Q1 2025 Darden Restaurants Inc Earnings Call

September 19, 2024

Operator: Hello and welcome to the Darden Fiscal Year 2025 First Quarter Earnings Call. Your lines have been placed on a listen-only mode until the question and answer session. To ask a question, you may press star one on your touch-tone phone at any time. We ask that you please limit yourselves to one question and one follow-up, then return to the queue. The conference is being recorded. If you have any objections, please disconnect at this time. I'll now turn the call over to Ms. Courtney Aquila. Thank you, Courtney. You may begin.

Hello, and welcome to the Darden fiscal year, 'twenty 25 first quarter earnings call.

Speaker Change: Your lines have been placed on a listen only mode until the question and answer session.

Speaker Change: Ask a question you May press star one on your Touchtone phone at any time.

Speaker Change: We ask you please limit yourself to one question and one follow up then return to the queue.

Speaker Change: The conference is being recorded if you have any objections. Please disconnect at this time.

Speaker Change: Now ill turn the call over to MS. Courtney Aquila.

Courtney Aquila: You may begin.

Courtney Aquila: Thank you, Kevin. Good morning everyone, and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's President and CEO, and Raj Vennam, CFO. As a reminder, comments made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that can cause the actual results to differ materially from our expectations and projections. Those risks are described in the company's press release, which was distributed this morning and is in its filings with the Securities and Exchange Commission. We are simultaneously broadcasting a presentation during this call, which is posted in the investor relations section of our website at darden.com. Today's discussion and presentation include certain non-GAAP measurements, and reconciliations of these measurements are included in the presentation.

Courtney Aquila: Thank you Kevin Good morning, everyone and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's, President and CEO and Raj the non CFO.

Speaker Change: As a reminder comments made during this call will include forward looking statements as defined in the private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that can cause the actual results to differ materially from our expectations and projections.

Speaker Change: Those risks are described in the company's press release, which was distributed this morning and as in the filings in its filings with the Securities and Exchange Commission.

Speaker Change: We are simultaneously broadcasting a presentation. During this call which is posted in the Investor Relations section of our website at Darden dotcom.

Speaker Change: Today's discussion and presentation include certain non-GAAP measurements and reconciliations of these measurements are included in the presentation.

Courtney Aquila: Looking ahead, we plan to release fiscal 2025 Q2 earnings on Thursday, 19 December, before the market opens, followed by a conference call. During today's call, all references to industry results refer to the Black Box Intelligence Casual Dining Benchmark. Excluding Darden, during our fiscal Q1, industry same-restaurant sales decreased 2.5%, and industry same-restaurant guest counts decreased 5.4%. This morning Rick will share some brief remarks on the quarter and discuss some of the actions our brands are taking in response to the current environment. Raj will provide details on our first quarter results and an update on the Chuy's acquisition. Now I will turn the call over to Rick.

Looking ahead, we plan to release fiscal 2025 Q2 earnings on Thursday, 19 December, before the market opens, followed by a conference call. During today's call, all references to industry results refer to the Black Box Intelligence Casual Dining Benchmark. Excluding Darden, during our fiscal Q1, industry same-restaurant sales decreased 2.5%, and industry same-restaurant guest counts decreased 5.4%. This morning Rick will share some brief remarks on the quarter and discuss some of the actions our brands are taking in response to the current environment. Raj will provide details on our first quarter results and an update on the Chuy's acquisition. Now I will turn the call over to Rick.

Speaker Change: Looking ahead, we plan to release fiscal 'twenty 'twenty five second quarter earnings on Thursday December 19th before the market opens followed by a conference call.

During today's call all references to industry results refer to the black box intelligence casual dining benchmark excluding darden.

Speaker Change: During our fiscal first quarter industry same restaurant sales decreased 2.5% and industry same restaurant guest counts decreased five 4%.

Speaker Change: This morning, Rick will share some brief remarks on the quarter and discuss some of the actions. Our brands are taking in response to the current environment and Raj will provide details on our first quarter results and an update on the choice acquisition.

Speaker Change: Now I will turn the call over to Rick.

Rick Cardenas: Thank you, Courtney. Good morning, everyone. We operate in a very dynamic competitive industry, and we have proven we can successfully navigate challenging environments due to our strategy rooted in our four competitive advantages, and our back to basics operating philosophy. While we fell short of our expectations for Q1, I believe in the strength of our business, and I am confident that the strategy we developed nearly 10 years ago remains the right one for our company. We have talked a lot about Darden's competitive advantages and how they provide a platform for our brands that enables them to deliver their ultimate potential.

Rick: Thank you Courtney and good morning, everyone.

Rick: We operate in a very dynamic and competitive industry and we have proven we can successfully navigate challenging environment due to our strategy rooted in our four competitive advantages and our back to basics operating philosophy.

Rick: While we fell short of our expectations for the first quarter I believe in the strength of our business and I am confident that the strategy. We developed nearly 10 years ago remains the right one for our company.

We've talked a lot about darden's competitive advantages and how they provide a platform for our brands that enables them to deliver their ultimate potential. However.

Rick Cardenas: However, driving strong operational execution is how we bring our brands to life, and we do that through our back to basics operating philosophy anchored in culinary innovation and execution, attentive service, and an engaging atmosphere supported by smart and relevant integrated marketing programs that resonate with our guests. This morning, I want to spend my time focusing on the work our brand teams are doing in each of these areas. Our brand culinary teams have continued to innovate to be ready when needed, but we have a high bar when it comes to introducing any new item to ensure it drives value for our guests and is simple to execute.

However, driving strong operational execution is how we bring our brands to life, and we do that through our back to basics operating philosophy anchored in culinary innovation and execution, attentive service, and an engaging atmosphere supported by smart and relevant integrated marketing programs that resonate with our guests. This morning, I want to spend my time focusing on the work our brand teams are doing in each of these areas. Our brand culinary teams have continued to innovate to be ready when needed, but we have a high bar when it comes to introducing any new item to ensure it drives value for our guests and is simple to execute.

Rick: However, driving strong operational execution is how we bring our brands to life and we do that through our back to basics operating philosophy anchored in culinary innovation and execution attentive service and an engaging atmosphere supported by smart and relevant integrated marketing programs that resonate with our guests.

Rick: This morning, I want to spend my time, focusing on the work our brand teams are doing in each of these areas.

Rick: Our brand culinary teams have continued to innovate to be ready when needed.

Rick: But we have a high bar when it comes to introducing any new item to ensure it drives value for our guests and as simple to execute.

Rick Cardenas: While all of our brands are innovating the menu, here are some examples from our four largest revenue brands. The Olive Garden team has been working on new dishes to give their guests another reason to visit in the back half of this fiscal year. This includes the return of two guest Steak Gorgonzola Alfredo and Stuffed Chicken Marsala, which were removed from the menu during COVID. Both have been recast with higher quality ingredients and easier execution for their restaurant teams, and both fill a gap on Olive Garden's menu for center of the plate protein forward dishes. This announcement received tremendous applause from their general managers at their GM conference in August. The LongHorn Steakhouse team closed their biggest menu gap with the addition of a healthier chicken dish. Their new Lemon Garlic Chicken has scored extremely well in guest satisfaction ratings.

While all of our brands are innovating the menu, here are some examples from our four largest revenue brands. The Olive Garden team has been working on new dishes to give their guests another reason to visit in the back half of this fiscal year. This includes the return of two guest Steak Gorgonzola Alfredo and Stuffed Chicken Marsala, which were removed from the menu during COVID. Both have been recast with higher quality ingredients and easier execution for their restaurant teams, and both fill a gap on Olive Garden's menu for center of the plate protein forward dishes. This announcement received tremendous applause from their general managers at their GM conference in August. The LongHorn Steakhouse team closed their biggest menu gap with the addition of a healthier chicken dish. Their new Lemon Garlic Chicken has scored extremely well in guest satisfaction ratings.

Rick: While all of our brands are innovating the menu here are some examples from our four largest revenue brands.

The olive garden team has been working on new dishes to give their guests. Another reason to visit in the back half of this fiscal year.

Rick: This includes the return of two guest favorites state Gorgonzola, Alfredo and stuffed chicken marsala.

Rick: Which were removed from the menu during COVID-19.

Rick: Both have been recast with higher quality ingredients and easier execution for their restaurant teams.

Rick: And both fill a gap on olive garden's menu for center of the plate protein forward dishes.

Rick: This announcement received tremendous applause from their general managers at their GM conference in August.

The longhorn steakhouse team closed their biggest menu gap with the addition of a healthier chicken dish, they're new lemon garlic chicken has scored extremely well and guest satisfaction ratings.

Rick Cardenas: LongHorn also introduced a new Dragon Fruit Margarita during the quarter made with an exclusive Patrón Reposado Tequila that was specially blended for LongHorn, and it has already become their top-selling margarita. The Yard House team introduced a new pizza platform that has resulted in higher quality pizzas that are cooked in half the time, and they have seen a significant increase in preference and guest satisfaction as a result. This follows the introduction of other successful new menu items such as their cheesesteak sandwiches and half-pound prime burgers. Finally, at Cheddar’s Scratch Kitchen you get a lot for not a lot. They create value by leveraging existing product across multiple menu items through purchasing opportunity buys, and limited time offers. As an example, for limited time they are offering two grilled pork chops topped with caramelized onions and bourbon glaze with two sides starting at $12.99.

LongHorn also introduced a new Dragon Fruit Margarita during the quarter made with an exclusive Patrón Reposado Tequila that was specially blended for LongHorn, and it has already become their top-selling margarita. The Yard House team introduced a new pizza platform that has resulted in higher quality pizzas that are cooked in half the time, and they have seen a significant increase in preference and guest satisfaction as a result. This follows the introduction of other successful new menu items such as their cheesesteak sandwiches and half-pound prime burgers. Finally, at Cheddar’s Scratch Kitchen you get a lot for not a lot. They create value by leveraging existing product across multiple menu items through purchasing opportunity buys, and limited time offers. As an example, for limited time they are offering two grilled pork chops topped with caramelized onions and bourbon glaze with two sides starting at $12.99.

Speaker Change: Well I'm going to also introduce a new dragon fruit Margarita during the quarter made with an exclusive petroleum rep aside or look to Kayla that was especially blended for longhorn.

Speaker Change: And it has already become the top selling Margarita.

Speaker Change: The yard house team introduced a new pizza platform that has resulted in higher quality pizzas that are cooked in half the time.

Speaker Change: And they have seen a significant increase in preference and guest satisfaction as a result.

Speaker Change: This follows the introduction of other successful new menu items, such as their cheesecake, cheesecake sandwiches and half pound Prime burgers.

Yeah.

Speaker Change: Finally, a cheddar scratch kitchen, you get it not get a lot for not a lot.

Speaker Change: They create value by leveraging existing product across multiple menu items through purchasing opportunity buys and limited time offers.

Speaker Change: As an example for a limited time, they are offering to grilled pork chops topped with karma lives onions, and Bourbon glazed with two sides starting at 12 99.

Rick Cardenas: Our supply chain team and the Cheddar's culinary team continue to actively search for potential opportunity buys to drive exceptional value for guests, and you will see more examples of their efforts in the back half of this fiscal year. Additionally, the Cheddar's team introduced a new lunch specials platform earlier this calendar year that continues to win on price and build guest loyalty. This was thoroughly tested prior to launch and features eight great lunch items starting at $8.59 during the quarter. They also reintroduced a guest favorite to the menu that was removed during COVID. The team worked extremely hard to simplify the process and succeeded. Onion rings are back, and guests are loving them. The Facebook post announcing the return of onion rings was the best-engaged and most-viewed post in Cheddar's history.

Our supply chain team and the Cheddar's culinary team continue to actively search for potential opportunity buys to drive exceptional value for guests, and you will see more examples of their efforts in the back half of this fiscal year. Additionally, the Cheddar's team introduced a new lunch specials platform earlier this calendar year that continues to win on price and build guest loyalty. This was thoroughly tested prior to launch and features eight great lunch items starting at $8.59 during the quarter. They also reintroduced a guest favorite to the menu that was removed during COVID. The team worked extremely hard to simplify the process and succeeded. Onion rings are back, and guests are loving them. The Facebook post announcing the return of onion rings was the best-engaged and most-viewed post in Cheddar's history.

Speaker Change: Our supply chain team and the Cheddars culinary team continue to actively search for potential opportunity buys to drive exceptional value for guests and you will see more examples of their efforts in the back half of this fiscal year.

Speaker Change: Okay.

Speaker Change: Additionally, the Cheddars team introduced new lunch specials platform earlier this calendar year that continues to win on price and build guest loyalty.

Speaker Change: This was thoroughly tested prior to launch and features a great lunch items starting at 859.

Speaker Change: During the quarter. They also reintroduced a guest favorite to the menu that was moved during COVID-19.

Speaker Change: The team worked extremely hard to simplify the process and succeeded onion.

Speaker Change: The onion rings are back and guests are loving that.

Speaker Change: Facebook post announcing the return of onion rings was the best engaged in most viewed post and Cheddar history.

Speaker Change: Yeah.

Rick Cardenas: From a service perspective, guests who visit our restaurants continue to have great experiences which we see reflected in our guest satisfaction scores, but we know the full service category lost focus on pace of meal over the years. In a world that has gotten faster, full service restaurants haven't kept up. We know we can do a better job of evaluating our guest time and that was a central theme of our general manager conferences last month. We believe we have an opportunity to drive incremental sales over time by capturing the quicker meal occasions. The opportunities vary by brand and it is something each brand team will continue to focus on over the long term. Providing an engaging atmosphere at each one of our restaurants where guests enjoy themselves and the occasion is fundamental to creating exceptional guest experiences.

From a service perspective, guests who visit our restaurants continue to have great experiences which we see reflected in our guest satisfaction scores, but we know the full service category lost focus on pace of meal over the years. In a world that has gotten faster, full service restaurants haven't kept up. We know we can do a better job of evaluating our guest time and that was a central theme of our general manager conferences last month. We believe we have an opportunity to drive incremental sales over time by capturing the quicker meal occasions. The opportunities vary by brand and it is something each brand team will continue to focus on over the long term. Providing an engaging atmosphere at each one of our restaurants where guests enjoy themselves and the occasion is fundamental to creating exceptional guest experiences.

Speaker Change: From a service perspective guests, who visit our restaurants continue to have great experiences, which we see reflected in our guest satisfaction scores.

Speaker Change: But we know the false or just something to that.

Speaker Change: The full service category lost focus on pace of meal over the years.

Speaker Change: In a world that has gotten faster full service restaurants haven't kept up.

Speaker Change: We know we can do a better job of evaluating our guests' time.

Speaker Change: And that was a central theme of our general manager conferences.

Speaker Change: Last month.

Speaker Change: We believe we have an opportunity to drive incremental sales over time by capturing the quicker meal occasions.

Speaker Change: The opportunities vary by brand and if there's something each brand team will continue to focus on over the long term.

Speaker Change: Providing an engaging atmosphere at each one of our restaurants, where guests enjoy themselves and the occasion is fundamental to creating exceptional guest experiences.

Rick Cardenas: Our facilities and remodel teams partner with each brand's operations team to ensure we are delivering on this promise. Each year we spend on average approximately $200,000 per restaurant for maintenance and remodels to keep our buildings fresh and inviting. But atmosphere is more than just the physical restaurant; it also involves the people who bring our brands to life. For example, at the center of every Yard House is their bar with more than 100 beers on tap, which is the cornerstone for their energized vibe. To strengthen this advantage, the Yard House team held their annual Best on Tap competition. During Q1, they recertified all 900 bartenders on their bar knowledge and execution and instilled pride about being a Yard House bartender. Congratulations to this year's winner, Andrew Stafford from the Yard House in Denver, Colorado.

Our facilities and remodel teams partner with each brand's operations team to ensure we are delivering on this promise. Each year we spend on average approximately $200,000 per restaurant for maintenance and remodels to keep our buildings fresh and inviting. But atmosphere is more than just the physical restaurant; it also involves the people who bring our brands to life. For example, at the center of every Yard House is their bar with more than 100 beers on tap, which is the cornerstone for their energized vibe. To strengthen this advantage, the Yard House team held their annual Best on Tap competition. During Q1, they recertified all 900 bartenders on their bar knowledge and execution and instilled pride about being a Yard House bartender. Congratulations to this year's winner, Andrew Stafford from the Yard House in Denver, Colorado.

Our facilities and remodel teams partner with each brand's operations team to ensure we are delivering on this promise.

Speaker Change: Each year, we spend on average approximately $200000 per restaurant for maintenance and remodels to keep our buildings fresh and inviting.

But atmosphere is more than just the physical restaurant. It also involves the people who bring our brands to life.

Speaker Change: For example at the center of every yard House is there a bar with more than 100 beers on tap, which is the cornerstone for their energized five.

Speaker Change: To strengthen disadvantage the yard house team held their annual best on tap competition during the first quarter.

Speaker Change: Hey, Recertified, all 900 bar tenders on their bar knowledge and execution and instilled pride about being a yard house bar tender.

Speaker Change: Congratulations to this year's winter, Andrew Stafford from the yard House in Denver, Colorado.

Rick Cardenas: The marketing that supports these priorities comes to life in different ways across our brands. Regardless, everything our brand marketing teams work on fits our marketing filters. First, it must elevate brand equity, second, be easy to execute, and third, not be at a deep discount. Perhaps nothing fits our marketing filters better than Never Ending Pasta Bowl at Olive Garden. We know that in this environment, guests are motivated by compelling offers like Never Ending Pasta Bowl that provide a strong value during a limited time. When the Olive Garden team saw their traffic gap to the industry go negative during our first quarter after years of outperformance, they reacted by moving this promotion up and having it run for a total of 12 weeks, three weeks longer than they had planned and four weeks longer than last year.

The marketing that supports these priorities comes to life in different ways across our brands. Regardless, everything our brand marketing teams work on fits our marketing filters. First, it must elevate brand equity, second, be easy to execute, and third, not be at a deep discount. Perhaps nothing fits our marketing filters better than Never Ending Pasta Bowl at Olive Garden. We know that in this environment, guests are motivated by compelling offers like Never Ending Pasta Bowl that provide a strong value during a limited time. When the Olive Garden team saw their traffic gap to the industry go negative during our first quarter after years of outperformance, they reacted by moving this promotion up and having it run for a total of 12 weeks, three weeks longer than they had planned and four weeks longer than last year.

The marketing that supports these priorities comes to life in different ways across our brands.

Speaker Change: Regardless everything our brand marketing teams work on fits our marketing filters.

Speaker Change: First it must elevate brand equity.

Speaker Change: <unk> be easy to execute and third not be at a deep discount.

Speaker Change: Perhaps nothing fits our marketing filters better than never ending pasta Bowl at Olive garden.

Speaker Change: We know that in this environment guests are motivated by a compelling offers like never ending pasta bowl that provide a strong value during a limited time.

Speaker Change: When the olive garden team saw their traffic gap to the industry go negative during our first quarter after years of outperformance. They reacted by moving this promotion up and having it run for a total of 12 weeks three weeks longer than they had planned and four weeks longer than last year.

Rick Cardenas: To help keep this offer exciting during a relatively long window, Olive Garden will introduce a new garlic herb sauce during the fifth week of the promotion. Beyond checking all our marketing filters, Never Ending Pasta Bowl offers guests tremendous value. The starting-at price point hasn't changed in three years, making it an even more compelling value, and Olive Garden is putting additional marketing support behind it. We have said that we intend to price below our competitors and inflation over time. In fact, when you look at Olive Garden over the last five years, they have priced more than 800 basis points below the full-service industry average, and 700 basis points below grocery inflation.

To help keep this offer exciting during a relatively long window, Olive Garden will introduce a new garlic herb sauce during the fifth week of the promotion. Beyond checking all our marketing filters, Never Ending Pasta Bowl offers guests tremendous value. The starting-at price point hasn't changed in three years, making it an even more compelling value, and Olive Garden is putting additional marketing support behind it. We have said that we intend to price below our competitors and inflation over time. In fact, when you look at Olive Garden over the last five years, they have priced more than 800 basis points below the full-service industry average, and 700 basis points below grocery inflation.

Speaker Change: To help keep this offer exciting during a relatively long window olive garden will introduce a new garlic herb sauce during the fifth week of the promotion.

Speaker Change: Yeah.

Speaker Change: Beyond checking all of our marketing filters never any possible offers guests tremendous value the starting at price point hasn't changed in three years, making it an even more compelling value in olive garden is putting additional marketing support behind it.

Speaker Change: We have said that we intend to price below our competitors and inflation overtime and.

Speaker Change: In fact, when you look at Olive garden over the last five years, they have price more than 800 basis points below the full service industry average and 700 basis points below grocery inflation.

Rick Cardenas: The Olive Garden team recognizes the need to do a better job of communicating this value to guests, so their advertising will prominently feature more price points this year compared to last year when the advertising message was primarily focused on equity building. Dan and his team are intensely focused on their business and prepared to react to market conditions as we move through the rest of this fiscal year. While Olive Garden has a national television program, they have also used Connected TV to reach their guests where they are consuming content. Using learnings from Olive Garden, we have successfully tested CTV across a number of brands including LongHorn, Yard House, and Cheddar's, and it's an opportunity. We remain focused on Connected TV, and our other digital tests have allowed us to learn and be more effective with our media investments.

The Olive Garden team recognizes the need to do a better job of communicating this value to guests, so their advertising will prominently feature more price points this year compared to last year when the advertising message was primarily focused on equity building. Dan and his team are intensely focused on their business and prepared to react to market conditions as we move through the rest of this fiscal year. While Olive Garden has a national television program, they have also used Connected TV to reach their guests where they are consuming content. Using learnings from Olive Garden, we have successfully tested CTV across a number of brands including LongHorn, Yard House, and Cheddar's, and it's an opportunity. We remain focused on Connected TV, and our other digital tests have allowed us to learn and be more effective with our media investments.

Speaker Change: The olive garden team recognizes the need to do a better job of communicating this value to guests. So their advertising will prominently feature more price points. This year compared to last year. When the advertising message was primarily focused on equity building.

Speaker Change: Okay.

Dan: Dan and his team are intensely focused on their business and prepared to react to market conditions as we move through the rest of this fiscal year.

Speaker Change: While olive garden has a national television program. They've also used connected T V to reach their guests whether they are consuming content.

Speaker Change: Using learnings from Olive Garden, we have successfully tested C. T V across a number of brands, including Longhorn yard house and shutters and its an opportunity remain we remain focused on.

Speaker Change: Connected TV and our other digital tests have allowed us to learn and be more effective with our media investments.

Rick Cardenas: Digital marketing has proven to be a targeted, efficient way to drive brand equity and incremental sales across all our brands. Before I wrap up, I want to share some details regarding the exciting partnership we announced this morning with Uber that will begin with a pilot at Olive Garden. As you know, Olive Garden already offers an amazing large party catering experience delivered by their team members. However, their guests have been asking for small order home delivery options, and delivery guests in general continue to show they're willing to pay for the convenience. As you also know, we had concerns about the third-party model. It was important for us to find a way to address this guest need state without disrupting the team member or guest experience and without compromising our competitive advantages, simple operating model, and business model.

Digital marketing has proven to be a targeted, efficient way to drive brand equity and incremental sales across all our brands. Before I wrap up, I want to share some details regarding the exciting partnership we announced this morning with Uber that will begin with a pilot at Olive Garden. As you know, Olive Garden already offers an amazing large party catering experience delivered by their team members. However, their guests have been asking for small order home delivery options, and delivery guests in general continue to show they're willing to pay for the convenience. As you also know, we had concerns about the third-party model. It was important for us to find a way to address this guest need state without disrupting the team member or guest experience and without compromising our competitive advantages, simple operating model, and business model.

Marketing has proven to be a targeted efficient way to drive brand equity and incremental sales across all our brands.

Speaker Change: Before I wrap up I want to share some details regarding the exciting partnership we announced this morning with Uber that will begin with a pilot at olive garden.

Speaker Change: As you know olive garden already offers an amazing large party catering experience delivered by their team members. However.

Speaker Change: However, their guests have been asking for small order home delivery options and delivery guests in general continue to show, they're willing to pay for the convenience.

Speaker Change: As you also know we had concerns about the third party model.

Speaker Change: It was important for us to find a way to address this guest need state without disrupting the team member and guest experience and without compromising our competitive advantages simple operating model and business model.

Speaker Change: We've had these concerns for some time, but that did not stop us from taking taking talking to delivery partners about possible solutions over the years.

Rick Cardenas: We've had these concerns for some time, but that did not stop us from talking to delivery partners about possible solutions over the years. We began having more serious discussions about Uber Direct in April, and our teams began working on the systems integrations in May. It was apparent to us that the solution addressed our concerns from a guest perspective. It protects the in restaurant experience as drivers will pick up orders curbside in the same manner our guests do today. It also enhances the takeout experience by giving guests the option to have someone else pick up their order. This delivery as a service further enhances the takeout experience for our guests, which is why we will have the same everyday value menu price for dine in, pickup, or delivery.

We've had these concerns for some time, but that did not stop us from talking to delivery partners about possible solutions over the years. We began having more serious discussions about Uber Direct in April, and our teams began working on the systems integrations in May. It was apparent to us that the solution addressed our concerns from a guest perspective. It protects the in restaurant experience as drivers will pick up orders curbside in the same manner our guests do today. It also enhances the takeout experience by giving guests the option to have someone else pick up their order. This delivery as a service further enhances the takeout experience for our guests, which is why we will have the same everyday value menu price for dine in, pickup, or delivery.

Speaker Change: We began having more serious discussions about Uber direct in April and our teams began working on the systems integrations in may.

Speaker Change: It was apparent to us that the solution addressed our concerns.

Speaker Change: Yeah.

Speaker Change: From a guest perspective it protects the in restaurant experience as drivers will pick up orders curbside in the same manner our guests do today.

Speaker Change: It also enhances the takeout experience by giving guests the option to have someone else pick up their order.

Speaker Change: This delivery as a service further enhances the takeout experience for our guests, which is why we will have the same everyday value menu price for dine in pick up or delivery.

Rick Cardenas: The added cost for delivery will be transparent to the guest, and with Uber's technology platform, guests will be able to track their order all the way to their delivery address. Second, in terms of the team member experience, our proprietary capacity management tool will remain in place, allowing us to manage volumes so we don't negatively impact restaurant operations or the in-restaurant dining experience, and our to-go specialist will be able to continue earning tips on these orders. Third, this partnership allows us to strengthen and defend our competitive advantages with significant scale, and extensive data and insights. It enables us to use the scale of Uber's driver network to enhance our scale, and since guests will order through our online portal or mobile app, we keep the data. And last, we believe this partnership will allow us to protect our simple operating model.

The added cost for delivery will be transparent to the guest, and with Uber's technology platform, guests will be able to track their order all the way to their delivery address. Second, in terms of the team member experience, our proprietary capacity management tool will remain in place, allowing us to manage volumes so we don't negatively impact restaurant operations or the in-restaurant dining experience, and our to-go specialist will be able to continue earning tips on these orders. Third, this partnership allows us to strengthen and defend our competitive advantages with significant scale, and extensive data and insights. It enables us to use the scale of Uber's driver network to enhance our scale, and since guests will order through our online portal or mobile app, we keep the data. And last, we believe this partnership will allow us to protect our simple operating model.

Speaker Change: The added cost for delivery will be transparent to the guest and with Uber as technology platform guests will be able to track their order all the way to their delivery address.

Speaker Change: Second in terms of the team member experience, our proprietary capacity management tool will remain in place.

Speaker Change: Allowing us to manage volumes, so we don't negatively impact restaurant operations or the in restaurant dining experience.

Speaker Change: And our to go specialists, who will be able to continue earning chips on these orders.

Speaker Change: Yeah.

Speaker Change: Third this partnership allows us to strengthen and defend our competitive advantages of significant scale and extensive data and insights.

Speaker Change: It enables us to use the scale of ubers driver network to enhance our scale and since guests will order through our online portal or mobile app, we keep the data.

Speaker Change: And last we believe this partnership will allow us to protect our simple operating model.

Rick Cardenas: Our teams execute a great curbside to-go experience today, and we believe there will be no significant changes to our operations. Overall, we view this as an incremental long-term sales driver. This is a first-party delivery, not third-party delivery marketplace, so it will take time for us to build sales. We intend to roll it out initially only at Olive Garden to learn, and we'll pilot at a limited number of Olive Garden restaurant locations in Q2. Assuming it is a successful pilot, we plan to begin a phased rollout to all Olive Garden locations that currently offer curbside to-go. We expect that to be complete before the end of the fiscal year to wrap up. I am confident in the actions all our brand teams are taking to address our guest needs in this environment.

Our teams execute a great curbside to-go experience today, and we believe there will be no significant changes to our operations. Overall, we view this as an incremental long-term sales driver. This is a first-party delivery, not third-party delivery marketplace, so it will take time for us to build sales. We intend to roll it out initially only at Olive Garden to learn, and we'll pilot at a limited number of Olive Garden restaurant locations in Q2. Assuming it is a successful pilot, we plan to begin a phased rollout to all Olive Garden locations that currently offer curbside to-go. We expect that to be complete before the end of the fiscal year to wrap up. I am confident in the actions all our brand teams are taking to address our guest needs in this environment.

Speaker Change: Our teams execute a great great.

Speaker Change: Great Curbside to go experience today, and we believe there will be no significant changes to our operators.

Speaker Change: Overall, we view this as an incremental long term sales driver.

Speaker Change: This is a first party delivery not third party delivery marketplace.

Speaker Change: So it will take time for us to build sales.

Speaker Change: We intend to roll it out initially only at olive garden to learn and we'll pilot at a little minute number of Olive garden restaurant locations in the second quarter.

Speaker Change: Assuming a successful pilot we plan to begin a phased rollout to all olive garden locations that currently offer curbside to go.

Speaker Change: We expect that to be complete before the end of the fiscal year.

Speaker Change: To wrap up I am confident in the actions all our brand teams are taking to address our guests' needs in this environment.

Rick Cardenas: Each of these actions fit our operating philosophy and marketing filters. More importantly, they do not compromise our long-term health for short-term benefits. I want to thank our 190,000 team members for the focus and commitment they continue to display. I'm extremely proud that our most recent engagement survey conducted by Gallup in July showed our overall team member engagement level reached a new all-time high and is nearly 30 points higher than the Gallup benchmark for US organizations. Thank you for all you do to make our company successful. Now I'll turn it over to Raj.

Each of these actions fit our operating philosophy and marketing filters. More importantly, they do not compromise our long-term health for short-term benefits. I want to thank our 190,000 team members for the focus and commitment they continue to display. I'm extremely proud that our most recent engagement survey conducted by Gallup in July showed our overall team member engagement level reached a new all-time high and is nearly 30 points higher than the Gallup benchmark for US organizations. Thank you for all you do to make our company successful. Now I'll turn it over to Raj.

Speaker Change: Each of these actions fit our operating philosophy and marketing filters.

Speaker Change: More importantly, they do not compromise our long term health for short term benefits.

Speaker Change: I want to thank our 190000 team members for the focus and commitment they continue to display IMAX.

Speaker Change: I'm extremely proud that our most recent engagement survey conducted by Gallup in July showed our overall team member engagement level reached a new all time high and has nearly 30 points higher than the Gallup benchmark for U S organizations.

Speaker Change: Thank you for all you do to make our company successful now I will turn it over to Raj.

Speaker Change: Yeah.

Raj Vennam: Thank you, Rick, and good morning, everyone. First quarter earnings results were lower than our expectations as a result of the sales softness that impacted the industry in July. June same-restaurant sales trends were in line with our fiscal 2024 fourth quarter results, and we were surprised by the significant step down in traffic beginning with the Fourth of July holiday. However, sales trends rebounded in August, resulting in flat same-restaurant sales for the month. The first three weeks of September have further improved, resulting in positive same-restaurant sales quarter-to-date for all of our segments except fine dining. Despite the sales softness we experienced during the first quarter, we delivered industry-leading margins and generated more adjusted EBITDA than the prior year, highlighting the durability and cash generation of our business model.

Raj: Thank you Rick and good morning, everyone.

Raj: First quarter earnings results were lower than our expectations as a result of the sales softness that impacted the industry in July.

Speaker Change: June same restaurant sales trends were in line with our fiscal 2020 for fourth quarter results and.

Speaker Change: And we were surprised by the significant step down in traffic beginning with the fourth of July holiday.

Speaker Change: However, sales trends rebounded in August resulting in flat same restaurant sales for the month.

Speaker Change: The first three weeks of September have further improved resulting in positive same restaurant sales quarter to date for all of our segments, except fine dining.

Speaker Change: Despite the sales softness we experienced during the first quarter, we delivered industry, leading margins and generated more adjusted EBITDA than the prior year, highlighting the durability and cash generation of our business model.

Raj Vennam: In the first quarter we generated $2.8 billion of total sales, 1% higher than last year, driven by the addition of 42 net new restaurants and partially offset by negative same restaurant sales of 1.1%. We outperformed the industry again this quarter with same restaurant sales that were 140 basis points better than the industry and same restaurant guest counts that exceeded the industry by 160 basis points. Our gap to the industry improved from the prior quarter driven by the outperformance of LongHorn and the brands in our other business segment. Adjusted diluted net earnings per share from continuing operations were slightly below last year at $1.75. We generated $392 million of Adjusted EBITDA and returned $338 million to our shareholders this quarter, paying $166 million in dividends and repurchasing $172 million in shares.

In the first quarter we generated $2.8 billion of total sales, 1% higher than last year, driven by the addition of 42 net new restaurants and partially offset by negative same restaurant sales of 1.1%. We outperformed the industry again this quarter with same restaurant sales that were 140 basis points better than the industry and same restaurant guest counts that exceeded the industry by 160 basis points. Our gap to the industry improved from the prior quarter driven by the outperformance of LongHorn and the brands in our other business segment. Adjusted diluted net earnings per share from continuing operations were slightly below last year at $1.75. We generated $392 million of Adjusted EBITDA and returned $338 million to our shareholders this quarter, paying $166 million in dividends and repurchasing $172 million in shares.

Speaker Change: In the first quarter, we generated $2 8 billion of total sales, 1% higher than last year driven by the addition of 42 net new restaurants, and partially offset by negative same restaurant sales of 1.1%.

We outperformed the industry again this quarter with same restaurant sales of about 140 basis points better than the industry and same restaurant guest counts that exceeded the industry by 160 basis points.

Speaker Change: Our gap to the industry improved from the prior quarter driven by the outperformance of longhorn and the brands and our other business segment.

Speaker Change: Adjusted diluted net earnings per share from continuing operations were slightly below last year at $1.75.

Speaker Change: We generated $392 million of adjusted EBITDA and retired $338 million star shareholders, this quarter paying $166 million in dividends and repurchasing $172 million in shares.

Raj Vennam: Now, looking at our adjusted margin analysis, compared to last year, food and beverage expenses were 50 basis points lower as commodities were only slightly inflationary for the quarter. Restaurant labor was 20 basis points higher as total labor inflation of approximately 4% was above our total pricing of approximately 2.5%. This unfavorability was partially offset by productivity improvements at our brands. Restaurant expenses were 30 basis points higher than last year driven by sales. Deleveraged marketing expenses were 20 basis points higher, consistent with our expectations. All of this resulted in restaurant level EBITDA of 18.8%, 20 basis points lower than last year. Adjusted G&A expenses were 20 basis points favorable due to lower incentive compensation accrual compared to the first quarter last year.

Now, looking at our adjusted margin analysis, compared to last year, food and beverage expenses were 50 basis points lower as commodities were only slightly inflationary for the quarter. Restaurant labor was 20 basis points higher as total labor inflation of approximately 4% was above our total pricing of approximately 2.5%. This unfavorability was partially offset by productivity improvements at our brands. Restaurant expenses were 30 basis points higher than last year driven by sales. Deleveraged marketing expenses were 20 basis points higher, consistent with our expectations. All of this resulted in restaurant level EBITDA of 18.8%, 20 basis points lower than last year. Adjusted G&A expenses were 20 basis points favorable due to lower incentive compensation accrual compared to the first quarter last year.

Speaker Change: Now looking at our adjusted margin analysis compared to last year.

Speaker Change: Food and beverage expenses were 50 basis points lower as commodities, what only slightly inflationary for the quarter.

Speaker Change: That's kind of labor was 20 basis points higher as total labor inflation of approximately 4% what was that about what our total pricing of approximately two 5%. This.

Speaker Change: This unfavorable it it was partially offset by productivity improvements at all brands.

Restaurant expenses were 30 basis points higher than last year, driven by sales deleverage.

Speaker Change: Marketing expenses were 20 basis points higher consistent with our expectations.

Speaker Change: All of this resulted in restaurant level EBITDA of 18, 8% 20 basis points lower than last year.

Speaker Change: Adjusted G&A expense was 20 basis points favorable due to lower incentive compensation accrual compared to the first quarter last year.

Raj Vennam: This favorability was partially offset by unfavorable mark-to-market expense on our deferred compensation due to the way we hedge mark-to-market expense. This unfavorability is largely offset in the tax line. Interest expense increased 30 basis points due to the financing expenses related to the Ruth's Chris acquisition. Our adjusted effective tax rate for the quarter was 10.6%. The rate favorability to last year is driven by the mark-to-market hedge I referenced earlier, along with the additional favorable tax planning actions. Our effective tax rate would have been approximately 12% without the impact of mark-to-market. In total, we generated $209 million in adjusted earnings from continuing operations, which was 7.6% of sales.

This favorability was partially offset by unfavorable mark-to-market expense on our deferred compensation due to the way we hedge mark-to-market expense. This unfavorability is largely offset in the tax line. Interest expense increased 30 basis points due to the financing expenses related to the Ruth's Chris acquisition. Our adjusted effective tax rate for the quarter was 10.6%. The rate favorability to last year is driven by the mark-to-market hedge I referenced earlier, along with the additional favorable tax planning actions. Our effective tax rate would have been approximately 12% without the impact of mark-to-market. In total, we generated $209 million in adjusted earnings from continuing operations, which was 7.6% of sales.

Speaker Change: This favorability was partially offset by unfavorable mark to market expense on our deferred compensation.

Speaker Change: Due to the way, we hedge mark to market expense. This unfavorable it is largely offset in the tax line.

Speaker Change: Interest expense increased 30 basis points due to the financing expenses related to the Ruth's Chris acquisition.

Speaker Change: Our adjusted effective tax rate for the quarter was 10, 6% the.

Speaker Change: The rate favorability to last year is driven by the mark to market hedge I referenced earlier, along with the additional favorable tax planning actions.

Speaker Change: Our effective tax rate would have been approximately 12% without the impact of mark to market.

Speaker Change: In total we generated $209 million and adjusted earnings from continuing operations, which was seven 6% of sales.

Speaker Change: Okay.

Raj Vennam: Now looking at our segments for the quarter, total sales for Olive Garden decreased by 1.5% due to negative same-restaurant sales of 2.9%, underperforming the industry benchmark by 40 basis points. Last year, Olive Garden same-restaurant sales were 6.1% in the first quarter. So on a two-year basis, Olive Garden has grown same-restaurant sales by 3.2%, exceeding the industry by 480 basis points over that period. Olive Garden continues to have strong segment profit margin, delivering 20.6% for the quarter. At LongHorn, total sales increased 6.5% driven by same-restaurant sales growth of 3.7%, outperforming the industry by 620 basis points and continuing to gain significant share even in this deep discounting environment. These results build on strong results from Q1 last year where they had same-restaurant sales of 8.1% and outperformed the industry by 720 basis points.

Now looking at our segments for the quarter, total sales for Olive Garden decreased by 1.5% due to negative same-restaurant sales of 2.9%, underperforming the industry benchmark by 40 basis points. Last year, Olive Garden same-restaurant sales were 6.1% in the first quarter. So on a two-year basis, Olive Garden has grown same-restaurant sales by 3.2%, exceeding the industry by 480 basis points over that period. Olive Garden continues to have strong segment profit margin, delivering 20.6% for the quarter. At LongHorn, total sales increased 6.5% driven by same-restaurant sales growth of 3.7%, outperforming the industry by 620 basis points and continuing to gain significant share even in this deep discounting environment. These results build on strong results from Q1 last year where they had same-restaurant sales of 8.1% and outperformed the industry by 720 basis points.

Speaker Change: Now looking at our segments for the quarter total sales for Olive garden decreased by 1.81, 0.5% due to negative same restaurant sales of 2.9% underperforming the industry benchmark by 40 basis points.

Speaker Change: Last year Olive Garden same restaurant sales were six 1% in the first quarter. So on a two year basis Olive garden has grown same restaurant sales by three 2% exceeding the industry by 480 basis points over that period.

Speaker Change: Olive Garden continues to have strong segment profit margin delivering 26% for the quarter.

Speaker Change: At Longhorn total sales increased six 5% driven by same restaurant sales growth of three 7% outperforming the industry by 620 basis points and continuing to gain significant share even in this deep discounting environment.

Speaker Change: These results build on strong results from Q1 last year, where they had same restaurant sales of eight 1% and outperformed the industry by 720 basis points.

Raj Vennam: The LongHorn team is doing a great job of staying focused on their strategy and maintaining momentum within their business. Sales growth and favorable beef cost resulted in segment profit margin of 17.9%, 40 basis points above last year. Total sales at fine dining segment increased 2% driven by the addition of eight net new restaurants. Same restaurant sales at both The Capital Grille and Eddie V's were negative as the fine dining category as a whole continues to be challenged. This resulted in lower segment profit margin than last year. The other business segment sales declined slightly driven by negative same restaurant sales of 1.8% for the brands in the segment. However, this segment outperformed the industry benchmark by 70 basis points and is continuing to gain share even in this intensified promotional activity in the industry. This quarter, segment profit margin of 15.1% was flat to last year.

The LongHorn team is doing a great job of staying focused on their strategy and maintaining momentum within their business. Sales growth and favorable beef cost resulted in segment profit margin of 17.9%, 40 basis points above last year. Total sales at fine dining segment increased 2% driven by the addition of eight net new restaurants. Same restaurant sales at both The Capital Grille and Eddie V's were negative as the fine dining category as a whole continues to be challenged. This resulted in lower segment profit margin than last year. The other business segment sales declined slightly driven by negative same restaurant sales of 1.8% for the brands in the segment. However, this segment outperformed the industry benchmark by 70 basis points and is continuing to gain share even in this intensified promotional activity in the industry. This quarter, segment profit margin of 15.1% was flat to last year.

Speaker Change: The longhorn team is doing a great job of staying focused on their strategy and maintaining momentum within their business.

Speaker Change: Sales growth and favorable beef cost resulted in segment profit margin of 17, 9% 40 basis points have all last year.

Speaker Change: Total sales at fine dining segment increased 2% driven by the addition of eight net new restaurants same restaurant sales at both capital grille, and Eddie V's were negative as the fine dining category as a whole continues to be challenged.

Speaker Change: This resulted in lower segment profit margin than last year.

Speaker Change: The other business segment sales declined slightly driven by negative same restaurant sales of one 8% for the brands in the segment.

Speaker Change: However, this segment outperformed the industry benchmark by 70 basis points and is continuing to gain share even in this intensified promotional activity in the industry this quarter.

Speaker Change: Segment profit margin of 415, 1% was flat to last year.

Raj Vennam: This morning, we reaffirmed our guidance, taking into consideration actual performance year to date and the initiatives Rick shared to support the remainder of the fiscal year. Now I'd like to provide a brief update on the pending Chuy's acquisition. We're currently on track to close in mid-October, assuming approval from Chuy's shareholders. We have secured financing to support the closing, and the team that successfully led the Ruth's Chris integration is ready to bring their expertise and lessons learned to this integration. And as we mentioned on the announcement call in July, we anticipate the transaction will be neutral to our adjusted earnings per share for this fiscal year, excluding transaction and integration related expenses. Finally, as Rick mentioned, we will not compromise our long-term health for short-term benefits.

This morning, we reaffirmed our guidance, taking into consideration actual performance year to date and the initiatives Rick shared to support the remainder of the fiscal year. Now I'd like to provide a brief update on the pending Chuy's acquisition. We're currently on track to close in mid-October, assuming approval from Chuy's shareholders. We have secured financing to support the closing, and the team that successfully led the Ruth's Chris integration is ready to bring their expertise and lessons learned to this integration. And as we mentioned on the announcement call in July, we anticipate the transaction will be neutral to our adjusted earnings per share for this fiscal year, excluding transaction and integration related expenses. Finally, as Rick mentioned, we will not compromise our long-term health for short-term benefits.

Speaker Change: This morning, we reaffirmed our guidance taking into consideration actual performance year to date and the initiators Rick shared to support the remainder of the fiscal year.

Speaker Change: Now I'd like to provide a brief update on the pending <unk> acquisition.

Speaker Change: We're currently on track to close in mid October assuming approval from TUI shareholders.

Speaker Change: We have secured financing to support the closing.

Speaker Change: And the team that successfully led the Ruth's Chris integration is ready to bring that expertise and lessons learned to this integration.

Speaker Change: And as we mentioned on the announcement call in July we anticipate the transaction will be neutral to our adjusted earnings per share for this fiscal year, excluding transaction and integration related expenses.

Speaker Change: Finally, as Rick mentioned, we will not compromise our long term health for short term benefits. We're confident in the actions. Our brand teams are taking to address the guests' needs. In this environment. We have proven we can navigate challenging environment and believe our strategy remains the right one for our company.

Raj Vennam: We're confident in the actions our brand teams are taking to address their guest needs in this environment. We have proven we can navigate challenging environments and believe our strategy remains the right one for our company. Now we'll open it up for questions.

Speaker Change: Now I will open it up for questions.

Operator: Thank you. We'll now be conducting a question and answer session. If you'd like to be placed into the question queue, please press star one on your telephone keypad. As a reminder, we ask you please ask one question and one follow-up, then return to the queue. Once again, that's star one to be placed into the question queue. One moment please, while we poll for questions. Our first question today is coming from Brian Bittner from Oppenheimer. Your line is now live.

Speaker Change: Thank you, we'll now be conducting a question and answer session, if you'd like to be placed into the question queue. Please press star one on your telephone keypad. As a reminder, we ask you. Please ask one question and one follow up then return to the queue. Once again Thats star one to be placed in the question queue.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: Our first question today is coming from Brian Bittner from Oppenheimer. Your line is now live.

[Analyst]: Thank you. Good morning. As it relates to the Uber partnership, I'm just curious, have you guys conducted an analysis on how impactful this could be for Olive Garden once fully rolled out? And are there plans or options to add more partners? Or will this be an exclusive partnership for some period of time?

Brian Bittner: Thank you. Good morning. As it relates to the Uber partnership, I'm just curious, have you guys conducted an analysis on how impactful this could be for Olive Garden once fully rolled out? And are there plans or options to add more partners? Or will this be an exclusive partnership for some period of time?

Brian Bittner: Thank you good morning.

Brian Bittner: As it relates to the Uber partnership I'm. Just curious have you guys conducted an analysis on on how impactful this could be for olive garden. Once once fully rolled out and are there plans or options.

Speaker Change: To add more partners or will this be an exclusive partnership for for some period of time.

Rick Cardenas: Hey Brian, we'll learn quite a bit from the pilot, but we do have some estimates from Uber that are pretty big. We're just not assuming that. But we do expect the incrementality to grow over time. And in terms of other partnerships, we have a two-year exclusive with Uber, but we have the ability to expand it to other brands if we'd like, if it works for Olive Garden. But right now we're focusing on Olive Garden. We're focusing on getting the restaurants that are piloting up and running. The technology is almost finished, and this is fully integrated into our system. So that's one of the reasons that we've spent some time to make this work. But it's a two-year exclusive, and then we have options after that.

Brian Bittner: Hey, Brian.

Speaker Change: We'll learn quite a bit from the pilot, but we do have some massive business from Uber that are pretty big we're just not assuming that but we do expect the incrementals to grow over time.

Speaker Change: And.

Speaker Change: In terms of other partnerships, we have a two year exclusive with Uber.

Speaker Change: But we have we have the ability to expand it to other brands if we'd like a if.

If it if it works for Olive garden, but right now we're focusing on olive garden, we're focusing on getting the restaurants that are piloting up and running.

The technology is almost finished and this is fully integrated into our system. So that's one of the reasons that we've we've spent some time to make this work.

Speaker Change: But to your to your exclusive and then we have options after that.

[Analyst]: Okay, thank you. My follow-up, just on the sales side, what's driving the improvement in September? I'm just curious. On Olive Garden, you've talked about taking less price in the industry, and that you want to showcase more price points in advertising, but you've seen some great success by some of your peers that are striking gold with creative promotions. I'm just curious how you're thinking about promotions moving forward and the opportunity to use that lever.

Brian Bittner: Okay, thank you. My follow-up, just on the sales side, what's driving the improvement in September? I'm just curious. On Olive Garden, you've talked about taking less price in the industry, and that you want to showcase more price points in advertising, but you've seen some great success by some of your peers that are striking gold with creative promotions. I'm just curious how you're thinking about promotions moving forward and the opportunity to use that lever.

Speaker Change: Okay. Thank you and my follow up just on the sales side, what's driving the improvement in September and I'm, just curious on an olive garden, you've talked about taking less price in the industry and that you want to showcase more price points and advertising, but you've seen some great success by.

Speaker Change: Some of your peers that are striking gold with creative promotions and just curious how you're thinking about promotions moving forward and the opportunity to use that lever.

Rick Cardenas: Hey, Brian, you know, the September we're seeing increases I think in the industry as well. But you know, all of our performance is contemplated in our guidance for the month of September and for the rest of the year in terms of promotions and things that we're looking at for Olive Garden. You know, Olive Garden and Olive Garden. I'll start by saying I'm really proud of the work that Dan and his team have done over the years. They continue to price below inflation, as you know. But one of the challenges is in this kind of environment, you know, consumers are looking for a little bit more price certainty, and we've seen a little bit of a decline in the first-time guests at Olive Garden. So they might not realize that we've taken so much less pricing than everybody.

Speaker Change: Hey, Brian you know the the.

Brian Bittner: September we're seeing increases I think in the industry as well.

Speaker Change: But you know our all of our performance as contemplated in our guidance for the month of September and for the rest of the year.

Speaker Change: In terms of promotion and and and things that we're looking at for Olive Garden.

Speaker Change: Olive garden in Olive garden.

Speaker Change: I'll start by saying I'm really proud of the work that Dan and his team have done over the years. They continue to price below inflation as you know.

Speaker Change: But one of the challenges is in this kind of environment.

Speaker Change: Consumers are looking for a little bit more price certainty and we've seen a little bit of a decline in the first time guests at olive garden's. So they might not realize that we've taken so much less pricing than everybody.

Rick Cardenas: So we've reacted and we're going to add some more price points throughout the year. Yes, you did mention that others might be showing some benefit with some deep discount limited time offers. You know, we're going to showcase our price points throughout the year in different ways. Some of them are limited time, like Never Ending Pasta Bowl. Others are just talking about the great value we already have, but being more prominent. That said, all of our marketing filters are intact and we may have some limited time offers in the back half of the year, but they will still fit our filters of being simple to execute, not at a deep discount, and continue to strengthen our competitive advantages. They'll just be things that help motivate guests to get to the restaurant while those things are still in the restaurant.

So we've reacted and we're going to add some more price points throughout the year. Yes, you did mention that others might be showing some benefit with some deep discount limited time offers. You know, we're going to showcase our price points throughout the year in different ways. Some of them are limited time, like Never Ending Pasta Bowl. Others are just talking about the great value we already have, but being more prominent. That said, all of our marketing filters are intact and we may have some limited time offers in the back half of the year, but they will still fit our filters of being simple to execute, not at a deep discount, and continue to strengthen our competitive advantages. They'll just be things that help motivate guests to get to the restaurant while those things are still in the restaurant.

Speaker Change: So we've reacted and we're going to add some more price points throughout the year. Yes, you did mention that others might be showing some benefit from with some some deep discount limited time offers you know we're going to we're going to showcase our price points through that throughout the year in different ways. Some of them are limited time like never ending.

Speaker Change: Possible others are just talking about the great value, we already have but being more prominent that said all of our marketing filters are intact and we may have some limited time offers in the back half of the year, but they will still fit our filters are being simple to execute not at a deep discount and continue.

To to <unk> to strengthen our competitive advantages they'll just be things that help motivate guest to get to the restaurant, while those things are still in a restaurant.

[Analyst]: Thank you, Rick.

Brian Bittner: Thank you, Rick.

Rick: Thank you Rick.

Rick Cardenas: Sure.

Speaker Change: Sure.

Operator: Thank you. Next question is coming from Brian Harbour from Morgan Stanley. Your line is now live.

Speaker Change: Thank you. Your next question is coming from Brian Harper from Morgan Stanley. Your line is now live.

[Analyst]: Yeah, thank you. Good morning. Maybe just also on Uber. So is there no pilot at other brands contemplated in 2025? Do you think that that would perhaps come in 2026? Or how would you treat the rest of Darden?

Brian Harbour: Yeah, thank you. Good morning. Maybe just also on Uber. So is there no pilot at other brands contemplated in 2025? Do you think that that would perhaps come in 2026? Or how would you treat the rest of Darden?

Brian Harper: Yes. Thank you good morning.

Speaker Change: Maybe just also on Uber is so is there no pilot at other brands contemplated in.

Speaker Change: 25, do you think that that would perhaps come in 'twenty six or how would you treat kind of the rest of the darden.

Rick Cardenas: You know, Brian, right now we're focusing on Olive Garden. We do have the ability to pilot other brands even in this fiscal year. We just want to make sure that the systems work, that we have a pretty seamless experience for our guests, for the drivers, and for our team members so that we know this works really well. And then we have the ability to pilot at other brands, and we have already the different pricing options from Uber for every one of our brands. Not that every one of our brands are going to be on this first-party delivery, but we do have the ability to put it in other brands, and that's going to be up to those brands to decide that they want to do it.

Speaker Change: Yeah, Brian right now, we're focusing a lot on olive garden, we do have the ability to pilot at other brands even in this fiscal year, we just want to make sure that the systems work that.

Speaker Change: We have a pretty seamless seamless.

Speaker Change: Experience for our guests and for the drivers and for our team members.

So that we know this works really well and then we have the ability to pilot at other brands and.

Speaker Change: And we have already the different pricing options from Uber for every one of our brands not that every one of our brands are going to be on this on this first party delivery, but we do have the ability to put it in other brands.

Speaker Change: That's gonna be up to those brands to decide that they want to do it.

[Analyst]: Okay, great. Thank you. Rick, can you maybe just talk a little bit more also about kind of the service opportunity or, you know, kind of that focus on speed and pace of meals? What, you know, what specifically do you think could change there? What, you know, is that more of a lunch comment or sort of like shoulder period comment? And how would we kind of see that over time?

Brian Harbour: Okay, great. Thank you. Rick, can you maybe just talk a little bit more also about kind of the service opportunity or, you know, kind of that focus on speed and pace of meals? What, you know, what specifically do you think could change there? What, you know, is that more of a lunch comment or sort of like shoulder period comment? And how would we kind of see that over time?

Speaker Change: Okay, great. Thank you.

Speaker Change: Could you maybe just talk a little bit more also about.

Speaker Change: Kind of the service opportunity that kind of that focus on speed and pace of meals.

Speaker Change: What specifically do you think could change there or what is that more of a lunch comments or sort of like silver period comment how would we kind of see that overtime.

Rick Cardenas: Yeah, Brian, this isn't just a throughput challenge. This is a guest need state challenge. You know, the world has gotten faster. People can get on their phones and order something, and it'll show up on their door in a few hours. You know, they've got other options to dine. And the full service restaurant category hasn't really gotten faster. And we believe that there's opportunities for us to speed up our experience without making the guests feel rushed. And we're going to do that. And so this is going to take a while. Now, some of these speed initiatives or these initiatives will help throughput earlier on, but what we're trying to do is capture that occasion where the guest has a little less time to eat than they did 10 years ago and they don't believe they can do that at a full service restaurant.

Speaker Change: Yeah, Brian This isn't just a throughput challenge this is a guest need state challenge.

Brian: The world has gotten faster if people can get on their phones and order something and it'll show up in their door and in a few hours you know they've got other options to dine and the full service restaurant category.

Speaker Change: Haven't really gotten faster.

Speaker Change: And we believe that there's opportunities for us to speed up our experience without making the guest feel rushed.

And we're going to do that and so this is going to take awhile. It now some of these some of these speed initiatives or these initiatives will help throughput.

Speaker Change: Earlier on but what we're trying to do is capture that occasion, where the guest has a little less time to eat.

Speaker Change: Then they did 10 years ago.

Speaker Change: And they don't believe they can do that at a full service restaurant, we believe they can.

Rick Cardenas: We believe they can. So we're going to spend our time to improve our time. You know, if you look at guests in full service, not just at Darden, but in full service restaurants, their speed scores are unfavorable. So when they talk about going to a full service restaurant and they talk about speed, it's inherently dissatisfying. We don't really get a whole lot of comments about being too fast. So we want to change that and we're going to be doing that over the years. We're going to do that job by job and make our experience faster than it is today. I'm not saying how much faster, but it's got to be faster than it is today for those guests who want it faster.

We believe they can. So we're going to spend our time to improve our time. You know, if you look at guests in full service, not just at Darden, but in full service restaurants, their speed scores are unfavorable. So when they talk about going to a full service restaurant and they talk about speed, it's inherently dissatisfying. We don't really get a whole lot of comments about being too fast. So we want to change that and we're going to be doing that over the years.

Speaker Change: And so we're going to spend our time.

Speaker Change: To improve our time.

Speaker Change: If you look at guests in full service not just at Darden, but in full service restaurants.

Speaker Change: There.

Speaker Change: Their speed scores.

Speaker Change: Our unfavorable so when they talk about going to a full service restaurant and they talk about speed, it's inherently dissatisfied.

Speaker Change: We don't really get a whole lot of comments about being too fast.

Speaker Change: So we want to change that.

Speaker Change: And we're gonna be doing that over the years, we're gonna do that job by job and and and.

We're going to do that job by job and make our experience faster than it is today. I'm not saying how much faster, but it's got to be faster than it is today for those guests who want it faster. At the end of the day, we need to value our guest's time and they have some different needs than they did 10 or 15 years ago.

Speaker Change: And make our experience faster than it is today I'm, not saying, how much faster, but it's gotta be faster than it is today for those guests who want it faster.

Rick Cardenas: At the end of the day, we need to value our guest's time and they have some different needs than they did 10 or 15 years ago.

Speaker Change: At the end of the day, we need to value our guest time.

Speaker Change: And they have some different different needs than they did 10 to 15 years ago.

[Analyst]: Thank you.

Brian Harbour: Thank you.

Speaker Change: Thank you.

Operator: Thank you. Next question today is coming from John Tower from Citi. Your line is now live.

Speaker Change: Thank you. Your next question today is coming from Jon Tower from Citi. Your line is now live.

[Analyst]: Great, thanks for taking the question. Just to hammer home more on Uber Eats, I am curious if you could speak to your plans for advertising the option for delivery, and specifically, do you plan to advertise on the Uber Eats platform for the brand? And then I've got a follow up.

Jon Tower: Great, thanks for taking the question. Just to hammer home more on Uber Eats, I am curious if you could speak to your plans for advertising the option for delivery, and specifically, do you plan to advertise on the Uber Eats platform for the brand? And then I've got a follow up.

Jon Tower: Great. Thanks for taking the question just.

Jon Tower: To hammer home more on Uber eats I am curious if you could speak to your plans for advertising.

Speaker Change: The option for delivery in.

Jon Tower: Specifically do you plan to advertise on Uber eats platform for the brand and then I've got a follow up.

Speaker Change: We do not plan on advertising on Uber eats for the brand, but that said you know as we have options to market to consumers and we do actually have marketing funds from over to help us do that and as we reach scale, we can leverage other marketing channels to drive consumers to our websites and our.

Rick Cardenas: We do not plan on advertising on Uber Eats for the brand. But that said, we have options to market to consumers, and we do actually have marketing funds from Uber to help us do that. As we reach scale, we can leverage other marketing channels to drive consumers to our websites and our mobile apps. But when a consumer goes to place a to-go order on our apps or on our mobile website, they will have the option at that time for delivery. So they'll see it in that way. We also have a 17 million guest E club at Olive Garden that we can market to to get it started. But we think a lot of this is going to build over time, and we do have options to market it.

Speaker Change: Mobile apps.

Speaker Change: But when a when a consumer goes to places to go order on our apps or on our mobile website. They will have the option at that time for delivery. So they'll see it in that way. We also have a 17 plus million guest E club at Olive garden that we can market to to get it started.

Speaker Change: But we think a lot of this is going to build over time, and we do have options to market. It.

Speaker Change: Got it and just a quick follow up on that and then another question.

[Analyst]: Got it. Just a quick follow-up on that. Then another question. In terms of Uber, is this contemplated in guidance, this relationship for fiscal 2025? And then the question is on the time improvements that you mentioned earlier, do you think this will require greater investment in technology and or staffing at the stores?

Jon Tower: Got it. Just a quick follow-up on that. Then another question. In terms of Uber, is this contemplated in guidance, this relationship for fiscal 2025? And then the question is on the time improvements that you mentioned earlier, do you think this will require greater investment in technology and or staffing at the stores?

Speaker Change: In terms of Hoover is this contemplated in guidance this relationship for fiscal 'twenty five and then the question is on the time improvements that you mentioned earlier do you think this will require greater investment in technology <unk> staffing at the stores.

Speaker Change: On the Uber side. It is everything that we have and we know this morning is contemplated in guidance and again, the Uber partner the over.

Rick Cardenas: On the Uber side, everything that we know this morning is contemplated in guidance. And again, the Uber partner, the Uber first-party delivery is going to take a while to build. We're going to pilot it, we're going to see how it works. And then our plan is to have it rolled out at all Olive Gardens by the end of this fiscal year. So that'll give you an idea of how much we expect it to be in this fiscal year. Now, if it goes really well and it does a lot more than we think, then yeah, we've got a little bit of room there. But if it doesn't, we think it's going to take a little while. So we'll stick with that. Everything we know is contemplated in our guidance. And the second part of your question.

Speaker Change: For the first party delivery is going to take a while to build we're going to pilot. It we're going to see how that works and then our plan is to have it rolled out at all olive garden's by the end of this fiscal year. So that'll give you an idea of the of how much we expect it to be in this fiscal year now if it goes really well in it and it does a lot more than we think then yeah, we've got a little bit of room there.

Speaker Change: But if it doesn't we think it's going to take a little while so we'll stick with that everything we know as contemplated in our guidance.

Speaker Change:

Speaker Change: And the second part of your question I'm sorry.

[Analyst]: I'm sorry, just on the tech or the improvement?

Jon Tower: I'm sorry, just on the tech or the improvement?

Speaker Change: Just on the tech and are they.

Speaker Change: Oh, yeah, Yeah, I'm, sorry on the speed side, Yeah, we've we make investments in technology. All the time, we're working on our R. Tech Tech roadmap now for three years and one of the things that that we're talking about is how do we help the restaurants.

Rick Cardenas: I'm sorry, on the speed side? Yeah, we make investments in technology all the time. We're working on our tech roadmap now over three years. And one of the things that that we're talking about is how do we help the restaurants get a little faster. But it doesn't necessarily need a lot of technology. Our focus is to work on our operations to improve the speed, and then if we need to add technology behind it to do that and on staffing, we don't believe it actually needs a lot of staffing either. And if it does, it's for times where guests are there, but we have false weights and how do we staff a little bit better there?

Speaker Change: Go get a little faster.

Speaker Change: But it doesn't necessarily need a lot of technology. Our focus is to work on our operations to improve the speed and then if we need to add technology behind it to do that so and on an on staffing we don't believe it actually needs a lot of staffing either.

Speaker Change: And if it does it's for it's for times, where guests are there, but we have false weights and how do we staff a little bit better there. We've got some good technology solutions to help managers understand when guests were ready to be sat and they didnt get that so that when they're writing their schedule. They can schedule it better so.

Rick Cardenas: We've got some good technology solutions to help managers understand when guests were ready to be sat and they didn't get sat, so that when they're writing their schedule, they can schedule it better. While it may add a few hours in the restaurant, it's going to add productive hours. It shouldn't hurt our margins. It should actually help our margins. Over time, we believe being a little faster is going to be beneficial to our guests, beneficial to our team, and beneficial to our investors.

We've got some good technology solutions to help managers understand when guests were ready to be sat and they didn't get sat, so that when they're writing their schedule, they can schedule it better. While it may add a few hours in the restaurant, it's going to add productive hours. It shouldn't hurt our margins. It should actually help our margins. Over time, we believe being a little faster is going to be beneficial to our guests, beneficial to our team, and beneficial to our investors.

Speaker Change: So while it may add in a few hours in the restaurant, it's going to add productive hours and so it shouldn't it shouldn't hurt our margins should actually help our margins. So over time, we believe being a little faster is gonna be beneficial to our guests beneficial to our team and beneficial to our investors.

[Analyst]: Great. Thanks for taking the questions.

Jon Tower: Great. Thanks for taking the questions.

Speaker Change: Alright, thanks for taking the questions.

Speaker Change: Yeah.

Operator: Thank you. Next question today is coming from Eric Gonzalez from KeyBanc Capital Markets. Your line is now live.

Speaker Change: Thank you next question today is coming from Eric Gonzalez from Keybanc capital markets. Your line is now live.

Speaker Change: Hum.

Raj Vennam: Hey, thanks for the question. You talked a little bit about the price point advertising at Olive Garden.

Eric Gonzalez: Hey, thanks for the question. You talked a little bit about the price point advertising at Olive Garden. You're still spending well below what you used to spend in the past. I'm just curious what your thoughts. Or on maybe increasing the level of spend to put a bit more pressure on your competitors.

Eric Gonzalez: Hey, Thanks for the question you talked a little bit about the price point advertising and Olive garden, you are still spending well below what you used to stay in the past. So I'm just curious what your thoughts are around maybe increasing the level of spend to put a bit more pressure on your competitors.

[Analyst]: You're still spending well below what you used to spend in the past.

Raj Vennam: I'm just curious what your thoughts.

[Analyst]: Or on maybe increasing the level of spend to put a bit more pressure on your competitors.

Raj Vennam: Eric, I think we want to be thoughtful about how we do marketing. And you saw that when we find that there is something that we can get a return on, we're willing to make the investment. So it's not that there is any constraint on the spend. It's more about do we think we can get the return on it. And we are just being more methodical. We've always said we are playing a long game. We're not trying to just win in the short term. We're trying to focus on the long term health of the business and how do we build it over time. And if there are ways where we can say that we can accomplish that objective by spending more in marketing, we're willing to do that.

Eric Gonzalez: Eric I think we wanted to be thoughtful about how we do marketing and you saw that then when we find that there is something that we can get out of turn out or were willing to make the investments. So it's not that.

Eric Gonzalez: There is any constraint on the spend it's more about do we think we can get a return on it and we are just being more methodical and we've always said we are playing a long game, we're not trying to just win in the short term, where we're trying to focus on the long term health of the business and how do we build it over time and if there are ways, where we can say that that we can accomplish that object.

Eric Gonzalez: By spending more in marketing, we're willing to do that.

Eric Gonzalez: Yeah.

Operator: Okay.

Eric Gonzalez: Okay. If I could just ask. About fine dining, I'm just curious what's driving the big downtick in that business and maybe when you expect that business to recover?

Speaker Change: Okay, and then if I could just ask a fine dining I just curious what's driving the big downtick in that business and maybe when you expect that business to recover.

Raj Vennam: If I could just ask.

[Analyst]: About fine dining, I'm just curious what's driving the big downtick in that business and maybe when you expect that business to recover?

Raj Vennam: Yeah, Eric, I think from a fine dining standpoint, it's been a continuing challenge as we got into the summer months. There were a lot of factors in the summer, seemed like, including some international travel and things like that. But it's just, it seems like there were other places where the luxury consumer was spending dollars on, especially this summer months. So we do expect a gradual build back. I don't know that we have an exact timing of when that's going to happen, but there is a clear difference between suburban markets and urban markets. We are still operating close to that mid-70s of pre-COVID levels in the urban markets, while suburban markets are in the more of the 90s in terms of retention to pre-COVID.

Speaker Change: Yeah, Eric I think from a fine dining standpoint, it's been a continual continuing challenge as we got into the into the into the summer months are there weren't a lot of factors into summer seem like including some international travel and things like that but it's just the.

Speaker Change: It seems like the there were other places where the luxury consumer was spending dollars on especially this summer months.

So we do expect a gradual build back I don't know that we have an exact timing of when that's going to happen but.

Speaker Change: There is a clear difference between suburban markets and urban markets.

Speaker Change: We are still operating close to that mid seventies, and the off pre COVID-19 levels at a in the urban markets are well suburban markets starting in the more of the nineties are in terms of retention to pre COVID-19 AR and so and then when we look at income people.

Raj Vennam: When we look at income, you know, people all the way up to 200,000 and below were seeing pullback. That's the other part of the fine dining impact. And they did get a lot of people, more aspirational guests maybe. And those were really losing them pretty fast. And that's part of the reason why Ruth's fine dining decline.

When we look at income, you know, people all the way up to 200,000 and below were seeing pullback. That's the other part of the fine dining impact. And they did get a lot of people, more aspirational guests maybe. And those were really losing them pretty fast. And that's part of the reason why Ruth's fine dining decline.

Speaker Change: All the way up to 200000 and below we're seeing pullback and so that's the other part of the fine dining impact when they did get a lot of.

People are more aspirational guests, maybe and those were really losing them pretty fast and that's part of the reason why you saw us fine dining decline.

[Analyst]: Got it. Thanks.

Eric Gonzalez: Got it. Thanks.

Speaker Change: Got it thanks.

Operator: Thank you. Next question today is coming from Jeffrey Bernstein from Barclays. Line is now live.

Thank you next question today is coming from Jeffrey Bernstein from Barclays. Your line is now live.

[Analyst]: Great. Thank you very much, Rick. My first question was just following up on the sales trends for both yourself and the industry. I think you talked about the July weakness and improvement since then. And we know that Olive Garden has that catalyst of the earlier launch of the Never Ending Pasta Bowl. But I just wanted to see the trends of the other brands since July would assume that just the broader industry and therefore all your brands have seen improvement. And if so, I'm just wondering what do you think was the industry shock of July and maybe your confidence that the worst is behind us? And then I had one follow up.

Brian Bittner: Great. Thank you very much, Rick. My first question was just following up on the sales trends for both yourself and the industry. I think you talked about the July weakness and improvement since then. And we know that Olive Garden has that catalyst of the earlier launch of the Never Ending Pasta Bowl. But I just wanted to see the trends of the other brands since July would assume that just the broader industry and therefore all your brands have seen improvement. And if so, I'm just wondering what do you think was the industry shock of July and maybe your confidence that the worst is behind us? And then I had one follow up.

Jeffrey Bernstein: Great. Thank you very much Rick.

Jeffrey Bernstein: Rick My first question was just following up on the sales trends for both yourself and the industry.

Jeffrey Bernstein: Thank you talked about the July weakness and improvements since then and we know that olive garden has that catalyst of the the earlier launch of the never ending pasta Bowl, but I just wanted to see.

Speaker Change: The trends at the other brands since July we do assume that just the broader industry and therefore, all your brands have seen improvement in.

Speaker Change: So I'm just wondering what what do you think was the industry shock of July.

Speaker Change: Your confidence that the worst is behind US and then I had one follow up.

Rick Cardenas: Yeah, if you look at what happened to the industry and to our brands, June and August were pretty similar to each other, both in industry and our brands. Well, at least to our brands, we were similar to Q4 trends in June and August. And then all of a sudden the industry kind of fell off a little bit in July. And we think it's driven by a few things. You know, there was some pretty interesting weather in the month of July with a lot of storms, hurricanes, tornadoes. We had the Olympics in July, which we expected the Olympics to be not too dramatic to us. But it was the highest opening day opening ceremony rating in over a decade. COVID had increased in July. We don't talk about it that much, but you know, there was an uptick there.

Speaker Change: Yeah, you know if you look at what happened to the industry.

Speaker Change: And to our brands June and August were pretty similar to each other both in industry and in our brands and well at least to our brands were similar to Q4 trends in June and August.

Speaker Change: And then all of a sudden the industry kind of fell off a little bit in July.

Speaker Change: And we think it's driven by a few things.

Speaker Change: You know there was some pretty interesting weather in the month of July with a lot of with with a lot of storms hurricanes.

Speaker Change: Hurricanes tornadoes, we had the Olympics in July, which we expected the Olympics out to be not that too dramatic to us, but it was the highest opening day opening ceremony rating in over a decade.

Speaker Change: Covid had increased in July you know, we don't talk about it that much but you know there was an uptick there are international travel as Raj mentioned, there was a lot more international travel out then in.

Rick Cardenas: International travel, as Raj mentioned, there was a lot more international travel out than in, which last year there was a lot more international travel in than out. And so there were a lot of factors in July. There was political volatility. I'm not sure anybody has seen the volatility in the politics that we've seen in the last couple of months. And so I think people had other things to worry about and think about. But we picked back up in August, and all of our brands are continuing that trend, and even the guidance that we have for the rest of this year, and everybody's talking a little bit about Olive Garden pickup because of Never Ending Pasta Bowl. But all our brands are getting better.

International travel, as Raj mentioned, there was a lot more international travel out than in, which last year there was a lot more international travel in than out. And so there were a lot of factors in July. There was political volatility. I'm not sure anybody has seen the volatility in the politics that we've seen in the last couple of months. And so I think people had other things to worry about and think about.

Raj: Which last year, there was a lot more international travel in and out.

Raj: And so there were a lot of factors in July there was political volatility I'm not sure anybody has seen the volatility in the politics that we've seen in the last in the last couple of months and so I think people had other things to worry about and think about them, but you know we picked back up in August.

But we picked back up in August, and all of our brands are continuing that trend, and even the guidance that we have for the rest of this year, and everybody's talking a little bit about Olive Garden pickup because of Never Ending Pasta Bowl. But all our brands are getting better. July was just something that was unexpected and we feel like we're going to be able to react in the right ways. We got that month behind us.

Raj: And all of our brands are continuing that trend.

Raj: Not just in and you know even even the the guidance that we have for the rest of this year and if everybody's talking little bit about olive garden's pick up because I've never any possible, but all our brands are getting better. So our July it was just something that that was unexpected.

Rick Cardenas: July was just something that was unexpected and we feel like we're going to be able to react in the right ways. We got that month behind us.

Raj: And.

Raj: You know we feel like.

Raj: We're gonna be able to react in the right ways.

Raj: And get get we got that months behind us.

[Analyst]: Understood. Then just following up on the promotional activity, obviously the peers have been more aggressive. You've avoided that. The earlier launch of the Never Ending Pasta Bowl seems like it's an indication of your desire or willingness to better compete. But like you said, it's still profitable. But then I think you mentioned some LTOs or some more LTOs in the second half of fiscal 2025. So I'm just wondering specifically what that might entail, whether it's you're talking about Olive Garden or other brands because again, I know you mentioned you're not going to compromise the long term health for the short term benefits, but just trying to get a sense for what that could entail in terms of an uptick in LTO activity in the back half of the year. Thank you.

Jeffrey Bernstein: Understood. Then just following up on the promotional activity, obviously the peers have been more aggressive. You've avoided that. The earlier launch of the Never Ending Pasta Bowl seems like it's an indication of your desire or willingness to better compete. But like you said, it's still profitable. But then I think you mentioned some LTOs or some more LTOs in the second half of fiscal 2025. So I'm just wondering specifically what that might entail, whether it's you're talking about Olive Garden or other brands because again, I know you mentioned you're not going to compromise the long term health for the short term benefits, but just trying to get a sense for what that could entail in terms of an uptick in LTO activity in the back half of the year. Thank you.

Speaker Change: Understood and then just following up on the promotional activity obviously, the peers have been more aggressive you've avoided that the earlier launch of the never ending pasta Bowl.

Speaker Change: It seems like it's an indication of your desire or willingness to better compete but like you said its still profitable, but then I think you mentioned some L T OS or some more L. T OS in the second half of fiscal 'twenty five so I'm just wondering.

Speaker Change: Specifically, what that might entail, whether it's you're talking about olive garden or other brands because again I know you mentioned youre not going to compromise the long term health for the short term benefits, but just trying to get a sense for what that could entail in terms of an uptick in <unk> activity in the back half of the year. Thank you.

Speaker Change: Yes.

Speaker Change: Yeah as we've said you know in this environment, we think it's appropriate to highlight the great value.

Rick Cardenas: Yeah. As we've said, you know, in this environment we think it's appropriate to highlight the great value. Last year we were spending most of our marketing dollars in promotional messaging on equity building. And we think because we've priced so much lower than the industry over the years and we want to make sure people understand that price point, that we want to put that a little bit more in front of guests, you know. So Olive Garden is shifting some of their marketing message to highlight the value guests can get at Olive Garden, especially for first time and infrequent users. And by bringing back fan favorites, whether at a limited time or on their core menu that are simple to execute and that are improvement for what they had before.

Speaker Change: Last year, we were spending most of our marketing dollars and promotional messaging on equity building.

Speaker Change: And we think because we price so much lower than the industry over the years and we wanted to make sure people understand that price point.

Speaker Change: That we want to put that a little bit more in front of in front of guests you know so there's the olive garden is shifting some of their marketing message to highlight the value guests can get it at olive garden.

Especially for first time, an infrequent users you know and and by bringing back fan favorites, whether at a limited time or on their on their core menu.

Speaker Change: You know that are simple to execute and their improvement for what they had before you know this will this will give guests a little bit more compelling reasons to visit then talking about our core equities, which are great to build long term, but in this environment. We want to we want to motivate guests to get back I want to be clear that this isn't a re.

Rick Cardenas: This will give guests a little bit more compelling reasons to visit than talking about our core equities, which are great to build long term. But in this environment we want to motivate guests to get back. I want to be clear that this isn't a return to constant deep discount promotions that add significant upstream costs that Olive Garden began to shift away from before COVID. We don't believe that that's the right thing to do. So what we're talking about in any limited time offer is something that's very simple to execute. It's just limited time to have guests know that hey, they got to get there and other brands. I talked a little bit about Cheddar's and using opportunity buys. They've done limited time offers for years. They just don't have the marketing as much behind it.

This will give guests a little bit more compelling reasons to visit than talking about our core equities, which are great to build long term. But in this environment we want to motivate guests to get back. I want to be clear that this isn't a return to constant deep discount promotions that add significant upstream costs that Olive Garden began to shift away from before COVID. We don't believe that that's the right thing to do. So what we're talking about in any limited time offer is something that's very simple to execute. It's just limited time to have guests know that hey, they got to get there and other brands. I talked a little bit about Cheddar's and using opportunity buys. They've done limited time offers for years. They just don't have the marketing as much behind it.

Speaker Change: Return to constant deep discount promotions that adds significant upstream costs that olive garden began to shift away from before Covid. We don't believe that that's the right thing to do so what we're talking about in any of the limited time offer is something that is very simple to execute.

Speaker Change: It's just the limited time to have guests know that hey, they got to get there and on the other brands I talked a little bit about cheddars and using opportunity buys them. They've done limited time offers for four years. They just don't have the marketing as much behind it but it's because of the VAT the.

Rick Cardenas: But it's because of the buy they can get by leveraging Darden scale and maybe items that some of the Darden brands won't be able to use, or other brands won't be able to use. They can put an item on the menu for a very, very great price, like the pork chop I mentioned. We had a T-bone at Cheddar's a year or two ago. I don't remember exactly what year that was. Also at a limited time, we have some other limited time things that are going to go on the menu in the back half of this fiscal year at Cheddar's. Those were buys that we've made a while back. So we'll see those. And right now, I think it's this week or Monday, Yard House starts Oktoberfest, which is also a limited time something we've always done.

But it's because of the buy they can get by leveraging Darden scale and maybe items that some of the Darden brands won't be able to use, or other brands won't be able to use. They can put an item on the menu for a very, very great price, like the pork chop I mentioned. We had a T-bone at Cheddar's a year or two ago. I don't remember exactly what year that was. Also at a limited time, we have some other limited time things that are going to go on the menu in the back half of this fiscal year at Cheddar's. Those were buys that we've made a while back. So we'll see those. And right now, I think it's this week or Monday, Yard House starts Oktoberfest, which is also a limited time something we've always done.

Buy they can get by leveraging darden's scale, and maybe items that that some of the darden brands wont be able to use our other brands won't be able to use.

Speaker Change: They can put an item on the menu for a very very great price like the pork chop I mentioned, yeah, we had a T bone it at Cheddars.

Speaker Change: A year or two ago I don't remember exactly what year that was also at a limited time, we have some other limited time things that are going to go on the menu.

Speaker Change: In the in the back half of this fiscal year at Cheddars. Those were buys that we've made a while back so we'll see those and right now I think it's this week or Monday.

Speaker Change: Your Art House stock starts October Fest, which is also a limited time something we've always done but what I didn't say is these are deep discounts because they're not and so we're not going to get into that real deep discount game to bring guests in for a really low price.

Rick Cardenas: But what I didn't say is these are deep discounts because they're not. And so we're not going to get into that real deep discount game to bring guests in for a really low price and have a lot of our core guests pay a lot of higher price. We've played that before. We don't think it's the right long-term thing. It might feel really great in the short term, but as we've said, we're not going to sacrifice the long-term health for short-term gains. So, long way to answer your question, yes, we will have more price points at Olive Garden on television. That said, we had already planned on doing that all year. We had planned on that at the beginning of this fiscal year.

But what I didn't say is these are deep discounts because they're not. And so we're not going to get into that real deep discount game to bring guests in for a really low price and have a lot of our core guests pay a lot of higher price. We've played that before. We don't think it's the right long-term thing. It might feel really great in the short term, but as we've said, we're not going to sacrifice the long-term health for short-term gains.

Speaker Change: And have a lot of our core guests pay a lot of higher price. We've played that before we don't think it's the right long term thing it might feel really great in the short term, but as we've said, we're not going to sacrifice the long term health for short term gains so.

So, long way to answer your question, yes, we will have more price points at Olive Garden on television. That said, we had already planned on doing that all year. We had planned on that at the beginning of this fiscal year. The way we're doing it may change a little bit, but we always plan to have quite a few price points on television this year.

Speaker Change: Long way to answer your question, Yes, we will have more price points at Olive garden on television that said, we had already planned out doing that all year. We had planned on that at the beginning of this fiscal year. The way we're doing it may change a little bit, but we've all we always plan to have a quite a few price points on TV. This year.

Rick Cardenas: The way we're doing it may change a little bit, but we always plan to have quite a few price points on television this year.

[Analyst]: Thank you, Rick.

Jeffrey Bernstein: Thank you, Rick.

Rick: Thank you Rick.

Rick Cardenas: Sure.

Speaker Change: Sure.

Operator: Thank you. Next question is coming from David Palmer from Evercore ISI. Your line is now live.

Speaker Change: Thank you next question is coming from David Palmer from Evercore ISI. Your line is now live.

Speaker Change: Yeah.

[Analyst]: Thanks. Good morning, and congrats on this delivery test and getting this done with the parameters you wanted, which included the menu prices being the same as your everyday menu. I wonder, what will that delivery fee be upon checkout that you're seeing as a consumer? Given that your menu prices will be the same, will that fee get you back to a margin equivalent to a takeout order? I have a quick follow up.

David Palmer: Thanks. Good morning, and congrats on this delivery test and getting this done with the parameters you wanted, which included the menu prices being the same as your everyday menu. I wonder, what will that delivery fee be upon checkout that you're seeing as a consumer? Given that your menu prices will be the same, will that fee get you back to a margin equivalent to a takeout order? I have a quick follow up.

David Palmer: Thanks, Hi, good morning, and congrats on the this delivery test in getting this done.

Speaker Change: And then with the parameters you wanted which which included the menu prices being the same as your everyday menu I.

Speaker Change: I wonder what will that deliveries Phoebe upon check out that youre seeing.

Speaker Change: As a consumer you know given.

Speaker Change: Given that your menu prices will be the same and will will that fee gets you back to our margin equivalent to a take out order and I have a quick follow up.

Rick Cardenas: Yeah, David, I just want to be clear on the delivery fee that's going to be paid by the guest. So while they see the menu price is the exact same menu price they see everywhere else, they will also see what it will cost them to have someone else pick up the food and bring it to them versus them coming to get it themselves. So it's really kind of a convenience. That said, it's a fairly low fee. And so we've got two parts of it. One is just a kind of a delivery fee which is around $5 for every order and then 5% of the entire order. So on a typical Olive Garden order, it'll probably be somewhere around $7 to have their food delivered to them versus picking it up themselves and then not including the tip.

Speaker Change: Yeah, David I, just wanted to be clear on the delivery fee. That's again it would be paid by the guests. So while they see the menu prices. The exact same menu price. They see everywhere else. They will also see what will it cost them to have someone else pick up the food and bring it to them versus them coming to get it themselves. So it's really kind of a convenience that said, it's a pretty it's a fairly low.

Speaker Change: Fee and so we've got a we've got two parts of it one is just a it's a.

Speaker Change: It kind of a delivery fee, which is around $5 for every order and then a 5% of the entire order. So on a typical olive garden order it'll probably be somewhere around $7 you have to have their food delivered to them versus versus picking it up themselves.

Speaker Change: And then not including the tip and by the way that tip as we said.

Rick Cardenas: And by the way, that tip, as we said, will be shared with our team members. So we believe that it's a win-win for everybody. If a consumer wants the convenience of delivery, we believe they should pay for that convenience in a transparent way. Today on third-party marketplace, a lot of the consumers are paying for it in a very untransparent way. They see a menu price that they may not realize is much higher than the menu price in the restaurant. We were clear that we didn't want that. So that's how it works. No incremental cost to Darden. That means it's not a margin difference to ours. We believe that was important. If you think about what we said years ago and even today, Olive Garden does about $1 billion in to-go sales.

And by the way, that tip, as we said, will be shared with our team members. So we believe that it's a win-win for everybody. If a consumer wants the convenience of delivery, we believe they should pay for that convenience in a transparent way. Today on third-party marketplace, a lot of the consumers are paying for it in a very untransparent way. They see a menu price that they may not realize is much higher than the menu price in the restaurant. We were clear that we didn't want that. So that's how it works. No incremental cost to Darden. That means it's not a margin difference to ours. We believe that was important. If you think about what we said years ago and even today, Olive Garden does about $1 billion in to-go sales.

Speaker Change: Will be shared with our team members so.

Speaker Change: We believe that it's a win win for everybody if a consumer wants to convenience through delivery, we believe they should pay for that convenience in a transparent way.

Speaker Change: Today, I'm third party marketplace, a lot of the consumers are paying for it in a very untransparent way they see a menu price that they may not realize is much higher than the menu price in the restaurant and we were clear that we didn't want that and so.

Speaker Change: That's that's how it works no incremental cost of Darden. So that means it's not a margin difference to our pick up.

Speaker Change: And we believe that was important if you think about what we said years ago and even today Olive garden does about $1 billion in sales in to go.

Speaker Change: And so if we were to transfer quite a bit of that to a third party marketplace without that charge being borne by someone other than olive garden. It would have been a big big margin margin disruptor, unless it was hugely incremental.

Rick Cardenas: If we were to transfer quite a bit of that to a third-party marketplace without that charge being borne by someone other than Olive Garden, it would have been a big, big margin disruptor unless it was hugely incremental. We've had third-party delivery in quite a few Olive Gardens, 13 to 14 of them, for years. The incrementality isn't that much to offset unless we wanted to charge a lot to our restaurant. So again, very low cost, we believe, to the consumer to get a delivery on an average order. And as the order size gets bigger, the percentage gets smaller. So the amount, the percent that they pay in total gets smaller because there's that $5 fixed fee.

If we were to transfer quite a bit of that to a third-party marketplace without that charge being borne by someone other than Olive Garden, it would have been a big, big margin disruptor unless it was hugely incremental. We've had third-party delivery in quite a few Olive Gardens, 13 to 14 of them, for years. The incrementality isn't that much to offset unless we wanted to charge a lot to our restaurant. So again, very low cost, we believe, to the consumer to get a delivery on an average order. And as the order size gets bigger, the percentage gets smaller. So the amount, the percent that they pay in total gets smaller because there's that $5 fixed fee.

Speaker Change: We've had third party delivery and quite a few olive garden's you mean at 13 or 14 of them for years, the increments howdy isn't that much to offset unless we wanted to charge a lot to the to our restaurants. So again very low cost we believe for the consumer to get a a a a delivery on an average order and as the order size gets bigger the percent.

Speaker Change: Get smaller so there.

Speaker Change: The percent that they pay in total get smaller because there's that $5 fixed fee.

Raj Vennam: I just want to clarify on the margin percentage might be a little different just because of the geography of the P&L. Right. Because the delivery fee might go, might be recorded as revenue. And that will come out of the restaurant expenses. So, but it has to be really meaningful to have impact on the percentage. But that's just a nuance with the way they accounted for.

Speaker Change #100: And I just wanted to clarify on the margin percentage might be a little different just because of the geography of the P&L right because the delivery fee. It might go it might've been.

Speaker Change #101: We called it out as revenue and so and that will come out of the restaurant expenses. So but it has to be really meaningful to have a impact on the percentage, but that's just a nuance with the awareness.

Speaker Change #101: Four.

Speaker Change #102: Hmm mm.

Mike: Mike just a follow up I just wanted to get your latest thinking in latest diagnosis about olive garden relative to the industry, which of course is a contrast of longhorn which is still actually at an accelerated basis outperforming is there anything that is clear to you and the customer satisfaction scores that you are seeing that is telling about an opportunity with.

[Analyst]: Just a follow-up, I just wanted to get your latest thinking and latest diagnosis about Olive Garden relative to the industry, which of course is a contrast to LongHorn, which is still actually on an accelerated basis outperforming. Is there anything that is clear to you in the customer satisfaction scores that you're seeing that is telling about an opportunity with Olive Garden? And you know, what are your insights telling you? Maybe it's something having to do with the category that you're in and the trade-off to at-home versus what we see in steak, for example. But any thoughts there that might inform your strategy? And thanks.

David Palmer: Just a follow-up, I just wanted to get your latest thinking and latest diagnosis about Olive Garden relative to the industry, which of course is a contrast to LongHorn, which is still actually on an accelerated basis outperforming. Is there anything that is clear to you in the customer satisfaction scores that you're seeing that is telling about an opportunity with Olive Garden? And you know, what are your insights telling you? Maybe it's something having to do with the category that you're in and the trade-off to at-home versus what we see in steak, for example. But any thoughts there that might inform your strategy? And thanks.

Speaker Change #103: Olive garden.

Speaker Change #105: What are your what are your insights telling you may.

Speaker Change #106: Maybe it's something having to do with you know the category that you're in and the tradeoffs to at home versus what we see in steak for example, but any thoughts there that might inform your strategy and thanks.

Rick Cardenas: Yeah, David, I think what we're seeing at LongHorn, you know, they've got, they're in the steak category and I will start steak brands with strong operations that deliver on quality or winning. You know, these are heightened times when steak is expensive in the grocery store. And so many people don't want to risk buying steak in the grocery store and preparing it and not doing it well. They might as well go to a restaurant and have them have the risk of the preparation. And I also say LongHorn's made significant investments over the years in quality and that continues to pay off. And our data supports that. People are trading down from fine dining into steaks. And so there's parts of the reason that LongHorn is doing well. But you got to execute. It's not every steak, every steak player in the country isn't doing great.

Yeah, David I think what we're seeing at Longhorn you know they've they've got there and the state category and I'll start state brands with strong operations that deliver on quality of winning you know. This these are heightened times when stake is expensive in the grocery store and so many people don't want to risk buying stake.

Speaker Change #106: The grocery store and preparing it where they'd end and not doing it well they might as well go to a restaurant and have them have the risk of the preparation and I'll also say long runs made significant investments over the years in quality and that continues to pay off.

Speaker Change #107: And our our data supports that people are trading down from fine dining and into steaks.

Speaker Change #107: And so that's there's parts of the reason at all that longhorn is doing well.

Speaker Change #107: But you got to execute it's not every state every state player in the country isn't doing great you got to execute and longhorn is doing that.

Rick Cardenas: You got to execute. LongHorn is doing that. On the Olive Garden front, you know, we have seen a little bit less influx of first time ish users or very infrequent users where during other times we may have seen more. Maybe that's because there's some promotional activities at a pretty deep discount from others. What I would say is Olive Garden is not losing guests to some of these brands that are doing some pretty deep discounts. Our data says that those brands are growing at the expense of other brands, not the expense of ours. Because when we look at Olive Garden consumers, their share of visits hasn't changed. It's just the total number of visits they have has changed. So that's one little insight that we have, is that we're not really losing. Neither is Cheddar's.

You got to execute. LongHorn is doing that. On the Olive Garden front, you know, we have seen a little bit less influx of first time ish users or very infrequent users where during other times we may have seen more. Maybe that's because there's some promotional activities at a pretty deep discount from others. What I would say is Olive Garden is not losing guests to some of these brands that are doing some pretty deep discounts. Our data says that those brands are growing at the expense of other brands, not the expense of ours. Because when we look at Olive Garden consumers, their share of visits hasn't changed. It's just the total number of visits they have has changed. So that's one little insight that we have, is that we're not really losing. Neither is Cheddar's.

Speaker Change #107: On the Olive Garden front.

Speaker Change #108: You know, we have seen a little bit less less influx of first time ish users or very infrequent users where during other times, we may have seen more and maybe that's because there's some promotional activities at a pretty deep discount from others.

Speaker Change #109: But what I would say is olive garden is not losing guests to some of these brands that are doing some pretty deep discounts. Our data says that those brands are growing at the expense of other brands not at the expense of ours, because when you look at when we look at olive garden consumers their share of visits Hasnt changed.

Speaker Change #109: It's just the total number of visits they have has changed.

Speaker Change #109: So.

Speaker Change #110: That that's that's one little insight that we have as you said, we're not really losing.

Speaker Change #110: Neither is cheddars, neither or other brands, they're not losing their guests to these discounts. These companies that are doing discounts might be taking share from other companies that are doing discounts.

Rick Cardenas: Neither are other brands. They're not losing their guests to these discounts. These companies that are doing discounts might be taking share from other companies that are doing discounts. So what are we doing? We are out there talking more about the great price that you can get at Olive Garden all the time, but motivating them a little bit more by saying, yeah, you get these prices all the time with unlimited first course, but some of these items, if you want them, you have to come in a little quicker.

Neither are other brands. They're not losing their guests to these discounts. These companies that are doing discounts might be taking share from other companies that are doing discounts. So what are we doing? We are out there talking more about the great price that you can get at Olive Garden all the time, but motivating them a little bit more by saying, yeah, you get these prices all the time with unlimited first course, but some of these items, if you want them, you have to come in a little quicker.

Speaker Change #110: So what are we doing we are out there talking more about the great price that you can get at Olive garden, all the time.

Speaker Change #110: But motivating them a little bit more by saying, yeah, you're getting these prices all the time with unlimited first course.

Speaker Change #110: But some of these items if you want them you have to come in a little quicker.

[Analyst]: Thank you.

David Palmer: Thank you.

Speaker Change #111: Thank you.

Operator: Thank you. Next question is coming from David Tarantino from Baird. Line is now live.

Speaker Change #111: Thank you next question is coming from David Tarantino from Baird. Your line is now live.

[Analyst]: Hi. Good morning, Rick. I had a question about the Uber Eats or I guess Uber Direct relationship. So my question is, you know, on the decision to make this primary or solely, you know, a first-party relationship and not offer Olive Garden on their marketplace. And you know, I guess, you know, I think most brands source most of their delivery orders from the marketplace and not first-party. So just wondering, you know, why that decision and would you ever be open to a deal that puts your brands on their marketplace?

David Tarantino: Hi. Good morning, Rick. I had a question about the Uber Eats or I guess Uber Direct relationship. So my question is, you know, on the decision to make this primary or solely, you know, a first-party relationship and not offer Olive Garden on their marketplace. And you know, I guess, you know, I think most brands source most of their delivery orders from the marketplace and not first-party. So just wondering, you know, why that decision and would you ever be open to a deal that puts your brands on their marketplace?

David Tarantino: Hi, Good morning, Rick I had a question about the Uber eats or I guess it would be a direct relationship. So my my question is on the decision to make this primarily or solely a first party relationship and not offer olive garden on their mark.

Speaker Change #113: A good place and I guess, you know I think most brands sourced most of their delivery orders from the marketplace and not first party. So just wondering you know.

Speaker Change #114: Why that decision and would you ever be open to a deal that that puts your brands on their marketplace.

Rick Cardenas: Yeah, I would start by where I mentioned earlier. The incrementality has to be really big to offset the $1 billion that we're doing in to-go sales at Olive Garden today without any fees. We believe that a lot of guests come to our website directly and they want delivery. And so we're going to start with that. We also know that if we can tell more people about this that they'll come to our website now, you know, with the acquisition of Chuy's and them coming in. We'll learn a little bit more about it, about third-party, and we'll see if there's an option down the road to do marketplace. But it doesn't solve the challenges that we've had.

Yeah, I would start by whereas where I mentioned earlier the increments how would it have to be really big to offset the $1 billion that we're doing in to go sales for olive garden today without any fees.

Speaker Change #115: We believe that the that most a lot of guests come to our website directly and they want to want delivery and so we're going to we're going to start with that we.

Speaker Change #115: We also know that if we can we can tell more people about this.

Speaker Change #115: That they'll come to our website.

Now you know with the acquisition of chewy and them coming in we'll learn a little bit more about it about third party and we'll see if there's an option down the road to do marketplace, but.

Speaker Change #116: It doesn't solve the challenges that we've had and so if it is as we've always said there are things that we don't like about third party marketplace. One of them is a market I mean, if you think about marketplace and reason maybe a lot of these folks are sourcing their delivery through that is it's really a marketing channel.

Rick Cardenas: And so, if, as we've always said, there are things that we don't like about third-party marketplace, one of them is, I mean, if you think about marketplace and the reason maybe a lot of these folks are sourcing their delivery through that is it's really a marketing channel. We're really strong marketers. We've got money we can spend in marketing that maybe others can't. And it's also a technology channel and we've got a great technology team. So some of these brands that are sourcing may be sourcing because that's the way they can and we have other ways to do it. So let's see how this works. And we'll look at just like we've been looking at this for years and seeing if there's a way to get in, this is our way in.

And so, if, as we've always said, there are things that we don't like about third-party marketplace, one of them is, I mean, if you think about marketplace and the reason maybe a lot of these folks are sourcing their delivery through that is it's really a marketing channel. We're really strong marketers. We've got money we can spend in marketing that maybe others can't. And it's also a technology channel and we've got a great technology team.

Speaker Change #115: We're really strong marketers, we've got money, we can spend in marketing.

Speaker Change #115: That maybe others can't.

Speaker Change #115: And it's also a technology channel and we've got a great technology team.

So some of these brands that are sourcing may be sourcing because that's the way they can and we have other ways to do it. So let's see how this works. And we'll look at just like we've been looking at this for years and seeing if there's a way to get in, this is our way in. If things change, David, and we think there's another option for us to be on the marketplace, then we have the ability to do that.

Speaker Change #115: So you know some of these brands that are sourcing maybe sourcing because that's the way they can.

Speaker Change #115: And we have other ways to do it so let's see how this works.

Speaker Change #115: And we'll look at we'll just like we've been looking at this for years and seeing if there's a way to get in this is our way in.

Rick Cardenas: If things change, David, and we think there's another option for us to be on the marketplace, then we have the ability to do that.

Speaker Change #115: And if things change David and we think it's there's another option for us to be on the marketplace. Then we have the ability to do that.

Speaker Change #117: Great makes sense. Thank you.

[Analyst]: Great. Makes sense. Thank you.

David Tarantino: Great. Makes sense. Thank you.

Rick Cardenas: Sure.

Speaker Change #115: Sure.

Operator: Thank you. Next question is coming from Chris O'Cull from Stifel. Your line is now live.

Chris <unk>: Thank you next question is coming from Chris <unk> from Stifel. Your line is now live.

[Analyst]: Thanks. Good morning, guys.

Chris O'Cull: Thanks. Good morning, guys. Raj. Olive Garden segment margin looked slightly below, I think, 2019 levels and maybe it was down, obviously, year over year. Can you talk about what drove that result?

Chris <unk>: Thanks, Good morning, guys Raj Olive Garden's segment margin looked slightly below I think 2019 levels and maybe it was down obviously year over year can you talk about what drove that result.

Operator: Raj.

[Analyst]: Olive Garden segment margin looked slightly below, I think, 2019 levels and maybe it was down, obviously, year over year. Can you talk about what drove that result?

Chris <unk>: Yeah.

Speaker Change #119: Yeah, I think Chris I think it's really stocked with the cells right. When you think about the where their same restaurant sales for when you have a negative 3%. There's a lot of deleverage and in fact I would say the.

Raj Vennam: Yeah, Chris, I think it really starts with the sales. Right. When you think about the way their same-restaurant sales were, when you have a -3%, there's a lot of deleverage. And in fact, I would say the unexpected step down in July really made it harder for us to react and adjust our costs. Our teams do a great job of forecasting the business and managing costs really well. However, July was surprising to us and to our models. I think none of our models would have predicted the type of step down we had in July. And that just made it a little more challenging. And then there are some timing stuff between the quarters that might have some nuances compared to pre-COVID. Frankly, I haven't looked at pre-COVID to be able to give you a full view on exactly what's the delta.

Speaker Change #120: Unexpected step down in July really made it harder for us to react and adjust our costs. Our teams do a great job of forecasting the business and managing costs really well how about your July was a little.

Speaker Change #121: Surprising to us and to our models I think you know none of our models would have predicted the type of step down we had in July.

Speaker Change #122: And that just made it a little more challenging and then there are some timing stuff in between the quarters that might have some nuances compared to pre COVID-19 I frankly, I havent looked at pre COVID-19 to be able to give you a full view on exactly what's the delta, but you know what are your I mean again at a 26% segment profit.

Raj Vennam: But year over year, I mean, again, at a 20.6% segment profit, this is really strong margins, right? I mean, no one else in the industry comes close. They're hundreds of basis points ahead of anybody else. So we feel like they're in a great place from that business model perspective.

But year over year, I mean, again, at a 20.6% segment profit, this is really strong margins, right? I mean, no one else in the industry comes close. They're hundreds of basis points ahead of anybody else. So we feel like they're in a great place from that business model perspective.

Speaker Change #121: Great.

Speaker Change #121: It's really strong margin side I mean, no one else in the industry comes close.

Speaker Change #121: Hundreds of basis points ahead of anybody else. So we feel like they're in a great place from that a business model perspective.

[Analyst]: Yeah, that makes sense. And then I know you're still targeting earnings growth, I guess call it 6% to 8% for the year, but is there anything we should be thinking about in terms of earnings cadence over the balance of the year?

Chris O'Cull: Yeah, that makes sense. And then I know you're still targeting earnings growth, I guess call it 6% to 8% for the year, but is there anything we should be thinking about in terms of earnings cadence over the balance of the year?

Speaker Change #123: Yeah that makes sense and then I know you're still targeting earnings growth I guess call it 6% to 8% for the year, but is there anything we should be thinking about in terms of earnings cadence over the balance of the year.

Raj Vennam: Yes, Chris, I think for us, when we look at it, it's probably in that mid to high single digits for the next three quarters. There may be a little bit of movement from quarter to quarter. One of the things we mentioned earlier when we provided guidance was that second quarter will have a little bit of a benefit because of Thanksgiving, shifting out of the Q2 into Q3 on sales. And you would expect some of that to flow through. But with that, all that said, I think the way we have, we think about it, it's probably in that mid to high single digit growth over the next few quarters. It's not like a huge difference quarter to quarter. There may be a couple points from quarter to quarter.

Speaker Change #123: Yeah, Chris I think for us when we look at it it's probably in that mid to high single digits for the next three quarters are you know there may be a little bit of movement from quarter to quarter are one of the things. We mentioned earlier when we provided guidance was that.

Speaker Change #123: That second quarter will have a little bit of a benefit because of Thanksgiving shifting out of the Q2 into Q3 on sales and you know you would expect some of that to flow through but with that all all of that said I think the way. We have we think about it it's probably in that mid to high single digit growth.

Speaker Change #123: Next a few quarters, it's not it's not like a huge difference quarter to quarter. There may be a couple of points from quarter to quarter.

[Analyst]: Perfect. Thanks guys.

Chris O'Cull: Perfect. Thanks guys.

Speaker Change #124: Perfect. Thanks, guys.

Operator: Thank you. Next question is coming from Jim Salera from Stephens. Your line is now live.

Speaker Change #124: Thank you next question is coming from Jim Solera from Stephens. Your line is now live.

[Analyst]: Hey guys, good morning. Thanks for taking our question. I wanted to ask on if you had a sense for what percentage of your Olive Garden guests already have the app downloaded because it sounds like the opportunity for incrementality from the delivery offering is really going to come from kind of existing Olive Garden guests. Do you have a sense for what the penetration of the app is already? And if you have any plans for kind of in-restaurant activation, whether it's the waiters or waitresses or somebody encouraging people to download the app at the restaurant?

Jim Salera: Hey guys, good morning. Thanks for taking our question. I wanted to ask on if you had a sense for what percentage of your Olive Garden guests already have the app downloaded because it sounds like the opportunity for incrementality from the delivery offering is really going to come from kind of existing Olive Garden guests. Do you have a sense for what the penetration of the app is already? And if you have any plans for kind of in-restaurant activation, whether it's the waiters or waitresses or somebody encouraging people to download the app at the restaurant?

Jim Solera: Hey, guys. Good morning, Thanks for taking my question I wanted to ask on.

Jim Solera: You had a sense for what percentage of your olive garden guests already has.

Jim Solera: Unloaded because it sounds like the opportunity for Brinker mentality from the delivery offering is really going to come from kind of existing olive garden. Yes did you have a sense for what the penetration of the App is already and do you have any plans for kind of in restaurant activation, whether it's the.

Speaker Change #126: The waiters and waitresses are somebody encouraging people to download the app at the restaurant.

Rick Cardenas: Hey, Jim, I just want to be clear that there's other ways to order to go at Olive Garden. About over 60% of our to go orders are already digital. Whether it's through our online platform or our mobile app, there's a pretty good percentage of our guests. We're not going to get into what percent have the app. You know, if there's things that we want to do to market that app a little bit more, we will. It's a pretty, it's a great app for a core consumer. You can get your name on the wait list. You can order to go, you can do a lot of other things. You know, without giving you the percent of guests that are on that app, it's not, it's not a, it's not a huge percentage, but it's a good percentage.

Jim Solera: Hey, Jim I.

Speaker Change #127: I just want to be clear that there's there's other ways to order to go at Olive garden and about over 60% of our to go orders are already digital.

Speaker Change #128: Whether it's through our online and online online platform or our mobile app.

Speaker Change #129: There's a pretty good percentage of our guests, we're not going to get into a what percent have the app.

Speaker Change #129: And you know if there's if there's things that we want to do to market that app a little bit more we will it's a pretty it's a it's a great app for for our core consumer you can get your name on the wait list you can order to go.

Ed: You can you can do a lot of other things and so Ed.

Speaker Change #131: You know without giving you the percent of guests that are on that App, it's not a it's not a it's not a huge percentage, but it's a good percentage, but again you can order on the website and actually when we started the pilot. The first the first way you're going to able to orders website, the apple won't be ready for it.

Rick Cardenas: But again, you can order on the website. And actually, when we start the pilot, the first way you're going to be able to order is website. The app won't be ready for, you know, it'll be ready during the pilot, but it won't be ready the first week we launched a pilot.

But again, you can order on the website. And actually, when we start the pilot, the first way you're going to be able to order is website. The app won't be ready for, you know, it'll be ready during the pilot, but it won't be ready the first week we launched a pilot.

Speaker Change #131: You know it'll be ready during the pilot, but it won't be ready the first week, we launched a pilot.

[Analyst]: Okay. And then I don't know if I missed this, I apologize. Can you guys just give us the traffic check and mix components for all of Olive Garden and LongHorn for the quarter.

Jim Salera: Okay. And then I don't know if I missed this, I apologize. Can you guys just give us the traffic check and mix components for all of Olive Garden and LongHorn for the quarter.

Speaker Change #131: Okay.

Speaker Change #131: And then if.

Speaker Change #132: If I missed this I apologize, but can you guys just give us the traffic checking mix components or raw garden and log on to the quarter.

Speaker Change #132: Yeah.

Speaker Change #133: Oh, so at Olive garden, our pricing was just sort of a 2% I think they were like one nine for the quarter. They had a pause a little bit of a positive mix. So they're in the mid fives for traffic and they can do five mid fives and then longhorn.

Raj Vennam: Oh, so at Olive Garden, our pricing was just south of 2%. I think they were like 1.9 for the quarter. They had a little bit of a positive mix. So they're in the mid-fives for traffic. Negative mid-fives. And then LongHorn had positive traffic of 0.7%. Their check growth was 3%. I think their pricing was really close to that. Maybe in the high 2s.

Speaker Change #133: Had positive traffic of <unk> seven their check growth was 3% I think their pricing was really close to that maybe in the high twos.

[Analyst]: Okay, great. Thank you. I'll hop back in with you.

Jim Salera: Okay, great. Thank you. I'll hop back in with you.

Speaker Change #133: Okay great.

Speaker Change #133: I'll hop back in the queue.

Operator: Thank you. Next question is coming from Jake Bartlett from Truist Securities. Your line is now live.

Speaker Change #133: Thank you next question is coming from Jake Bartlett from <unk> Securities. Your line is now live.

[Analyst]: Great, thanks for taking the question. You know, Rick, you know, since all the changes since COVID I think a question for investors has been, you know, what stays around? What are the big changes you made, what remains? And you know what caught my attention was some of the add backs on the menu you mentioned kind of adding a couple items back. Olive Garden. The question is, is the menu simplification kind of reversing here a little bit. Are you going to be making efforts to take items off as you add old ones back? What's the message here with kind of the menu and your commitment to the simplification?

Jake Barlett: Great, thanks for taking the question. You know, Rick, you know, since all the changes since COVID I think a question for investors has been, you know, what stays around? What are the big changes you made, what remains? And you know what caught my attention was some of the add backs on the menu you mentioned kind of adding a couple items back. Olive Garden. The question is, is the menu simplification kind of reversing here a little bit. Are you going to be making efforts to take items off as you add old ones back? What's the message here with kind of the menu and your commitment to the simplification?

Jake Bartlett: Great. Thanks for taking the question Rick.

Jake Bartlett: All the changes since Covid I think a question for investors has been you know what state what stays around what are the big changes you've made what what remains and what caught my attention was some of the add backs on the menu you mentioned kind of adding a couple of items back at Olive garden.

Speaker Change #135: The question is no.

Speaker Change #136: Is the menu simplification, you know kind of reversing here a little bit are you going to be making efforts to take items off as you add the old ones back what's the message here with kind of the menu and your commitment to the simplification.

Rick Cardenas: Yeah, Jake, we're very committed to keeping the menu simple. All of our brands have really high bars to add items. The items that we have added. For example, at LongHorn, the Lemon Garlic Chicken filled a hole in the menu on something that we took off that was a more healthy chicken option. And they didn't want to add just anything. And so it took them a while to find something that was really guest satisfying. You know, the great thing is it really doesn't add a whole lot of skew. I don't know if it adds any SKUs. In our restaurant, we already have the chicken. We already have the seasoning of everything else. It's just adding another. A different kind of topping on that chicken. So it's really simple to execute. At Yard House, the pizzas replaced pizzas. So we already had pizzas.

Speaker Change #137: Yeah, Jake we're very committed to keeping the menu simple.

Speaker Change #137: All of our brands have really high bars to add items are the items that we've added for example at longhorn.

Speaker Change #137: The lemon garlic chicken filled the hole in the menu on something that we took off that was a a more healthy chicken option.

Speaker Change #137: And they didn't want to add just anything and so it took them a while to find something that was really guest satisfying you know the great thing is it really doesn't matter a whole lot of SKU I don't know if it adds any skus in our restaurants, we already have the chicken where have the seasoning. We already have everything else is just adding another a different kind of topping on that on that chicken. So it's really simple.

Speaker Change #137: To execute.

Speaker Change #138: At yard house, the pizzas, we replaced pizzas. So we already had pizza is we've just replaced them with better quality do better quality toppings and actually in some ways a more appealing pizza for more people. We had I'll give you. An example, we had a a a pepperoni and mushroom pizza, we just took off.

Rick Cardenas: We just replaced them with better quality dough, better quality toppings, and actually in some ways a more appealing pizza for more people. I'll give you an example. We had a pepperoni and mushroom pizza. We just took the mushrooms off and we're selling more. Right. So we also improved the cook time on those pizzas. So it wasn't like we added new items, we just changed them. Same with the cheesesteak. We had a different kind of cheesesteak on the menu. We fixed this one. We had burgers on the menu. We've got different burgers on the menu. So we didn't really add to the menu at Yard House by doing that. And their menu is significantly more lower than it was before. So, yes, we are clear that the menu simplification we did was the right thing for us.

We just replaced them with better quality dough, better quality toppings, and actually in some ways a more appealing pizza for more people. I'll give you an example. We had a pepperoni and mushroom pizza. We just took the mushrooms off and we're selling more. Right. So we also improved the cook time on those pizzas. So it wasn't like we added new items, we just changed them. Same with the cheesesteak. We had a different kind of cheesesteak on the menu.

Speaker Change #138: Took the mushrooms off and we're selling more right. So we also improve the the the cook time on those pizza. So it wasn't like we added new items, we just changed them.

Same with the Cheesecake, we had a different kind of cheesesteak on the menu. We fix this one we had brokers on the menu we've got different burgers on the menu. So we didnt really add to the menu at yard house by doing that and their menu is significantly lower than it was before so yes, we are clear that the menu simplification.

We fixed this one. We had burgers on the menu. We've got different burgers on the menu. So we didn't really add to the menu at Yard House by doing that. And their menu is significantly more lower than it was before. So, yes, we are clear that the menu simplification we did was the right thing for us. But we do know that we have to continue to innovate on the menu. And when we add items, we take items off.

Speaker Change #138: When we did.

Speaker Change #138: It was the right thing for us, but we do know that we have to continue to innovate on the menu and when we add items, we take items off.

Rick Cardenas: But we do know that we have to continue to innovate on the menu. And when we add items, we take items off.

[Analyst]: Great. I appreciate that. Another question or follow up is on pricing on some of the inflation that you're seeing. Last call, you mentioned 2.5% to 3% pricing for 2025. I think the Q1 here was at 2.5%. So is that the right way to think about pricing for the rest of the year? That it remains at the lower end of that range? And then the other part of the question is on the operating cost inflation. You reiterated your guidance for inflation. But when I look at the commodities outlook, things look to be a little bit better. Beef is now low single-digit inflation, produce is flat. There's just the items that change got a little bit better for you.

Jake Barlett: Great. I appreciate that. Another question or follow up is on pricing on some of the inflation that you're seeing. Last call, you mentioned 2.5% to 3% pricing for 2025. I think the Q1 here was at 2.5%. So is that the right way to think about pricing for the rest of the year? That it remains at the lower end of that range? And then the other part of the question is on the operating cost inflation. You reiterated your guidance for inflation.

Speaker Change #138: Great I appreciate that.

Speaker Change #139: Another question or follow up is on pricing on some of the inflation that you're seeing the last call. You mentioned, you know 2.5% to 3%, placing for 25 I think the first quarter here was about two and a half. So is that the right way to think about pricing for the rest of the view that it remains at the lower end of that range and then the other part of it.

Speaker Change #140: Is is on the operating cost inflation. Your you reiterated your guidance for inflation, but when we look at the commodity outlook things look to be getting a little bit better beef is now.

Jake Barlett: But when I look at the commodities outlook, things look to be a little bit better. Beef is now low single-digit inflation, produce is flat. There's just the items that change got a little bit better for you. So is it fair to say that your cost environment, inflation environment is a little bit better than previously expected, but you're going to be on the more conservative side for pricing? How should we look at those factors?

Speaker Change #141: Low to low single digit inflation produces flat.

Speaker Change #142: The items that changed a little bit better for you. So is it fair to say that your you know that.

[Analyst]: So is it fair to say that your cost environment, inflation environment is a little bit better than previously expected, but you're going to be on the more conservative side for pricing? How should we look at those factors?

Your cost environment inflation, environment's, a little bit better than you previously expected, but you're going to be on the more conservative side of for pricing how should we look at those those factors.

Raj Vennam: Yeah, Jake, I think we're probably going to be in that range of 2.5% to 3% any given quarter. I don't think we have any quarter where it's going to be higher than 3%. But you know, 2.7%, 2.8% in some quarters is likely. Now we're going to not, you know, not everything is locked in from a pricing perspective. We're going to kind of watch where the costs come in. So and then on the commodity side, you're right, we are seeing better than expected inflation. In fact, Q1 we were only, as I said in my prepared remarks, you know, slightly inflationary, but we do have some headwind in the back half with chicken. Our chicken contract runs out at the beginning of new calendar year and that implies there is given where chicken is trending, there is some risk there. And so we incorporated that.

Speaker Change #142: Yeah, Jake I think you know yeah, we're probably going to be in that range of two and a half to three any given quarter are I don't think we have any quarter, whether its going to be higher than three but you know 2728 in some quarters as is likely now we're going to not you know not everything is locked in from a pricing perspective, we're going to.

Speaker Change #143: Kind of watch where the costs come in so on and then on the commodity side, you're right. We are seeing better than expected inflation in fact first quarter.

Speaker Change #143: We were only as I said in my prepared remarks, I'm, you know slightly inflationary, but we do have some headwind in the back half a chicken chicken contract runs out you know at the beginning of new calendar year and that that may imply there is given where chicken is trending it there is some risk there.

Speaker Change #143: And so we incorporated that now with all that said for the full year, we're probably likely going to be yeah, we're likely going to be south of that but with the guidance say its approximately two so you can think of it as maybe when we started it might have been a little bit north of two and maybe now we're looking at a little bit south of two.

Raj Vennam: Now, with all that said for the full year, we're probably likely going to be, we're likely going to be south of that. But the guide says approximately two. So you can think of it as maybe when we started it might have been a little bit north of two and maybe now we're looking at a little bit south of two.

Now, with all that said for the full year, we're probably likely going to be, we're likely going to be south of that. But the guide says approximately two. So you can think of it as maybe when we started it might have been a little bit north of two and maybe now we're looking at a little bit south of two.

[Analyst]: Great. I appreciate it.

Jake Barlett: Great. I appreciate it.

Speaker Change #144: Great I appreciate it.

Operator: Thank you. Next question today is coming from Sara Senatore from Bank of America. Your line is now live.

Speaker Change #144: Thank you next question today is coming from Sara Senatore from Bank of America. Your line is now live.

Courtney Aquila: Hi, thank you. This is Katherine Griffin on for Sara. The first question is on the steak category. Rick, I think you spoke to, you know, y'all of the businesses accelerating, but I'm curious about that performance in the context of the broader steak category because it seems that that's slowed in recent weeks. Is that a fair assessment?

[Company Representative] (Bank of America): Hi, thank you. This is Katherine Griffin on for Sara. The first question is on the steak category. Rick, I think you spoke to, you know, y'all of the businesses accelerating, but I'm curious about that performance in the context of the broader steak category because it seems that that's slowed in recent weeks. Is that a fair assessment?

Katherine Griffin: Hi. Thank you. This is Katherine Griffin on for Sarah on the first question is on the steak category. Rick I think you spoke to you you know you are.

All of that all of the businesses, yeah, like accelerating but I'm curious about that performance in the context of the broader steak category because it seems that that's slowed in recent weeks does that is that a fair assessment.

Yeah.

Raj Vennam: Kathleen, if you're talking about specifically LongHorn, we haven't seen any slowdown. That's not what we're experiencing, in fact.

Speaker Change #146: Catherine if you're talking about specifically longhorn we haven't seen any slowdown that's not that's not what we're experiencing in fact right. Okay. Okay. Yeah, Yeah, as Rick said I think September quarter to date, we're actually trending out of that ball August levels are pretty much all of our brands across all of our brands.

Courtney Aquila: Right, okay.

[Company Representative] (Bank of America): Right, okay.

Raj Vennam: Yeah. As Rick said, I think September quarter to date, we're actually trending at or above August levels at pretty much all of our brands across all our brands.

Courtney Aquila: Right. I guess, yeah, the question was more about relative to the broader category, but it sounds like it hasn't slowed. So. Yeah, thank you for clarifying. And then the second question is just on the curbside mix. I think you said that there's a phase rollout out across locations that have the curbside to go. So have you quantified how many of your stores have to go and what would cause that maybe to change?

[Company Representative] (Bank of America): Right. I guess, yeah, the question was more about relative to the broader category, but it sounds like it hasn't slowed. So. Yeah, thank you for clarifying. And then the second question is just on the curbside mix. I think you said that there's a phase rollout out across locations that have the curbside to go. So have you quantified how many of your stores have to go and what would cause that maybe to change?

Speaker Change #147: Right I guess the other question was more about you know relative to the broader category, but it sounds like it hasn't slowed so yeah.

Speaker Change #148: Yeah. Thank you for clarifying on and then the second question is just on the like Curbside next I think you said that there's a phase rollout across locations that have the curbside you know.

Speaker Change #149: To do so have you quantified how much how many of their sorry, I'd have to go and like what would what.

Speaker Change #150: Like how does that maybe change.

Rick Cardenas: Hey, Katherine, pretty much every Olive Garden has to go. Every Olive Garden has to go. Almost all of them have curbside. There's just a couple of restaurants here or there that might not have curbside. Whether it's like a, you know, let's just use Times Square in New York City. Probably not a curbside. Actually, they already have third-party delivery in Times Square. So, you know, what we wanted to be clear is that this is a curbside experience no matter what. So if a guest orders to go and they want it delivered, the only difference is somebody else is picking it up for them curbside, just like today.

Catherine: Hey, Catherine pretty much every olive garden has to go Oliver Oliver every olive garden has to go almost all of them have curbside. There's just a couple of restaurants here or there that might not have curbside, whether it's like a you know let's.

Catherine: Let's just use times square in New York City, probably not a curbside actually they already have third party delivery in times square. So you know what we wanted to be clear is that.

Speaker Change #152: This is a curbside experience no matter, what so if if a guest orders to go and they want it delivered the only difference is somebody else's picking it up for them curbside just like today.

Courtney Aquila: Great. Thank you.

[Company Representative] (Bank of America): Great. Thank you.

Speaker Change #153: Great. Thank you.

Rick Cardenas: Sure.

Speaker Change #153: Sure.

Operator: Thank you. Next question is coming from Peter Saleh from BTIG. Your line is now live.

Peter Saleh: Thank you. Your next question is coming from Peter Saleh from <unk>. Your line is that life.

Rick Cardenas: Great.

Peter Saleh: Great. Thanks for taking the questions. Just a couple clarifications on the Uber Eats partnership. Are you allowing for the entire menu? At Olive Garden or including LTOs for delivery, or is there any limitations on? On the menu going forward?

Peter Saleh: Great. Thanks for taking my questions just a couple of clarifications on the Uber eats partnership.

Raj Vennam: Thanks for taking the questions.

Operator: Just a couple clarifications on the Uber Eats partnership.

[Analyst]: Are you allowing for the entire menu?

Peter Saleh: Are you, allowing for the entire menu at olive garden, or including L. T OS for delivery or is there any limitations on the menu going forward.

Raj Vennam: At Olive Garden or including LTOs for delivery, or is there any limitations on?

Operator: On the menu going forward?

Rick Cardenas: Right now, anything on the menu can be ordered to go. You can't do Never Ending. It's kind of hard to do. Never Ending. Pasta Bowl to go. But the only thing is, yeah, alcohol is not available for delivery, but food items, everything's available. I will clarify that, though. Remember, we do large party catering that we deliver for big groups. Some of those items may be available for delivery, but they wouldn't get the same kind of experience you get when you do the Olive Garden catering. So it would just be somebody bringing a pan of lasagna to your house versus if you do a large party catering, we go in and we set it up, and we bring the trays and everything else. So that's the only difference.

Right now anything on the menu can be ordered to go you can't do never end, it's kind of hard to do never ending pasta Bowl to go but I'm. The only the only thing is.

Is yeah.

Speaker Change #155: Alcohol is not available for delivery.

But food items everything is available.

Speaker Change #156: We'll clarify that though remember we do large party catering.

Speaker Change #157: That we deliver for big groups. Some of those items may be available for delivery, but they wouldn't get the same kind of experience you get when you do the olive garden catering. So it would just be somebody bringing a pan of lasagna to your house versus if you do a large party catering we go in and we set it up and we we bring the we bring the.

Some of those items may be available for delivery, but they wouldn't get the same kind of experience you get when you do the Olive Garden catering. So it would just be somebody bringing a pan of lasagna to your house versus if you do a large party catering, we go in and we set it up, and we bring the trays and everything else. So that's the only difference. But you can order pretty much anything that you can order today on Olive Garden's menu for to-go or for delivery. Great.

Speaker Change #157: Trade and everything else. So that's the only difference, but you can order pretty much anything that you can order today on olive garden's menu for it to go or for delivery.

Rick Cardenas: But you can order pretty much anything that you can order today on Olive Garden's menu for to-go or for delivery. Great.

Speaker Change #158: Great. Thanks for that and then just on.

Operator: Thanks for that.

Peter Saleh: Thanks for that. And then just. Overall, when you think about this Uber Eats partnership. Was there a cohort of consumers that? You were trying to target here, something that you're not getting, or are you thinking this will help maybe more for lunch versus dinner? Any details around kind. Of how you came to this conclusion. Of moving forward on. The delivery process?

Rick Cardenas: And then just.

Raj Vennam: Overall, when you think about this Uber Eats partnership.

Speaker Change #159: On the overall overall when you think about this it breeds partnerships or was there a cohort of consumers that you were trying to target here something that you're not getting or are you thinking this will help maybe more for lunch versus dinner and any details around kind of how you came to this conclusion of moving forward on.

Operator: Was there a cohort of consumers that?

Raj Vennam: You were trying to target here, something that you're not getting, or are you thinking this will help maybe more for lunch versus dinner? Any details around kind.

Operator: Of how you came to this conclusion.

Rick Cardenas: Of moving forward on.

Speaker Change #159: The third on the on the delivery process.

Operator: The delivery process?

Rick Cardenas: Well, I'll start by saying delivery is a lot stickier than we thought it would be. We thought that over time, consumers would see how expensive it is and kind of pull back on that, but it's been fairly sticky. There are consumers that want the, want the convenience of having something brought to them versus coming to get it. And this is not a lunch or dinner. This is a need state for convenience. And it's a different occasion. We do know that in some of our restaurants that do the delivery today. So we've got again, handfuls of restaurants, those guests don't come to eat in the restaurant. And so this is a new occasion for them. And we believe we'll be able to pick up some new occasions going forward. But it's not a lunch or a dinner thing.

Speaker Change #160: Well I'll start by saying delivery is a lot stickier than we thought it would be.

Speaker Change #160: You know, we thought that over time consumers would see how expensive it is and kind of pull back on that but it's been fairly sticky.

Speaker Change #160: There are consumers that want to want the convenience of having something brought to them versus coming to get it and this is not a lunch or dinner. This as a need state for convenience and it's a different occasion we.

We do know that in some of our restaurants that do the delivery today. So we've got again, handfuls of restaurants, those guests don't come to eat in the restaurant. And so this is a new occasion for them. And we believe we'll be able to pick up some new occasions going forward. But it's not a lunch or a dinner thing. It's just an occasion of getting something, getting the convenience of not having to get in your car and go pick it up.

We do know that in in some of our restaurants that do that do the delivery today. So we've got again a handful of restaurants.

Speaker Change #160: Those guests don't come to eat in the restaurants and so this is a new occasion for them.

Speaker Change #160: And we believe we'll be able to pick up some new occasions going forward, but it's not a lunch or dinner thing. It's just an occasion of getting something getting the convenience of not having to get in your car and go pick it up.

Rick Cardenas: It's just an occasion of getting something, getting the convenience of not having to get in your car and go pick it up.

Operator: Thank you very much. Thank you. Next question is coming from Gregory Francfort from Guggenheim Securities. Your line is now live.

Speaker Change #160: Thank you very much.

Speaker Change #161: Thank you. Your next question is coming from Gregory Frankfurt from Guggenheim Securities. Your line is now live.

[Analyst]: Hey, thanks for the question.

Gregory Francfort: Hey, thanks for the question. My question is, can you just remind. When the pricing, I think you said 1.9% for the quarter, when that rolls off. I'm just curious how you're thinking about pricing going forward. Your menu actually does not have massive differences in price points across regions. I'm curious how you balance maybe spreading that out a little bit with kind of advertising some of these national price points more aggressively to the customer. Thanks.

Speaker Change #162: Hey, Thanks for the question.

Courtney Aquila: My question is, can you just remind.

Gregory Frankfurt: Question is can you just remind us maybe when when the pricing and easily a one 9% in the quarter, what when that rolls off.

[Analyst]: When the pricing, I think you said 1.9% for the quarter, when that rolls off. I'm just curious how you're thinking about pricing going forward. Your menu actually does not have massive differences in price points across regions. I'm curious how you balance maybe spreading that out a little bit with kind of advertising some of these national price points more aggressively to the customer. Thanks.

Speaker Change #164: And I'm, just curious how you're thinking about.

Speaker Change #165: And going forward I you your menu actually does not have massive differences in price points across regions. I'm curious, how you balance maybe spreading that out a little bit with kind of advertising. Some of these national price points are.

Speaker Change #165: More aggressively to the customer.

Raj Vennam: Hey, Greg. Yeah. There was some pricing action in the middle of the quarter. So there is some timing of when that, so the 1.9 was for the full quarter. So we don't anticipate any additional actions until specifically at Olive Garden, if any, until sometime in the new calendar year. I don't want to get into boxing ourselves in a certain date or time on the amount of pricing because we, like I said, this is one of those things where we're very thoughtful about how much pricing we take. Even in times when people were taking a lot, we were holding back. And so that philosophy hasn't changed. So we want to not again, I don't want to give out a number because then it becomes something we have to do.

Speaker Change #165: Hey, Greg Yeah, there was some pricing action in the middle of the quarter. So there was some timing of when that so the one nine was for the full quarter.

Speaker Change #166: So I, we don't anticipate any additional actions until especially at olive garden are if any until sometime in the new calendar year are I don't want to get into boxing ourselves in a certain date or a time on that but I am on our pricing because we got like I said. This is one of those things where we're very thoughtful about how much pricing are we.

Speaker Change #166: Take even in times when people were taking a lot we were being we were holding back.

Speaker Change #166: So that philosophy hasn't changed so we want to not again I don't want to give out a number because then it becomes something we have to do now with that said from a tier from a geography perspective, we do have hearing and we do have the price difference even when we have promotions days, where the kind of pricing you know there is a small percentage of markets.

Raj Vennam: Now with that said, from a geography perspective, we do have tiering and we do have the price difference. Even when we have promotions. There's a way to kind of price in some; there is a small percentage of markets. For example, if you're living in California, California, you're probably paying more for Never Ending Pasta Bowl than the rest of the country or if you're in New York City. So there is some differences and we do have multiple tiers. So the pricing takes into consideration a lot of factors to kind of account for that.

Now with that said, from a geography perspective, we do have tiering and we do have the price difference. Even when we have promotions. There's a way to kind of price in some; there is a small percentage of markets. For example, if you're living in California, California, you're probably paying more for Never Ending Pasta Bowl than the rest of the country or if you're in New York City. So there is some differences and we do have multiple tiers. So the pricing takes into consideration a lot of factors to kind of account for that.

Speaker Change #166: For example, if you were living in California, you'll probably paying more for now anything possible than the rest of the country are or if you're in New York City. So there is some differences and we do it we do have multiple tiers. So the pricing is takes into consideration a lot of factors to kind of account for that.

Rick Cardenas: Yeah, Greg, I'll just add one thing, you know, we do. We're very clear in our advertising and our messaging. So if you think about what I said in the prepared remarks about Cheddar's pork chop starting at $12.99, it's not a. It's not a lot of times when people say starting at, it's because you have different items on that promotion and one of them is at this price and there's another one, and another one, another one there. The reason I didn't say $12.99 is it's not $12.99 everywhere. So we do tier across all of our brands, across all of our geographies, we have tiers and in some markets we have a different price in different restaurants for the same brand. So we're very, very focused on pricing.

Speaker Change #166: Yeah, Greg I'll, just add one thing we do.

Greg: We're very clear in our advertising and our messaging. So if you think about what I said in the prepared remarks about cheddars porch out starting at 12 99, it's not a it's not a lot of times when people say starting out just because you have different items on that promotion and one of them is that this pricing is another one and another one and another one there.

Greg: The reason I didn't say 12 99 is its not 12 99 everywhere. So we do tier across all of our brands across all of our geographies we have tiers.

Greg: And in some in some markets, we have a different price in different restaurants for the same brand.

Greg: So we're very very focused on pricing, we have a data analytics team that works that.

Rick Cardenas: We have a data analytics team that works that and gives us the best places to take price and not take price that help us in the long run. So we are very surgical in our pricing, which means that it's harder for us to advertise a one price everywhere other than doing starting at.

We have a data analytics team that works that and gives us the best places to take price and not take price that help us in the long run. So we are very surgical in our pricing, which means that it's harder for us to advertise a one price everywhere other than doing starting at.

Greg: And gives us the best places to take price and not take price that helped us in the long run so I'm, we're very surgical in our pricing.

Greg: Which which means that it's harder for us to advertise a one price everywhere.

Greg: Other than doing starting it.

[Analyst]: Thank you.

Gregory Francfort: Thank you.

Greg: Thank you.

Operator: Thank you. Next question is coming from Jeff Farmer from Gordon Haskett. Your line is now live.

Greg: Thank you. Our next question is coming from Jeff Farmer from Gordon Haskett. Your line is now live.

[Analyst]: Thanks, I appreciate that. It's late in the call, so I'll try to be quick here. Can you guys just shed some light on that Olive Garden customer income cohort that's historically responded, or I would say, I guess who's historically or currently responding to Never Ending Pasta Bowl? Just the bigger picture question there is if that's giving you any relief with that lower income consumer cohort.

Jeff Farmer: Thanks, I appreciate that. It's late in the call, so I'll try to be quick here. Can you guys just shed some light on that Olive Garden customer income cohort that's historically responded, or I would say, I guess who's historically or currently responding to Never Ending Pasta Bowl? Just the bigger picture question there is if that's giving you any relief with that lower income consumer cohort.

Jeff Farmer: Thanks, I appreciate that it's late in the call. So I'll try to be quick here can you guys. Just said shed some light on that olive garden customer incoming cohort. That's historically responded or I would say I guess who's historically or currently responding to never ending pasta Bowl just the bigger picture question Theres, if that's giving you any relief without.

Speaker Change #168: Lower income consumer cohort.

Speaker Change #168: Yeah.

Raj Vennam: Hey, Jeff, interestingly, when we actually do Never Ending Pasta Bowl, we actually get a lift from consumers across income spectrum all the way up to 150,000. Yes. So it's not necessarily a bigger lift for lower income versus the middle income. It seems like middle income is just as sensitive to some of these price points. And so historically this has shown that it actually helps us with some new guests and some infrequents. So that's really where we get the benefit. It's more about those guests where Rick addressed earlier that that's where we might be missing some. And Never Ending Pasta Bowl really gets them back and then they can see that the menu prices are actually pretty low compared to other places.

Jeff Farmer: Hey, Jeff Interestingly, when we actually do now renting possible, we actually get income it lift from consumers that cross income spectrum, all the way up to 150 K, yes, so it's not necessarily a bigger lift for lower income watches the middle income. It seems like middle income is just that sensitive to some of these price points and so.

Speaker Change #170: And historically this has shown that it actually helps us with some new guests in some infrequent. So that's really where we get the benefit is more about those guests where it got addressed earlier that that's where we might be missing something and now what I'm ending possible really gets them back.

Speaker Change #171: Okay. That's helpful and you can see that the menu prices are actually pretty low compared to other places.

[Analyst]: Thank you for that. Just as a quick follow-up, in terms of thinking about Olive Garden's diminished market share over the last couple of quarters, do you think that not fully capturing that individual or small party delivery opportunity has contributed to that diminished market share? Dynamic.

Jeff Farmer: Thank you for that. Just as a quick follow-up, in terms of thinking about Olive Garden's diminished market share over the last couple of quarters, do you think that not fully capturing that individual or small party delivery opportunity has contributed to that diminished market share? Dynamic.

Speaker Change #172: Thank you for that and just as a quick follow up in terms of thinking about olive garden's diminished market share over the over the last couple of quarters.

Speaker Change #173: Do you think that not fully capturing that individual or small party delivery opportunity has contributed to that diminished market share market share dynamic.

Rick Cardenas: Jeff, I just want to be clear. Whenever we hear diminished market share, it sounds like we're losing share. The only quarter Olive Garden has had lower traffic than the industry in, I think, the last five years is the quarter we just ended, and it wasn't that much different. So, yes, this quarter we lost a little bit of traffic share, but we're still at the 50th percentile. So there were some others that did really well to drive some traffic that moved the average a little bit. Now, could it be that some of these delivery customers that didn't have a chance to get Olive Garden are part of that reason? Perhaps. But you know, saying that we've lost share, I think is not really what we believe. We did lose it in one quarter over the last few years.

Speaker Change #173: Hey, Jeff I, just wanted to be clear when whenever we hear diminished market share. It sounds like we're losing share the only quarter Olive garden has had lower traffic than the industry and I think the last five years is the quarter. We just ended and it wasn't that much different.

Speaker Change #174: So yes this quarter, we lost a little bit of traffic share, but we're still at the 50th per center.

Speaker Change #175: So there were some others that did really well to drive some traffic that moved the average a little bit.

Speaker Change #176: Now could it be that some of these delivery customers that didn't have a chance to get olive garden are a part of that reason perhaps.

Speaker Change #176: But you know the the the.

Speaker Change #178: Saying that we've lost share I think is is not really.

Speaker Change #178: What we believe we did lose it in one quarter over the last few years. So yeah, just quickly 100% fair I should have worded that diminished market share outperforming okay. What I should have said so fair no problem. Thank you for the responses alright, thanks, Jeff.

[Analyst]: So, yeah, just quickly, 100% fair. I should have worded that diminished market share, outperformance, what I should have said.

Jeff Farmer: So, yeah, just quickly, 100% fair. I should have worded that diminished market share, outperformance, what I should have said. So, fair. No problem. Thank you for the response. Thank you.

Rick Cardenas: So, fair. No problem.

[Analyst]: Thank you for the response. Thank you.

Rick Cardenas: Thanks, Jeff.

Operator: Thank you. Next question is coming from Danilo Gargiulo from Bernstein. Your line is out live.

Speaker Change #179: Thank you next question is coming from do you have a cadre of love from Bernstein. Your line is that right.

Speaker Change #178: Yeah.

[Analyst]: Thank you. You were mentioning that the greater political uncertainty may have affected the consumer sentiment, specifically in July. Can you make comments on how you think this tighter migration controls that we are hearing from both parties actually might be affecting labor cost for your brands? And what do you expect the labor cost to be in 2025?

Danilo Gargiulo: Thank you. You were mentioning that the greater political uncertainty may have affected the consumer sentiment, specifically in July. Can you make comments on how you think this tighter migration controls that we are hearing from both parties actually might be affecting labor cost for your brands? And what do you expect the labor cost to be in 2025?

Speaker Change #180: Thank you.

Speaker Change #181: You were mentioning that the greater political uncertainty may have affected the consumer sentiment in July can you make comments on how you're seeing these tighter maybe there's some controls have you been getting from both parties that might be affecting labor cost for your brands and what would you expect labor cost to being 25.

Speaker Change #181: Okay.

Raj Vennam: Danilo, labor costs are actually holding up pretty well. I think when we look at the current quarter, our overall labor inflation was around 4%. Hourly labor wages were 3.9%, which has come off of really high numbers a couple of years ago. I think from an applicant flow, we're seeing a lot higher applicants. So we actually feel really good about the labor situation and the availability of labor. When we look at overall for the full year, we're still expecting our labor to be more in that 4% range, which is not that different from pre-COVID. So we don't see that as an issue, at least in the near term or for the rest of the fiscal year.

Speaker Change #182: Okay, Daniela labor costs that are actually holding up pretty well I think when we when we look at the current quarter are our overall labor inflation was around 4% hourly labor wages water, 3.9%. We just come off of a really high number say, a couple of years ago and and and.

I think you know from an applicant flow, we're seeing a lot higher our applicants and and so we actually feel really good about the labor situation.

And Oh on the availability of labor and when we look at overall for the full year, we're still expecting our labor to be more in that 4% range, which is not that different from pre COVID-19.

Speaker Change #182: And and so we we don't see a dart as an issue at least in the near term I'm all for the rest of the fiscal year.

[Analyst]: Great. Can you make also some comments on the actions you're taking to maybe address some of the challenges that you're seeing in the fine dining segment?

Danilo Gargiulo: Great. Can you make also some comments on the actions you're taking to maybe address some of the challenges that you're seeing in the fine dining segment?

Speaker Change #183: Great and can you make some comments on the actions you've taken to maybe address some of the challenges you are seeing in the fine dining segment.

Rick Cardenas: Yeah, Danilo, you know, you think about fine dining sometimes you've got an economy at when you've got lower, you know, kind of consumers that were more aspirational going into fine dining than are not in there now. It's not something that we really want to go after very hard. We believe that the fine dining consumer is a very, very discerning consumer. And I will say that when you look at across all of our brands, but even especially in fine dining, the consumer that is a frequent consumer to us is not stopping coming. The people that know what you get when you go to fine dining are still coming to fine dining. It's some of those that may have come during times that they wanted to be aspirational. That said, we brought Wagyu and Wine back at The Capital Grille. It's back right now.

Speaker Change #183: Yeah, Danilo I'm, you know think about fine dining sometimes you've got an economy at the at that when you've got lower that.

Speaker Change #184: You know kind of consumers that were more aspirational going into fine dining then they're not they're not in there now it's it's not something that we really want to go after very hard we believe that the fine dining consumer is a very a very discerning consumer and I will say that when you look at across all of our brands.

Speaker Change #184: But even in especially in fine dining the consumer that is a frequent consumer to us is not stopping coming.

Speaker Change #184: The people that know what you get when you go to fine dining are still coming to fine dining at some of those that that may have come during times that are they wanted to be aspirational that said, we brought wagyu and wind back at at capital grille. Its its back right. Now is the first time I think in five years, we've run wagyu in wine.

Rick Cardenas: It's the first time I think in five years we've run Wagyu and Wine. And that's a great choice of one of three great Wagyu burgers and some great glasses of wine for a good price point. So you know, that might get some of those consumers to come in and see. Excuse me, but you know, sometimes you don't want to market to people to really change your brand when you've got these great discerning consumers that come to our restaurants and they're still coming.

It's the first time I think in five years we've run Wagyu and Wine. And that's a great choice of one of three great Wagyu burgers and some great glasses of wine for a good price point. So you know, that might get some of those consumers to come in and see. Excuse me, but you know, sometimes you don't want to market to people to really change your brand when you've got these great discerning consumers that come to our restaurants and they're still coming.

Speaker Change #184: That's a great wag choice of one of three great Wagyu burgers.

Speaker Change #184: And are great and some great glasses wine for a good price point. So you know that might get some of those consumers to come in and see [laughter] excuse me, but you know sometimes you don't want to market to people to really change your brand when you've got these great discerning consumers that come to our restaurants and they're still coming.

Speaker Change #184: Yeah.

[Analyst]: Excellent. Thank you.

Danilo Gargiulo: Excellent. Thank you.

Speaker Change #184: Excellent. Thank you.

Speaker Change #184: Okay.

Operator: Thank you. Next question today is coming from Lauren Silberman from Deutsche Bank. Your line is now live.

Speaker Change #184: Thank you next question today is coming from Lauren Silberman from Deutsche Bank. Your line is that life.

Courtney Aquila: Hey guys, appreciate the time. So there's obviously increased demand for value across the industry with Never Ending Pasta Bowl. Are you seeing a higher mix or take rate than you've seen historically on the promo just given that demand for value?

Lauren Silberman: Hey guys, appreciate the time. So there's obviously increased demand for value across the industry with Never Ending Pasta Bowl. Are you seeing a higher mix or take rate than you've seen historically on the promo just given that demand for value?

Lauren Silberman: Hey, guys. Appreciate the time, so theres, obviously increased demand for value across the industry with never ending pasta Bowl are you seeing a higher mix or take rate than you've seen historically on the promo just given that demand for value.

Rick Cardenas: Yeah, Lauren, we are seeing a little bit more, little bit more preference. Not dramatically more preference, but we are seeing an increase in preference in the buy up. So the add on for Never Ending Pasta Bowl. Now there are some parts of the country that we're seeing a lot of preference because it's a better value. Even though the price point is tiered, it's still a great value. And so yeah, there is a little bit of more people coming because of the value, but it's performing at our expectations.

Speaker Change #186: Yeah, Lauren we are seeing a little bit more little bit more preference not not dramatically more preference, but we are seeing an increase in preference in the buy up so the add on.

Speaker Change #187: For never ending Pasta Bowl now there are some parts of the country that we're seeing a lot of preference because it's a better value even though the price point is tiered it's still a great value.

Speaker Change #187: And so yeah, there is a little bit of more people coming because of the value.

Speaker Change #187: But it's it's performing at our expectations.

Courtney Aquila: Great. And then just one follow-up on the delivery side. So Olive Garden off-prem is already in the mid-20% range without delivery. Any additional color on how you're thinking about the potential incrementality to off-premises delivery and how much this can add to the long-term off-prem run rate?

Lauren Silberman: Great. And then just one follow-up on the delivery side. So Olive Garden off-prem is already in the mid-20% range without delivery. Any additional color on how you're thinking about the potential incrementality to off-premises delivery and how much this can add to the long-term off-prem run rate?

Speaker Change #188: Great and then just one follow up on the delivery side, the olive garden off premise already in the mid 20% range without delivery any additional color on how you're thinking about the potential increments to off premise with delivery and how that how much that can add to a long time off Prem run rate.

Rick Cardenas: Yeah, Lauren, what I would say is we're going to learn a lot from the pilot. We're going to learn a lot while it builds. I will say we believe this will be incremental in some way. It's not every delivery order will be incremental, but there are consumers that have wanted Olive Garden delivered for small order for years. So we know that this will be some incremental sales out of this. We will learn from the pilot. We will learn from the first, you know, hundred or so restaurants that roll out after the pilot and keep going from there. But we believe that over time this will continue to build and will be highly incremental.

Speaker Change #189: Yeah, Lauren what I would say is we're going to learn a lot from the pilot we're going to learn a lot while it builds I will say, we believe this will be incremental in some way, it's not not every or delivery order will be incremental but there are consumers that have wanted olive garden delivered for small order for years. So we know that there.

Speaker Change #189: Will we there will be some incremental sales out of this we will learn from from the pilot we will learn from the first you know 100, or so restaurants that rollout after the pilot and keep going from there.

Speaker Change #189: But our we believe that over time this will continue to build and it will be a highly incremental.

Courtney Aquila: Great. Does the pilot include 100 restaurants? Is that what you're saying?

Lauren Silberman: Great. Does the pilot include 100 restaurants? Is that what you're saying?

Speaker Change #189: Great is the pilot include Andre restaurants that you were saying.

Rick Cardenas: The pilot, we plan on having about probably about 100 restaurants in the pilot in Q2, and then we're going to leave it there through the holidays. Then if all the systems and everything works, then that's when the rollout will start. Now, getting to 100 restaurants means that the technology is working. So we're going to start very slowly in maybe five or six restaurants in one market to test the technology and then build from there, but build pretty quickly to the 100 and then kind of stop the pilot, not stop the pilot, but stop expanding in the pilot until after the holidays.

Speaker Change #190: Ah the pilot, we we plan on having about 100, probably about 100 restaurants in the pilot in the second quarter and then we're going to leave it there through the holidays.

Speaker Change #190: And then you know if all the systems and everything works.

Speaker Change #190: Then that's when the rollout will start now getting to 100 restaurants means that the technology is working so we're gonna start very slowly.

Speaker Change #190: And you know, maybe five or six restaurants in one market to test the technology in and build from there, but build pretty quickly to the 100, and then kind of stopped the pilot and not the stop start to pilot the stop expanding in a pilot until after the holidays.

Courtney Aquila: Gotcha. Thank you very much.

Lauren Silberman: Gotcha. Thank you very much.

Speaker Change #191: Gotcha. Thank you very much.

Rick Cardenas: Sure.

Speaker Change #190: Yeah.

Operator: Thank you. Next question today is coming from Andy Barish from Jefferies. Your line is now live.

Speaker Change #192: Thank you. Your next question today is coming from Andy Barish from Jefferies. Your line is now live.

Raj Vennam: Hey, guys.

Andy Barish: Hey, guys. Yeah, just wanted to maybe finish up. On Never Ending Pasta Bowl. Just kind of moving it up. How do you see the life cycle. Kind of that promotion, you know, as it starts to lap the year ago launch and, you know, I guess with the new. Sauce, do you expect, you know, things? To continue, and then also just some color on the comparisons from a year ago? Just, does October and November get a little bit tougher than September?

Andy Barish: Hey, guys, Yeah, just wanted to.

[Analyst]: Yeah, just wanted to maybe finish up.

Raj Vennam: On Never Ending Pasta Bowl. Just kind of moving it up. How do you see the life cycle.

Andy Barish: Maybe finish up on never ending pasta Bowl just kind of moving it up how do you see about lifecycle kind of a bad promotion as it starts to lap a year ago launch and.

[Analyst]: Kind of that promotion, you know, as it starts to lap the year ago launch and, you know, I guess with the new.

Speaker Change #194: You know I guess I guess with the new the new source do you expect.

Raj Vennam: Sauce, do you expect, you know, things?

[Analyst]: To continue, and then also just some color on the comparisons from a year ago?

Speaker Change #194: Now things to continue and then also.

Just some color around the comparisons from a year ago.

Raj Vennam: Just, does October and November get a little bit tougher than September?

Speaker Change #195: October and November I get a little bit tougher than September.

Rick Cardenas: Andy? I'll talk about the length of Olive Garden's Never Ending Pasta Bowl. So, yes, we added four weeks to last year. It was three weeks more than our plan because we had always planned to add a few more weeks over time to Never Ending Pasta Bowl. Now it is a 12-week promotion. So we're doing some things to kind of juice it up during the time. One of them is adding this new sauce, and we're adding the media to introduce the new sauce, which will coincide with last year's launch of Never Ending Pasta Bowl. That said, you know, it probably will wear off a little bit towards the end when last year's Never Ending Pasta Bowl was still going stronger. But we believe that Never Ending Pasta Bowl is better than not having Never Ending Pasta Bowl during that time right before Thanksgiving.

Andy Barish: So Andy Oh, I'll talk about the the length of olive garden's never any possible. So yes, we added four weeks to last year. It was three weeks more than our plan because we had always planned to add a few more weeks overtime to never any possible now it is a 12 week promotion. So we're doing some things to kind of <unk>.

Andy Barish: Set up during the time one of them is adding this new source.

Andy Barish: And we're adding the media to introduce the new sauce, which will coincide with last year's launch of never ending pasta Bowl.

Speaker Change #196: That said you know it probably will where we're off a little bit towards the end when when are the last year's never any possible was still going stronger, but we believe that never ending pasta bowl is better than not having never ending pasta bowl during that time right before the outbreak before Thanksgiving. So.

Rick Cardenas: So we don't anticipate having every week that we run Never Ending Pasta Bowl this year being positive last year because probably towards the tail end of this year's Never Ending Pasta Bowl, it's going to still be running on a little bit of strength of last year's Never Ending Pasta Bowl. And I'll let Raj talk about kind of the forward kind of compares.

So we don't anticipate having every week that we run Never Ending Pasta Bowl this year being positive last year because probably towards the tail end of this year's Never Ending Pasta Bowl, it's going to still be running on a little bit of strength of last year's Never Ending Pasta Bowl. And I'll let Raj talk about kind of the forward kind of compares.

Speaker Change #196: We don't anticipate.

Raj: Having every week that we run out of any possible this year being positive to last year, because probably towards the tail end of this year is never any possible, it's going to still be running on a little bit of strength of last year's net any P. B and I'll, let Raj talk about kind of the the the forward kind of compares.

Raj Vennam: Yes, I think on the when you think about where we were last year, we started to see some softness as we got into the fall of last year, especially as we got into mid to late October across all our brands. And in fact, last year, Never Ending Pasta Bowl preference went up significantly from the year before, and that probably helped that Never Ending Pasta Bowl hold up well. But outside of Olive Garden, we started to see other brands did see some softness as we get into October and then into November. So there is the compares actually get a little bit better. Not significantly though, but there was some softness last year. Thank you.

Raj: Yeah, I think on the when you think about where we were last year, we started to see some softness as we got into the fall of last year, especially as we get into mid to late October across all our brands and in fact last year now running possible preference went up significantly from the year before and that that's.

Raj: Probably helped that never ending possible hold up well, but outside of Olive garden. We saw we started to see other brands did see some softness as we get into October.

Raj: October and then into November so that is the compares to actually get a little bit better not significantly, though but there wasn't some softness last year.

Raj: Yeah.

Speaker Change #197: Thank you.

Operator: Thank you. Next question is coming from John Ivankoe from J.P. Morgan. Your line is now live.

Speaker Change #197: Thank you next question is coming from Johnny Wankel from JP Morgan. Your line is now live.

Hi, Thank you when you look at you know olive garden's performance over the last couple of quarters, what really distinguishes in your mind, you know kind of the better markets from the slower markets, maybe even within those markets and what kind of distinguish US you know a better store within a store. That's a that's not is performing as well.

[Analyst]: When you look at Olive Garden performance over the last couple of quarters, what really distinguishes in your mind kind of the better markets from the slower markets, maybe even within those markets? What kind of distinguishes a better store than a store that's not as performing as well? Is it income driven? Is it demographics driven? Or there may be certain areas of the country where you have a lot more incremental competition. Is there a way for us to kind of look below the averages and say, hey, here's kind of a class of underperforming stores? And more interestingly, do you have anything yourselves, any tools that you can do to pull some of the underperforming stores closer to average or above average?

John Ivanko: When you look at Olive Garden performance over the last couple of quarters, what really distinguishes in your mind kind of the better markets from the slower markets, maybe even within those markets? What kind of distinguishes a better store than a store that's not as performing as well? Is it income driven? Is it demographics driven? Or there may be certain areas of the country where you have a lot more incremental competition. Is there a way for us to kind of look below the averages and say, hey, here's kind of a class of underperforming stores? And more interestingly, do you have anything yourselves, any tools that you can do to pull some of the underperforming stores closer to average or above average?

Speaker Change #198: And then can we is it income driven is it demographics driven or are there maybe certain areas of the country, where you have a lot more incremental competition is there a way for us to kind of look below the averages and say hey, here's kind of a class of underperforming stores and more interestingly is do you have anything yourselves any tools like <unk>.

Speaker Change #199: You can do to pull some of the underperforming stores closer to average or above average.

Rick Cardenas: Yeah, John, I'll use Olive Garden as the example since it's a big part of our system. But let's just, in geography, there are parts of the country that actually were softer than other parts of the country. So Florida, for example, soft. Texas, a little soft in a quarter. You know, Florida, if you think about the travel component I mentioned and if you listen to the theme parks and you listen to Disney and what happened in the summer, it was a slower summer. Texas, as I said, we had a lot of storms, got the hurricane hit in Houston. We have over 60 restaurants in Houston across all of Darden. That said, when you really look at performance across geography, the difference is the quality and commitment of the management team and are they executing our standards the way we're supposed to execute our standards?

Speaker Change #200: Yeah, John I'll I'll use Olive garden is the example, since its you know a big part of our system, but let's just in geography. There are parts of the country that actually were softer than other parts of the country. So Florida for example.

Speaker Change #200: Texas is a little soft in the quarter. You know you know, Florida. If you think about the travel component I mentioned and if you listen to the theme parks and you listen to the Disney and what would happen in the summer.

Speaker Change #201: It was a slower summer Ah, Texas as I said, we had a lot of storms get the hurricane hidden Houston, we have over 60 restaurants in Houston across Olive Garden that said when you really look at performance across geography. The difference is the quality and commitment of the management team.

Speaker Change #202: And are they executing our standards the way we're supposed to execute our standards I'll give you. The the you know one olive garden's has been focusing on offering our guests a refill we know that if you're offered a refill whether or not you accept the refill your value your intent to return everything else goes way up if.

Rick Cardenas: I'll give you the one, you know. Olive Garden has been focusing on offering a guest a refill. We know that if you're offered a refill, whether or not you accept the refill, your value, your intent to return, everything else goes way up. If you're not, it doesn't. So that, we know, is one of the big drivers of Olive Garden performance at Longhorn. If your steak is cooked correctly, and by the way, they do a great job in cooking the steaks correctly. If it's cooked correctly, your intent to return is huge. If it's not, it's a lot lower. So I will tell you that if the management team is trained and ready to go and the general manager or the managing partner is leading that team to our standards, they do really well. If they don't, then they don't.

I'll give you the one, you know. Olive Garden has been focusing on offering a guest a refill. We know that if you're offered a refill, whether or not you accept the refill, your value, your intent to return, everything else goes way up. If you're not, it doesn't. So that, we know, is one of the big drivers of Olive Garden performance at Longhorn. If your steak is cooked correctly, and by the way, they do a great job in cooking the steaks correctly. If it's cooked correctly, your intent to return is huge. If it's not, it's a lot lower. So I will tell you that if the management team is trained and ready to go and the general manager or the managing partner is leading that team to our standards, they do really well. If they don't, then they don't.

Speaker Change #202: We're not it doesn't so that we can we know is one of the big drivers of Olive garden performance at Longhorn if your stake is cooked correctly and by the way they do a great job in cooking mistakes correctly, if it's cooked correctly. Your intent to return is huge if it's not.

Speaker Change #202: It's a lot lower so I will tell you that if the management team is trained and ready to go.

Speaker Change #202: And the general manager of the managing partners, leading that team to our standards. They do really well if they don't then they don't and so that we've got our directors of operations in those restaurants to help those managers, but you know we offer the same menu across all of our restaurants, where we hire the same people across all of our restaurants is that management team that makes.

Rick Cardenas: And so that we've got our directors of operations in those restaurants to help those managers. But, you know, we offer the same menu across all of our restaurants. We hire the same people across all of our restaurants. It's that management team that makes the difference. And we believe we have the best management teams in the industry and the best general managers in the business. So we're really confident that we continue to execute. We win.

And so that we've got our directors of operations in those restaurants to help those managers. But, you know, we offer the same menu across all of our restaurants. We hire the same people across all of our restaurants. It's that management team that makes the difference. And we believe we have the best management teams in the industry and the best general managers in the business. So we're really confident that we continue to execute. We win.

Speaker Change #202: The difference and we believe we have the best management teams and in the industry and the best General managers in the business. So we're really confident that we continue to execute we went.

[Analyst]: Thank you.

John Ivanko: Thank you.

Speaker Change #203: Thank you.

Operator: Thank you. Next question is coming from Jim Sanderson from Northcoast Research. Your line is now live.

Speaker Change #204: Thank you. Your next question is coming from Jim Sanderson from Northcoast Research. Your line is now live.

Rick Cardenas: Hey, thanks for the question. I wanted to go back to the discussion on pricing. I think that you had taken down your create your own pasta promotion price point by about 4% over the summer. Just wondering if you could tell us a little bit more about how that worked out in the quarter and whether you expect to feature more discounted promotions going forward, similar to what we saw over the summer. Hey, Jim, you know, if you think about create your own pasta, we had priced it up kind of late in last fiscal year to, I think, a little bit over $13. And we thought, you know what, maybe we should have kept it at $12.99. So it's actually at $12.99 on our menu today. So it wasn't. I don't think it was a 4% reduction.

Jim Sanderson: Hey, thanks for the question. I wanted to go back to the discussion on pricing. I think that you had taken down your create your own pasta promotion price point by about 4% over the summer. Just wondering if you could tell us a little bit more about how that worked out in the quarter and whether you expect to feature more discounted promotions going forward, similar to what we saw over the summer.

Jim Sanderson: Hey, Thanks for the question I wanted to go back to the discussion on pricing I think that.

Jim Sanderson: You had taken down your create your own pasta promotion price point by about 4% over the summer just wondering if you could tell us a little bit more about how that worked out in the quarter and whether you expect to.

Speaker Change #206: Teacher more discounted promotions going forward similar to what we saw over the summer.

Rick Cardenas: Hey, Jim, you know, if you think about create your own pasta, we had priced it up kind of late in last fiscal year to, I think, a little bit over $13. And we thought, you know what, maybe we should have kept it at $12.99. So it's actually at $12.99 on our menu today. So it wasn't. I don't think it was a 4% reduction.

Speaker Change #206: Hey, Jim you know if you think about create your own pasta, we had priced it up kind of late in last fiscal year, two I think a little bit over $13 and we thought you know what maybe we should have kept it at 12 99. So it's actually at 12 99 on our menu today. So it wasn't I don't think it was up 4%.

Speaker Change #207: <unk>, maybe it was but you know it went down maybe 40 or 50 cents so probably so.

Rick Cardenas: Maybe it was, but it went down maybe $0.40, $0.50. So probably so. But we still took our pricing across. And so we decided that Never Ending Pasta Bowl, which is a great value offer every day, probably it makes more sense at $12.99 than at $13.49. So we were able to move that price other places. So when you think about what we're doing in the future with it, we believe it's going to stay around that price point. But we'll continue to refresh that offer and continue to provide reasons for guests to come and Create Your Own Pasta at $12.99, which is not limited time. It's every day.

Maybe it was, but it went down maybe $0.40, $0.50. So probably so. But we still took our pricing across. And so we decided that Never Ending Pasta Bowl, which is a great value offer every day, probably it makes more sense at $12.99 than at $13.49. So we were able to move that price other places. So when you think about what we're doing in the future with it, we believe it's going to stay around that price point. But we'll continue to refresh that offer and continue to provide reasons for guests to come and Create Your Own Pasta at $12.99, which is not limited time. It's every day.

Speaker Change #207:

Speaker Change #207: But we still took our pricing across and so we decided that never any possible with us which is a great value offer every day, probably it makes more sense at 12 99, then at 13 49.

Speaker Change #207: So we were able to move that price other places.

Speaker Change #208: Uh huh.

Speaker Change #208: So when you think about what we're doing in the future with it we believe it's going to stay around that price point, but we'll continue to refresh that that offer and continue to add provide reasons for guests to come in get create your own pasta at 12, 99, which is not limited time its everyday.

Rick Cardenas: But we'll also continue to talk about some of the great value we have on the rest of the menu and maybe some limited time offers to get people in so they can see the great value on the rest of the menu. If there's any other things on pricing. Raj, did I miss anything on the price?

But we'll also continue to talk about some of the great value we have on the rest of the menu and maybe some limited time offers to get people in so they can see the great value on the rest of the menu. If there's any other things on pricing. Raj, did I miss anything on the price?

But we will also continue to talk about some of the great value. We have on the rest of the menu and maybe some limited time offers to get people and so they can see the great value on the rest of the menu. If there's any other things on pricing a rush it did I Miss anything on the pricing I think he got it right.

Raj Vennam: I think you got it.

Rick Cardenas: Yeah. Just a quick follow-up. When you did normalize that price point back to $12.99, did you notice any consumer reaction, good or bad, given? Yes, we did. You know, it performed better than it was doing at $13 plus. Preference went up a little bit, and our performance in June was, I think, a little bit better than it was in May at Olive Garden. Yep. Understood. Last quick question. Can you give us an estimate of the dollar budget for G&A for the year, given you had some exceptional expenses last year for comparison purposes?

Jim Sanderson: Yeah. Just a quick follow-up. When you did normalize that price point back to $12.99, did you notice any consumer reaction, good or bad, given?

Speaker Change #209: Just a quick follow up when you did normalize that price point back to 12 99 did you notice any consumer reaction good or bad you haven't yet yes. We did you know it it performed better than it was doing at 13, plus a preference went up a little bit and ARPA.

Rick Cardenas: Yes, we did. You know, it performed better than it was doing at $13 plus. Preference went up a little bit, and our performance in June was, I think, a little bit better than it was in May at Olive Garden.

Speaker Change #209: <unk> in June was I think a little bit better than it was in may.

Speaker Change #210: So at Olive Garden Yep.

Jim Sanderson: Yep. Understood. Last quick question. Can you give us an estimate of the dollar budget for G&A for the year, given you had some exceptional expenses last year for comparison purposes?

Speaker Change #211: Understood last quick question can you give us an estimate of the dollar budget for G&A for the year. Given you had some exceptional expenses last year for comparison purposes.

Raj Vennam: Yeah, I think we said this in the initial guidance. It hasn't changed since then. We're probably looking at somewhere close to $450 million with Q1 being $125 million. You can expect the rest to be more in that $105 to 110 million any given quarter.

Speaker Change #212: Yeah, I think we as we I think we said this in their initial guidance. He hasn't changed since then we're probably looking at somewhere close to $450 million with the first quarter being 125, you can expect that has to be more in that one O flight to 110 any given quarter.

[Analyst]: Very good.

Jim Sanderson: Very good. Thank you very much.

Rick Cardenas: Thank you very much. Thank you.

Speaker Change #212: Very good thank you very much.

Raj Vennam: Thank you.

Speaker Change #211: Okay.

Operator: Next question is coming from Brian Vaccaro from Raymond James. Your line is now live.

Speaker Change #214: Thank you next question is coming from Brian Vaccaro from Raymond James Your line is that life.

[Analyst]: Hi, thanks so much. Just two quick ones for me on your existing off premise business at Olive Garden. Can you remind us what percent of that is? Small order takeout versus larger group or catering type orders?

Brian Vaccaro: Hi, thanks so much. Just two quick ones for me on your existing off premise business at Olive Garden. Can you remind us what percent of that is? Small order takeout versus larger group or catering type orders?

Brian Vaccaro: Hi, Thanks, so much just two quick ones for me.

Brian Vaccaro: This thing off premise business at Olive Garden can you remind us what percent of that is small order takeout versus larger group or a catering type orders.

Rick Cardenas: Yeah, it's about 80% small order and about 20% kind of catering side.

Speaker Change #216: Yeah, it's it's about 80% small order and about 20% kind of catering set.

[Analyst]: Okay, great. And just to clarify on your comments on Never Ending Pasta, Rick, did you say that the overall sales mix on NEP was up or was that trade up, you know, adding on proteins? That was up. And just curious, what percentage of your customers end up trading up and adding proteins versus staying at that starting price point?

Brian Vaccaro: Okay, great. And just to clarify on your comments on Never Ending Pasta, Rick, did you say that the overall sales mix on NEP was up or was that trade up, you know, adding on proteins? That was up. And just curious, what percentage of your customers end up trading up and adding proteins versus staying at that starting price point?

Speaker Change #217: Okay, great and just to clarify on your comments on Neverending Pasta Ray did you say that the overall sales mix on any P was up or was that trade up adding on proteins that was that and just curious what percentage of your customers end up trading up and adding proteins versus staying at that starting price point.

Rick Cardenas: Yes, I would say two things. One, the overall preference is up slightly for Never Ending Pasta Bowl in some markets of the country. It's up a lot. But it's up slightly. But the trade-up is up more than our overall preference is up. And the trade-up is 60 to 65% of the people order the protein on top of the pasta, which is up versus last year.

Speaker Change #218: Yeah, I would say two things one the overall preferences up slightly for never any possible in some markets of the country, it's up a lot, but it's up slightly.

Speaker Change #219: But the trade up is up more than our overall preferences up and it trade.

Speaker Change #220: The trade up is about 65, 60% to 65% of the people order the order the protein on top of the the the pasta, which is up versus last year.

[Analyst]: Perfect.

Brian Vaccaro: Perfect. Thank you.

Raj Vennam: Thank you.

Speaker Change #221: Perfect. Thank you.

Rick Cardenas: Sure.

Speaker Change #220: Sure.

Operator: Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over to Courtney for any further closing comments.

Thank you we've reached end of our question and answer session I'd like to turn the floor back over to Courtney for any further or closing comments.

Speaker Change #220: Okay.

Courtney Aquila: That concludes our call. I want to remind you that we plan to release the second quarter results on Thursday, 19 December before the market opens, with the conference call to follow. Thank you for participating in today's call.

Courtney Aquila: That concludes our call I want to remind you that we plan to release, our second quarter results on Thursday December 19th before the market opens with a conference call to follow thank you for participating in today's call.

[Analyst]: Thank you.

Brian Bittner: Thank you.

Operator: That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Speaker Change #222: Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.

[Analyst]: It.

It.

Q1 2025 Darden Restaurants Inc Earnings Call

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