Q4 2023 Bloomin Brands Inc Earnings Call

Operator: Greetings, and welcome to the Bloomin' Brands Fiscal Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Greetings and welcome to the Bloom and brands fiscal fourth quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow management's prepared remarks. It is now my pleasure to introduce your host per period.

Operator: A brief question-and-answer session will follow management's prepared remarks. It is now my pleasure to introduce your host, Tara Kurian, Vice President, Corporate Finance and Investor Relations. Thank you. Ms. Kurian, you may begin. Thank you, and good morning, everyone.

<unk>: <unk>, Vice President corporate finance and Investor Relations. Thank you Ms. Karen you may begin.

Karen: Thank you and good morning, everyone with me on today's call are David Deno, Our Chief Executive Officer, and Chris Meyer Executive Vice President and Chief Financial Officer by now you should have access to our fiscal fourth quarter 'twenty to 'twenty three earnings release. It can also be found on our website at www.

Tara Kurian: With me on today's call are David Deno, our Chief Executive Officer, and Chris Meyer, Executive Vice President and Chief Financial Officer. By now, you should have access to our fiscal fourth quarter 2023 earnings release. It can also be found on our website at www.bloominbrands.com in the Investors section. Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release on our website, as previously described.

Karen: Lehman brands Dot com in the investors section throughout this conference call, we will be presenting results on an adjusted basis, an explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release on our website as previously described.

Tara Kurian: Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward-looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward-looking statements. Some of these risks are mentioned in our earnings release. Others are discussed in our SEC filings, which are available at www.sec.gov.

Speaker Change: Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward looking statements, including a discussion of recent trends. These.

Speaker Change: These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward looking statements. Some.

Speaker Change: Some of these risks are mentioned in our earnings release, others are discussed in our SEC filings, which are available at www Dot SEC Dot Gov.

Tara Kurian: During today's call, we'll provide a brief recap of our financial performance for the fiscal fourth quarter of 2023, an overview of company highlights, and current thoughts on fiscal 2024 guidance. Once we've completed these remarks, we'll open the call up for questions. With that, I would now turn the call over to David Deno.

Speaker Change: During today's call we will provide a brief recap of our financial performance for the fiscal fourth quarter 2023, an overview of company highlights and current thoughts on fiscal 2024 guidance. Once we've completed these remarks, we'll open the call up for questions.

Speaker Change: With that I would like to now turn the call over to David Deno.

David Deno: Well, thank you Tara and welcome to everyone listening today as noted in this morning's earnings release adjusted Q4 2023 diluted earnings per share was <unk> 75.

David Deno: And welcome to everyone listening today. As noted in this morning's earnings release, adjusted Q4 2023 diluted earnings per share was 75 cents. This compares to 68 cents in Q4 2022, reflecting a growth of 10% year-over-year. However, combined U.S. comparable sales were down 20 basis points.

David Deno: This compares to <unk> 68 in Q4, 2022, reflecting a growth of 10% year over year.

Combined U S comparable sales were down 20 basis points, our fourth quarter and 2023 results were largely in line with expectations. Importantly, we had a sequential U S comp sales and traffic improvement from Q3 into Q4, and we think Q4, a softer October was offset by progressively improving comp sales ending with a strong holiday.

David Deno: Our fourth quarter and 2023 results were largely in line with expectations. Importantly, we had sequential U.S. comp sales and traffic improvement from Q3 into Q4. And within Q4, a softer October was offset by progressively improving comp sales, ending with a strong holiday season.

David Deno: Susan.

David Deno: Before we discuss 2024, and more specifically our plans at Outback Steakhouse, I would like to recognize two businesses that had outstanding results in 2023, Parabas and Brazil. Krabus continues to take share versus the industry. Krabus posted comp sales growth of 3.9% and positive traffic growth for the year. In 2023, Krabus outperformed the industry in sales by 90 basis points and in traffic growth by 300 basis points. They continue to demonstrate strength, specifically in their off-premises channel and growing catering business. Crab's Bistro, which we launched in 2023, is a lunch-focused catering option featuring our wide variety of sandwiches that reflect Crab's Italian heritage is now offered in our restaurant as a compelling lunch offer, either within the restaurant or to-go.

Before we discuss 2024 and more specifically our plans at Outback Steakhouse I would like to recognize two businesses that had outstanding results in 2023 Carrabba's in Brazil.

<unk> continues to take share versus the industry Carrabba's posted comp sales growth of three 9% and positive traffic growth for the year in 2023, Carrabba's outperformed the industry in sales by 90 basis points and a traffic growth by 300 basis points.

David Deno: It continued to demonstrate strength specifically in their off premise channel and growing catering business problems Bistro, which we launched in 2023 is a lunch focused catering option featuring a wide variety of sandwiches that reflect perhaps Italian heritage is now offered in our restaurants as a compelling launch offer either within the restaurant or to go.

David Deno: Bistro continues to outperform expectations. Brazil had another great year with significant growth in sales and profit, especially impressive given the lapping of pent-up demand in 2022. We continue to expand this business throughout the country and to open 18 new restaurants in 2023. We look forward to capitalizing on our leading position and doubling our restaurant footprint in the coming years. Our 2023 results would not have been possible without our great teams in the restaurant and in our restaurant support center. Thank you for delivering outstanding hospitality and excellent service to our guests.

David Deno: <unk> continues to outperform expectations.

David Deno: Brazil had another great year with significant growth in sales and profits. This is especially impressive given the lapping of pent up demand in 2022, we.

David Deno: We continue to expand this business throughout the country and opened 18, new restaurants in 2023.

David Deno: We look forward to capitalizing on our leading position in doubling our restaurant footprint in the coming years.

David Deno: Our 2023 results would not have been possible without our great teams in the restaurants and our restaurant support center. Thank you for delivering outstanding hospitality and excellent service to our guests.

David Deno: As we move forward, we remain focused on the strategic priorities that are making us a stronger, leaner, operations-centered company. These priorities include, first, driving in-restaurant, same-store sales growth, which remains our top priority, especially at Outback. Second, increasing new restaurant openings while refreshing our existing assets. Third, maintaining our off-premises momentum. Fourth, becoming a more digitally driven company. And finally, investing in technology to improve infrastructure and drive growth while preserving margins. Our primary focus remains improving in-restaurant sales and traffic at Outback.

David Deno: As we move forward, we remain focused on the strategic priorities that are making us a stronger leaner operations centered company. These priorities include first driving in restaurants same store sales growth remains our top priority, especially at Outback second increasing new restaurant openings, while refreshing our existing assets.

Third maintaining our off premise with momentum fourth becoming a more digitally driven company.

David Deno: And finally investing in technology to improve infrastructure and drive growth while preserving margins.

David Deno: Our primary focus remains improving in restaurant sales and traffic at Outback, we've done a lot of work to better understand our ever evolving post COVID-19 customer. We believe we have a better idea of who our customer is and as a result, we continue to sharpen our brand positioning the.

David Deno: We've done a lot of work to better understand our ever-evolving post-COVID customers. We believe we have a better idea of who our customer is, and as a result, we continue to sharpen our brand position. The first step of this effort was the launch of Outback's No Rules, Just Right campaign.

David Deno: The first step of this effort was the launch of Opex No rules just ride campaign. This is built in our brand equity and heritage and it bring back the adventure and it referenced is expected from Outback I, especially like the just right part of that phrase as it reinforces the food and service promise to our customers.

David Deno: This was built on our brand equity and heritage, and it brings back the adventure and irreverence as expected from Outback. I especially like the just right part of that phrase, as it reinforces the food and service promise to our customers. In addition, we spent more on marketing and advertising in 2023 to improve our share of voice in a highly competitive market. During Q4, we saw a positive response to our additional marketing. We plan to increase our 2024 spending by approximately $20 million.

David Deno: In addition, we spent more on marketing and advertising in 2023 to improve our share of voice in a highly competitive marketplace.

David Deno: Q4, we saw a positive response to our additional marketing spend you plan to increase our 2020 for spending by approximately $20 million. This investment will improve our share of voice and build traffic utilizing a blend of TV high return digital tactics.

David Deno: This investment will improve our share of voice and build traffic, utilizing a blend of television and high-return digital tech. The advertising highlights new menu innovation, accessible price points, and great value. We also recognize the consumer may be more careful with their discretionary spending. Our current LTO, a three-course Aussie dinner for $16.99, offers the customer great value.

David Deno: The advertising highlights new menu innovation accessible price points and great value.

David Deno: We also recognized the consumer may be more careful with their discretionary spending our current LTE O. A three course Aussie Jennifer $60 99 offers the customer a great value.

David Deno: We will continue to be thoughtful in our approach to overall pricing and discounting. The No Rules Just Right campaign and the marketing investment are just the start of the work underway at Outback. There will be more to unveil about our strategy at Outback in the coming quarter. Since we are going to spend more on marketing in 2024, we must make sure our operations are best-in-class. We will continue to focus on delivering a differentiated guest experience, specifically improved service and consistently great food. We are solving this through investments in technology such as server handhelds and new ovens and grills, as well as relentlessly focusing on key operational behaviors. As a result of this work, our internal customer measures have meaningfully improved. A couple of key leading indicators that we track are stake accuracy and consistency of experience.

David Deno: We will continue to be thoughtful about our approach to overall pricing and discounting the no rules just right campaign and the marketing investments are just the start of the work underway at Outback there'll be more to unveil and our strategy at outback in the coming quarters.

David Deno: Let's we're going to spend more in marketing in 2024 at Outback, We must make sure. Our operations are best in class. We will continue to focus on delivering a differentiated guest experience specifically improved service and consistently great food. We are solving this through investments in technology, such as such as server handhelds, and new ovens and grills as well as relentlessly focusing.

A key operational behaviors.

David Deno: As a result of this work our internal customer measures have meaningfully improved a couple of key leading indicators that we track our steak accuracy and consistency of experience over the last year Big accuracy is up 400 basis points and consistency of experience is up 700 basis points. This progress is further validated by casual dining in.

David Deno: Over the last year, stake accuracy is up 400 basis points, and consistency of experience is up 700 basis points. This progress is further validated by casual dining industry metrics, which have continued to improve. Friendly service and food quality are now 300 and 360 basis points ahead of our casual dining peers, respectively. We are confident in the strategy at Outback, and it is working.

David Deno: History metrics, which have continued to improve friendly service and food quality are now 300, and 360 basis points ahead of our casual dining peers respectively.

We are confident in our strategy to Opex and it is working in 12 of the last 14 weeks Opex has beaten the industry comp sales growth based on recent trends, we expect to see opex perform above the industry and this is reflected in our guidance.

David Deno: In 12 of the last 14 weeks, OPEX has beaten the industry in comp sales. Based on recent trends, we expect to see OPEC perform above the industry, and this is reflected in our guidance. On to our second priority, new unit development and improving our assets. We are upgrading our assets through new openings, relocating, and remodeling. We opened six new domestic units in 2023 and are on track to nearly triple that in 2024. We know that upgrading our assets is a big part of improving our traffic trends, especially at Outback. Our development pipeline for new restaurants and relocations remains very robust.

David Deno: Onto our second priority, New unit development and improving our asset base, we are upgrading our assets through new openings relocating and remodeling restaurants, we opened six new domestic units in 2023 and are attracted nearly triple that in 2024.

David Deno: That upgrading our assets is a big part of improving our traffic trends, especially at Outback.

David Deno: Our development pipeline for new restaurants, and relocations remains very robust we are opportunistic on relocations and continue to see outsized sales lift on these investments we successfully completed over 100 Remodels in 2023 and will continue to work our way through the system in 2020 for our development efforts provide a runway for future growth offer good returns.

David Deno: We are opportunistic on relocations and continue to see outside sales lift on these investments. We have successfully completed over 100 green miles in 2023 and will continue to work our way through the system in 2024. Our development efforts provide a runway for future growth, offer good returns, and are a key part of our strategy. The last priority I'll discuss today is our leading off-premises channel. The business has more than doubled since 2019 and currently represents 24% of our U.S. sales. We were pioneers in the to-go space, and we continue to see robust demand in this highly incremental location. In addition, the success of our catering business at all of our brands, but particularly Carrabba's, provides a runway for future growth. Next, let me comment on our restaurant closure initiative. We periodically review our asset base, and in our latest review, we made the decision to close 41 underperforming locations. The majority of these restaurants were older assets with leases from the 1990s and early 2000s.

David Deno: And our key part of our strategy.

David Deno: The last priority I'll discuss today is our leading off premises channel the business has more than doubled since 2019, and currently represents 24% of our U S. Sales, we were pioneers in the <unk> space and we continue to see robust demand in this highly incremental location. In addition, the success of our catering business at all of our brands, but particularly Carrabba's provides a runway for future growth.

David Deno: Next let me comment on our restaurant closure initiative.

David Deno: Erratically review, our asset base and in our latest review we made the decision to close 41 underperforming locations the.

David Deno: The majority of these restaurants were older assets with leases from the 19th and early two thousands this decision considered a variety of factors, including sales and traffic trade areas and the investments that would have to be made to improve the restaurants. Despite this initiative our confidence and our portfolio remains high as we plan to open 40 to 45, new restaurants across the system in 2024.

David Deno: This decision considered a variety of factors, including sales and traffic, trade areas, and the investment that would have to be made to improve the restaurant's reputation. Despite this initiative, our confidence in our portfolio remains high as we plan to open 40 to 45 new restaurants across the system in 2024. These are promising trade areas with great potential. It's critical to add that these closures are not a reflection of the hard work of our team members.

David Deno: These are promising trade areas with great potential.

It is critical add that these closures are not a reflection of the hard work of our team members as always we will take care of our people offering many of the opportunity to transfer to another restaurant and severance for those who do not.

David Deno: Importantly, the sales growth initiatives I described are supported by a solid foundation with healthy margins robust cash flow and a strong balance sheet. This strength gives us the ability to invest in new unit development technology enhancements and asset improvements while meeting our commitments.

David Deno: As always, we will take care of our people, offering many the opportunity to transfer to another restaurant and severance for those who do not. Importantly, the sales growth initiatives I described are supported by a solid foundation with healthy margins, robust cash flow, and a strong balance. This strength gives us the ability to invest in new unit development, technology enhancements, and asset improvements while meeting our commitments. We remain dedicated to delivering great food and experiences for our guests while building a strong business that will continue to thrive for many years to come. Before I turn the call over to Chris, I just wanted to comment on the 8K we sent out this morning regarding Chris's retirement from Bloomin' Brands. Chris has been a great partner to me for the last five years as CFO. He has made many, many contributions to our company, and he will be missed. The company is considering various options for his replacement. Chris is expected to continue in his current role until such a time as a successor is named and otherwise assist in the transition.

David Deno: Main dedicated to delivering great food and experience for our guests while building a strong business that will continue to thrive for many years to come.

Speaker Change: Before I turn the call over to Chris I, just wanted to comment on the 8-K, we sent out this morning regarding Chris's retirement from Bloom and brands, Chris has been a great partner to me the last five years as CFO. He has made many many contributions to our company and he will be missed.

Chris Meyer: The company is considering various options for his replacement Christopher.

Chris Meyer: This is expected to continue in his current role until such a time a successor is named and otherwise assist in the transition Chris.

Chris Meyer: Chris Thank you for everything you've done for the company and for me over to you to discuss our financial performance in 2020 for guidance.

Christopher: Thanks, Dave for the kind words, it's been a privilege working with you and serving as our CFO for the last five years I.

Chris Meyer: I would like to start by providing a recap of our financial performance for the fiscal fourth quarter of 2023 total revenues in Q4 were $1 $109 billion, which was up 9% from 2022. This was primarily driven by an additional $83 $5 million of revenue from our 50 <unk> week favorable foreign exchange.

Chris Meyer: Chris, thank you for everything you have done for the company and for me. Now, over to you to discuss our financial performance and 2024 guidance. Thanks Dave for the kind words.

Chris Meyer: <unk> and the net impact of restaurant openings and closures.

Chris Meyer: U S comparable restaurant sales came in just slightly below our expectations at negative 20 basis points.

Chris Meyer: It's been a privilege working with you and serving as our CFO for the last five years. I would like to start by providing a recap of our financial performance for the fiscal fourth quarter of 2023. Total revenues in Q4 were $1.19 billion, which was up 9% from 2022. This was primarily driven by an additional $83.5 million of revenue from our 53rd week, favorable foreign exchange translation, and the net impact of restaurant openings and closures. U.S. comparable restaurant sales came in just slightly below our expectations at a negative 20 basis.

Chris Meyer: This reflects a comparable 14 week view versus 2022 traffic in Q4 was down three 1%, which represented a 160 basis point improvement in traffic from Q3.

Chris Meyer: Average check was up two 9% in Q4 versus 2022, as we mentioned in our prior calls check average benefit decreased steadily throughout the year as we chose not to replicate the amount of menu pricing that had been taken in 2022, we remain very cautious about taking additional menu pricing, particularly at outback.

Chris Meyer: Q4 off premises was approximately 24% of total U S. Sales importantly, the highly incremental third party delivery business was 13% of total U S sales, which was up from 12% in Q3, driven by our growth in catering.

Chris Meyer: This reflects a comparable 14-week view versus 2022. Traffic in Q4 was down 3.1%, which represented a 160 basis point improvement in traffic from Q3. Average check was up 2.9% in Q4 versus 2022. However, as we mentioned in our prior calls, check average benefit decreased steadily throughout the year as we chose not to replicate the amount of menu pricing that had been taken in 2022. We remain very cautious about taking additional menu pricing, particularly at Outback.

Chris Meyer: As it relates to other aspects of our Q4 financial performance.

Chris Meyer: GAAP diluted earnings per share for the quarter was <unk> 45 versus 61 of diluted earnings per share in 2022 adjusted diluted earnings per share was <unk> 75 versus <unk> 68 of adjusted diluted earnings per share in 2022 the.

Chris Meyer: The primary difference between GAAP and adjusted diluted earnings per share is due to restaurant closing and asset impairment costs related to our restaurant closure initiative.

Chris Meyer: Q4 off-premises was approximately 24% of total U.S. sales. Additionally, the highly incremental third-party delivery business was 13% of total U.S. sales, which was up from 12% in Q3, driven by our growth in catering, as it relates to other aspects of our Q4 financial performance. Gap diluted earnings per share for the quarter was $0.45 versus $0.61 of diluted earnings per share in 2022. Adjusted diluted earnings per share was $0.75 versus $0.68 of adjusted diluted earnings per share in 2022. The primary difference between GAAP and adjusted diluted earnings per share is due to restaurant closing and asset impairment costs related to our restaurant closure initiative.

Chris Meyer: Q4, adjusted restaurant level operating margins were 15, 9% versus 16, 8% last year the reduction in restaurant margin from last year was driven by a couple of factors first as we mentioned on the last call. In Q4, we were lapping significant beef favorability from 2022. This.

Chris Meyer: <unk>, coupled with a smaller benefit from average check did not allow us to leverage the Cogs line like we had throughout the first three quarters of 2023.

Chris Meyer: Second inflation levels remain somewhat elevated in Q4 and drove additional year over year margin unfavorably labor inflation was up four 4% in Q4 and restaurant operating expense inflation was up four 7%.

Chris Meyer: Total company adjusted operating income margin was seven 5% in Q4 compared to eight 2% in 2022 depreciation expense and general and administrative expense were both up in Q4, consistent with our increased levels of capital spending and our investments in infrastructure to support growth.

Chris Meyer: Q4 adjusted restaurant level operating margins were 15.9% versus 16.8% last year. The reduction in restaurant margin from last year was driven by a couple of factors. First, as we mentioned on the last call, in Q4, we were lapping significant beef favorability from 2022. This lapping, coupled with a smaller benefit from average check, did not allow us to leverage the COGS line like we had throughout the first three quarters of 2023. Second, inflation levels remained somewhat elevated in Q4 and drove additional year-over-year margin unfavorability. Labor inflation was up 4.4% in Q4, and restaurant operating expense inflation was up 4.7%.

Chris Meyer: As it relates to the 50 <unk> week, we estimate that the benefit from the extra week was worth 16 of diluted EPS to our 2023 results.

Chris Meyer: Week between Christmas and New year's includes many of our busiest days of the year and this is reflected in the large EPS amount from this week the operating margin for the 50 <unk> week is higher than our normal operating margin because some of our fixed expenses such as rent and depreciation are recorded on a monthly basis and were not allocated.

Chris Meyer: The total company adjusted operating income margin was 7.5% in Q4 compared to 8.2% in 2022. Depreciation expense and general and administrative expense were both up in Q4, consistent with our increased levels of capital spending and our investments in infrastructure to support growth. As it relates to the 53rd week, we estimate that the benefit from the extra week was worth 16 cents of diluted EPS for our 2023 results. The week between Christmas and New Year's includes many of our busiest days of the year, and this is reflected in the large EPS amount from this week. The operating margin for the 53rd week is higher than our normal operating margin because some of our fixed expenses, such as rent and depreciation, are recorded on a monthly basis and were not allocated to the 53rd week. Turning to our capital structure, total debt was $786 million at the end of Q4.

Chris Meyer: The 50 <unk> week.

Chris Meyer: Turning to our capital structure total debt was $786 million at the end of Q4, we have worked very hard coming out of COVID-19 to reduce our debt levels and are pleased that our lease adjusted leverage ratio is solidly below our goal of three times with significant levels of liquidity in.

Chris Meyer: In terms of share repurchases, we repurchased two 8 million shares of stock in 2023 for $70 million as indicated in this mornings earnings release. The board has canceled the existing $125 million authorization and approved a new $350 million authorization expiring in.

Chris Meyer: August of 2025. This is a larger authorization than we would normally put in place. The purpose of the authorization is two fold.

$150 million of this authorization allows us to continue to repurchase a typical volume of shares over the next 18 months.

Chris Meyer: Our convertible bond matures in May of 2025, the remaining $200 million of this authorization allows for flexibility to retire the convert some time between now and next May there are a number of ways to structure a potential transaction and these additional dollars give us the flexibility to retire the remaining.

Chris Meyer: We have worked very hard coming out of COVID to reduce our debt levels and are pleased that our lease-adjusted leverage ratio is solidly below our goal of three times, with significant levels of liquidity. In terms of share repurchases, we repurchased 2.8 million shares of stock in 2023 for $70 million. As indicated in this morning's earnings release, the board has canceled the existing $125 million authorization and approved a new $350 million authorization expiring in August of 2025. This is a larger authorization than we would normally put in place. The purpose of the authorization is two-fold.

Chris Meyer: Meaning $105 million of principal on the convert and remove the dilution from the converts that currently exists in our share counts.

Chris Meyer: In our 2024 guidance, we are assuming approximately 4 million shares related to the convert are included in our adjusted EPS calculation.

Chris Meyer: The board also declared a quarterly dividend of 24 cents a share payable on March 20th.

Chris Meyer: First, $150 million of this authorization allows us to continue to repurchase a typical volume of shares over the next 18 months. Second, our convertible bond matures in May of 2025. The remaining $200 million of this authorization allows for flexibility to retire the convert sometime between now and next May. There are a number of ways to structure a potential transaction, and these additional dollars give us the flexibility to retire the remaining $105 million of principal on the convert and remove the dilution from the convert that currently exists in our share count. In our 2024 guidance, we are assuming approximately 4 million shares related to the conversion are included in our adjusted EPS calculation. The board also declared a quarterly dividend of 24 cents a share payable on March 20.

Chris Meyer: Before I turn to 2024 I wanted to remind everyone that our full year 2023. Adjusted results include the benefits from the Brazil tax legislation and the 50 <unk> week that.

Chris Meyer: The Brazil tax legislation benefit was worth approximately 26.

Chris Meyer: And the 50 <unk> week was worth approximately <unk> 16 on.

Chris Meyer: On a comparative 52 week basis, our 2023 adjusted diluted earnings per share result was $2 51.

Chris Meyer: Now turning to our 2024 and Q1 guidance.

Chris Meyer: We expect the full year U S comparable restaurant sales to be flat to 2% on a comparable calendar basis.

Chris Meyer: Adjusted diluted earnings per share are expected to be between $2 51, and $2 66.

Chris Meyer: Before I turn to 2024, I wanted to remind everyone that our full-year 2023 Adjusted Results include the benefits from the Brazil Tax Legislation in the 53rd week. The Brazil tax legislation benefit was worth approximately $0.26, and the 53rd week was worth approximately $0.16. On a comparative 52-week basis, our 2023 adjusted diluted earnings per share result was $2.51. Now, turning to our 2024 and Q1 guidance. We expect the full-year U.S. comparable restaurant sales to be flat to 2% on a comparable calendar basis. Adjusted diluted earnings per share are expected to be between $2.51 and $2.66.

Chris Meyer: We expect commodities inflation to be between 3% and 4% driven in large part by beef inflation.

Chris Meyer: We expect our full year tax rate assumption to be between 14% and 16% capital.

Chris Meyer: <unk> are expected to be between $270 million and $290 million our level of capital spending accelerated late in 2023 is our new restaurant pipeline has grown the 2024 capital plan includes dollars to support approximately 40 to 45, new restaurant openings.

Chris Meyer: Including significant Q4 spending for 2025 openings as well as ongoing funding of remodel relocation and infrastructure projects to.

Chris Meyer: We expect commodities inflation to be between 3% and 4%, driven in large part by beef inflation. We expect our full-year tax rate assumption to be between 14% and 16%. Capital expenditures are expected to be between $270 million and $290 million. Our level of capital spending accelerated late in 2023 as our new restaurant pipeline grew. The 2024 capital plan includes dollars to support approximately 40 to 45 new restaurant openings, including significant Q4 spending for 2025 openings, as well as ongoing funding of remodel, relocation, and infrastructure projects. The 53rd week in 2023 creates some complexity in comparing year-over-year results both for the full year and by quarter. Each fiscal quarter of 2024 will be compared to a fiscal quarter of 2023 that includes a one-week shift. This shift is especially impactful in the first quarter.

Chris Meyer: The 50 <unk> week in 2023 creates some complexity in comparing year over year results, both for the full year and by quarter.

Chris Meyer: Each fiscal quarter of 2024, we'll be comparing to a fiscal quarter from 2023 that includes a one week shift this shift is especially impactful in the first quarter.

Chris Meyer: Please refer to the fiscal and comparable calendar dates table provided in our earnings release. This morning to help you better understand our 2024 calendar.

Chris Meyer: As it relates to the first quarter similar to the rest of the industry, we experienced negative impacts from weather in the first few weeks of the year. This represents a one 3% comparable sales headwind to the quarter. We have included this thinking in our comparable sales guidance as such we expect U S comparable restaurant sales to be down.

Chris Meyer: Between 50 basis points, and 200 basis points on a comparable calendar basis.

Chris Meyer: The good news is we've seen continued sales growth ahead of the industry. In addition, our Valentines day week represented the strongest week in our company's history. This trend, including the weather impact from the first three weeks are included in our guidance.

Chris Meyer: Please refer to the fiscal and comparable calendar dates table provided in our earnings release this morning to help you better understand our 2024 calendar. As it relates to the first quarter, similar to the rest of the industry, we experienced negative impacts from weather in the first few weeks of the year. This represents a 1.3% comparable sales headwind for the quarter. We have included this thinking in our comparable sales guidance. As such, we expect U.S. comparable restaurant sales to be down between 50 basis points and 200 basis points on a comparable calendar basis. The good news is that we've seen continued sales growth ahead of the industry. In addition, our Valentine's Day week represented the strongest week in our company's history. This trend, including the weather impact from the first three weeks, is included in our guidance. We expect Q1 adjusted diluted earnings per share to be between $0.70 and $0.75, which includes a negative $0.06 impact due to the calendar shift and an approximate $0.05 impact from weather at the beginning of the quarter.

Chris Meyer: We expect Q1 adjusted diluted earnings per share to be between 70 and 75.

Chris Meyer: Which includes a negative 6% impact due to the calendar shift and an approximate <unk> <unk> impact from weather at the beginning of the quarter. In addition, the removal of the Brazil tax exemption is a headwind of eight <unk> in Q1 versus 2023.

Chris Meyer: In summary, we successfully navigated a challenging environment in Q4, we will remain disciplined in executing against our strategy in 2024 and will emerge a better stronger operations focused company and with that we will open up the call for questions.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Chris Meyer: In addition, the removal of the Brazil tax exemption is a headwind of $0.08 in Q1 versus 2023. In summary, we successfully navigated a challenging environment in Q4. We will remain disciplined in executing against our strategy in 2024 and will emerge as a better, stronger operations-focused company. And with that, we will open up the call for questions. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

Speaker Change: May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys to allow for as many questions as possible.

Speaker Change: Ask that you. Please keep to one question and one follow up.

Speaker Change: Our first question comes from the line of Jeffrey Bernstein with Barclays. Please proceed with your question.

Jeffrey Bernstein: Great. Thank you very much.

Jeffrey Bernstein: My question is on the broader consumer environment.

Jeffrey Bernstein: Curious, let me see multiple brands at a pretty good perspective.

Jeffrey Bernstein: Consumer behavior in recent months impacting traffic or mix.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. To allow for as many questions as possible, we ask that you please keep to one question and one follow-up. Our first question comes from the line of Jeffrey Bernstein with Barclays. Please proceed with your question.

Jeffrey Bernstein: You mentioned the risk of a slow in consumer in 2024, so I'm just trying to gauge what you've seen in recent months.

Speaker Change: And Chris just to clarify I think you said Valentine's day, very strong valentines week.

Speaker Change: Broadly the trends since the first few weeks of January with the inclement weather would you say that they are now back to the strength you were seeing to close the fourth quarter or how would you gauge that more recent momentum and then I had one follow up.

Jeffrey Bernstein: My question is on the broader consumer environment, for the multiple brands have a pretty good perspective on any change in consumer behavior in recent months, impacting traffic or Nick. And they mentioned the risk of a slow-on consumer in 2024. So just trying to gauge what you've seen in recent months. And Chris, just to clarify, I think you said Valentine's Day, very strong, or Valentine's week.

Chris Meyer: Yes, good morning.

Speaker Change: Yes, we see the consumer hanging in there.

Speaker Change: Our trends as I talked about on the call we had a weak October but they got stronger as the quarter moved along and we finished really strong and then we had the first three weeks of weather, but then the strength that we've seen return and I'm really pleased with some of the trends, we're seeing in our business, especially at Outback and Carrabba's 12 of the last <unk>.

David Deno: But more broadly, the trend since the first few weeks of January with the inclement weather, would you say that they're now back to the strength you were seeing to close the fourth quarter? Or how would you gauge that more recent momentum?

Speaker Change: 114 weeks Outback has outperformed the industry, we expect that trend to continue.

Speaker Change: And we've tried to incorporate that all of that in our guidance. So we see the consumer hanging in there and we see our brands doing pretty well.

Speaker Change: Trend.

Speaker Change: Yeah, and the only thing I would add to that is you asked about mix and mix trends, yes, no. We're still and you saw it in the numbers, we're still we're still seeing some negative mix trends.

David Deno: Yeah, we see the consumer hanging in there. Our trends, as I talked about on the call, we had a weak October, but they got stronger as the quarter moved along, and we finished really strong.

Speaker Change: So up in the financials, but at the same time I think as we've said in the last couple of calls a lot of that is engineered the growth in catering at Carrabba's has been significant the <unk> activity has been very successful. So I think that it's been more engineered than anything else now that's not to say that there isn't some check management going on but I don't think thats the lions share of what we've been seeing.

David Deno: And then we had the first three weeks of weather, but then the strength that we've seen returned. And I'm really pleased with some of the trends we're seeing in our business, especially at Outback and Carrabba's. In 12 of the last 14 weeks, Outback has outperformed the industry. We expect that trend to continue, and we've tried to incorporate all that in our guidance, so we see the consumer hanging in there, and we see our brands doing pretty well in terms of trends. Yeah, and the only thing I would add to that is that you asked about mixed and mixed trends.

Speaker Change: Understood and then my follow up is just.

Speaker Change: More broadly.

Speaker Change: Dave in the boardroom I'm, just wondering has anything changed in recent months or quarters.

Speaker Change: Activist involvement I'm, just wondering whether there is any change in perspective, our priorities or how's that.

Speaker Change: Investor and the impacts that you've seen if any as we look to your business through 2024. Thank you.

Chris Meyer: Yeah, no, we're still, and you saw the numbers, we're still, we're still seeing some negative mixed trends show up in the financials. But at the same time, I think, as we've said in the last couple calls, a lot of that is engineered. The growth in catering at Carabas has been significant. The LTO activity has been very successful. So I think that it's been more engineered than anything else

Speaker Change: They've been a very positive part of our company and we welcomed two new board members. As you saw we've had good interaction the boardroom good ideas and they have been a big part of helping us understand how we can move our businesses forward and we're very optimistic about the year end.

Jeffrey Bernstein: Now, that's not to say that there isn't some check management going on, but I don't think that's the lion's share of what we've been seeing understood. And then my follow-up question is just, More broadly, Dave, in the boardroom, I'm just wondering, has anything changed in recent months or quarters? You know, there's activist involvement.

Speaker Change: And I think it's been a good partnership.

Speaker Change: Great to hear thank you very much.

Speaker Change: Thank you. Our next question comes from the line of Alex Slagle with Jefferies. Please proceed with your question.

Alexander Russell Slagle: Alright, thanks, good morning.

Alexander Russell Slagle: Morning, Chris Congrats.

Alexander Russell Slagle: Great career, there and Oh.

Alexander Russell Slagle: We'll all Miss you for sure.

David Deno: I'm just wondering whether there's any change in perspective or priorities or how that investor and the kind of the impact that you've seen, if any, as you look to your business through 2024. Thank you. Yeah, we have a – they've been a very positive part of our company, and we welcomed our two new board members, as you saw. We've had good interaction in the boardroom, good ideas, and they've been a big part of helping us understand how we can move our businesses forward. And we're very optimistic about the year, and I think it's been a good partnership. Great to hear. Thank you very much.

Alexander Russell Slagle: Yeah.

Alexander Russell Slagle: To ask I guess, just as you step back and think about all of this the efforts you've made.

Alexander Russell Slagle: Improving the guest experience at Outback and investing in food quality and simplification better service Remodels.

Alexander Russell Slagle: How far have you gone along the spectrum of what you think you need to do to position. This brand as a share gainer and I know we have more that we'll hear about in the quarters to come but.

Wanted to sort of think about that and I don't know if theyre thinking that way.

Alexander Russell Slagle: Specific dollar amounts to how much you've invested in how much you think you.

Jeffrey Bernstein: Thank you. Our next question comes from the line of Alex Slagle with Jefferies. Please proceed with your question. All right, thanks. Good morning.

Alexander Russell Slagle: You need to do in the core experience, but any thoughts around that.

Alexander Russell Slagle: Chris, congrats. A great career there, and we'll all miss you for sure. I wanted to ask, I guess, just as you step back and think about all the efforts you've made, improving the experience at Outback and investing in food quality, simplification, better service, and remodels, I mean, how far have you gone along the spectrum of what you think you need to do to position this brand as a shared gainer? And I know we have more that we'll hear about in the quarters to come. But I want to sort of think about that, and I don't know if there's even a way to.

Alexander Russell Slagle: Sure.

Alexander Russell Slagle: Think we've made progress, but we have more to do.

Alexander Russell Slagle: I don't know if I should give a football analogy or a scale of one to 10, but I think we've made we've made progress we're seeing it in our trends, which especially at the end of last year in the first quarter of this year at Outback, but when you look at the work we've done to understand our consumer and in this post COVID-19 environment and sharpen our positioning that's been done I think.

Look at the no rules just right positioning we've started that started more work to do there. If you look at the food and service elements that we've invested in we invest we have invested some but we have even more to do I think us on some of the service elements and some of the food elements, we talked about the additional spending in marketing in 2024, we're seeing some return on that.

David Deno: What are your thoughts on this project? I think we've made progress, but we still have more to do. I don't know if I should give a football analogy or a scale of 1 to 10, but I think we've made progress. We're seeing it in our trends, especially at the end of last year and the first quarter of this year at OPAC. But when you look at the work we've done to understand our consumer in the post-COVID environment and sharpen our positioning, that's been done. I think you look at the No Rules Just Write positioning we've started. That's started.

Alexander Russell Slagle: We've opened up six new restaurants, and we can open up 15 to 18 in 2024 and then we're remodeling so it's <unk>.

Alexander Russell Slagle: Alex its started but we have more to do and I think we're beginning to see the trend change in the business.

Speaker Change: Got it.

Speaker Change: The closures how many of those effectively would have been relocations.

Speaker Change: It's the relocation pipelines are still the same.

Speaker Change: Before or how does that look and maybe any thoughts on like that cash on cash return profile of these new units.

David Deno: There's more work to do there. If you look at the food and service elements that we've invested in, we've invested in some, but we have even more to do, I think, on some of the service elements and some of the food elements. We talked about additional spending and marketing in 2024, and we're seeing some return on that.

Speaker Change: Yes, so give you some perspective no. None of these would be quote unquote considered relocation opportunities I think the relocations. This year, we'll probably have another five or so I think that we like the cadence that we have in terms of relocations every time, we relocated new Outback, we see significant sales lifts and I think that the.

David Deno: We've opened up six new restaurants, and we're going to open up 15 to 18 in 2024, and then we're remodeling. So, Alex, it's started, but we have more to do, and I think we're beginning to see it in the trend change in the business.

Just to sort of piggyback on the on the question to Dave about Outback I think that the relocation and what we see when we do a relocation is one of the reasons why we really believe in the relevance and the strength of the Outback brand. Because every time, we do that we see such positive results now what I would say is like from a new unit perspective, obviously, we.

Alexander Russell Slagle: And the closures, how many of those effectively would have been relocations? Is the relocation pipeline sort of still the same as it was before? How does that look?

Speaker Change: We're seeing pretty good cash on cash returns.

Speaker Change: <unk>.

Chris Meyer: And I mean, maybe any thoughts on the cash on cash return profile of these new units? Yeah, so I'll give you some perspective. No, none of these would be, quote unquote, considered relocation opportunities. I think, you know, the relocations this year will probably have another five or so. I think that we like the cadence that we have in terms of relocations. Every time we relocate a new Outback, we see significant sales lifts. And I think that, you know, just to sort of piggyback on the question Dave asked about Outback, I think that the relocation and what we see when we do a relocation is one of the reasons why we really believe in the relevance and the strength of the Outback brand because every time we do that, we see such positive results.

Speaker Change: We think about allocation of capital we get asked a lot why are you investing so much in new units, we're getting solid returns on these new units there are in infill opportunities in strong markets with strong demographics, and obviously I mean, I think from a capital allocation perspective, if we were seeing that we werent getting the returns that we need to justify the investment then we would use those dollars.

Speaker Change: Elsewhere. So we feel really good about kind of the whole strategy and how we're deploying capital.

Speaker Change: Thank you.

Thank you. Our next question comes from the line of John <unk> with Jpmorgan. Please proceed with your question.

John: Thank you.

John: Question is around menu simplification then.

John: I guess, a couple of things I mean, one how far down. This journey are you in terms of yet another significant reduction in menu items at Outback, obviously that would come with reduced complexity in some cases that actually may come with reduced cost. So just wanted to get your sense of how big of an opportunity you guys see.

Chris Meyer: Now, what I would say is that from a new unit perspective, obviously, we're seeing pretty good cash on cash returns. You know, we think about allocation of capital. We get asked a lot, you know, why are you investing so much in new units? We're getting solid returns on these new units. They're in infill opportunities and strong markets with strong demographics. And obviously, I think from a capital allocation perspective, if we were seeing that we weren't getting the returns that we need to justify the investment, then we would use those dollars elsewhere. So we feel really good about kind of the whole strategy and how we're deploying capital. Thank you. Thank you. Our next question comes from the line of John Ivankoe with JP Morgan. Please proceed with your question. Hi.

John: That to be.

John: The first question and then secondly are there any opportunities for kind of a longer term price investments of the Outback brand. I mean are there is some opportunities on the menu, where you could sell a lot more certain certain foods, including.

John: Foods that are regularly price on the menu of actually lowering the menu prices and maybe in some cases, bringing them a little bit closer to where peers are.

Speaker Change: Yes, John.

John: I think on the simplification side Thats something we have always looked at and we are continuing to look at and I think thats a good point that you make and it's something that works. We're looking at in the marketplace I don't want to get any further than that because of competitive reasons, but I think you've hit on something that we're that we're looking at net that brings improved operations and I talked on the call about the progress we're making.

John William Ivankoe: Thank you. The question is around menu simplification and, you know, I guess a couple of things. One, you know, how far down this journey are you in terms of, you know, yet another significant reduction in menu items at Outback? Obviously, that would come with reduced complexity, which may actually come with reduced cost.

John: And if we can make it with the technology and with some of the work we're doing on the menu. If we can make it easier for operators to.

John: Serve product and easier for our customers to navigate the menu that could be an opportunity for us. So we're looking at that number one number two is the way we tried to get about this John is if you look at our combo pricing thats something thats very attractive versus competitors. If you look at what we're doing with the Aussie three course meal 16, 99 that works very.

David Deno: So I just wanted to get your sense of how big of an opportunity you guys see that to be, you know, as kind of the first question. And then, secondly, are there any opportunities for kind of longer-term price investments in the Outback brand? I mean, are there some opportunities on the menu where, you know, you could sell a lot more certain, you know, certain foods, including, you know, foods that are regularly priced on the menu and actually lower the menu prices and maybe, in some cases, bring them a little bit closer to where peers are? Yeah, John.

John: Well and we're also potentially looking at some high quality menu items that may be a little bit lower price that we would introduce on the menu to help offset some of the pricing at outback that some of the pricing perceptions at Outback. So those are the things that we're doing is looking at our combo pricing. We're looking at some of the <unk> that we're doing in advertising against that and we're also looking.

John: At some of the menu items that we can bring in place that might be a little.

John: Lower price point, but offer of high value and high quality.

Speaker Change: Thank you.

David Deno: I think, on the simplification side, that's something we have always looked at, and we are continuing to look at, and I think that's a good point that you make. And it's something that we look at in the marketplace. I don't want to get any further than that because of competitive reasons, but I think you've hit on something that we're looking at.

Speaker Change: Thank you. Our next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question.

Sharon Zackfia: Hi, Good morning can you give us some more texture around the closers.

Sharon Zackfia: What concepts were impactful.

Sharon Zackfia: Isaac Ro.

Sharon Zackfia: Our older locations, but any commonality other than the comparable or older and then how do we think about the impact of those closures on revenue and margins as we think about 24.

David Deno: And that brings improved operations, and I talked on the call about the progress we're making, and if we can do it with the technology and with some of the work we're doing on the menu, if we can make it easier for operators to serve product and easier for our customers to navigate the menu, that could be an opportunity for us. So we're looking at that, number one. Number two is, the way we tried to approach this, John, is if you look at our combo pricing, that's something that's very attractive versus competitors. If you look at what we're doing with the Aussie three-course meal at $16.99, that works very well.

Speaker Change: Yes, they are split across the portfolio. So there was.

Speaker Change: Mostly outback, but there was a handful in the other concepts as well.

Speaker Change: There we talked about the revenue impact you know.

Speaker Change: About $100 million of.

Speaker Change: Actual revenue would come out of related those closures, but actually its profit accretive right.

Speaker Change: What part of the reason why we're making this move we probably going to add about $4 million of EBIT to the bottom line results of the company. This year as a result of the closures.

Speaker Change: I think Sharon is we're opening 40%, 40% to 45, new restaurants too.

David Deno: And we're also potentially looking at some high-quality menu items that may be a little bit lower priced that we would introduce on the menu to help offset some of the pricing at Outback, some of the pricing perceptions at Outback. So those are the things that we're doing. We're looking at our combo pricing, we're looking at some of the LTOs that we're doing and advertising against that, and we're also looking at some of the menu items that we can bring in place that might be a little lower price point but offer high value and high quality. Thank you. Thank you. Our next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question. Hi, good morning.

Speaker Change: To bring in those restaurants will be far more visible attractive higher performing across the portfolio.

And so that will that will really that will really help as well.

Speaker Change: Thanks for that and I think you alluded to in the Capex.

Speaker Change: Maybe a further acceleration in development in 2025 kind of Triangulating the commentary that correctly is that.

Speaker Change: Is that the case.

Speaker Change: No from 40 to 45, new locations. This year, what I mean, what kind of cadence of growth do you think you can maintain as you.

Speaker Change: You get into 'twenty, five 'twenty six and beyond.

Sharon Zackfia: Can you give us some more texture around the closures? And what concepts were impacted? Besides the Aussie grill, I know that they were older locations, but was there any commonality other than the fact that they were older?

Speaker Change: Yes, Sharon I love our pipeline, our real estate team has done a great job.

Speaker Change: You are correct, we would like to improve the cadence and raise the cadence as we go forward as Chris mentioned, we're always on top of our returns to make sure that the returns are great but.

Chris Meyer: And then how do we think about the impact of those closures on revenue and margins as we think about 24? Yeah, they're split across the portfolio. So there was, you know, mostly Outback, but there were a handful in the other concepts as well.

Speaker Change: We have a pipeline building that is very very strong, especially in our stronghold markets in the southeast yes, maybe just to give you a little context on the capital guide and how that comes together a little bit. So one of the dynamics that you are going to have in the 2020 for capital spending is that in 2023, we had about $65 million of restaurant technology.

David Deno: We talked about the revenue impact, you know, sort of about $100 million of actual revenue would come out related to those closures. But actually, it's profit accretive, right? You know, that's part of the reason why we're making this move. We're probably going to add about $4 million of EBIT to the bottom line results of the company this year as a result of the closure. The other thing, Sharon, is we're opening 40 to 45 new restaurants to bring in. Those restaurants will be far more visible, attractive, and higher-performing across the portfolio, and so that will really help as well. Thanks for that!

Speaker Change: <unk> that spend is going to fall off in 2024, but we are then going to have an increase in the number of new units that youre going to see in the numbers. So it's really just a trade between the technology and the restaurants, increasing the number of new units.

Speaker Change: Very helpful. Thank you.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question comes from the line of Jeff Farmer with.

Sharon Zackfia: And I think you alluded to in the CapEx. Kind of maybe a further acceleration in development in 2025, if I'm kind of triangulating the commentary there correctly. Is that, is that the case?

Jeff Farmer: Gordon Haskett. Please proceed with your question.

Jeff Farmer: Thanks, and best of luck to Chris with everything Youre going to be pursuing in the future.

Jeff Farmer: Couple of questions for you.

Jeff Farmer: Anything you can offer on the sort of the component assumptions across pricing traffic mix as it relates to that flat to 2% same store sales guidance for 2024.

David Deno: And, you know, from 40 to 45 new locations this year, what, I mean, what kind of pace of growth do you think you can maintain as you get into 25, 26, and beyond? Yeah, Sharon. I love our pipeline. Our real estate team has done a great job. You're correct.

Speaker Change: Yeah sure I'll give I'll give you some perspective, so I think if you think about traffic.

Speaker Change: There's a pretty wide range of possible outcomes here I'd say anywhere from flat, which I think is certainly doable, but also down to like particularly be down to 2% a lot of it is going to depend on sort of the external environment.

Chris Meyer: We would like to improve the cadence and raise the cadence as we go forward. As Chris mentioned, we're always on top of our returns to make sure that the returns are great. But we have a pipeline building that is very, very strong, especially in our stronghold markets in the Southeast. Yeah, and maybe just to give you a little context on the capital guide and how that comes together a little bit. So one of the dynamics that you are going to have in 2024 capital spending is that in 2023, we had about $65 million in restaurant technology. That spend is going to fall off in 2024.

But theres also a couple of things worth calling out on that I mean first we're going to start out in a little bit of a hole here in Q1 because of the weather from a traffic traffic perspective, and then I would say candidly the category as measured by black box or Napa or wherever you choose to look at the category look it's likely going to have a negative traffic outlook for 2024, and I don't know.

Speaker Change: Thats anything new I mean, I think that outside of a couple of years around COVID-19. The category generally speaking been down 2% to 3% pretty much every year that I can I can remember going back quite a ways. So I think those two things taken in perspective. It is our goal and as our commitment to try to outperform the category in traffic this year, which is why if the category.

Chris Meyer: But we are then going to have an increase in the number of new units that you're going to see in the numbers. So it's really just a trade between technology and restaurants, increasing the number of new units. Very helpful.

Speaker Change: Down 2% to 3% our traffic is going to be flat to down 2% in that range. We expect to outperform the category does a little better because the consumer seems to be hanging in there then of course, we have opportunity to have some upside there. So that's how I would think about traffic now in terms of average check pricing et cetera start with average check in the full year guide and assumes an average.

Jeff Farmer: Thank you. Thank you. Our next question comes from the line of Jeff Farmer with... This is Gordon Haskett.

Chris Meyer: Please proceed with your question. Thanks, and best of luck to Chris with everything you're going to be pursuing in the future. A couple questions for you. Anything you can offer on the sort of the component assumptions across pricing traffic mix as it relates to that flat to 2% central sales guidance for 2024? Yeah, yeah, sure.

Speaker Change: Check increase of call it 2% to 3% and thats going to be comprised of about I would say three 5% of so of pricing and then some negative mix in that negative mix again is driven by some of the things I talked about in terms of catering growth L. T O activity things like that the pricing assumption is going to have about 2% or so rollover pricing and.

Speaker Change: And then a small amount of incremental pricing over the balance of the year again, I mean, the commodity environment is going to be somewhat benign, but the one area, where it is not benign isn't the beef markets and so we're going to have significant beef inflation against this year again this year and so some of that incremental pricing is going to be meant to offset that.

Chris Meyer: I'll give you some perspective. So I think if you think about traffic, there's a pretty wide range of possible outcomes. It's anywhere from flat, which I think, you know, is certainly doable, but also down to, like, maybe down to 2%. A lot of it's going to depend on sort of the external environment. But there's also a couple things worth calling out about that. I mean, first, you know, we're going to start out in a little bit of a hole here in Q1 because of the weather from a traffic perspective. And then I would say, candidly, the category is measured by, you know, Black Fox or NAP, however you choose to look at the category.

Speaker Change: Alright, that's helpful. And then just as a follow up as it relates to again sort of the increased level of media.

Speaker Change: Have you sort of fully implemented data across Q4 and into the first part of <unk> or is this going to sort of slowly build.

How should we be thinking about the ongoing effort to sort of get a stronger media.

Speaker Change: Share of voice out there.

Chris Meyer: Look, it's likely going to have a negative traffic outlook for 2024, and I don't think that's anything new. I mean, I think that outside of a couple years around COVID, the category, generally speaking, has been down 2% to 3% pretty much every year that I can remember going back quite a ways. So I think those two things taken in perspective, it is our goal and is our commitment to try to outperform the category in traffic this year, which is why if the category is down 2% to 3%, our traffic is going to be flat to We expect to outperform. If the category does a little better because the consumer seems to be hanging in there, then, of course, we have the opportunity to have some upside there. So that's how I would think about traffic. Now, in terms of, you know, average check pricing, et cetera, start with average check. In the full year guide, it assumes an average check increase of, call it, 2% to 3%.

Speaker Change: Yes, Jeff two ways to think about it one it will build and we will always look at the ideas, we have and I'm pretty excited about a couple of the ideas coming up balance of the year and so the idea is will the funding will follow the ideas. So we see that there they will build during the year and then we will fully support our.

Speaker Change: Ideas are strong share of voice.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question comes from the line of Sara Senatore with Bank of America. Please proceed with your question.

Sara Harkavy Senatore: Alright, thank you.

Sara Harkavy Senatore: I'm trying to understand how you are thinking about capital allocation by which I mean.

Sara Harkavy Senatore: You realize obviously have high returns, but we bear scenario, where you know if you reinvested that money elsewhere, maybe not in capital but.

Sara Harkavy Senatore: Opex, maybe even more marketing or maybe or something like that where you could get you think you could see a return across the system.

Sara Harkavy Senatore: Does the relocations, obviously healthy individuals.

Sara Harkavy Senatore: As I think about you know.

Chris Meyer: And that's going to be comprised of about, I'd say, 3.5% or so of pricing and then some negative mix. And that negative mix, again, is driven by some of the things I talked about in terms of catering growth, LTO activity, things like that. The pricing assumption is going to have about 2% or so of rollover pricing and then a small amount of incremental pricing over the balance of the year. You know, again, I mean, the commodity environment is going to be somewhat benign, but the one area where it's not benign is in the beef markets.

Sara Harkavy Senatore: The guidance it looks a little heavier on capex than we had thought.

Sara Harkavy Senatore: And so wondering how you kind of compare ROI across the different.

Sara Harkavy Senatore: Of capital within the P&L or or <unk>, Capex, and then and then I just have a quick.

Speaker Change: Clarifying question sure we look at that very carefully across the P&L, but we look at our labor investments are food investments and then also capex.

Speaker Change: One of our ways to unlock traffic growth, especially at Outback, where we have older assets is the refreshment of the really strong assets relocations and new and that will uplift the entire trade area and as we did our relocations or excuse me as we did our remodels in 2023, we tried to concentrate them for instance, in Florida and we saw the.

Chris Meyer: And so we're going to have significant beef inflation again this year, and so some of that incremental pricing is going to be meant to offset that. Alright, that's helpful.

Jeff Farmer: And just as a follow-up, as it relates to, again, sort of the increased level of media... Have you sort of fully implemented that across Q4 into the first part of 1Q, or is this going to sort of slowly build? How should we be thinking about the ongoing effort to sort of get a stronger media and share a voice out there? Yeah, Jeff, two ways to think about it.

Speaker Change: A benefit of that concentration so as we look across the P&L. We look at the investments, we're making labor we look at the investments, we're making food, but in advertising, but then also we look at our capital and we know that.

Speaker Change: Cash on cash return, we received was strong and then what it does to the entire marketplace and then what does for traffic as we uplift our assets. Yes. We've made we've made decisions like that in the past I mean, we certainly have and whether it's increasing portion sizes at some of our brands or adding a second side there had been reinvestments back in areas, where we think it makes sense so search.

David Deno: One, it will build. And we will always look at the ideas we have. And I'm pretty excited about a couple of the ideas coming up during the balance of the year. And so the ideas will, the funding will follow the ideas. So we see that there, they will build during the year, and then we will fully support our ideas with a strong share of voice. Thank you. Thank you.

Speaker Change: One of the advantages of having a significant amount of free cash flow like we have is that you are able to make these kind of investments and decisions and still leave yourself in a really good shape from an from a capital structure standpoint.

Sara Harkavy Senatore: Our next question comes from Sara Senatore with Bank of America. Please proceed with your question. Thank you. I guess I'm trying to understand how you are thinking about capital allocation, by which I mean, you know, the reloads obviously have high returns, but is there a scenario where, you know, if you reinvested that money elsewhere, maybe not in capital but, you know, an operational expenditure, maybe even more marketing or labor, something like that, where you could get, you think you could see a return across the system, just As I think about, you know, the guidance, it looks a little heavier on CapEx than we had thought, and so I'm wondering how you kind of compare ROI across the different uses of capital within the P&L or in CapEx, and then I just have a quick clarifying question. Sure.

Speaker Change: Got it thank you.

Speaker Change: Clarify what Youre gearing has.

Speaker Change: Order implications.

Speaker Change: Trade area, so that the perception of the customers in that trade area from zero a remodel.

Speaker Change: Reverberate throughout the trade area is that is that fair, yes, there's nothing like a new op back or two in a trade in a city to to attract people and say Wow look at that especially in our new prototypes, which we think are very attractive. So thats part of the traffic building as well as the entire trade area, we factor in and we'll factor in cannibalization when we come up with the <unk>.

Speaker Change: Returns for new restaurant investments. So if there is a we felt going into entering a restaurant and a charity where we already have a significant presence we factor in potential cannibalization into our mouth model to make sure that we're making the right decisions.

David Deno: We look at that very carefully across the P&L. We look at our labor investments, our food investments, and then also CapEx. One of our ways to unlock traffic growth, especially at Outback, where we have older assets, is refreshment of the really strong assets, relocations, and new. And that will uplift the entire trade area.

Speaker Change: Got it okay. Thank you Adnan just a clinical question am I understanding correctly the repurchase.

Speaker Change: Just to offset the dilution from <unk>.

Speaker Change: The convert is that is it sort of pretty much a wash.

Chris Meyer: And as we did our relocations, excuse me, as we did our remodels in 2023, we tried to concentrate them, for instance, in Florida, and we saw the benefit of that concentration. So, you know, as we look across the P&L, we look at the investments we want to make in labor, we look at the investments we want to make in food and advertising, but then also we look at our capital, and we know that the cash on cash return we receive is strong, and then what it does for the entire marketplace, and then what it does for traffic as we uplift our assets. Yeah, and we've made decisions like that in the past.

Speaker Change: Well, yes so.

Speaker Change: The convert gets pretty pretty complicated, but let me. So let me just try to frame. The 300, because it's an important part of what we're trying to do here the $350 million share repurchase authorization. So you can put aside the $1 50 right. Because the 150 is just normal course of business, we did $70 million of share repurchases in 2023, we've got another $150 million for the.

Speaker Change: Next 18 months, that's pretty much normal course of business. The remaining 200. It just gives us optionality and again I'm not going to get too much into timing because timing can be anywhere between now and next may when the convert comes to maturity, but what I can say about how it would be performed is.

Sara Harkavy Senatore: I mean, we certainly have; whether it's increasing portion sizes at some of our brands or adding a second side, there have been reinvestments back into areas where we think it makes sense. So, certainly, one of the advantages of having a significant amount of free cash flow like we have is that you're able to make these kinds of investments and decisions and still, you know, leave yourself in really good shape from a capital structure standpoint. I got it.

Speaker Change: At the end of the day, what would likely be the outcome is that you would have.

Speaker Change: Of that $200 million of share repurchases you would just have the 4 million shares that are currently sitting in my adjusted earnings per share share count those shares would come out of the share count using the funds from the $200 million the remainder of it the 105 million Thats the principle on the convert there's just.

Speaker Change: Some options between I can I can do some share buybacks and and and issuing shares et cetera. There's just some arbitrage there that's really more just a refinancing kind of event the real impact to share count would be that 4 million shares that are sitting currently in my adjusted share count if that makes sense.

David Deno: Thank you. Just to clarify, some of what you're doing has broader implications, as you say, for the trade area. So the perception of customers in that trade area from, you know, reload or remodel may reverberate throughout the trade area. Is that fair?

Speaker Change: Great. Thank you very much very helpful.

Speaker Change: Thank you. Our next question comes from the line of Brian <unk> with Morgan Stanley. Please proceed with your question.

Chris Meyer: Yeah. There's nothing like a new Outback or two in a trade in a city to attract people and say, wow, look at that, especially our new prototypes, which we think are very attractive. So that's part of the traffic building as well for the entire trade area. We factor in, and we'll factor in cannibalization when we come up with the returns on new restaurant investment. So if there's a charity we're going to and entering a restaurant in a charity where we already have a significant presence, we factor in potential cannibalization into our model to make sure that we're making the right decision. Okay, thank you. And then just a technical question, am I understanding correctly that the repurchase would just offset the dilution from the conversion? Is it sort of pretty much a wash?

Brian: Thanks, Good morning, and Chris Best of luck to you.

Brian: Just a question on did you saw what you expect wage inflation to be this year.

Brian: I think a broader question about labor do you feel like there is kind of a need to.

Brian: Reinvest in labor or add some to stores as you think about kind of building traffic this year.

Brian: Yes, I think our labor models are very well established well run we've invested behind the technology to enable our servers with invested in cooking technology to enable our back of the house.

Brian: The service model is strong and we feel very good about it so the labor spending at the restaurant level number of hours et cetera is in really good shape.

Brian: And you asked about in place look, yes, I mean.

Brian: I think that.

Brian: Yes, I think inflation call. It four 5% it just seems like that 4% to 5% range of inflation is just pretty sticky.

Chris Meyer: Well, yeah, and so, you know, the conversion gets pretty complicated. But let me just try to frame the 300, because it's an important part of what we're trying to do here. The $350 million share repurchase authorization. So you can put aside the 150, right, because the 150 is just the normal course of business.

Brian: And I don't see it going anywhere anytime in the future, particularly since we have such a presence in Florida, and Florida is going through the stage of raising their minimum wage. So look I think that is just part of how we go to market. That's why the productivity initiatives and things like that becomes so important because you need some offsets.

Chris Meyer: We did $70 million of share repurchases in 2023. We got another $150 million for the next 18 months. That's pretty much the normal course of business. The remaining 200, it just gives us optionality.

Brian: Can't just take unlimited amounts of pricing to offset that and Thats why we focus so much on making sure we do the right thing with productivity.

Speaker Change: Okay got it thanks.

Speaker Change: Maybe I'll take the bait on your comment about kind of the work you've done your customer.

Chris Meyer: And again, I'm not going to get too much into timing because timing could be anywhere between now and next May when the convert comes to maturity. But what I can say about how it would be implemented is, at the end of the day, what would likely be the outcome is that you would have, of that $200 million of share repurchases, you would just have the 4 million shares that are currently sitting in my adjusted earnings per share share count. Those shares would come out of the share count using the funds from the $200 million.

Speaker Change: What's changed I guess for what was.

Speaker Change: Some of your key insights from that work you've done.

Speaker Change: Yes, I don't want to get into too much detail for competitive reasons, but.

Speaker Change: Couple of things one our.

Speaker Change: Our core is loves Outback steakhouse and they.

Speaker Change: It continued to ramp.

Speaker Change: Say that again, and again and again and I think we have some permission from some of our explorer is out there that might be looking at some other categories of interest, but the focus is on the core and if we can pick a few up to explore as it look at other categories. Besides state. The Outback has a permission to do that and the last thing is the reinforcement of how opex such an adventurous stake.

Chris Meyer: The remainder of it, the $105 million that's the principal on the convert, there's just some options between I can do some share buybacks and issuing shares, et cetera. There's just some arbitrage there. That's really more just a refinancing kind of event. The real impact on the share count would be those 4 million shares that are sitting currently in my adjusted share count, if that makes sense. Thank you very much.

Speaker Change: House, and we have a lot of support for our long heritage of no rules, just right or Aussie heritage et cetera, all those things came to light.

Speaker Change: As we continue to do our research.

Brian Harbor: Thank you. Our next question comes from the line of Brian Harbor with Morgan Stanley. Please proceed with your question. Thanks, good morning. Yeah, and Chris, best of luck to you.

Thank you. Our next question comes from the line of Lauren Silberman with Deutsche Bank. Please proceed with your question.

Hi, Thank you.

Lauren Silberman: On advertising side, that's a bit more there and your approach to marketing messaging or you're going to lean into two.

David Deno: Just a question on, did you spell out what you expected wage inflation to be this year? And I, I think a broader question about labor. Do you feel like there's, you know, kind of a need to reinvest in labor or, you know, add some to stores as you think about kind of building traffic this year? Yeah, I think our labor models are very well established and well run. We've invested in back-end technology to enable our servers, and we've invested in cooking technology to enable our back of the house. The service model is strong, and we feel very good about it. So the labor spending at the restaurant level, the number of hours, etc., has been really good. Look, yeah, I mean, LeBron, I think that, yeah, I think inflation, you know, call it four and a half percent. It just seems like that, you know, four to five percent range of inflation is pretty sticky.

2024, how much more in value.

Speaker Change: And then just in terms of how we think about the step up.

Lauren Silberman: In advertising spend.

Lauren Silberman: It will move up during the year, but I think more importantly, it will do will be with the ideas that we have which I'm like I said before I'm very optimistic about I think if you can if we can do the combo of a product that consumers really love and I don't want to get into detail here along with a good value I think thats the magic.

Lauren Silberman: That we can bring together at outback, especially to help grow traffic and our advertising and our and our consumer awareness and excitement I think thats clearly something that we can do because we have a heritage of that the second thing is like I said Youll see.

Chris Meyer: And I don't see it, you know, going anywhere anytime in the future, particularly since, you know, we have such a presence in Florida, and Florida is going through this stage of raising their minimum wage. So look, I think that's just part of how we go to market; that's why the productivity initiatives and things like that are so important, because you need some offsets; you can't just take an unlimited amount of pricing to offset that, and that's why we focus so much on making sure we do the right thing with productivity. Okay, yeah, I got it.

Lauren Silberman: The step up of spending during the year as the ideas come to fruition and we'll continue to track that return as we go forward and lastly, I think we have a much better understanding we've talked about in other calls on the way to advertise via digital versus network versus TV. Those are things that we can also look at and change the mix around as we as we need to.

So those are the things that we're doing what their advertising investment and we'll continue to track the returns and what we can do going forward.

Brian Harbor: Thanks. Um, maybe I'll take the bait on your comment about the kind of work you've done for your customer, what what's changed, I guess, or what were, you know, some of your key insights from that work. Yeah, I don't want to get into too much detail for competitive reasons, but a couple things. One, our core is... loves Outback Steakhouse, and they continue to say that again and again and again. And I think we have some permission from some of our explorers out there that might be looking at some other categories of interest, but the focus is on the core, and if we can pick a few explorers that look at other categories besides steak, I think Outback has the permission to do that.

Speaker Change: Okay. Thank you and then just on restaurant margin what's embedded in the guide this year and can you just talk about how we should think about the cadence.

Speaker Change: Our margin.

Speaker Change: Throughout the year. Thank you.

Speaker Change: Yes, I think I think as you as you look at opera will start with operating margins in right and we will talk about restaurant margins at the same time, I think but to give perspective, we finished at seven 6% of our op margin line in 2023 50 basis points of that was driven by the 50 <unk> week in the Brazil tax exemption, so youre not going.

Speaker Change: Have those in 2024, so if you exclude those two and you say youre starting points at seven one look with the guide we gave I'd expect op margin to be slightly up to slightly down probably flattish, depending on where we land within our guidance range.

David Deno: And the last thing is the reinforcement of how Outback is such an adventurous steakhouse, and we have a lot of support for our long heritage of No Rules Just Write, our Aussie heritage, etc. All those things came to light as we continued to do our research. Thank you. Our next question comes from the line of Laura Silberman with Deutsche Bank. Please proceed with your question. Hi, thank you.

Speaker Change: Around call it 7% or so which is again as a reminder, it's 210 basis points above where we were in 2019. Despite what continues to be very persistent inflation. So.

Speaker Change: You think about it from a restaurant margin in the category perspective, I think cost of goods sold and Opex, just given where the productivity dollars will probably land in some of the inflation that we're seeing in those categories Cogs is a little bit less inflation. This year those both of those categories have a decent chance to be favorable in terms of margin year over year labor is probably.

Brian Harbor: On advertising, I just wanted to ask a bit more about that and your approach to marketing; what type of messaging are you going to lean into in 2024? How much more in value do we need to see? And then just in terms of how we think about the step up in advertising spend? It will move up during the year, but I think, more importantly, it'll be with the ideas that we have, which, like I said before, I'm very optimistic about. I think if we can do the combo of products that consumers really love, and I don't want to get into detail here, along with good value, I think that's the magic that we can bring together at Outback, especially to help grow traffic and our advertising and our consumer awareness and excitement. I think that's clearly something that we can do because we have a heritage of that.

Speaker Change: The one category, that's most likely to be a little higher year over year, given the inflation that I just talked about that 4% to 5% inflation and then the other pieces. When you go further down the P&L. The one G&A, we'd like to keep somewhat flat on a dollar basis, but depreciation is going to be higher obviously with the capital spend so I would expect.

Speaker Change: <unk> as a percentage of total revenues to be higher as well. So that gives you a little bit of sense of how to think about the pieces parts.

David Deno: The second thing is, like I said, you'll see the step-up of spending during the year as the ideas come to fruition, and we'll continue to track that return as we go forward. And lastly, I think we have a much better understanding, as we've talked about in other calls, on the way to advertise via digital versus network or versus television. Those are things that we can also look at and change the mix around as we need to. So those are the things that we're doing with our advertising investment, and we continue to track the returns and what we can do going forward. Okay, thank you. And then just on the restaurant margin, what's embedded in the guide this year? And can you just talk about how we should be thinking about the cadence?

Speaker Change: Thank you very helpful.

Speaker Change: Thank you. Our next question comes from the line of Brian Vaccaro with Raymond James. Please proceed with your question.

Brian M. Vaccaro: Hi, Thanks, and good morning, and congrats Chris Best of luck to you.

Brian M. Vaccaro: So.

Brian M. Vaccaro: Just circling back on the Outback comps for a second could you be a little more specific on the degree of improvement you've seen or how much that spread versus the industry has improved over the last few months.

Brian M. Vaccaro: And also just given the unusual swings on weather in January anyway, you could level set how your U S comps look more recently as the weather has normalized.

Laura Silberman: of Margin throughout the year. Yeah, I think as you look at it, we'll start with operating margins and we'll talk about restaurant margins at the same time. But to give you perspective, we finished at 7.6% in our operating margin line in 2023; 50 basis points of that was driven by the 53rd week and the Brazil tax exemption. So you're not going to have those in 2024.

Brian M. Vaccaro: Yes.

Speaker Change: I don't want to get into specifics.

Speaker Change: Percentage points versus the industry, Brian I hope you understand that but I think you know me pretty well.

Speaker Change: <unk> gone from a place and especially in the fall in Outback was behind the industry in same store sales growth to a point.

Speaker Change: In December and then into <unk>.

Speaker Change: Q1.

Speaker Change: We're consistently ahead.

Chris Meyer: So if you exclude those two and you say you're starting points at 7.1, look, with the guide we gave, I'd expect operating margin to be slightly up to slightly down, probably flattish, depending on where we land within our guidance range. In and around, call it 7% or so, which is, again, as a reminder, it's 210 basis points above where we were in 2019, despite what continues to be very persistent inflation. So you think about it from a restaurant margin and a category perspective, I think cost of goods sold and OPEX, just given where the productivity dollars will probably land and some of the inflation that we're seeing in those categories cause a little bit less inflation this year. Both those categories have a decent chance to be favorable in terms of margin year over year.

Speaker Change: And we're very pleased about that and that's the beginning of that as a result of the beginning of the work we're doing and we can see going forward. Some of the work we're doing to help that trend continue and hopefully strengthen.

Speaker Change: But that is that is.

Speaker Change: But all I can say right now I don't want to get into.

Speaker Change: Price points per say after the weather. The first three weeks, we have seen the trend resume that we saw in December and the last few weeks have shown just that until we've tried to bundle all of that into our guidance for the quarter.

Speaker Change: Yes.

Speaker Change: Okay fair enough and on that spread is it fair to say that that spread is positive on both a comp and traffic basis.

Speaker Change: Yes, yes.

Speaker Change: Okay.

Speaker Change: Brian question on <unk> before I get into next question I. Just wanted to mentioned one thing that hasnt gotten a lot of attention on this call, but I just need to say a couple of things about the carrabba's team how great. They are doing and if you look at their trends versus the industry. There just knocking it out of the park both in traffic and in sales and it's a brand we feel very good about and something that hasnt been.

Chris Meyer: Labor is probably the one category that's most likely to be a little higher year over year, given the inflation that I just talked about, that 4% to 5% inflation. And then the other piece is when you go further down the P&L, the one, you know, G&A, we'd like to keep somewhat flat on a dollar basis, but depreciation is going to be higher, obviously, with the capital spend. So I would expect depreciation as a percentage of total revenues to be higher as well. That gives you a little bit of a sense of how to think about the pieces part. Thank you; it was very helpful.

Speaker Change: When opportunities going forward. So excuse me for interrupting you, but just wanted to mention that no absolutely and definitely noted.

Speaker Change: My other question was just on the fourth quarter store margin dynamics labor and other Opex moved a little differently than we were expecting and I guess on labor that little over 100 basis points of pressure I think you saw year on year could you just give some color on what drove that and to what degree you reinvested in hours or service in.

Speaker Change: In the quarter.

Speaker Change: Yeah, well I wouldn't say so much reinvestment in hours for service I think the labor dynamic that you see in Q4 was mostly inflation, but we did have some additional compensation expenses related to relative to last year, specifically related to the 50 <unk> week as we pay our partners.

Brian M. Vaccaro: Our next question comes from the line of Brian Vaccaro with Raymond James. Please proceed with your question. Hi, thanks and good morning, and congrats, Chris.

David Deno: Best of luck to you. So, just circling back on the Outback comps for a second, could you be a little more specific on the degree of improvement you've seen or how much that spread versus the industry has improved over the last few months? And also, given the unusual swings in weather in January, any way you could level-set how your U.S. comps look more recently as the weather has normalized?

Speaker Change: Percentage of cash flow that 50, <unk> week was just outsized and it just we just lost some leverage on that line and then we were lapping some stuff from a year ago from a onetime perspective that wasn't as big but those are kind of the big buckets. I mean, I think that broadly speaking, Brian the Q4 margin performance. What we've really tried to June people into was the fact that the Cogs line.

David Deno: Yeah, um, I don't want to get into specific percentage points versus the industry, Brian, I hope you understand that, but I think you know me pretty well. We've gone from a place, especially in the fall, when Outback was behind the industry in same-store sales growth to a point in December and then into Q1, where we're consistently ahead. And we're very pleased about that, and that's the result of the beginning of the work we're doing. And we can see, going forward, some of the work we're doing to help that trend continue and, hopefully, strengthen. But that is about all I can say right now. I don't want to get into price points per se.

What's going to move the way that it did because we had been leveraging that restaurant margin pretty favorably up until Q4, but we talked about the idea that we weren't going to leverage the Cogs line, just because some of the beef activity that we had a year ago. So that was probably the biggest dynamic, but yes labor was a little higher but I think it had a lot to do with just kind of that dynamics of the 50, <unk> week and how that came to.

Speaker Change: Got it.

Speaker Change: Okay. Thank you for that and just on the topic of productivity if I could last one what level of savings did you achieve in 'twenty three and could you provide a few more specifics on.

Some of the key drivers of efficiency in 2024 will be.

Speaker Change: Yes, so we ended up at about $55 million or so of productivity in 2023, and again I think the buckets that we saw in 2023 are largely going to be the buckets that we would see in 2024.

David Deno: After the weather, the first three weeks, we've seen the trend resume that we saw in December. And the last few weeks have shown just that. And so we've tried to bundle all that into our guidance for the quarter. Okay, fair enough. And on that spread, is it fair to say that that spread is positive on both a comp and traffic basis? Yeah. Yeah. Okay.

Speaker Change: Again, I think we're going after another $50 million of productivity this year.

Speaker Change: A lot of it is going to be driven by the restaurant technology that we've put in place, but another big piece is going to be a supply chain related because theres a lot of opportunities there that we've been looking at as well as some of the menu work and things that Dave talked about so it's going to be pretty broadly spread across the P&L between Cogs and labor et cetera.

David Deno: Brian, before I get to your next question, I just want to mention one thing that hasn't gotten a lot of attention on this call, but I just need to say a couple things about the Carabas team and how great they're doing. And if you look at their trends versus the industry, they're just knocking it out of the park, both in traffic and in sales. And it's a brand we feel very good about and something that has investment opportunities going forward. So, excuse me for interrupting you, but I just wanted to mention that. No, absolutely, and definitely noted.

Speaker Change: Again, maybe a little more weighted to to cost of goods sold but we will see I just want to underscore too Brian.

Speaker Change: The productivity will do we do we will not touch food quality and not such service levels. It's pure.

Getting our great products and our service to our people in a more efficient manner. So that's extremely important to us.

Speaker Change: Alright, Thank you very much I'll pass it along.

Speaker Change: Thank you. Our next question comes from the line of.

David Deno: My other question was just on the fourth-quarter store margin dynamics. Labor and other OPECs moved a little differently than we were expecting. And I guess on labor, that little over 100 basis points of pressure I think you saw year on year. Could you just give some color on what drove that and to what degree you reinvested in hours or service in the quarter? Yeah, well, I wouldn't say so much reinvestment in hours for service. I think the labor dynamic that you see in Q4 was mostly inflation, but we did have some additional compensation expenses relative to last year, specifically related to the 53rd week. As we pay our partners on a percentage of cash flow, that 53rd week was just outsized, and we just lost some leverage on that line. And then we were lapping some stuff from a year ago from a one-time perspective that wasn't as big, but those are kind of the big buckets.

Speaker Change: Ryan Mellon with Piper Sandler. Please proceed with your question.

Ryan Mellon: Hey, Thank you just a question on Brazil can you just touch on the operating environment down there right now what you expect to see as you put together the guidance for the year and then just related to that I know you've been asked this many times in the past, but if you could just give your.

Ryan Mellon: Current thinking on your desire to own those restaurants longer term and if the current environment is conducive to taking any action on that front for the foreseeable future I'm.

I'm sure the environment remains good.

Ryan Mellon: Installations come down interest interest rates are still pretty high down there, but the consumer is in good shape we.

Ryan Mellon: We had a tremendous sales.

Ryan Mellon: Improvement last year at this time, partly because of the World Cup. So.

Ryan Mellon: So that was a very difficult lappish with are able to do.

Ryan Mellon: And so the new year.

Ryan Mellon: Openings are fantastic our position is unparalleled number one and so the operating environment. We believe continues to be really really strong so that that is.

Chris Meyer: I mean, broadly speaking, Brian, the Q4 margin performance. What we really tried to tune people into was the fact that the COGS line was going to move the way that it did because we had been leveraging that restaurant margin pretty favorably up until Q4, but we talked about the idea that we weren't going to leverage the COGS line just because of some of the beef activity that we had a year ago. So that was probably the biggest dynamic. But yeah, labor was a little higher, but I think it had a lot to do with just kind of the dynamics of the 53rd week and how that came together. Okay, thank you for that.

Ryan Mellon: That's important.

Ryan Mellon: Second piece is we've looked at in the past about potentially having that business to be a franchise business that still is something that we may or may not consider.

Ryan Mellon: We'll just continue to look at the environment and then the value we get from the business and as we move forward. So.

Ryan Mellon: We continue to look at Optionality down there, but right now our job is to continue to continue to build a great business.

Speaker Change: Okay. Thank you and then just as a follow up just a question on Bonefish can you touch on some of the.

Chris Meyer: And just on the topic of productivity, if I could last one, what level of savings did you achieve in 23? And could you provide a few more specifics on what some of the key drivers of efficiency in 2024 will be? Yeah, so we ended up at about $55 million or so of productivity in 2023. And again, I think the buckets that we saw in 2023 are largely going to be the buckets that we would see in 2024.

Same store sales trends recently, maybe what's going on with that brand what are the key priorities for that brand. This year over the next few years, just what's the team going to be focused on.

Speaker Change: I think for US we have.

Speaker Change: And to do some more work there you know some of the work that we did at Outback quite frankly, you get a better understanding of our customer on this post COVID-19 environment, I think thats something that we need to focus on that and we're doing that work right. Now is there a menu investment and simplification opportunities that we can do we're looking at that we've invested in operations both in technology, but also focusing.

Chris Meyer: Again, I think we're going after another $50 million in productivity this year, and a lot of it is going to be driven by the restaurant technology that we put in place. But another big piece is going to be supply chain related, because there are a lot of opportunities there that we've been looking at, as well as some of the menu work and things that Dave talked about. So it's going to be pretty broadly spread across the P&L between COGS and labor, etc. You know, again, maybe a little more weighted to the cost of goods sold, but we'll see. I just want to underline, Brian, the productivity we achieve will not touch food quality or touch service levels. It's pure... getting our great products and our service to our people in a more efficient manner. So, that's extremely important. All right, thank you very much. I'll pass it along.

Speaker Change: Key measures such as speed of service in our bar and for food because it's such a bar centered concept, it's our highest mixing.

Speaker Change: Beer liquor wine business in casual dining and we continue to refresh our assets at bonefish those kind of a four pronged strategy. There it's not a growth vehicle for us will continue to upgrade the assets and we'll continue to the customer and menu work to get that brand.

Speaker Change: Trends to improve.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from the line of Dennis Geiger with UBS. Please proceed with your question.

David Deno: Thank you. Our next question comes from the line, Brian Mullen with Piper Sandler. Please proceed with your question. Thank you. I just have a question about Brazil.

Great. Thanks, guys encouraging to hear about the progress that you are continuing to see across the outback operations and the customer satisfaction scores et cetera.

Brian Mullen: Can you just touch on the operating environment down there right now, and what you expect to see as you put together the guidance for the year? And then, just related to that, I know you've been asked this many times in the past, but if you could just give your current thinking on your desire to own those restaurants for the long term and if the current environment is conducive to taking any action on that front, you know, for the foreseeable future. Sure, the environment remains good.

Dennis Geiger: And then I can personally attest to to some of the positive customer experience benefits from the server handhelds and in some visits recently so just wondering if you could talk a little more about the opportunity for operations gains where is it is it consistency of speed where sort of the biggest opportunities that you've identified lie.

David Deno: Inflation's come down, interest rates are still pretty high down there, but the consumer is in good shape. We had a tremendous sales improvement last year at this time, probably because of the World Cup. So that was a very difficult lap, which we were able to do.

Dennis Geiger: And I guess, most importantly sort of how long you think it takes to get to I think the best in class levels that you spoke to us as a target.

David Deno: And so the New Year's openings are fantastic. Our position is unparalleled, number one. And so the operating environment, we believe, continues to be really, really strong. So that's important. The second piece is, we've looked in the past at potentially having that business be a franchise business. That still is something that we may or may not consider. We'll just continue to look at the environment and then the value we get from the business as we move forward. So we continue to look at optionality down there, but right now, our job is to continue to build a great business. Okay, thank you. And then, just as a follow-up, just a question on Bonefish. Can you touch on some of the recent in-source sales trends? Maybe what's going on with that brand?

Dennis Geiger: We're making significant progress in our operating measures. So we will continue to make progress each and every month and our goal is certainly as soon as we can I do want to make a specific prediction, but it's something that we are all over and I am very pleased with the operating measures. We're seeing both in the internal progress were making but also extra.

Dennis Geiger: Surely with Technomic and other people that do a lot of work for us externally. So that is really really a great thing to see.

Dennis Geiger: So that's the first and the second thing is I think it's more around the trade off at the restaurants between variety and menu simplification can we continue to make progress there as we do our work. So there's more work coming at Outback. There number two is really leveraging our technology you saw the benefit of the handheld.

David Deno: What are the key priorities for that brand this year or over the next few years? Just what is the team going to be focused on? I think for us, we have to do some more work there. Some of the work that we did at Outback was, quite frankly, to get a better understanding of our customers in this post-COVID environment. I think that's something that we need to focus in on, and we're doing that work right now. Are there menu investment and simplification opportunities that we can do? We're looking at that now.

Dennis Geiger: That's clearly happening.

Dennis Geiger: Grills had been a big success, if you look at <unk> and Reorders steak satisfaction, that's been very very strong and then as we continue to do this casual dining customer comes two or three times a year. We just got continued to make progress here that will be a reinforcement in building traffic and then as we look at our <unk>.

David Deno: We've invested in operations both in technology but also focusing on key measures such as speed of service in our bar and for our food because it's such a bar-centered concept. It's our highest-mixing beer, liquor, and wine business in casual dining. And we continue to refresh our assets at Bonefish, so that's kind of the four-prong strategy there. It's not a growth vehicle for us.

Dennis Geiger: Kansas to help our managing partners and our teams to offer great service those are the things that we're looking at.

Speaker Change: Very helpful. I appreciate that and then just.

Speaker Change: Second question, just as it relates to some of the bunch of the traffic drivers that you've spoken to but a bunch of the work that the team has been doing.

David Deno: We'll continue to upgrade the assets, and we'll continue to do the customer and menu work to get that brand trend to improve. Thank you. Thank you. Our next question comes from the line of Dennis Geiger with UBS. Please proceed with your question. Great.

Speaker Change: As we think about maybe some of the biggest drivers for this year. If there are a couple that you think can be most impactful. This year and then if there are some that are kind of most impactful on a multiyear basis would there be anything that you'd kind of break out there. Thank you, yes, I love I love some of our product and marketing ideas coming up and.

Dennis Geiger: Thanks, guys. It's encouraging to hear about the progress that you're continuing to see across the Outback operations and the customer satisfaction scores, etc. And I can personally attest to some of the positive customer experience benefits from the server handhelds and in some visits recently. So just wondering if you could talk a little more about the opportunity for operations gains. You know, where is it? Is it consistency of speed, or food?

Speaker Change: And I like the fact that we're looking at how we're spending our advertising dollars and how we're doing it to support those ideas. So in the near term that's clearly something that we'll be looking at.

Speaker Change: And very hopeful for longer term.

Speaker Change: The menu work, we talked about continuing with our positioning is really important I think the asset upgrades. If you live in Florida and go into Opex, most of them and remodel now and you can see it.

David Deno: Where sort of the biggest opportunities that you've identified lie? And, I guess, most importantly, sort of how long you think it takes to get to, I think, the best-in-class levels that you spoke to as a target? Yeah, we're making significant progress in our operating measures, so we'll continue to make progress each and every month, and our goal is certainly, as soon as we can. I don't want to make a specific prediction, but it's something that we are all over. And I'm very pleased with the operating measures we're seeing, both in the internal progress we're making, but also externally with Technomic and other people that do a So, that's the first one.

Speaker Change: Those are the things longer term are going to really help us our operations longer term.

Speaker Change: Our asset investment longer term, our menu work, we want a balanced some short term gains, which I think are possible along with some of the strong long term things that we have in place at Outback.

Speaker Change: Very helpful. Thank you.

Speaker Change: Thank you. Our next question comes from the line of Jon Tower with please proceed with your question.

Jon Tower: Great. Thanks, I appreciate it and Chris Best of luck and look forward to.

Jon Tower: You know what you do next.

Jon Tower: I'm curious maybe on the $60 99, three course meal I'm just curious to get your thoughts on how you think about everyday value on your own menu today.

David Deno: The second thing is, I think it's more around the trade-off at the restaurant between variety and menu simplification. Can we continue to make progress there as we do our work? So there's more work coming out back there. Number two is really leveraging our technology. You saw the benefit of the handheld.

And do you feel like that is decent launch and or something that you can continue to evolve over time to have an everyday value option for consumers.

David Deno: That's clearly happening. The grills have been a big success. If you look at reorders and reorders and steak satisfaction, that's been very, very strong. And then as we continue to do this, in casual dining, the customer comes two or three times a year. We've just got to continue to make progress here. That will be a reinforcement in building traffic, and then as we look at our chances to help our managing partners and our teams to offer great service, those are the things that we're looking at. Very helpful; I appreciate that.

Overtime.

Jon Tower: Yes, I think it's the first step and I think it's something we'll continue to look at for our various.

Jon Tower: <unk> time offer opportunities, we'd certainly look at that but then as I mentioned early on the call. John We're also looking at some products that may have a lower price point. There is still really great products that are good returns to the company, but also great offer great value to the customer. So we're doing some of that work on the menu side as well, but we have the opportunity through our combos.

Jon Tower: Through selected <unk> with the right marketing spend to drive value in the brand.

David Deno: And then just one second question, just as it relates to some of the traffic drivers that you've spoken to, a lot of the work that the team's been doing, as we think about maybe some of the biggest drivers for this year, if there are a couple that you think can be most impactful this year, and then if there are some that are kind of most impactful on a multi-year basis, would there be anything that you' Thank you. Yeah, I love some of our product and marketing ideas that we have coming up, and I like the fact that we're looking at how we're spending our advertising dollars and how we're doing it to support those ideas.

Jon Tower: And the menu items, you speak up do you see those as permanent or L. T O.

Jon Tower: We are thinking that there will be permanent but they have to earn their right onto the menu.

Speaker Change: Got it and then I guess, just just zooming out a little bit and thinking about the business I know for a few years.

Speaker Change: <unk> been aiming towards that 8% or so EBIT margin target and have exceeded it.

Speaker Change: At one point and now we're taking a bit of a step back. So I'm just curious to get your thoughts on how you see it evolving over the next several years I would assume obviously 'twenty four is going to be a more difficult year for that.

David Deno: So in the near term, that's clearly something that we'll be looking at and very hopeful for. Longer term, some of the menu work we talked about, continuing with our positioning is really important. I think the asset upgrades, if you live in Florida and go into an Outback, most of them have been remodeled now, and you can see it, those are things that, longer term, are going to really help us. So our operations longer term, our asset investment longer term, our menu work, we want to balance some short-term gains, which I think are possible, along with some of the strong long-term things that we have in place at Outback Very helpful; thank you.

But beyond 24 to 25, how should we think about your ability as a company to get back to that 8% or so target.

Speaker Change: Before I turn it over to Chris I, just want to mention.

Speaker Change: Theres, a very benign commodity basket, one exception, that's beef and so we don't want to price up.

Speaker Change: To cover that deep cost entirely so we have to continue to looking at our our margins too to look at that and how it means what it means for our customer what I want to make that broad 0.1st before I turn it over to Chris.

Chris Meyer: Yeah, well I think that look.

Dennis Geiger: Thank you. Our next question comes from the line of John Tower with Citi. Please proceed with your question. Great. Thanks. I appreciate it. And Chris, best of luck.

Chris Meyer: Longer term I think we still feel good about using 8% as an operating margin target I think the problem has been in the time period between 2022 and 2024. We've had this massive inflation that's been really tough to leverage not just for us, but candidly for everyone, who is trying to be thoughtful about menu pricing and things and balancing that dynamic and look the good news is.

David Deno: Look forward to seeing what you do next, um, Curious, maybe on the $16.99 Aussie three-course meal? I'm just curious to get your thoughts on how you think about everyday value on your own menu today. And do you feel like that is a decent launch and or something that you can continue to evolve over time to have an everyday value option for consumers? Yeah, I think it's the first step, and I think it's something we'll continue to look at in our various, you know, limited time offer opportunities. We can certainly look at that.

Chris Meyer: Because I think that despite the inflation margins are kind of hanging in there.

Chris Meyer: And so as you think about like what's the path forward I would say the key areas, we probably need to make progress on in 2024 would be first and foremost we need to continue to make traffic progress at outback because traffic ultimately is going to be a lever moving forward that youre going to have to leverage in order to continue to make progress on margins.

David Deno: But then, as I mentioned earlier on the call, John, you know, we're also looking at some products that may have a lower price point that are still really great products that are a good return on the company, but also great, and offer great value to the customer. So we're doing some of that work on the menu side as well. But we have the opportunity through our combos and through selected LTOs with the right marketing spend to drive value in the brand. In the menu items you speak of, do you see those as permanent or LTO?

Chris Meyer: Once you start to see the new restaurants ramp up youll begin to leverage depreciation et cetera, and you'll make more progress on that in 2024, and then I think the last thing is once the beef situation improves youll have the makings of a much better landscape from an inflation standpoint to make progress on margins. So I think the signs are encouraging and I think that looking ahead to 2025.

Chris Meyer: And beyond there's some reasons to believe.

Speaker Change: Got it thanks for taking the question.

David Deno: We are thinking that they will be permanent, but they have to earn their right to be on the menu. Got it. And then, I guess, just kind of zooming out a little bit and thinking about the business. I know for a few years you've been aiming toward that 8% or so EBIT margin target and you exceeded it at one point, and now we're taking a bit of a step back. So, I'm just curious to get your thoughts on how you see it evolving over the next several years. I would assume, obviously, 24 is going to be a more difficult year for that.

Speaker Change: Thank you. Our final question. This morning comes from the line of Andrew <unk> with BMO capital markets. Please proceed with your question.

Hey, good morning, Thanks for taking the questions I just had two on the cost side. The first one is back on the marketing spend you mentioned that it's going to ramp through the year. So is it fair to assume that that would hold at a higher level in 2025, as well and maybe more importantly are you going to be exiting this year at a more kind of a steady state level.

David Deno: But beyond 24 and into 25, how should we think about your ability as a company to get back to that 8% or so target? Yeah, before I turn over to Chris, I just want to mention there's a very benign commodity basket, one exception, that's beef. And so, you know, we don't want to price it up to cover that beef cost entirely. So we have to continue looking at our margins to look at that and how it means what it means for our customers. But I want to make that broad point first before I turn over to Chris.

Speaker Change: I think if I am.

Speaker Change: Looking at this right you'd be kind of like two and a half maybe a little bit higher than that percent of sales. So still a bit of a gap from where you were pre COVID-19, but just curious how we should think about that trending.

Speaker Change: So I'll start and I'll turn it over to Dave, Yes, I think the way I think about 2020 for marketing is yes. It will be higher it's probably going to be higher in every quarter to be honest, even in Q1 than it was a year ago. So theres going to be increases in marketing spend I think.

Dave: We've talked about marketing we've talked about this for years in terms of who used to spend three 5% of sales on marketing, we got down to the low twos, we recognize but we've always talked about hey look even when we laid out that margin framework. A couple of years ago. We said Hey look we think the sweet spot for marketing is probably in that two 5% to 3% of sales range I think thats kind of where we really think it's going to be long term as well.

Chris Meyer: Yeah, well, I think that, you know, look, longer term, I think we still feel good about using 8% as an operating margin target. I think the problem has been, you know, in the time period between 2022 and 2024, we've had this massive inflation that's been really tough to leverage, not just for us but, candidly, for everyone who's trying to be thoughtful about menu pricing and things and, you know, balancing that dynamic. And look, the good news is that I think that, you know, despite inflation, margins are kind of hanging in there. And so as you think about, like, what the path forward would be, I'd say the key areas we probably need to make progress on in 2024 would be, you know, first and foremost, we need to continue to make progress on traffic at Outback because traffic, ultimately, is going to be a lever moving forward that you're going to have to leverage in order to continue to make progress on margins.

Dave: So I think that if we land this year sort of in that two 5% to 3% range that I would say that that's probably a good thought for us moving forward, but obviously the spending can ramp up as our sales increase so I think we feel good about it as a percentage of sales.

Yeah, and I'd, just like to say in our company. The money follows the ideas and good ideas get supported and will continue to have that discipline.

Speaker Change: Okay that makes sense and then just my other one was on the commodity outlook. It sounds like really only be problems out there and you've been able to lock. These on an annual basis. The last couple of years, we're able to do that again this year I'm just curious on the visibility that that commodity outlook. Thanks.

Speaker Change: Yes, same thing were probably 74% locked on our basket for the year 70, 475 somewhere in there because beef is 100% locked obviously as in prior years, though we're hopeful that the market continues to make progress and if it does hopefully we can take advantage of some of that upside.

Chris Meyer: You know, second, once you start to see the new restaurants ramp up, you'll begin to leverage depreciation, et cetera, and you'll make more progress on that in 2024. And then I think that, you know, the last thing is once the beef situation improves, you'll have the makings of a much better landscape from an inflation standpoint to make progress on margins. So I think the signs are encouraging, and I think that looking ahead to 2025 and beyond, there are some reasons to believe. I got it.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Thank you, ladies and gentlemen that concludes our question and answer session I will turn the floor back to Mr. Dino for any final comments.

Dino: Thank you everybody for your time. This morning, we look forward to updating you.

Dino: On our Q1 call later this year and Chris. Thank you for everything you've done for our company. Thank you. Thanks everybody.

John Tower: Thanks for taking the question. Thank you. Our final question this morning comes from the line of Andrew Strelzik with BMO Capital Markets. Please proceed with your question. Hey, good morning.

Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.

David Deno: Thanks for taking the questions. I just had two on the cost side. The first one is back on marketing spend. You mentioned that it's going to ramp up through the year. So is it fair to assume that that would hold at a higher level in 2025 as well? And maybe more importantly, are you going to be exiting this year at a more kind of steady state level? I think if I'm looking at this right, you'd be kind of like two and a half, maybe a little bit higher than that percent of sales. So still, a bit of a gap from where you were pre-COVID.

David Deno: But I'm just curious about what we should think about that trending. So, I'll start, and I'll turn it over to Dave. Yeah, I think the way I think about 2024 marketing is, yes, it will be higher. It's probably going to be higher in every quarter, to be honest, even Q1, than it was a year ago. So, there's going to be increases in marketing spend. I think that we've talked about marketing before. We've talked about this for years in terms of us spending three and a half percent of sales on marketing. We got down to the low twos.

Speaker Change: [music].

Chris Meyer: We recognized what we've always talked about. Hey, look, even when we laid out that margin framework a couple years ago, we said, hey, look, we think the sweet spot for marketing is probably in that two and a half to three percent of sales range. I think that's kind of where we really think it's going to be long term as well. So, I think that if we land this year sort of in that two, five to three percent range, then I would say that that's probably a good bet for us moving forward.

John Tower: But obviously, the spending can ramp up as our sales increase. So, I think we feel good about it as a percentage of sales. Yeah, and I'd just like to say, in our company, the money follows the ideas, and good ideas get supported, and we'll continue to have that. Okay, that makes sense. And then just my other one was on the commodity outlook. You know, it sounds like really only beef is a problem child there, and you've been able to lock in beef on an annual basis the last couple of years. Were you able to do that again this year?

David Deno: I'm just curious about the visibility of that commodity outlook, thanks. Yeah, same thing. We're probably, you know, 74% locked on our basket for the year, 74, 75, somewhere in there. Beef is 100% locked.

Chris Meyer: Obviously, as in previous years, though, we're hopeful that the market continues to make progress, and if it does, hopefully, we can take advantage of some of that upside. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the phone back to Mr. Deno for any final comments. Thank you, everybody, for your time this morning.

Operator: We look forward to updating you on our Q1 call later this year. And Chris, thank you for everything you've done for our company. Thank you. Thank you. This concludes today's conference call. You may disconnect your lines at this time.

Operator: Thank you for your participation. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Greetings, and welcome to the Bloomin' Brands fiscal fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode.

Tara Kurian: A brief question and answer session will follow management's prepared remarks. It is now my pleasure to introduce your host, Tara Kurian, Vice President, Corporate Finance and Investor Relations. Thank you. Ms. Kurian, you may begin. Thank you, and good morning, everyone.

Tara Kurian: With me on today's call are David Deno, our Chief Executive Officer, and Chris Meyer, Executive Vice President and Chief Financial Officer. By now, you should have access to our fiscal fourth quarter 2023 earnings release. It can also be found on our website at www.bloominbrands.com in the investor section. Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release on our website, as previously described.

Tara Kurian: Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward-looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward-looking statements. Some of these risks are mentioned in our earnings release. Others are discussed in our SEC filings, which are available at www.sec.gov.

David Deno: During today's call, we'll provide a brief recap of our financial performance for the fiscal fourth quarter of 2023, an overview of company highlights, and current thoughts on fiscal 2024 guidance. Once we've completed these remarks, we'll open the call up for questions. With that, I would now turn the call over to David Deno.

David Deno: And welcome to everyone listening today. As noted in this morning's earnings release, adjusted Q4 2023 diluted earnings per share was 75 cents. This compares to 68 cents in Q4 2022, reflecting a growth of 10% year-over-year. However, combined U.S. comparable sales were down 20 basis points.

David Deno: Our fourth quarter and 2023 results were largely in line with expectations. Importantly, we had sequential U.S. comp sales and traffic improvement from Q3 into Q4. And within Q4, a softer October was offset by progressively improving comp sales, ending with a strong holiday season.

David Deno: Before we discuss 2024, and more specifically, our plans at Outback Steakhouse, I would like to recognize two businesses that had outstanding results in 2023. Carabas in Brazil and Krabus continues to take share versus the industry. Krabus posted comp sales growth of 3.9% and positive traffic growth for the year. In 2023, Krabus outperformed the industry in sales by 90 basis points and in traffic growth by 300 basis points. They continue to demonstrate strength, specifically in their off-premises channel and growing catering business. Crab's Bistro, which we launched in 2023, is a lunch-focused catering option featuring our wide variety of sandwiches that reflect Crab's Italian heritage is now offered in our restaurant as a compelling lunch offer, either within the restaurant or to-go.

[music].

David Deno: Bistro continues to outperform expectations. Brazil had another great year with significant growth in sales and profit, especially impressive given the lapping of pent-up demand in 2022. We continue to expand this business throughout the country and to open 18 new restaurants in 2023. We look forward to capitalizing on our leading position and doubling our restaurant footprint in the coming years. Our 2023 results would not have been possible without our great teams in the restaurants and in our restaurant support center. Thank you for delivering outstanding hospitality and excellent service to our guests.

Speaker Change: Greetings and welcome to the Bloom and brands fiscal fourth quarter 2023 earnings Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow management's prepared remarks. It is now my pleasure to introduce your host per period.

Speaker Change: President corporate finance and Investor Relations. Thank you Ms. Karen you may begin.

Karen: Thank you and good morning, everyone with me on today's call are David Deno, Our Chief Executive Officer, and Chris Meyer Executive Vice President and Chief Financial Officer by now you should have access to our fiscal fourth quarter 2023 earnings release. It can also be found on our website at www.

David Deno: As we move forward, we remain focused on the strategic priorities that are making us a stronger, leaner, operations-centered company. These priorities include, first, driving in-restaurant, same-store sales growth, which remains our top priority, especially at Outback. Second, increasing new restaurant openings while refreshing our existing assets. Third, maintaining our off-premises momentum. Fourth, becoming a more digitally driven company. And finally, investing in technology to improve infrastructure and drive growth while preserving margins. Our primary focus remains improving in-restaurant sales and traffic at Outback.

Chris Meyer: Don't blame and brands Dot com in the investors section throughout this conference call, we will be presenting results on an adjusted basis, an explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release on our website as previously described.

Chris Meyer: Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward looking statements, including a discussion of recent trends.

David Deno: We've done a lot of work to better understand our ever-evolving post-COVID customers. We believe we have a better idea of who our customer is, and as a result, we continue to sharpen our brand position. The first step of this effort was the launch of Outback's No Rules, Just Right campaign.

Chris Meyer: These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward looking statements.

Chris Meyer: Some of these risks are mentioned in our earnings release, others are discussed in our SEC filings, which are available at www Dot SEC Dot Gov.

David Deno: This was built on our brand equity and heritage, and it brings back the adventure and irreverence as expected from Outback. I especially like the just right part of that phrase, as it reinforces the food and service promise to our customers. In addition, we spent more on marketing and advertising in 2023 to improve our share of voice in a highly competitive market. During Q4, we saw a positive response to our additional marketing. We plan to increase our 2024 spending by approximately $20 million.

Chris Meyer: During today's call we will provide a brief recap of our financial performance for the fiscal fourth quarter 2023, an overview of company highlights and current thoughts on fiscal 2020 for guidance.

Speaker Change: Once we've completed these remarks, we'll open the call up for questions.

Speaker Change: That I would like to now turn the call over to David Deno.

Well, thank you Tara and welcome to everyone listening today as noted in this morning's earnings release adjusted Q4 2023 diluted earnings per share was <unk> 75.

David Deno: This investment will improve our share of voice and build traffic, utilizing a blend of television and high-return digital tech. The advertising highlights new menu innovation, accessible price points, and great value. We also recognize the consumer may be more careful with their discretionary spending. Our current LTO, a three-course Aussie dinner for $16.99, offers the customer great value.

David Deno: This compares to <unk> 68 in Q4, 2022, reflecting a growth of 10% year over year.

David Deno: Buying U S comparable sales were down 20 basis points, our fourth quarter and 2023 results were largely in line with expectations. Importantly, we had a sequential U S comp sales and traffic improvement from Q3 into Q4.

David Deno: We will continue to be thoughtful in our approach to overall pricing and discounting. The No Rules Just Right campaign and the marketing investment are just the start of the work underway at Outback. There will be more to unveil about our strategy at Outback in the coming quarter. Since we are going to spend more on marketing in 2024, we must make sure our operations are best-in-class. We will continue to focus on delivering a differentiated guest experience, specifically improved service, and consistently great food. We are solving this through investments in technology such as server handhelds and new ovens and grills, as well as relentlessly focusing on key operational behaviors. As a result of this work, our internal customer measures have meaningfully improved. A couple of key leading indicators that we track are stake accuracy and consistency of experience.

David Deno: In Q4, a softer October was offset by progressively improving comp sales ending with a strong holiday season.

Before we discuss 2024 and more specifically our plants at Outback Steakhouse I would like to recognize two businesses that had outstanding results in 2023 Carrabba's in Brazil.

David Deno: <unk> continues to take share versus the industry Carrabba's posted comp sales growth of three 9% and positive traffic growth for the year in 2023, Carrabba's outperformed the industry in sales by 90 basis points and a traffic growth by 300 basis points.

David Deno: They continue to demonstrate strength specifically in their off premise channel and growing catering business, perhaps bistro, which we launched in 2023 is a launched focused catering option featuring a wide variety of sandwiches that reflect profit Italian heritage is now offered in our restaurants is a compelling launch offer either within the restaurant or to go.

David Deno: Over the last year, stake accuracy is up 400 basis points, and consistency of experience is up 700 basis points. This progress is further validated by casual dining industry metrics, which have continued to improve. Friendly service and food quality are now 300 and 360 basis points ahead of our casual dining peers, respectively. We are confident in the strategy at Outback, and it is working.

<unk> continues to outperform expectations.

David Deno: Brazil had another great year with significant growth in sales and profits. This was especially impressive given the lapping of pent up demand in 2022, we continue to expand this business throughout the country and opened 18, new restaurants in 2023.

David Deno: Look forward to capitalizing on our leading position in doubling our restaurant footprint in the coming years.

David Deno: Our 2023 results would not have been possible without our great teams in the restaurants and our restaurant support center.

David Deno: In 12 of the last 14 weeks, OPEX has beaten the industry in comp sales. Based on recent trends, we expect to see OPEC perform above the industry, and this is reflected in our guidance. On to our second priority, new unit development and improving our assets. We are upgrading our assets through new openings, relocating, and remodeling. We opened six new domestic units in 2023 and are on track to nearly triple that in 2024. You know that upgrading our assets is a big part of improving our traffic trends, especially at Outback. Our development pipeline for new restaurants and relocations remains very robust.

David Deno: Thank you for delivering outstanding hospitality and excellent service to our guests.

David Deno: As we move forward, we remain focused on our strategic priorities are making us a stronger leaner operations centered company. These priorities include first driving in restaurant same store sales growth, which remains our top priority, especially at outback.

David Deno: Second increasing new restaurant openings, while refreshing our existing assets.

David Deno: Third maintaining our off premise with momentum fourth becoming a more digitally driven company and finally investing in technology to improve infrastructure and drive growth while preserving margins.

David Deno: Our primary focus remains improving in restaurant sales and traffic at Outback, we've done a lot of work to better understand our every evolving post COVID-19 customer. We believe we have a better idea of who our customer is and as a result, we continue to sharpen our brand positioning the.

David Deno: We are opportunistic on relocations and continue to see outside sales lift on these investments. We have successfully completed over 100 green miles in 2023 and will continue to work our way through the system in 2024. Our development efforts provide a runway for future growth, offer good returns, and are a key part of our strategy. The last priority I'll discuss today is our leading off-premises channel. The business has more than doubled since 2019 and currently represents 24% of our U.S. sales. We were pioneers in the to-go space, and we continue to see robust demand in this highly incremental location. In addition, the success of our catering business at all of our brands, but particularly Carrabba's, provides a runway for future growth. Next, let me comment on our restaurant closure initiative. We periodically review our asset base, and in our latest review, we made the decision to close 41 underperforming locations. The majority of these restaurants were older assets with leases from the 1990s and early 2000s.

David Deno: The first step of this effort was the launch of Opex No rules just ride campaign. This was built on our brand equity and heritage and it bring back to the adventure and irreverence is expected from Outback I, especially like the just right part of that phrase as it reinforces the food and service promise to our customers.

David Deno: In addition, we spent more on marketing and advertising in 2023 to improve our share of voice in a highly competitive marketplace.

David Deno: Q4, we saw a positive response to our additional marketing spend we plan to increase our 2020 for spending by approximately $20 million. This investment will improve our share of voice and build traffic utilizing a blend of TV high return digital tactics.

David Deno: The advertising highlights new menu innovation accessible price points and great value.

David Deno: We also recognized the consumer may be more careful with their discretionary spending our current LTE O. A three course Aussie Jennifer $60 99 offers the customer a great value.

David Deno: This decision considered a variety of factors, including sales and traffic, trade areas, and the investment that would have to be made to improve the restaurant. Despite this initiative, our confidence in our portfolio remains high as we plan to open 40 to 45 new restaurants across the system in 2024. These are promising trade areas with great potential. It's critical to add that these closures are not a reflection of the hard work of our team members.

David Deno: We'll continue to be thoughtful about our approach to overall pricing and discounting the no rules just right campaign and the marketing investments are just the start of the work underway at Outback there'll be more to unveil and our strategy at outback in the coming quarters.

David Deno: Since we are going to spend more on marketing in 2024 at Outback, We must make sure. Our operations are best in class. We will continue to focus on delivering a differentiated guest experience specifically improved service and consistently great food. We are solving this through investments in technology, such as such as server handhelds, and new ovens and grills as well as relentlessly focusing.

David Deno: As always, we will take care of our people, offering many the opportunity to transfer to another restaurant and severance for those who do not. Importantly, the sales growth initiatives I described are supported by a solid foundation with healthy margins, robust cash flow, and a strong balance. This strength gives us the ability to invest in new unit development, technology enhancements, and asset improvements while meeting our commitments. We remain dedicated to delivering great food and experiences for our guests while building a strong business that will continue to thrive for many years to come. Before I turn the call over to Chris, I just wanted to comment on the 8K we sent out this morning regarding Chris's retirement from Bloomin' Brands. Chris has been a great partner to me for the last five years as CFO. He has made many, many contributions to our company, and he will be missed. The company is considering various options for his replacement. Chris is expected to continue in his current role until such a time as a successor is named and otherwise assist in the transition.

David Deno: A key operational behaviors.

David Deno: As a result of this work our internal customer measures have meaningfully improved a couple of key leading indicators that we track our steak accuracy and consistency of experience over the last year Big accuracy is up 400 basis points and consistency of experience is up 700 basis points. This progress is further validated by casual dining industry.

David Deno: History metrics, which have continued to improve friendly service and food quality are now 300, and 360 basis points ahead of our casual dining peers respectively.

We are confident in the strategy at Outback and it is working and 12 of the last 14 weeks Opex has beaten the industry in comp sales growth based on recent trends, we expect to see opex perform above the industry and this is reflected in our guidance.

David Deno: Onto our second priority, New unit development and improving our asset base, we are upgrading our assets through new openings relocating and remodeling restaurants, we opened six new domestic units in 2023 and are attracted nearly triple that in 2024.

Chris Meyer: Chris, thank you for everything you have done for the company and for me. Now, over to you to discuss our financial performance and 2024 guidance. Thanks Dave for the kind words.

David Deno: That upgrading our assets is a big part of improving our traffic trends, especially at Outback.

Chris Meyer: It's been a privilege working with you and serving as our CFO for the last five years. I would like to start by providing a recap of our financial performance for the fiscal fourth quarter of 2023. Total revenues in Q4 were $1.19 billion, which was up 9% from 2022. This was primarily driven by an additional $83.5 million of revenue from our 53rd week, favorable foreign exchange translation, and the net impact of restaurant openings and closures. U.S. comparable restaurant sales came in just slightly below our expectations at negative 20 basis points.

Our development pipeline for new restaurants, and relocations remains very robust we are opportunistic on relocations and continue to see outsized sales lift on these investments we successfully completed over 100 Remodels in 2023 and will continue to work our way through the system in 2020 for our development efforts provide a runway for future growth offer good returns.

David Deno: And our key part of our strategy.

David Deno: The last priority I'll discuss today is our leading off premise. This channel the business has more than doubled since 2019, and currently represents 24% of our U S. Sales, we were pioneers in the <unk> space and we continue to see robust demand in this highly incremental locations. In addition, the success of our catering business at all of our brands, but particularly Carrabba's provides a runway for future growth.

Chris Meyer: This reflects a comparable 14-week view versus 2022. Traffic in Q4 was down 3.1%, which represented a 160 basis point improvement in traffic from Q3. Average check was up 2.9 percent in Q4 versus 2022. However, as we mentioned in our prior calls, check average benefit decreased steadily throughout the year as we chose not to replicate the amount of menu pricing that had been taken in 2022. We remain very cautious about taking additional menu pricing, particularly at Outback.

David Deno: Next let me comment on our restaurant closure initiative.

David Deno: Ironically review, our asset base and in our latest review made the decision to close 41 underperforming locations the.

David Deno: The majority of these restaurants were older assets with leases from the 19th and early two thousands this decision considered a variety of factors, including sales and traffic trade areas and the investments that would have to be made to improve the restaurants. Despite this initiative, our confidence and our portfolio remains high as we plan to over 40% to 45, new restaurants across the system in 2024.

Chris Meyer: Q4 off-premises was approximately 24% of total U.S. sales. Additionally, the highly incremental third-party delivery business was 13% of total U.S. sales, which was up from 12% in Q3, driven by our growth in catering, as it relates to other aspects of our Q4 financial performance. Gap diluted earnings per share for the quarter was $0.45 versus $0.61 of diluted earnings per share in 2022. Adjusted diluted earnings per share was $0.75 versus $0.68 of adjusted diluted earnings per share in 2022. The primary difference between GAAP and adjusted diluted earnings per share is due to restaurant closing and asset impairment costs related to our restaurant closure initiative.

David Deno: These are promising trade areas with great potential.

It is critical add that these closures are not a reflection of the hard work of our team members as always we will take care of our people offering many of the opportunity to transfer to another restaurant and severance for those who do not.

David Deno: Importantly, the sales growth initiatives I described are supported by a solid foundation with healthy margins robust cash flow and a strong balance sheet. This strength gives us the ability to invest in new unit development technology enhancements and asset improvements while meeting our commitments, we remain dedicated to delivering great food and experience for our guests while building a strong business that will continue to thrive for many years.

David Deno: To come.

Speaker Change: Before I turn the call over to Chris I, just wanted to comment on the 8-K, we sent out this morning regarding Chris's retirement from Bloomer brands, Chris has been a great partner to me the last five years as CFO. He has made many many contributions to our company and he will be missed.

Chris Meyer: Q4 adjusted restaurant level operating margins were 15.9% versus 16.8% last year. The reduction in restaurant margin from last year was driven by a couple of factors. First, as we mentioned on the last call, in Q4, we were lapping significant beef favorability from 2022. This lapping, coupled with a smaller benefit from average check, did not allow us to leverage the COGS line like we had throughout the first three quarters of 2023. Second, inflation levels remained somewhat elevated in Q4 and drove additional year-over-year margin unfavorability. Labor inflation was up 4.4% in Q4, and restaurant operating expense inflation was up 4.7%.

The company is considering various options for his replacement Christopher.

Speaker Change: This is expected to continue in his current role until such a time a successor is named and otherwise assist in the transition Chris.

Speaker Change: Chris Thank you for everything you've done for the company and for me over to you to discuss our financial performance in 2024 guidance. Thanks, Dave for the kind words, it's been a privilege working with you and serving as our CFO for the last five years.

Chris Meyer: I would like to start by providing a recap of our financial performance for the fiscal fourth quarter of 2023 total revenues in Q4 were $1 $109 billion, which was up 9% from 2022. This was primarily driven by an additional $83 5 million of revenue from our 50 <unk> week favorable foreign exchange.

Chris Meyer: Total company adjusted operating income margin was 7.5% in Q4 compared to 8.2% in 2022. The appreciation expense and general and administrative expense were both up in Q4, consistent with our increased levels of capital spending and our investments in infrastructure to support growth. As it relates to the 53rd week, we estimate that the benefit from the extra week was worth 16 cents of diluted EPS for our 2023 results. The week between Christmas and New Year's includes many of our busiest days of the year, and this is reflected in the large EPS amount from this week. The operating margin for the 53rd week is higher than our normal operating margin because some of our fixed expenses, such as rent and depreciation, are recorded on a monthly basis and were not allocated to the 53rd week. Turning to our capital structure, total debt was $786 million at the end of Q4.

Chris Meyer: <unk> and the net impact of restaurant openings and closures.

Chris Meyer: U S comparable restaurant sales came in just slightly below our expectations at negative 20 basis points.

Chris Meyer: This reflects a comparable 14 week view versus 2022 traffic in Q4 was down three 1%, which represented a 160 basis point improvement in traffic from Q3.

Chris Meyer: Average check was up two 9% in Q4 versus 2022, as we mentioned in our prior calls check average benefit decreased steadily throughout the year as we chose not to replicate the amount of menu pricing that had been taken in 2022, we remain very cautious about taking additional menu pricing, particularly at outback.

Q4 off premises was approximately 24% of total U S. Sales importantly, the highly incremental third party delivery business was 13% of total U S sales, which was up from 12% in Q3, driven by our growth in catering.

Chris Meyer: We have worked very hard coming out of COVID to reduce our debt levels and are pleased that our lease-adjusted leverage ratio is solidly below our goal of three times, with significant levels of liquidity. In terms of share repurchases, we repurchased 2.8 million shares of stock in 2023 for $70 million. As indicated in this morning's earnings release, the board has canceled the existing $125 million authorization and approved a new $350 million authorization expiring in August of 2025. This is a larger authorization than we would normally put in place. The purpose of this authorization is twofold.

Chris Meyer: As it relates to other aspects of our Q4 financial performance.

Chris Meyer: GAAP diluted earnings per share for the quarter was <unk> 45 versus <unk> 61 of diluted earnings per share in 2022, adjusted diluted earnings per share was <unk> 75 versus.

Chris Meyer: Versus 68 of adjusted diluted earnings per share in 2022.

Chris Meyer: The primary difference between GAAP and adjusted diluted earnings per share is due to restaurant closing and asset impairment costs related to our restaurant closure initiative.

Chris Meyer: First, $150 million of this authorization allows us to continue to repurchase a typical volume of shares over the next 18 months. Second, our convertible bond matures in May of 2025. The remaining $200 million of this authorization allows for flexibility to retire the convert sometime between now and next May. There are a number of ways to structure a potential transaction, and these additional dollars give us the flexibility to retire the remaining $105 million of principal on the convert and remove the dilution from the convert that currently exists in our share count. In our 2024 guidance, we are assuming approximately 4 million shares related to the conversion are included in our adjusted EPS calculation. The board also declared a quarterly dividend of 24 cents a share payable on March 20.

Q4, adjusted restaurant level operating margins were 15, 9% versus 16, 8% last year the reduction in restaurant margin from last year was driven by a couple of factors first as we mentioned on the last call. In Q4, we were lapping significant be favorability from 2022. This.

Chris Meyer: <unk>, coupled with a smaller benefit from average check did not allow us to leverage the Cogs line like we had throughout the first three quarters of 2023.

Chris Meyer: Second inflation levels remain somewhat elevated in Q4 and drove additional year over year margin unfavorably labor inflation was up four 4% in Q4 and restaurant operating expense inflation was up four 7%.

Chris Meyer: Before I turn to 2024, I wanted to remind everyone that our full-year 2023 adjusted results include the benefits from the Brazil tax legislation in the 53rd week. The Brazil tax legislation benefit was worth approximately $0.26, and the 53rd week was worth approximately $0.16. On a comparative 52-week basis, our 2023 adjusted diluted earnings per share result was $2.51. Now, turning to our 2024 and Q1 guidance. We expect the full-year U.S. comparable restaurant sales to be flat to 2% on a comparable calendar basis. Adjusted diluted earnings per share are expected to be between $2.51 and $2.66.

Total company adjusted operating income margin was seven 5% in Q4 compared to eight 2% in 2022 depreciation expense and general and administrative expense were both up in Q4, consistent with our increased levels of capital spending and our investments in infrastructure to support growth.

Chris Meyer: As it relates to the 50 <unk> week, we estimate that the benefit from the extra week was worth 16 of diluted EPS to our 2023 results.

Chris Meyer: Week between Christmas and New year's includes many of our busiest days of the year and this is reflected in the large EPS amount from this week the operating margin for the 50 <unk> week is higher than our normal operating margin because some of our fixed expenses such as rent and depreciation are recorded on a monthly basis and were not allocated.

Chris Meyer: We expect commodities inflation to be between 3% and 4%, driven in large part by beef inflation. We expect our full-year tax rate assumption to be between 14% and 16%. Capital expenditures are expected to be between $270 million and $290 million. Our level of capital spending accelerated late in 2023 as our new restaurant pipeline grew. The 2024 capital plan includes dollars to support approximately 40 to 45 new restaurant openings, including significant Q4 spending for 2025 openings, as well as ongoing funding of remodel, relocation, and infrastructure projects. The 53rd week in 2023 creates some complexity in comparing year-over-year results both for the full year and by quarter. Each fiscal quarter of 2024 will be compared to a fiscal quarter of 2023 that includes a one-week shift. This shift is especially impactful in the first quarter.

Chris Meyer: The 50 <unk> week.

Chris Meyer: Turning to our capital structure total debt was $786 million at the end of Q4, we have worked very hard coming out of COVID-19 to reduce our debt levels and are pleased that our lease adjusted leverage ratio is solidly below our goal of three times with significant levels of liquidity in.

Chris Meyer: In terms of share repurchases, we repurchased two 8 million shares of stock in 2023 for $70 million as indicated in this mornings earnings release. The board has canceled the existing $125 million authorization and approved a new $350 million authorization expiring in.

Chris Meyer: August of 2025. This is a larger authorization than we would normally put in place. The purpose of the authorization is two fold.

Chris Meyer: $150 million of this authorization allows us to continue to repurchase a typical volume of shares over the next 18 months.

Chris Meyer: Please refer to the fiscal and comparable calendar dates table provided in our earnings release this morning to help you better understand our 2024 calendar. As it relates to the first quarter, similar to the rest of the industry, we experienced negative impacts from weather in the first few weeks of the year. This represents a 1.3% comparable sales headwind for the quarter. We have included this thinking in our comparable sales guidance. As such, we expect U.S. comparable restaurant sales to be down between 50 basis points and 200 basis points on a comparable calendar basis. The good news is that we've seen continued sales growth ahead of the industry. In addition, our Valentine's Day week represented the strongest week in our company's history. This trend, including the weather impact from the first three weeks, is included in our guidance. We expect Q1 adjusted diluted earnings per share to be between $0.70 and $0.75, which includes a negative $0.06 impact due to the calendar shift and an approximate $0.05 impact from weather at the beginning of the quarter.

Chris Meyer: Our convertible bond matures in May of 2025, the remaining $200 million of this authorization allows for flexibility to retire the convert some time between now and next May there are a number of ways to structure a potential transaction and these additional dollars gives us the flexibility to retire the remaining.

Chris Meyer: Meaning $105 million of principal on the convert and remove the dilution from the converts that currently exists in our share counts.

Chris Meyer: In our 2024 guidance, we are assuming approximately 4 million shares related to the convert are included in our adjusted EPS calculation.

Chris Meyer: The board also declared a quarterly dividend of 24, a share payable on March 20th.

Chris Meyer: Before I turn to 2024 I wanted to remind everyone that our full year 2023. Adjusted results include the benefits from the Brazil tax legislation and the 50 <unk> week that.

Chris Meyer: The Brazil tax legislation benefit was worth approximately 26.

Chris Meyer: In addition, the removal of the Brazil tax exemption is a headwind of $0.08 in Q1 versus 2023. In summary, we successfully navigated a challenging environment in Q4. We will remain disciplined in executing against our strategy in 2024 and will emerge as a better, stronger operations-focused company. And with that, we will open up the call for questions. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Chris Meyer: And the 50 <unk> week was worth approximately <unk> 16.

Chris Meyer: On a comparative 52 week basis, our 2023 adjusted diluted earnings per share result was $2 51.

Chris Meyer: Now turning to our 2024 and Q1 guidance.

Chris Meyer: We expect the full year U S comparable restaurant sales to be flat to 2% on a comparable calendar basis.

Chris Meyer: Adjusted diluted earnings per share are expected to be between $2 51.

Chris Meyer: And $2 66.

Chris Meyer: We expect commodities inflation to be between 3% and 4% driven in large part by beef inflation.

Operator: You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. To allow for as many questions as possible, we ask that you please keep to one question and one follow-up. Our first question comes from the line of Jeffrey Bernstein with Barclays. Please proceed with your question. Great. Thank you very much.

Chris Meyer: We expect our full year tax rate assumption to be between 14% and 16% capital.

Chris Meyer: <unk> are expected to be between $270 million and $290 million our level of capital spending accelerated late in 2023 is our new restaurant pipeline has grown the 2024 capital plan includes dollars to support approximately 40 to 45, new restaurant openings.

Jeffrey Bernstein: My question is on the broader consumer environment, see the multiple brands have a pretty good perspective. Any change in consumer behavior in recent months impacting traffic or mix? And they mentioned the risk of a slow-on consumer in 2024. So just trying to gauge what you've seen in recent months. And Chris, just to clarify, I think you said Valentine's Day, very strong, or Valentine's week.

Chris Meyer: Including significant Q4 spending for 2025 openings as well as ongoing funding of remodel relocation and infrastructure projects to.

Chris Meyer: The 50 <unk> week in 2023 creates some complexity in comparing year over year results, both for the full year and by quarter.

David Deno: But more broadly, the trend since the first few weeks of January with the inclement weather, would you say that they're now back to the strength you were seeing to close the fourth quarter? Or how would you gauge that more recent momentum?

Chris Meyer: Each fiscal quarter of 2024, we'll be comparing to a fiscal quarter from 2023 that includes a one week shift this shift is especially impactful in the first quarter.

David Deno: Yeah, we see the consumer hanging in there. Our trends, as I talked about on the call, we had a weak October, but they got stronger as the quarter moved along, and we finished really strong.

Chris Meyer: Please refer to the fiscal and comparable calendar dates table provided in our earnings release. This morning to help you better understand our 2024 calendar.

Chris Meyer: And then we had the first three weeks of weather, but then the strength that we've seen returned. And I'm really pleased with some of the trends we're seeing in our business, especially at Outback and Carrabba's. In 12 of the last 14 weeks, Outback has outperformed the industry. We expect that trend to continue, and we've tried to incorporate all that in our guidance, so we see the consumer hanging in there, and we see our brands doing pretty well in terms of trends. Yeah, and the only thing I would add to that is that you asked about mixed and mixed trends.

Chris Meyer: As it relates to the first quarter similar to the rest of the industry, we experienced negative impacts from weather in the first few weeks of the year. This represents a one 3% comparable sales headwind to the quarter. We have included this thinking in our comparable sales guidance as such we expect U S comparable restaurant sales to be down.

Chris Meyer: Between 50 basis points, and 200 basis points on a comparable calendar basis.

Jeffrey Bernstein: Yeah, no, we're still, and you saw it in the numbers, we're still seeing some negative mixed trends show up in the financials. But at the same time, I think, as we've said, you know, in the last couple calls, a lot of that's engineered. The growth in catering at Carabas has been significant. The LTO activity has been very successful.

Chris Meyer: The good news is we've seen continued sales growth ahead of the industry. In addition, our Valentines day week represented the strongest week in our company's history. This trend, including the weather impact from the first three weeks are included in our guidance.

Chris Meyer: We expect Q1 adjusted diluted earnings per share to be between 70 and 75.

David Deno: So I think that it's been more engineered than anything else. Now, that's not to say that there isn't some check management going on, but I don't think that's the lion's share of what we've been seeing. Understand that my follow-up is just, More broadly, Dave, in the boardroom, I'm just wondering, has anything changed in recent months or quarters with his activist involvement? I'm just wondering whether there's any change in perspective or priorities or how that investor and the kind of the impact that you've seen, if any, as you look to your business through 2024. Thank you. Yeah, we have a very positive part of our company, and we welcomed our two new board members, as you saw. We've had good interaction in the boardroom, good ideas, and they've been a big part of helping us understand how we can move our businesses forward. We're very optimistic about the year, and I think it's been a good partnership. Great to hear. Thank you very much.

Chris Meyer: Which includes a negative 6% impact due to the calendar shift and an approximate <unk> <unk> impact from weather at the beginning of the quarter. In addition, the removal of the Brazil tax exemption is a headwind of eight <unk> in Q1 versus 2023.

Chris Meyer: In summary, we successfully navigated a challenging environment in Q4, we will remain disciplined in executing against our strategy in 2024 and will emerge a better stronger operations focused company and with that we will open up the call for questions.

Speaker Change: Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Jeffrey Bernstein: Thank you. Our next question comes from the line of Alex Slagle with Jefferies. Please proceed with your question. All right. Thanks. Good morning.

Speaker Change: May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys to allow for as many questions as possible.

Alexander Russell Slagle: Chris, congrats. A great career there, and we'll all miss you for sure. I wanted to ask, I guess, just as you step back and think about all these efforts you've made, improving the guest experience at Outback and investing in food quality, simplification, better service, and remodels. I mean, how far have you gone along the spectrum of what you think you need to do to position this brand as a share gainer? And I know we have more that we'll hear about, you know, in the quarters to come, but I want to sort of think about that. And I don't know if there's even a way to.

Speaker Change: Ask that you. Please keep to one question and one follow up.

Speaker Change: Our first question comes from the line of Jeffrey Bernstein with Barclays. Please proceed with your question.

Jeffrey Bernstein: Great. Thank you very much.

Jeffrey Bernstein: My question is on the broader consumer environment.

Jeffrey Bernstein: Curious.

Jeffrey Bernstein: Multiple brands in a pretty good perspective.

Jeffrey Bernstein: Consumer behavior in recent months impacting traffic or mix.

David Deno: Specific dollar amounts relating to how much you've invested and how much you think you need to do in the core experience, but any thoughts around that? Sure. I think we've made progress, but we have more to do. I don't know if I should give a football analogy or a scale of 1 to 10, but I think we've made progress. We're seeing it in our trends, especially at the end of last year and the first quarter this year at OPAC. But when you look at the work we've done to understand our consumer in the post-COVID environment and sharpen our positioning, that's been done. I think you look at the No Rules Just Write positioning we've started. That's started.

Jeffrey Bernstein: You mentioned the risk of a slow in consumer in 2024, so just trying to gauge what you've seen in recent months.

Speaker Change: And Chris just to clarify I think you said.

Speaker Change: Very strong valentines week.

Chris Meyer: More broadly the trends since the first few weeks of January with the inclement weather would you say that they are now back to the strength you were seeing to close the fourth quarter or how would you gauge that more recent momentum and then I had one follow up.

Speaker Change #100: Yes, good morning.

Speaker Change #101: Yes, we see the consumer hanging in there.

Speaker Change #102: Our trends as I talked about on the call we had a weak October but they got stronger as the quarter moved along and we finished really strong and then we had the first three weeks of weather, but then the strength that we've seen return and I'm really pleased with some of the trends, we're seeing in our business, especially at Outback and Carrabba's 12 of the last <unk>.

David Deno: There's more work to do there. If you look at the food and service elements that we've invested in, we've invested in some, but we have even more to do, I think, on some of the service elements and some of the food elements. We talked about additional spending and marketing in 2024, and we're seeing some return on that.

Speaker Change #102: 114 weeks Outback has outperformed the industry, we expect that trend to continue.

Speaker Change #102: And we've tried to incorporate that all of that in our guidance. So we see the consumer hanging in there and we see our brands doing pretty well.

David Deno: We've opened up six new restaurants, and we're going to open up 15 to 18 in 2024, and then we're remodeling. So, Alex, it's started, but we have more to do, and I think we're beginning to see it in the trend change in the business.

Speaker Change #102: Trend.

Speaker Change #103: Yeah, and the only thing I would add to that is you asked about mix and mix trends, yes, no. We're still and you saw it in the numbers, we're still we're still seeing some negative mix trends.

Speaker Change #103: So up in the financials, but at the same time I think as we've said in the last couple of calls a lot of that is engineered the growth in catering at Carrabba's has been significant the <unk> activity has been very successful. So I think that it's been more engineered than anything else now that's not to say that there isn't some check management going on but I don't think thats the lions share of what we've been seeing.

Alexander Russell Slagle: And those, the closures, how many of those effectively would have been relocations? Is the relocation pipeline sort of still the same as it was before? Or how does that look?

Chris Meyer: And I mean, maybe any thoughts on the cash on cash return profile of these new units? Yeah, so I'll give you some perspective. No, none of these would be, quote unquote, considered relocation opportunities. I think, you know, the relocations this year will probably have another five or so. I think that we like the cadence that we have in terms of relocations. Every time we relocate a new Outback, we see significant sales lifts. And I think that, you know, just to sort of piggyback on the question Dave asked about Outback, I think that the relocation and what we see when we do a relocation is one of the reasons why we really believe in the relevance and the strength of the Outback brand because every time we do that, we see such positive results.

Speaker Change #104: Understood and then my follow up is just.

Speaker Change #104: More broadly.

Speaker Change #104: We've in the boardroom I'm, just wondering if something changed in recent months or quarters.

Speaker Change #104: Activist involvement I'm, just wondering whether there is any change in perspective of priorities or how is that.

Speaker Change #104: Investor and the impacts that you've seen if any as you look to your business through 2024. Thank you yeah, we have a.

Speaker Change #105: <unk> been a very positive part of our company and we welcomed two new board members. As you saw we've had good interaction the boardroom good ideas and they have been a big part of helping us understand how we can move our businesses forward and we're very optimistic about the year end.

Speaker Change #105: And I think it's been a good partnership.

Speaker Change #106: Great to hear thank you very much.

Chris Meyer: Now, what I would say is that from a new unit perspective, obviously, we're seeing pretty good cash on cash returns. You know, we think about allocation of capital. We get asked a lot, you know, why are you investing so much in new units? We're getting solid returns on these new units. They're in infill opportunities and strong markets with strong demographics. And obviously, I think from a capital allocation perspective, if we were seeing that we weren't getting the returns that we need to justify the investment, then we would use those dollars elsewhere.

Speaker Change #106: Thank you. Our next question comes from the line of Alex Slagle with Jefferies. Please proceed with your question.

Alexander Russell Slagle: Alright, thanks, good morning.

Alexander Russell Slagle: Morning, Chris Congrats.

Alexander Russell Slagle: Great career there.

Alexander Russell Slagle: We'll all Miss you for sure.

Alexander Russell Slagle: Yes.

Alexander Russell Slagle: To ask I guess, just as you step back and think about all of this the efforts you've made.

Alexander Russell Slagle: For being the guest experience at Outback and investing in food quality and simplification better service Remodels.

Alexander Russell Slagle: How far have you gone along the spectrum of what you think you need to do to position. This brand as a share gainer and I know we have more that we'll hear about in the quarters to come but wanted to sort of think about that and I don't know if theres anything that way too.

Chris Meyer: So we feel really good about kind of the whole strategy and how we're deploying capital. Thank you. Thank you. Our next question comes from the line of John Ivankoe with JP Morgan. Please proceed with your question.

Alexander Russell Slagle: That specific dollar amounts to how much you've invested in how much you think you need to do in the core experience, but any thoughts around that.

John William Ivankoe: Thank you. The question is around menu simplification and, you know, I guess a couple of things. One, you know, how far down this journey are you in terms of, you know, yet another significant reduction in menu items at Outback? Obviously, that would come with reduced complexity, which may actually come with reduced cost.

Alexander Russell Slagle: Sure.

Alexander Russell Slagle: Think we've made progress, but we have more to do.

Alexander Russell Slagle: I don't know if I should give a football analogy or a scale of one to 10, but I think we've made we've made progress we're seeing it in our trends, which especially at the end of last year in the first quarter of this year at Outback, but when you look at the work we've done to understand our consumer and in this post COVID-19 environment and sharpen our positioning that's been done I think.

David Deno: So, I just wanted to get your sense of how big of an opportunity you guys see that to be, you know, as kind of the first question. And then, secondly, are there any opportunities for kind of longer-term price investments in the Outback brand? I mean, are there some opportunities on the menu where, you know, you could sell a lot more certain, you know, certain foods, including, you know, foods that are regularly priced on the menu and actually lower the menu prices, maybe in some cases, bringing them a little bit closer to where peers are? Yeah, John.

Alexander Russell Slagle: Look at the no rules just right positioning we've started that started more work to do there. If you look at the food and service elements that we've invested in we invest we have invested some but we have even more to do I think us on some of the service elements and some of the food elements, we talked about the additional spending in marketing in 2024, we're seeing some return on that.

Alexander Russell Slagle: We've opened up six new restaurants, and we can open up 15 to 18 in 2024 and then we're remodeling so it's <unk>.

Alexander Russell Slagle: Alex its started but we have more to do and I think we're beginning to see it in the trend change in the business.

David Deno: I think, on the simplification side, that's something we have always looked at, and we are continuing to look at, and I think that's a good point that you make. And it's something that we look at in the marketplace. I don't want to get any further than that because of competitive reasons, but I think you've hit on something that we're looking at.

Speaker Change #107: Got it.

Speaker Change #107: The closures how many of those effectively would have been relocations.

Speaker Change #107: It's the relocation pipelines are still the same.

Speaker Change #107: Before or how does that look and maybe any thoughts on like that cash on cash return profile of these new units.

David Deno: And that brings improved operations, and I talked on the call about the progress we're making. If we can do it with the technology and with some of the work we're doing on the menu, if we can make it easier for operators to serve product and easier for our customers to navigate the menu, that could be an opportunity for us. So we're looking at that, number one. Number two is, the way we tried to approach this, John, is if you look at our combo pricing, that's something that's very attractive versus competitors. If you look at what we're doing with the Aussie three-course meal, $16.99, that works very well.

Speaker Change #107: Yes, so give you some perspective no. None of these would be quote unquote considered relocation opportunities I think the relocations. This year, we'll probably have another five or so I think that we like the cadence that we have in terms of relocations every time, we relocated new Outback, we see significant sales lifts and I think that the.

Speaker Change #108: Just to sort of piggyback on the on the question to Dave about Outback I think that the relocation and what we see when we do a relocation is one of the reasons why we really believe in the relevance and the strength of the Outback brand. Because every time, we do that we see such positive results now what I would say is like from a new unit perspective, obviously, we.

Sharon Zackfia: And we're also potentially looking at some high-quality menu items that may be a little bit lower priced that we would introduce on the menu to help offset some of the pricing at Outback, some of the pricing perceptions at Outback. So those are the things that we're doing. We're looking at our combo pricing, we're looking at some of the LTOs that we're doing and advertising against that, and we're also looking at some of the menu items that we can bring in place that might be a little lower price point but offer high value and high quality. Thank you. Thank you. Our next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question. Hi, good morning.

We're seeing pretty good cash on cash returns.

Speaker Change #108: <unk>.

Speaker Change #108: We think about allocation of capital we get asked a lot why are you investing so much in new units, we're getting solid returns on these new units there are in infill opportunities in strong markets with strong demographics, and obviously I mean, I think from a capital allocation perspective, if we were seeing that we werent getting the returns that we need to justify the investment then we would use those dollars.

Elsewhere. So we feel really good about kind of the whole strategy and how we're deploying capital.

Speaker Change #109: Thank you.

Speaker Change #109: Thank you. Our next question comes from the line of John <unk> with Jpmorgan. Please proceed with your question.

Chris Meyer: Can you give us some more texture around the closures? And you know, what concepts were impacted? Besides the Aussie Grill, I know that they were older locations, but was there any commonality other than the fact that they were older?

John: Alright, thank you.

John: Question is around menu simplification then.

John: I guess, a couple of things I mean, one how far down. This journey are you in terms of you know yet another significant reduction in menu items at Outback, obviously that would come with reduced complexity in some cases that actually may come with reduced cost. So just wanted to get your sense of how big of an opportunity you guys see.

David Deno: And then how do we think about the impact of those closures on revenue and margins as we think about 24? Yeah, they're split across the portfolio. So there was, you know, mostly Alpac, but there were a handful in the other concepts as well.

Sharon Zackfia: There, we talked about the revenue impact, you know, sort of about $100 million of actual revenue would come out related to those closures. But actually, it's profit accretive, right? You know, that's part of the reason why we're making this move. We're probably going to add about $4 million of EBIT to the bottom line results of the company this year as a result of the closure. The other thing, Sharon, is we're opening 40 to 45 new restaurants to bring in. Those restaurants will be far more visible, attractive, and higher-performing across the portfolio, and so that will really help as well. Thanks for that!

John: That to be.

John: The first question and then secondly are there any opportunities for kind of a longer term price investments are the outback brand. I mean are there is some opportunities on the menu, where you could sell a lot more certain certain foods, including.

John: Foods that are regularly price on the menu of actually lowering the menu prices and maybe in some cases, bringing them a little bit closer to where peers are.

Speaker Change #110: Yes, John.

John: I think on the simplification side Thats something we have always looked at and we are continuing to look at and I think thats a good point that you make and it's something that works. We're looking at in the marketplace I don't want to get any further than that because of competitive reasons, but I think you've hit on something that we're that we're looking at net that brings improved operations and I talked on the call about the progress we're making.

David Deno: And I think you alluded to in the cat bag, kind of maybe a further acceleration in development in 2025 if I'm kind of triangulating the commentary there correctly. Is that the case, you know, from 40 to 45 new locations this year? What, I mean, what kind of cadence of growth do you think you can maintain as you get into 25, 26, and beyond? Yeah, Sharon. I love our pipeline.

John: And if we can make it with the technology and with some of the work we're doing on the menu. If we can make it easier for operators to.

Chris Meyer: Our real estate team has done a great job. You're correct. We would like to improve the cadence and raise the cadence as we go forward. As Chris mentioned, we're always on top of our returns to make sure that the returns are great, but we have a pipeline building that is very, very strong, especially in our stronghold markets in the Southeast. Yeah, and maybe just to give you a little context on the capital guide and how that comes together a little bit. So one of the dynamics that you are gonna have in the 2024 capital spending is that in 2023, we had about 65 million in restaurant technology. That spend is gonna fall off in 2024, but we are then gonna have an increase in the number of new units that you're gonna see in the numbers. So it's really just a trade between technology and restaurants increasing the number of new units. Very helpful.

John: Serve product and easier for our customers to navigate the menu that could be an opportunity for us. So we're looking at that number one number two is the way we tried to get about this John is if you look at our Commvault pricing Thats something thats very attractive versus competitors. If you look at what we're doing with the Aussie three course meal 16, 99 that works very.

John: Well and we're also potentially looking at some high quality menu items that may be a little bit lower price that we would introduce on the menu to help offset some of the pricing at outback that some of the pricing perceptions at Outback. So those are the things that we're doing is looking at our combo pricing. We're looking at some of the <unk> that we're doing in advertising against that and we're also looking.

John: At some of the menu items that we can bring in place that might be a little.

Lower price point, but offer of high value and high quality.

Chris Meyer: Thank you. Thank you. Our next question comes from the line of Jeff Farmer with... Gordon Haskett. Please proceed with your question. Thanks, and best of luck to Chris with everything you're going to be pursuing in the future.

Speaker Change #111: Thank you.

Speaker Change #111: Thank you. Our next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question.

Sharon Zackfia: Hi, Good morning can you give us some more texture around the closers.

Jeff Farmer: A couple questions for you. Anything you can offer on the sort of the component assumptions across pricing and traffic mix as it relates to that flat to 2% same for sales guidance for 2024? Yeah, yeah, sure.

Sharon Zackfia: What concepts were impactful.

Sharon Zackfia: <unk> grill.

Our older locations, but any commonality other than the comparable or older and then how do we think about the impact of those closures on revenue and margins as we think about 24.

Chris Meyer: I'll give you some perspective. So I think if you think about traffic, there's a pretty wide range of possible outcomes. It's anywhere from flat, which I think, you know, is certainly doable, but also down to, like, maybe down to 2%. A lot of it's going to depend on sort of the external environment. But there's also a couple things worth calling out about that. I mean, first, you know, we're going to start out in a little bit of a hole here in Q1 because of the weather from a traffic perspective. And then I would say, you know, candidly, the category is measured by Blackbox or NAP, however you choose to look at the category.

Speaker Change #112: Yes, they are split across the portfolio. So there was.

Speaker Change #112: Mostly outback, but there was a handful in the other concepts as well.

Speaker Change #112: We talked about the revenue impact of.

Speaker Change #112: About $100 million of actual revenue would come out of related those closures, but actually its profit accretive right.

Speaker Change #112: What part of the reason why we're making this move we probably going to add about $4 million of EBIT to the bottom line results of the company. This year as a result of the closures.

Speaker Change #112: Sharon is we're opening 40%, 40% to 45, new restaurants too.

Speaker Change #112: To bring in those restaurants will be far more visible attractive higher performing across the portfolio and.

Chris Meyer: Look, it's likely going to have a negative traffic outlook for 2024, and I don't think that's anything new. I mean, outside of a couple years around COVID, the category, generally speaking, has been down 2% to 3%, pretty much every year that I can remember going back quite a ways. So I think those two things taken together, it is our goal and it is our commitment to try to outperform the category in traffic this year, which is why if the category is down 2% to 3%, our traffic is going to be flat to down 2% in that range. We expect to outperform. If the category does a little better because the consumer seems to be hanging in there, then, of course, we have the opportunity to have some upside there. So that's how I would think about traffic. Now, in terms of, you know, average check pricing, et cetera, start with average check. In the full year guide, it assumes an average check increase of, call it, 2% to 3%.

Speaker Change #112: And so that will that will really that will really help as well.

Speaker Change #113: Thanks for that and I think you alluded to in the Capex kind of maybe a further acceleration in development in 2025 kind of Triangulating. The commentary that correctly is that is that the case.

Speaker Change #114: No from 40 to 45, new locations this year.

Speaker Change #114: What kind of cadence of growth do you think you can maintain as you can.

Speaker Change #114: Getting into 'twenty, five 'twenty six and beyond.

Speaker Change #115: Yes, Sharon I love our pipeline, our real estate team has done a great job.

Speaker Change #116: You are correct, we would like to improve the cadence and raise the cadence as we go forward as Chris mentioned, we're always on top of our returns to make sure that the returns are great but.

Speaker Change #116: We have a pipeline building that is very very strong, especially in our stronghold markets in the southeast yes, maybe just to give you a little context on the capital guide and how that comes together a little bit. So one of the dynamics that you are going to have in the 2020 for capital spending.

Chris Meyer: And that's going to be comprised of about, I'd say, 3.5% or so of pricing and then some negative mix. And that negative mix, again, is driven by some of the things I talked about in terms of catering growth, LTO activity, things like that. The pricing assumption is going to have about 2% or so of rollover pricing and then a small amount of incremental pricing over the balance of the year. You know, again, I mean, the commodity environment is going to be somewhat benign, but the one area where it's not benign is in the beef markets.

Speaker Change #116: Is that in 2023, we had about $65 million of restaurant technology that spend is going to fall off in 2024, but we are then going to have an increase in the number of new units that youre going to see in the numbers. So it's really just a trade between the technology and the restaurants, increasing the number of new units.

Very helpful. Thank you.

Speaker Change #116: Thank you. Our next question comes from the line of Jeff Farmer with.

Jeff Farmer: Gordon Haskett. Please proceed with your question.

Jeff Farmer: Thanks, and best of luck to Chris with everything Youre going to be pursuing in the future.

Jeff Farmer: Couple of questions for you.

Jeff Farmer: Anything you can offer on the sort of the component assumptions across pricing traffic mix as it relates to that flat to 2% same store sales guidance for 2024.

Chris Meyer: And so we're going to have significant beef inflation again this year, and so some of that incremental pricing is going to be meant to offset that. All right, that's helpful. And just as a follow-up, as it relates to, again, sort of the increased level of media... Have you sort of fully implemented that across Q4 and into the first part of 1Q, or is this going to sort of slowly build? How should we be thinking about the ongoing effort to sort of get a stronger media and share a voice out there? Yeah, Jeff, there are two ways to think about it.

Speaker Change #117: Yeah sure I'll give I'll give you some perspective, so I think if you think about traffic.

Speaker Change #118: A pretty wide range of possible outcomes here I'd say anywhere from flat, which I think is certainly doable, but also down to like particularly be down to 2% a lot of it is going to depend on sort of the external environment.

Speaker Change #118: But theres also a couple of things worth calling out on that I mean first we're going to start out in a little bit of a hole here in Q1 because of the weather from a traffic traffic perspective, and then I would say candidly the category as measured by black box or Napa or wherever you choose to look at the category look it's likely going to have a negative traffic outlook for 2024, and I don't think.

Jeff Farmer: One, it will build. And we will always look at the ideas we have. And I'm pretty excited about a couple of the ideas coming up during the balance of the year. And so the ideas will, and the funding will follow the ideas. So we see that there, it will build during the year, and then we will fully support our ideas with a strong share of voice. Thank you. Thank you. Our next question comes from the line of Sara Senatore with Bank of America. Please proceed with your question.

Speaker Change #118: Thats anything new I mean, I think that outside of a couple of years around COVID-19. The category generally speaking been down 2%, 3% pretty much every year that I can I can remember going back quite a ways. So I think those two things taken in perspective. It is our goal and as our commitment to try to outperform the category.

Speaker Change #118: In traffic this year, which is why if the category is down 2% to 3% our traffic is going to be flat to down 2% in that range. We expect to outperform the category does a little better because the consumer seems to be hanging in there then of course, we have opportunity to have some upside there. So that's how I would think about traffic now in terms of.

David Deno: Thank you. I guess I'm trying to understand how you are thinking about capital allocation, by which I mean, you know, the reloads obviously have high returns, but is there a scenario where, you know, if you reinvested that money elsewhere, maybe not in capital, but, you know, an op-ex, maybe even more marketing or labor, something like that, where you could get, you think you could see a return across the system, just because the relocations obviously help the individual, as I think about, you know, the guidance that looks a little heavier on CapEx than we had thought, and so wondering how you kind of compare ROI across the different uses of capital within the P&L or in CapEx, and then I just have a quick clarifying question. Sure.

Speaker Change #118: Average check pricing et cetera start with average check in the full year guide assumes an average check increase of call it 2% to 3% and thats going to be comprised of about I would say three 5% of so of pricing and then some negative mix in that negative mix again is driven by some of the things I talked about in terms of catering growth <unk> activity things like.

Speaker Change #118: That the pricing assumption is going to have about 2% or so rollover pricing and then a small amount of incremental pricing over the balance of the year again, I mean, the commodity environment is going to be somewhat benign, but the one area, where it is not benign isn't the beef markets and so we're going to have significant beef inflation against this year again.

Sara Harkavy Senatore: We look at that very carefully across the P&L. We look at our labor investments, our food investments, and then also CapEx. One of our ways to unlock traffic growth, especially at Outback, where we have older assets, is refreshment of the really strong assets, relocations, and new. And that will uplift the entire trade area. And as we did our relocations, excuse me, as we did our remodels in 2023, we tried to concentrate them, for instance, in Florida, and we saw the benefit of that concentration. So, you know, as we look across the P&L, we look at the investments we want to make in labor, we look at the investments we want to make in food and advertising, but also we look at our capital, and we know that the cash-on-c Yeah, and we've made decisions like that in the past.

Speaker Change #118: And so some of that incremental pricing is going to be meant to offset that.

Helpful. And then just as a follow up as it relates to again through the increased level of media.

Speaker Change #118: Have you sort of fully implemented that across Q4 and into the first part of <unk> or is this going to sort of slowly build.

Speaker Change #118: How should we be thinking about the ongoing effort to sort of get a stronger media.

Speaker Change #118: Share of voice out there.

Speaker Change #119: Yes, Jeff two ways to think about it one it will build and we will always look at the ideas, we have and I'm pretty excited about a couple of the ideas coming up balance of the year and so the idea is will the funding will follow the ideas. So we see that there they will build during the year and then we will fully support our.

Speaker Change #119: Ideas are strong share of voice.

David Deno: I mean, we certainly have; whether it's increasing portion sizes at some of our brands or adding a second size, there have been reinvestments back into areas where we think it makes sense. So, certainly, one of the advantages of having a significant amount of free cash flow like we have is that you're able to make these kinds of investments and decisions and still, you know, leave yourself in really good shape from a capital structure standpoint. I got it.

Speaker Change #120: Thank you.

Speaker Change #120: Okay.

Speaker Change #120: Thank you. Our next question comes from the line of Sara Senatore with Bank of America. Please proceed with your question.

Sara Harkavy Senatore: Alright, thank you.

Sara Harkavy Senatore: I'm trying to understand how you are thinking about capital allocation by which I mean.

Sara Harkavy Senatore: You realize obviously have high returns, but we bear scenario, where if you reinvest.

Sara Harkavy Senatore: Invested that money elsewhere, maybe not in capital but.

Sara Harkavy Senatore: Opex, maybe been more marketing or labor or something like that where you could get you think you could see a return across the system.

Chris Meyer: Thank you. Just to clarify, some of what you're doing has broader implications, as you say, for the trade area. So the perception of customers in that trade area from, you know, reload or remodel may reverberate throughout the trade area. Is that fair?

Sara Harkavy Senatore: Because the relocations, obviously healthy individuals.

Sara Harkavy Senatore: As I think about.

Sara Harkavy Senatore: The guidance it looks a little heavier on capex than we had thought.

Sara Harkavy Senatore: Yes. There's nothing like a new op-back or two in a trade in a city to attract people and say, wow, look at that, especially our new prototypes, which we think are very attractive. So that's part of the traffic building as well for the entire trade area. We factor in, and we'll factor in cannibalization when we come up with the returns for new restaurant investments. So if there's a, if we're going to and entering a restaurant in a charity where we already have a significant presence, we factor in potential cannibalization into our model to make sure that we're making the right decision. Okay, thank you. And then just a technical question. Am I understanding correctly that the repurchase would just offset the dilution from the conversion? Is it sort of pretty much a wash?

Speaker Change #121: So wondering how you kind of compare ROI across the different uses of capital within the P&L or or in Capex and then and then I just have a quick.

Sara Harkavy Senatore: Clarifying question.

Sara Harkavy Senatore: We look at that very carefully across the P&L will look at our labor investments are food investments and then also capex.

Sara Harkavy Senatore: One of our ways to unlock traffic growth, especially at Outback, where we have older assets is the refreshment of the really strong assets relocations and new and that will uplift the entire trade area and as we did our relocations or excuse me as we did our remodels.

Sara Harkavy Senatore: In 2023, we tried to concentrate them for instance, in Florida, and we saw the benefit of that concentration. So as we look across the P&L. We look at the investments, we're making labor we look at the investments we'll make in food, but in advertising, but then also we look at our capital and we know that the cash on cash return. We received was strong and then what.

David Deno: Well, yeah, and so, you know, the conversion gets pretty complicated. But let me just try to frame the 300, because it's an important part of what we're trying to do here. The $350 million share repurchase authorization. So you can put aside the 150, right, because the 150 is just the normal course of business.

Sara Harkavy Senatore: It does for the entire marketplace and then what does for traffic as we uplift our assets. Yes. We've made we've made decisions like that in the past I mean, we certainly have whether it's increasing portion sizes at some of our brands or adding a second side there had been reinvestments back in areas, where we think it makes sense. So certainly.

Chris Meyer: We did $70 million of share repurchases in 2023. We got another $150 million for the next 18 months. That's pretty much the normal course of business. The remaining 200, it just gives us optionality.

One of the advantages of having a significant amount of free cash flow like we have is that you are able to make these kind of investments and decisions and still leave yourself in a really good shape from an from a capital structure standpoint.

Chris Meyer: And again, I'm not going to get too much into timing because timing could be anywhere between now and next May when the convert comes to maturity. But what I can say about how it would be implemented is, at the end of the day, what would likely be the outcome is that you would have, of that $200 million of share repurchases, you would just have the 4 million shares that are currently sitting in my adjusted earnings per share share count. Those shares would come out of the share count using the funds from the $200 million.

Speaker Change #122: Got it thank you.

Speaker Change #123: Clarify what Youre gearing has.

Speaker Change #123: Broader implications for the trade area, so that the perception of the customers in that trade area from a remodel.

Speaker Change #123: Reverberate throughout the trade that Gary is that is that fair, yes, there's nothing like a new op back or two in a trade in a city to attract people and say Wow look at that especially in our new prototypes, which we think are very attractive. So thats part of the traffic building as well for the entire trade area, we factor in and we will factor in cannibalization when we come up with the returns.

Chris Meyer: The remainder of it, the $105 million that's the principal on the convert, there's just some options between I can do some share buybacks and, you know, and issuing shares, et cetera. There's just some arbitrage there. That's really more just a refinancing kind of event. The real impact on the share count would be those 4 million shares that are sitting currently in my adjusted share count, if that makes sense.

Speaker Change #123: New restaurant investments. So if there's a if we're going into entering a restaurant and a charity where we already have a significant presence we factor in potential cannibalization into our mouth model to make sure that we're making the right decisions.

Brian Harbor: Thank you very much. Thank you. Our next question comes from the line of Brian Harbert with Morgan Stanley. Please proceed with your question. Thanks, good morning.

Speaker Change #124: Got it okay. Thank you and then just for clinical question am I understanding correctly the repurchase.

Speaker Change #124: Just offset the dilution from <unk>.

Chris Meyer: Yeah, and Chris, best of luck to you. Just a question: did you spell out what you expected wage inflation to be this year? And I think a broader question about labor. Do you feel like there's, you know, kind of a need to reinvest in labor or, you know, add some to stores as you think about kind of building traffic this year? Yeah, I think our labor models are very well-established and well-run.

Speaker Change #124: The convert is that is it sort of pretty much a wash.

Well, yes so.

Speaker Change #124: The convert gets pretty pretty complicated, but let me. So let me just trying to frame. The 300, because it's an important part of what we're trying to do here the $350 million share repurchase authorization. So you can put aside the $1 50 right. Because the 150 is just normal course of business, we did $70 million of share repurchases in 2023, we've got another $150 million for the.

David Deno: We've invested in technology to enable our servers. We've invested in cooking technology to enable our back of the house. The service model is strong, and we feel very good about it. So the labor spending at the restaurant-level number of hours, etc., has been really good. Look, yeah, I mean, LeBron, I think that, yeah, I think inflation, you know, call it four and a half percent.

Speaker Change #124: The next 18 months, that's pretty much normal course of business. The remaining 200. It just gives us optionality and again I'm not going to get too much into timing because timing can be anywhere between now and next may when the convert comes to maturity, but what I can say about how it would be performed is.

Speaker Change #124: At the end of the day, what would likely be the outcome is that you would have.

Speaker Change #124: Of that $200 million of share repurchases you would just have the 4 million shares that are currently sitting in my adjusted earnings per share share count those shares would come out of the share count using the funds from the $200 million the remainder of it the $105 million Thats the principle on the convert Theres just.

Chris Meyer: It just seems like that, you know, four to five percent range of inflation is pretty sticky. And I don't see it going anywhere anytime in the future, particularly since, you know, we have such a presence in Florida, and Florida is going through this stage of raising their minimum wage. So look, I think that's just part of how we go to market; that's why the productivity initiatives and things like that are so important, because you need some offsets. You can't just take an unlimited amount of pricing to offset that. And that's why we focus so much on making sure we do the right thing with productivity. Okay, yeah, got it.

Speaker Change #124: Some options between I can I can do some share buybacks in and issuing shares et cetera. There is just some arbitrage there that's really more just a refinancing kind of event the real impact to share count would be that 4 million shares that are sitting currently in my adjusted share count if that makes sense.

Speaker Change #125: Great. Thank you very much very helpful.

Speaker Change #125: Thank you. Our next question comes from the line of Brian <unk> with Morgan Stanley. Please proceed with your question.

Brian Harbor: Thanks. Um, maybe I'll take the bait on your comment about the kind of work you've done for your customer, what what's changed, I guess, or what were, you know, some of your key insights from that work. Yeah, I don't want to get into too much detail for competitive reasons, but a couple things. One, our core is... loves Outback Steakhouse, and they continue to say that again and again and again. And I think we have some permission from some of our explorers out there who might be looking at some other categories of interest. But the focus is on the core, and if we can pick up a few, a few explorers that look at other categories besides steak, I think Outback has the permission to do that. And the last thing is the reinforcement of how Outback is such an adventurous steakhouse. And we have a lot of support for our long heritage of No Rules Just Write, our Aussie heritage, et cetera.

Brian M. Vaccaro: Thanks, Good morning, and Chris Best of luck to you.

Brian M. Vaccaro: Just a question on did you saw what you expect wage inflation to be this year.

Brian M. Vaccaro: I think a broader question about labor do you feel like there is kind of a need to.

Brian M. Vaccaro: Reinvest in labor or add some of the stores as you think about kind of building traffic this year.

Brian M. Vaccaro: Yes, I think our labor models are very well established well run we've invested behind the technology to enable our servers, we've invested in cooking technology to enable our back of the house.

Brian M. Vaccaro: The service model is strong and we feel very good about it so the labor spending at the restaurant level number of hours et cetera is in really good shape.

Brian M. Vaccaro: And you asked about in place look, yes, I mean.

Brian M. Vaccaro: I think that.

Brian M. Vaccaro: Yes, I think inflation call. It four 5% it just seems like that 4% to 5% range of inflation is just pretty sticky.

David Deno: All those things came to light as we continued to do our research. Thank you. Our next question comes from the line of Laura Silberman with Deutsche Bank. Please proceed with your question. Hi, thank you.

Brian M. Vaccaro: I don't see it going anywhere anytime in the future, particularly since we have such a presence in Florida, and Florida is going through the stage of raising their minimum wage. So look I think that's just part of of how we go to market.

Laura Silberman: On advertising, I just wanted to ask a bit more about that and your approach to marketing; what type of messaging are you going to lean into in 2024? How much more in value do we need to see? And then just in terms of how we think about the step-up in advertising spend? Yeah, it will move up during the year, but I think more importantly, it'll be with the ideas that we have, which, like I said before, I'm very optimistic about. I think if we can do the combo of products that consumers really love, and I don't want to get into detail here, along with good value, I think that's the magic that we can bring together at Outback, especially to help grow traffic and our advertising and our consumer awareness and excitement. I think that's clearly something that we can do because we have a heritage of that.

Why the productivity initiatives and things like that become so important because you need some offsets you can't just take unlimited amounts of pricing to offset that and Thats why we focus so much on making sure we do the right thing with productivity.

Speaker Change #126: Okay got it thanks.

Speaker Change #127: Maybe I'll take the bait on your comment about kind of the work you've done and your customer.

Speaker Change #127: Whats changed I guess for what was.

Speaker Change #127: Some of your key insights from that work you've done.

Speaker Change #128: Yes, I don't want to get into too much detail for competitive reasons, but.

Speaker Change #128: Couple of things one are.

Speaker Change #128: Our core is loves Outback steakhouse and they continue to ramp.

Speaker Change #128: Say that again, and again and again and I think we have some permission from some of our explore is out there that might be looking at some other categories of interest, but the focus is on the core and if we can pick up you up to explore as it look at other categories. Besides state I think outback has a permission to do that and the last thing is the reinforcement of how opex such an adventure.

David Deno: The second thing is, like I said, you'll see the step-up of spending during the year as the ideas come to fruition, and we'll continue to track that return as we go forward. And lastly, I think we have a much better understanding, as we've talked about in other calls, on the way to advertise via digital versus network or versus television. Those are things that we can also look at and change the mix around as we need to. So those are the things that we're doing with our advertising investment, and we continue to track the returns and what we can do going forward. Okay, thank you. And then just on the restaurant margin, what's embedded in the guide this year? And can you just talk about how we should be thinking about the cadence?

Speaker Change #128: <unk> Steakhouse, and we have a lot of support for our long heritage of no rules, just right or Aussie heritage et cetera, all those things came to light.

Speaker Change #128: As we continue to do our research.

Speaker Change #128: Thank you. Our next question comes from the line of Lauren Silberman with Deutsche Bank. Please proceed with your question.

Lauren Silberman: Hi, Thank you.

Lauren Silberman: On advertising, so I'd ask a bit more there and your approach to marketing messaging or you're going to lean into 2020.

Lauren Silberman: 2024, how much more in value we need to.

Speaker Change #129: And then just in terms of how we think about the step up.

Chris Meyer: of Margin throughout the year. Thank you. Yeah, I think as you look at operating, we'll start with operating margins, and we'll talk about restaurant margins at the same time. But to give you perspective, we finished at, you know, 7.6% in our operating margin line in 2023. 50 basis points of that was driven by the 53rd week and the Brazil tax exemption. So, you know, you're not going to have those in 2024.

Lauren Silberman: In advertising spend.

Lauren Silberman: It will move up during the year, but I think more importantly, it will do will be with ideas that we have which I'm like I said before I'm very optimistic about.

Lauren Silberman: I think if you can if we can do the combo of products that consumers really love and I don't want to get into detail here along with the good value I think thats. The magic that we can bring together at outback, especially to help grow traffic and our advertising and our and our consumer awareness and excitement I think thats clearly something that we can do.

Brian M. Vaccaro: So, if you exclude those two and you say you're starting points at 7.1, look, with the guide we gave, I'd expect the operating margin to be, you know, slightly up to slightly down, probably flattish, depending on where we land within our guidance range. In and around, call it 7% or so, which is, you know, again, as a reminder, it's 210 basis points above where we were in 2019, despite what continues to be very persistent inflation. So, if you think about it from a restaurant margin and a category perspective, I think cost of goods sold and OpEx, just given where the productivity dollars will probably land in some of the inflation that we're seeing in those categories, COGS is a little bit less inflation this year.

Lauren Silberman: Because we have a heritage of that the second thing is like I said Youll see.

Lauren Silberman: The step up of spending during the year as the ideas come to fruition.

Lauren Silberman: And we will continue to track that return as we go forward and lastly, I think we have a much better understanding we've talked about in other calls on the way to advertise via digital versus network versus TV. Those are things that we can also look at and change the mix around as we as we need to so those are the things that we're doing with their advertising investment and we continue to track that.

Lauren Silberman: <unk> and what we can do going forward.

Speaker Change #130: Okay. Thank you and then just on restaurant margin what's embedded in the guide this year and can you just talk about how we should think about the cadence.

Speaker Change #130: Margin.

Speaker Change #131: Throughout the year. Thank you.

Speaker Change #132: Yes, I think I think as you as you look at opera will start with operating margins and we will talk about restaurant margins at the same time, I think but to give perspective, we finished at seven 6% of our op margin line in 2023 50 basis points of that was driven by the 50 <unk> week in the Brazil tax exemption so youre not.

Brian M. Vaccaro: Both those categories have a decent chance to be favorable in terms of margin year over year. Labor is probably the one category that's most likely to be a little higher year over year, given the inflation that I just talked about, that 4% to 5% inflation. And then the other piece is when you go further down the P&L, the one, you know, G&A, we'd like to keep somewhat flat on a dollar basis, but depreciation is going to be higher, obviously, with the capital spend. So, I would expect depreciation as a percentage of total revenues to be higher as well. So, that gives you a little bit of sense about, I think, the pieces part. Thank you, very helpful.

Speaker Change #132: Have those in 2024, so if you exclude those two and you say youre starting point to seven one look with the guide we gave I'd expect op margin to be slightly up to slightly down probably flattish, depending on where we land within our guidance range in and around call it 7% or so which is again as a reminder, it's 210 basis points.

Speaker Change #132: Above where we were in 2019, despite what continues to be very persistent inflation. So.

Chris Meyer: Thank you. Our next question comes from the line of Brian Vaccaro with Raymond James. Please proceed with your question. Hi, thanks and good morning, and congratulations, Chris.

Speaker Change #132: You think about it from a restaurant margin in the category perspective, I think cost of goods sold and Opex, just given where the productivity dollars will probably land in some of the inflation that we're seeing in those categories Cogs is a little bit less inflation. This year those both of those categories have a decent chance to be favorable in terms of margin year over year labor is probably.

Chris Meyer: Best of luck to you. So, just circling back on the Outback comps for a second, could you be a little more specific on the degree of improvement you've seen or how much that spread versus the industry has improved over the last few months? And also, given the unusual swings in weather in January, any way you could level-set how your U.S. comps look more recently as the weather has normalized?

Speaker Change #132: The one category, that's most likely to be a little higher year over year, given the inflation that I just talked about that 4% to 5% inflation and then the other pieces. When you go further down the P&L. The one G&A, we'd like to keep somewhat flat on a dollar basis, but depreciation is going to be higher obviously with the capital spend so I would expect.

David Deno: Yeah, um, I don't want to get into specific percentage points versus the industry, Brian, I hope you understand that, but I think you know me pretty well. We've gone from a place, especially in the fall, when Outback was behind the industry in same-store sales growth to a point in December and then into Q1, where we're consistently ahead. And we're very pleased about that, and that's the result of the beginning of the work we're doing. And we can see, going forward, some of the work we're doing to help that trend continue and, hopefully, strengthen. But that is about all I can say right now. I don't want to get into price points per se.

Speaker Change #132: <unk> as a percentage of total revenues to be higher as well. So that gives you a little bit of a sense of how to think about the pieces parts.

Speaker Change #133: Thank you very helpful.

Speaker Change #133: Thank you. Our next question comes from the line of Brian Vaccaro with Raymond James. Please proceed with your question.

Brian M. Vaccaro: Hi, Thanks, and good morning, and congrats Chris Best of luck to you.

Brian M. Vaccaro: So.

Brian M. Vaccaro: Just circling back on the Outback comps for a second could you be a little more specific on the degree of improvement you've seen or how much that spread versus the industry has improved over the last few months and also just given the unusual swings on weather in January anyway, you could level set how your U S comps look more recently as the weather has normalized.

David Deno: After the weather, the first three weeks, we've seen the trend resume that we saw in December. And the last few weeks have shown just that. And so we've tried to bundle all that into our guidance for the quarter. Okay, fair enough. And on that spread, is it fair to say that that spread is positive on both a comp and traffic basis? Yeah, yeah. Okay. Brian, before I get into your next question, I just want to mention one thing that hasn't gotten a lot of attention on this call, but I just need to say a couple of things about the Carabas team and how great they're doing.

Brian M. Vaccaro: Yes.

Speaker Change #134: I don't want to get into specifics.

Speaker Change #135: Percentage points versus the industry, Brian I hope you understand that but I think you know me pretty well.

Speaker Change #135: <unk> gone from a place and especially in the fall in Outback was behind the industry in same store sales growth to a point.

Speaker Change #135: In December and then into Q1, we're consistently ahead.

David Deno: And if you look at their trends versus the industry, they're just knocking it out of the park, both in traffic and in sales. And it's a brand we feel very good about and something that has investment opportunities going forward. So excuse me for interrupting you, but I just wanted to mention that.

Speaker Change #135: And we're very pleased about that and that's the beginning of that as a result of the beginning of the work we're doing and we can see going forward. Some of the work we're doing to help that trend continue and hopefully strengthen.

Speaker Change #135: That is that is.

Speaker Change #135: But all I can say right now I don't want to get into <unk>.

David Deno: And definitely noted. My other question was just on the fourth quarter store margin dynamics. Labor and other OPECs moved a little differently than we were expecting.

Speaker Change #135: Price points per say after the weather. The first three weeks, we have seen the trend resume that we saw in December and the last few weeks have shown just that until we've tried to bundle all of that into our guidance for the quarter.

Chris Meyer: And I guess on labor, that little over 100 basis points of pressure you saw year on year. Could you just give some color on what drove that and to what degree you reinvested in hours or service in the quarter? Yeah, well, I wouldn't say so much reinvestment in hours for service. I think the labor dynamic that you see in Q4 was mostly inflation, but we did have some additional compensation expenses relative to last year, specifically related to the 53rd week.

Speaker Change #135: Yes.

Speaker Change #136: Okay fair enough and on that spread is it fair to say that that spread is positive on both a comp and traffic basis.

Speaker Change #137: Yes, yes.

Speaker Change #137: Okay.

Speaker Change #138: Brian question on before I get into next question I just wanted to mentioned one thing that hasnt gotten a lot of attention on this call, but I just need to say a couple of things about the carrabba's team how great. They are doing and if you look at their trends versus the industry. They are just knocking it out of the park, both the traffic and in sales and it's a brand we feel very good about and something that hasnt been.

Chris Meyer: You know, as we pay our partners on a percentage of cash flow, that 53rd week was just outsized, and we just lost some leverage on that line, and then we were lapping some stuff from a year ago from a, you know, one-time perspective that wasn't as big, but those are kind of the big buckets. I mean, broadly speaking, Brian, the Q4 margin performance, what we really tried to, you know, tune people into was the fact that the COGS line was going to move the way that it did because we had been leveraging that restaurant margin pretty favorably up until Q4, but we, you know, we talked about the idea that we weren't going to leverage the COGS line just because of some of the beef activity that we had a year ago. So that was probably the biggest dynamic, but yeah, labor was a little higher, but I think it had a lot to do with just kind of the dynamics of the 53rd week and how that came together.

Speaker Change #139: When opportunities going forward. So excuse me for interrupting you, but just wanted to mention that no absolutely and definitely noted.

Speaker Change #139: My other question was just on the fourth quarter store margin dynamics labor and other Opex moved a little differently than we were expecting and I guess on labor that little over a 100 basis points of pressure I think you saw year on year could you just give some color on what drove that and to what degree you reinvested in hours or service and.

Speaker Change #139: In the quarter.

Speaker Change #140: Yeah, well I wouldn't say so much reinvestment in hours for service I think the labor dynamic that you see in Q4 was mostly inflation, but we did have some additional compensation expenses related to relative to last year, specifically related to the 50 <unk> week as we pay our partners.

Speaker Change #140: Percentage of cash flow that 50, <unk> week was just outsized and it just we just lost some leverage on that line and then we were lapping some stuff from a year ago from a onetime perspective that wasn't as big but those are kind of the big buckets. I mean, I think that broadly speaking, Brian the Q4 margin performance. What we've really tried to June people into was the fact that the Cogs line.

Chris Meyer: Okay, thank you for that. And just on the topic of productivity, if I could, last one, what level of savings did you achieve at 23? And could you provide a few more specifics on what some of the key drivers of efficiency in 2024 will be? Yeah, so we ended up at about $55 million or so of productivity in 2023, and again, I think the buckets that we saw in 2023 are largely going to be the buckets that we would see in 2024. Again, I think we're going after another $50 million in productivity this year. A lot of it is going to be driven by the restaurant technology that we put in place, but another big piece is going to be supply chain-related, because there are a lot of opportunities there that we've been looking at, as well as some of the menu work and things that Dave talked about.

Speaker Change #140: What's going to move the way that it did because we had been leveraging that restaurant margin pretty favorably up until Q4, but we talked about the idea that we weren't going to leverage the Cogs line, just because some of the beef activity that we had a year ago. So that was probably the biggest dynamic, but yes labor was a little higher but I think it had a lot to do with just kind of that dynamics of the 50, <unk> week and how that came to.

Speaker Change #140: Gather.

Speaker Change #141: Okay. Thank you for that and just on the topic of productivity if I could last one what level of savings did you achieve in 'twenty three and could you provide a few more specifics on.

Speaker Change #141: What some of the key drivers of efficiency in 2024 will be.

Yes, so we ended up at about $55 million or so of productivity in 2023, and again I think the buckets that we saw in 2023 are largely going to be the buckets that we would see in 2024.

Chris Meyer: So it's going to be pretty broadly spread across the P&L between COGS and labor, etc. You know, again, maybe a little more weighted to the cost of goods sold, but we'll see. I just want to emphasize, too, Brian, the productivity we do will not touch food quality or service levels. It's pure... getting our great products and our service to our people in a more efficient manner. So, that's extremely important. All right, thank you very much. I'll pass it along.

Speaker Change #141: Again, I think we're going after another $50 million of productivity this year.

Speaker Change #141: A lot of it is going to be driven by the restaurant technology that we've put in place, but another big piece is going to be supply chain related because theres a lot of opportunities there that we've been looking at as well as some of the menu work and things that Dave talked about so it's going to be pretty broadly spread across the P&L between Cogs and labor et cetera.

Brian Mullen: Thank you. Our next question comes from the line, Brian Mullen with Piper Sandler. Please proceed with your question. Thank you. I just have a question about Brazil.

Speaker Change #142: Again, maybe a little more weighted to to cost of goods sold but we will see I just want to underscore too Brian.

Speaker Change #142: The productivity will do we do we will not touch food quality and not such service levels. It's pure.

David Deno: Can you just touch on the operating environment down there right now? What do you expect to see as you put together the guidance for the year? And then, just related to that, I know you've been asked this many times in the past, but if you could just give your current thinking on your desire to own those restaurants longer term and if the current environment is conducive to taking any action on that front for the foreseeable future. Sure, the environment remains good.

Speaker Change #142: Getting our great products and our service to our people in a more efficient manner. So that's extremely important to us.

Speaker Change #143: Alright, Thank you very much I'll pass it along.

Thank you. Our next question comes from the line of.

Ryan Mellon with Piper Sandler. Please proceed with your question.

Ryan Mellon: Hey, Thank you just a question on Brazil can you just touch on the operating environment down there right now what you expect to see as you put together the guidance for the year and then just related to that I know you've been asked this many times in the past, but if you could just give your.

David Deno: Inflation's come down, interest rates are still pretty high down there, but the consumer is in good shape. We had a tremendous sales improvement last year at this time, probably because of the World Cup. So that was a very difficult lap, which we were able to do.

David Deno: And so the New Year openings are fantastic. Our position is unparalleled, number one. And so the operating environment, we believe, continues to be really, really strong. So that's important. The second piece is, we've looked in the past at potentially having that business be a franchise business. That still is something that we may or may not consider. We'll just continue to look at the environment and then the value we get from the business as we move forward. So we continue to look at optionality down there, but right now, our job is to continue to build a great business. Okay, thank you. And then, just as a follow-up, just a question on Bonefish. Can you touch on some of the recent in-source sales trends? Maybe what's going on with that brand?

Ryan Mellon: Current thinking on your desire to own those restaurants longer term and if the current environment is conducive to taking any action on that front for the foreseeable future I'm.

Ryan Mellon: I'm sure the environment remains good.

Ryan Mellon: Installations come down interest interest rates are still pretty high down there, but the consumer is in good shape we.

Ryan Mellon: We had a tremendous sales.

Ryan Mellon: Improvement last year at this time, partly because of the World Cup. So.

Ryan Mellon: So that was a very difficult lappish with are able to do.

Ryan Mellon: And so the new year.

Ryan Mellon: Openings are fantastic our position is unparalleled number one and so the operating environment. We believe continues to be really really strong so that is.

Ryan Mellon: That's important.

Ryan Mellon: Second piece is we've looked at in the past about potentially having that business to be a franchise business that is still is something that we may or may not consider.

David Deno: What are the key priorities for that brand this year or over the next few years? Just what is the team going to be focused on? I think for us, we have to do some more work there. Some of the work that we did at Outback was, quite frankly, to get a better understanding of our customers in this post-COVID environment. I think that's something that we need to focus in on, and we're doing that work right now. Are there menu investment and simplification opportunities that we can do?

Ryan Mellon: We'll just continue to look at the environment and then the value we get from the business and as we move forward. So.

Ryan Mellon: We continue to look at Optionality down there, but right now our job is strategic to continue to build a great business.

Speaker Change #144: Okay. Thank you and then just as a follow up just a question on Bonefish can you touch on some of the.

Same store sales trends recently, maybe what's going on with that brand what are the key priorities for that brand. This year over the next few years, just what's the team going to be focused on.

David Deno: We're looking at that. We've invested in operations, both in technology but also focusing on key measures, such as speed of service in our bar and for our food, because it's such a bar-centered concept. It's our highest mixing beer, liquor, and wine business in casual dining. And we continue to refresh our assets at Bonefish, so that's kind of the four-prong strategy there. It's not a growth vehicle for us.

Speaker Change #144: I think for US we have.

Speaker Change #144: And to do some more work there some of the work that we did at Outback quite frankly, you get a better understanding of our customer on this post COVID-19 environment, I think thats something that we need to focus on that and we're doing that work right. Now is there a menu of investment and simplification opportunities that we can do we're looking at that we've invested in operations both in technology, but also focusing.

David Deno: We'll continue to upgrade the assets, and we'll continue to do the customer and menu work to get that brand trend to improve. Thank you. Thank you. Our next question comes from the line of Dennis Geiger with UBS. Please proceed with your question.

Speaker Change #144: Key measures such as speed of service in our bar and for food because it's such a bar centered concept is our highest mixing.

Dennis Geiger: Great. Thanks, guys. It's encouraging to hear about the progress that you're continuing to see across the Outback operations and the customer satisfaction scores, etc. And I can personally attest to some of the positive customer experience benefits from the server handouts and in some visits recently. So just wondering if you could talk a little more about the opportunity for operations gains. You know, where is it? Is it consistency of speed, or food?

Speaker Change #144: Beer liquor wine business in casual dining and we continue to refresh our assets at bonefish those kind of the four pronged strategy. There it's not a growth vehicle for us will continue to upgrade the assets and we'll continue to the customer and menu work to get that brand.

Speaker Change #144: Trends to improve.

Speaker Change #145: Thank you.

Speaker Change #145: Yeah.

Speaker Change #145: Thank you. Our next question comes from the line of Dennis Geiger with UBS. Please proceed with your question.

David Deno: Where sort of the biggest opportunities that you've identified lie? And, I guess, most importantly, sort of how long you think it takes to get to, I think, the best-in-class levels that you spoke to as a target? Yeah, we're making significant progress in our operating measures, so we'll continue to make progress each and every month, and our goal is certainly, as soon as we can. I don't want to make a specific prediction, but it's something that we are all over. And I'm very pleased with the operating measures we're seeing, both in the internal progress we're making, but also externally with Technomic and other people that do a So, that's the first one.

Dennis Geiger: Great. Thanks, guys encouraging to hear about the progress that you are continuing to see across the outback operations and the customer satisfaction scores et cetera.

Dennis Geiger: And then I can personally attest to to some of the positive customer experience benefits from the server handhelds and in some visits recently so just wondering if you could talk a little more about the opportunity for operations gains whereas.

Dennis Geiger: Is it is it consistency of speed, where sort of the biggest opportunities that you've identified lie and I guess, most importantly sort of how long you think it takes to get to I think the best in class levels that you spoke to us as a target.

David Deno: The second thing is, I think it's more around the trade-off at the restaurant between variety and menu simplification. Can we continue to make progress there as we do our work? So there's more work coming out back there. Number two is really leveraging our technology. You saw the benefit of the handheld.

We're making significant progress in our operating measures. So we will continue to make progress each and every month and our goal is certainly as soon as we can I don't want make a specific prediction, but it's something that we are all over and I am very pleased with the operating measures. We're seeing both in the internal progress were making but also extra.

David Deno: That's clearly happening. The grills have been a big success. If you look at reorders and reorders and steak satisfaction, that's been very, very strong. And then as we continue to do this, you know, in casual dining, the customer comes two or three times a year. We've just got to continue to make progress here. That will be a reinforcement in building traffic, and then as we look at our chances to help our managing partners and our teams to offer great service, those are the things that we're looking at. Very helpful; I appreciate that.

Dennis Geiger: Certainly with Technomic and other people that do a lot of work for us externally. So that is really really a great thing to see.

Dennis Geiger: So that's the first and the second thing is I think it's more around the trade off at the restaurant between variety and menu simplification can we continue to make progress there as we do our work. So there's more work coming at Outback. There number two is really leveraging our technology you saw the benefit of the.

Dennis Geiger: And then just one second question, just as it relates to some of the traffic drivers that you've spoken to, a lot of the work that the team's been doing, as we think about maybe some of the biggest drivers for this year, if there are a couple that you think can be most impactful this year, and then if there are some that are kind of most impactful on a multi-year basis, would there be anything that you' Thank you. Yeah, I love some of our product and marketing ideas that we have coming up, and I like the fact that we're looking at how we're spending our advertising dollars and how we're doing it to support those ideas.

Dennis Geiger: That's clearly happening.

Dennis Geiger: <unk>.

Dennis Geiger: Grills had been a big success, if you look at <unk> and Reorders steak satisfaction, that's been very very strong and then as we continue to do this casual dining customer comes two or three times a year. We've just got continued to make progress here that will be a reinforcement in building traffic and then as we look at our chances.

Dennis Geiger: To help our managing partners and our teams to offer great service those are the things that we're looking at.

Very helpful. I appreciate that and then just.

Speaker Change #146: Second question, just as it relates to some of the bunch of the traffic drivers that you've spoken to a bunch of the work that the team has been doing.

Dennis Geiger: So in the near term, that's clearly something that we'll be looking at and very hopeful for. Longer term, some of the menu work we talked about, continuing with our positioning is really important. I think the asset upgrades, if you live in Florida and go into our Outbacks, most of them have been remodeled now, and you can see it; those are things that, longer term, are going to really help us. So our operations longer term, our asset investment longer term, our menu work, we want to balance some short-term gains, which I think are possible, along with some of the strong long-term things that we have in place at Out Very helpful; thank you.

Speaker Change #146: As we think about maybe some of the biggest drivers for this year. If there are a couple that you think can be most impactful. This year and then if there are some that are kind of most impactful on a multiyear basis would there be anything that you'd kind of break out there. Thank you, yes, I love I love some of our product and marketing ideas coming up.

Speaker Change #146: And I like the fact that we're looking at how we're spending our advertising dollars and how we're doing it to support those ideas. So in the near term that's clearly something that we'll be looking at.

Speaker Change #146: And very hopeful for longer term.

Speaker Change #146: Some of the menu work, we talked about continuing with our positioning is really important I think the asset upgrades. If you live in Florida and go under Opex most of them and remodel now and you can see it.

David Deno: Thank you. Our next question comes from the line of John Tower with Citi. Please proceed with your question. Great, thanks. I appreciate it. And Chris, best of luck.

Speaker Change #146: Those are the things longer term are going to really help us our operations longer term our asset investment longer term our menu work, we want a balanced some short term gains, which I think are possible along with some of the strong long term things that we have in place at Outback.

John Tower: I look forward to seeing what you do next....

David Deno: Curious, maybe on the $16.99 Aussie three-course meal. I'm just curious to get your thoughts on how you think about everyday value on your own menu today, and do you feel like that is a decent launch and or something that you can continue to evolve over time to have an everyday value option for consumers? Yeah, I think it's the first step, and I think it's something we'll continue to look at in our various, you know, limited time offer opportunities. We can certainly look at that. But then, as I mentioned earlier on the call, John, we're also looking at some products that may have a lower price point that are still really great products that are a good return on the company but also great, and offer great value to the customer. So we're doing some of that work on the menu side as well, but we have the opportunity through our combos and through selected LTOs with the right marketing spend to drive value in the brand. In the menu items you speak of, do you see those as permanent or LTO?

Speaker Change #147: Very helpful. Thank you.

Speaker Change #148: Thank you. Our next question comes from the line of.

Speaker Change #148: John Tower with Citi. Please proceed with your question.

John Tower: Great. Thanks, I appreciate it and Chris Best of luck and look forward to seeing what you do next.

<unk>.

John Tower: Curious maybe on the $60 99.

The three course meal I'm, just curious to get your thoughts on how you think about everyday value on your own menu today and do you feel like that is decent launch or something that you can continue to evolve over time to have an everyday value option for consumers over time.

John Tower: Yes, I think it's the first step and I think it's something we'll continue to look at for when they are various.

John Tower: <unk> time offer opportunities, we'd certainly look at that but then as I mentioned earlier on the call. John We're also looking at some products that may have a lower price point. They are still really great products that are good return to the company, but also a great offer great value to the customers. So we're doing some of that work on the menu side as well, but we have the opportunity through our combos.

David Deno: We are thinking that they will be permanent, but they have to earn their right to be on the menu. Got it. And then, I guess, just kind of zooming out a little bit and thinking about the business. I know for a few years you've been aiming toward that 8% or so EBIT margin target and you exceeded it at one point, and now we're taking a bit of a step back. So I'm just curious to get your thoughts on how you see it evolving over the next several years. I would assume, obviously, 24 is going to be a more difficult year for that.

John Tower: And through selected <unk> with the right marketing spend to drive value in the brand.

And the menu items, you speak up do you see those as permanent or L. T O.

John Tower: We are thinking that there will be permanent but they have to earn the right onto the menu.

John Tower: Got it and then I guess, just kind of zoom out a little bit and thinking about the business I know for a few years.

John Tower: Aiming toward that 8% or so EBIT margin target had exceeded it.

David Deno: But beyond 24 and into 25, you know, how should we think about your ability as a company to get back to that 8% or so target? Yeah, before I turn over to Chris, I just want to mention there's a very benign commodity basket, one exception, that's beef. And so, you know, we don't want to price it up to cover that beef cost entirely. So we have to continue looking at our margins to look at that and how it means what it means for our customers. But I want to make that broad point first before I turn over to Chris.

John Tower: At one point and now we're taking a bit of a step back. So I'm just curious to get your thoughts on how you see it evolving over the next several years I would assume obviously 'twenty four is going to be a more difficult year for that.

John Tower: But beyond 'twenty four 'twenty five how should we think about your ability as a company to get back to that 8% or so target.

Speaker Change #150: Before I turn it over to Chris I, just want to mention.

Speaker Change #151: Theres, a very benign commodity basket, one exception, that's beef and so we don't want to price up.

Speaker Change #151: To cover that deep cost entirely so we have to continue to looking at our our margins too to look at that and how it means what it means for our customer, but I want to make that broad 0.1st before I turn it over to Chris.

Chris Meyer: Yeah, well, I think that, you know, look, longer term, I think we still feel good about using 8% as an operating margin target. I think the problem has been, you know, in the time period between 2022 and 2024, we've had this massive inflation that's been really tough to leverage, not just for us but, candidly, for everyone who's trying to be thoughtful about menu pricing and things and, you know, balancing that dynamic. And look, the good news is that I think that, you know, despite inflation, margins are kind of hanging in there. And so as you think about, like, what the path forward would be, I'd say the key areas we probably need to make progress on in 2024 would be, you know, first and foremost, we need to continue to make progress on traffic at Outback because traffic, ultimately, is going to be a lever moving forward that you're going to have to leverage in order to continue to make progress on margins.

Chris Meyer: Well I think that look.

Chris Meyer: Longer term I think we still feel good about using 8% as an operating margin target I think the problem has been in the time period between 2022 and 2024. We've had this massive inflation that's been really tough to leverage not just for us, but candidly for everyone, who is trying to be thoughtful about menu pricing and things and balancing that dynamic and look the good news is.

Chris Meyer: I think that despite the inflation margins are kind of hanging in there.

And so as you think about like what's the path forward I would say the key areas, we probably need to make progress on in 2024 would be first and foremost we need to continue to make traffic progress at outback because traffic ultimately is going to be a lever moving forward that youre going to have to leverage in order to continue to make progress on margins.

Chris Meyer: You know, second, once you start to see the new restaurants ramp up, you'll begin to leverage depreciation, et cetera, and you'll make more progress on that in 2024. And then I think that, you know, the last thing is once the beef situation improves, you'll have the makings of a much better landscape from an inflation standpoint to make progress on margins. So I think the signs are encouraging, and I think that looking ahead to 2025 and beyond, there are some reasons to believe. I got it.

Chris Meyer: Second once you start to see the new restaurants ramp up youll begin to leverage depreciation et cetera, and youll make more progress on that in 2024, and then I think the last thing is once the beef situation improves youll have the makings of a much better landscape from an inflation standpoint to make progress on margins. So I think the signs are encouraging and I think that looking ahead to 2000 <unk>.

Chris Meyer: Five and beyond.

Chris Meyer: Some reasons to believe.

Got it thanks for taking my questions.

Chris Meyer: Thank you. Our final question. This morning comes from the line of Andrew <unk>.

John Tower: Thanks for taking the question. Thank you. Our final question this morning comes from the line of Andrew Strelzik with BMO Capital Markets. Please proceed with your question. Hey, good morning.

Andrew: <unk> with BMO capital markets. Please proceed with your question.

Andrew: Hey, good morning, Thanks for taking the questions I just had two on the cost side. The first one is back on the on the marketing spend you mentioned thats going to ramp through the year. So is it fair to assume that that would hold at a higher level in 2025, as well and maybe more importantly are you going to be exiting this year at a more steady state level I think.

Andrew Strelzik: Thanks for taking the questions. I just had two on the cost side. The first one is back on marketing spend. You mentioned that it's going to ramp up through the year. So is it fair to assume that that would hold at a higher level in 2025 as well? And maybe more importantly, are you going to be exiting this year at a more kind of steady state level? I think if I'm looking at this right, you'd be kind of like two and a half, maybe a little bit higher than that percent of sales. So still, a bit of a gap from where you were pre-COVID.

Andrew: If I'm looking at this right you'd be kind of like two and a half maybe a little bit higher than that percent of sales. So still a bit of a gap from where you were pre COVID-19, but just just curious how we should think about that trending.

Chris Meyer: But just curious what we should think about that trending. So, I'll start and I'll turn it over to Dave. Yeah, I think the way I think about 2024 marketing, yes, it will be higher. It's probably going to be higher in every quarter, to be honest, even Q1 than it was a year ago.

Speaker Change #153: So I'll start and I'll turn it over to Dave, Yes, I think the way I think about 2020 for marketing is yes. It will be higher it's probably going to be higher in every quarter to be honest, even Q1 than it was a year ago. So theres going to be increases in marketing spend I think.

Chris Meyer: So, there's going to be increases in marketing spend. I think that we've talked about this for years in terms of we used to spend three and a half percent of sales on marketing. We got down to the low twos.

The we've talked about marketing we've talked about this for years in terms of who used to spend three 5% of sales on marketing, we got down to the low twos, we recognize but we've always talked about hey look even when we laid out that margin framework. A couple of years ago. We said Hey look we think the sweet spot for marketing is probably in that two 5% to 3% of sales range I think thats kind of where we really think it's going to be long term as well.

Chris Meyer: We recognized what we've always talked about. Hey, look, even when we laid out that margin framework a couple years ago, we said, hey, look, we think the sweet spot for marketing is probably in that two and a half to three percent of sales range. I think that's kind of where we really think it's going to be long term as well. So, I think that if we land this year sort of in that two, five to three percent range, then I would say that that's probably a good bet for us moving forward. But obviously, spending can ramp up as our sales increase.

Speaker Change #153: So I think that if we land this year sort of in that two 5% to 3% range that I would say that that's probably a good thought for us moving forward, but obviously the spending can ramp up as our sales increase so I think we feel good about it as a percentage of sales.

Chris Meyer: So, I think we feel good about it as a percentage of sales. Yeah, and I'd just like to say, in our company, the money follows the ideas, and good ideas get supported, and we'll continue to have that. Okay, that makes sense. And then my other one was on the commodity outlook. You know, it sounds like only beef is a problem child there, and you've been able to lock up beef on an annual basis the last couple of years. Were you able to do that again this year? I'm just curious about the visibility of that commodity outlook. Thanks. Yeah, same thing. We're probably, you know, 74% locked on our basket for the year, 74, 75, somewhere in there. Beef is 100% locked. Obviously, as in previous years, though, we're hopeful that the market continues to make progress. And if it does, hopefully, we can take advantage of some of that upside.

Speaker Change #154: Yeah, and I'd, just like to say in our company. The money follows the ideas and good ideas get supported and will continue to have that discipline.

Speaker Change #155: Okay that makes sense and then just my other one was on the commodity outlook.

Speaker Change #155: Like really only be problems out there and you've been able to lock. These on an annual basis. The last couple of years, where you're able to do that again. This year I'm just curious on the visibility that that commodity outlook. Thanks, Yes, same thing were probably 74% locked on our basket for the year 70, 475 somewhere in there beef.

Speaker Change #156: Beef is beef is 100% locked obviously as in prior years, though we're hopeful that the market continues to make progress and if it does hopefully we can take advantage of some of that upside.

Andrew Strelzik: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Deno for any final comments. Thank you, everybody, for your time this morning. We look forward to updating you on our Q1 call later this year. And Chris, thank you for everything you've done for our company. Thank you. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change #156: Thank you, ladies and gentlemen that concludes our question and answer session I will turn the floor back to Mr. Dino for any final comments.

Thank you everybody for your time. This morning, we look forward to updating you.

Dino: On our Q1 call later this year and Chris. Thank you for everything you've done for our company. Thank you. Thanks everybody.

Speaker Change #157: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.