on we just we made the decision I think in hindsight, we may have made that decision to quickly.
And didn't give a chance to play out to play out but.
But we do we thought was right right wrong or in different we may we made a pivot and.
It's behind Us and now we're moving on.
Great. Thank you.
Our next question comes from Brian Vaccaro from Raymond James. Please go ahead.
Hi, Thanks, and good morning, I'm, just two quick ones for me to we circle back on the Olive garden incentives in the quarter. If you look across all marketing channels has been mix of value added sales compared year on year.
We were we were definitely out there with a lot more incentives.
That that was part of we need to be out there because we pulled back on the advertising spend. So it was just noticed again, it's a small channel and which we play in but we definitely increased and we also were out there doing a ton of testing.
So test and learn just doesn't apply to our smaller brands that was test and learn inside of Olive garden, probably the most test.
Trying to understand which TV eyes would resonate with consumers how long of.
Time that they need to put on those to activate the consumer. So we were definitely in the marketplace and it's a great way for us to talk to our E.
The club members.
So.
Again, I just think it so it's it's a risk for you to look at all that nice relation because the media spend was down.
Significantly.
And we were we were we were testing and learning in this in this channel.
All right that's helpful and shifting gears to longhorn, obviously, a pretty sharp sequential acceleration that you saw.
Talk to about a few different factors, but could you, possibly rank order to the factors that drove that acceleration in your view and then maybe just a little more color on how you drove that improved throughput during the busiest we get hours that you referenced. Thank you ill answer I'll answer it backwards I think is just as just focus.
I think we're focusing on on those disease hours were asking for a top management person in the restaurant to be at the front door to help with that process.
It's like anything else in our business, we focus on something we get it and management team they've done a great job focusing on that.
I think the beauty of of the longhorn quarter as I can't point I'm not going to point to anything specific I believe this was a quarter were four years of investment.
Couple extra weeks of really really good advertising, that's resonated with the consumer.
Great stability in the leadership roles in the restaurants, all came together and we had a great quarter.
And anybody that.
That tries to isolate point to one thing other than a onetime promotion I believe it's very hard very difficult to do and I. Just think everything came together for longhorn great quarter, great job to the team anybody that's out there listen you guys did great job.
Alright, thank you.
I would now like to turn the call back to Kevin Calico for closing remarks.
Thanks, Carol that concludes our call for today I'd like to remind you that we plan release third quarter results on Thursday March 19th before the market opens with a conference call to follow Thank you all for participating in today's call.
Ladies and gentlemen. This concludes today's conference. Thank you again for your participation you may now disconnect.
Okay.
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