Q4 2026 Brinker International Inc Earnings Call

August 12, 2026

Operator: Good day, and welcome to the Brinker Q4 2026 earnings call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Kim Sanders, Vice President of Investor Relations. Ma'am, the floor is yours.

Operator: Good day, and welcome to the Brinker Q4 2026 Earnings CXall. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Kim Sanders, Vice President of Investor Relations. Ma'am, the floor is yours.

Speaker #1: Good day, and welcome to the Brinker Q4 F26 earnings call. At this time, all participants have been placed in a listen-only mode. The floor will be open for questions and comments following the presentation.

Speaker #1: It is now my pleasure to turn the floor over to your host, Kim Sanders, Vice President of Investor Relations. Ma'am, the floor is yours.

Speaker #2: Thank you, Holly, and good morning, everyone. And thank you for joining us on today's call. Here with me today are Kevin Hochman, Chief Executive Officer, and President of BRINKER International and President of Chili's, and Michael Ware, Chief Financial Officer.

Kim Sanders: Thank you, Holly, and good morning, everyone, and thank you for joining us on today's call. Here with me today are Kevin Hochman, Chief Executive Officer and President of Brinker International and President of Chili's, and Mika Ware, Chief Financial Officer. Results for our fourth quarter were released earlier this morning and are available on our website at brinker.com. Kevin and Mika will first make prepared comments related to our strategic initiatives and operating performance.

Speaker #2: Results for our fourth quarter were released earlier this morning and are available on our website at brinker.com. As usual, Kevin and Michael will first make prepared comments related to our strategic initiatives and operating performance.

Speaker #2: Then we will open the call for your questions. Before beginning our comments, I would like to remind everyone of our safe harbor regarding forward-looking statements.

Kim Sanders: Then we will open the call for your questions. Before beginning our comments, I would like to remind everyone of our safe harbor regarding forward-looking statements. During our call, management may discuss certain items which are not based entirely on historical facts. Any such items should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Speaker #2: During our call, management may discuss certain items which are not based entirely on historical facts. Any such items should be considered forward-looking statements within the meaning of the private securities litigation reform act of 1995.

Speaker #2: All such statements are subject to risks and uncertainties which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include factors more completely described in this morning's press release, and the company's filings with the SEC.

Kim Sanders: All such statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include factors more completely described in this morning's press release and the company's filings with the SEC. On the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business and believes will provide insight into the company's ongoing operations. With that said, I will turn the call over to Kevin.

Speaker #2: And of course, on the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business and believes will provide insight into the company's ongoing operations.

Speaker #2: And with that said, I will turn the call over to Kevin.

Speaker #3: Thank you, Kim, and good morning, everyone. Thank you for joining us as we discuss our financial and operating performance for the fourth quarter. As well as provide guidance for fiscal 27.

Kevin Hochman: Thank you, Kim, and good morning, everyone. Thank you for joining us as we discuss our financial and operating performance for the fourth quarter, as well as provide guidance for fiscal 2027. Q4 Chili's same-store sales of +6% marked our 21st consecutive quarter of same-store sales growth and again, significantly outpaced the industry. This strong result was rolling a +24% from last year and a +15% from two years ago for a three-year cumulative comp of 50%. There are lots of different ways to look at our results, but the key conclusion is that Chili's turnaround is real. Fiscal 2026 saw this brand increase its lead as the number one casual dining traffic brand, and the results are sustaining year after year.

Speaker #3: Q4 Chili's same-store sales are up 6%, marking our 21st consecutive quarter of same-store sales growth, and again, significantly outpaced the industry. This strong result was rolling a plus 24% from last year, and a plus 15% from two years ago, for a three-year cumulative comp of 50%.

Speaker #3: There are lots of different ways to look at our results, but the key conclusion is that Chili's turnaround is real. Fiscal 26 saw this brand increase its lead as the number one casual dining traffic brand, and the results are sustaining year after year.

Kevin Hochman: There are lots of different ways to look at our results, but the key conclusion is that Chili's turnaround is real. Fiscal 2026 saw this brand increase its lead as the number one casual dining traffic brand, and the results are sustaining year after year.

Speaker #3: It's important to note in this difficult operating environment that, instead of using precious resources and investments on initiatives to drive short-term sales, we at Chili's focus our resources for long-term sustainable growth.

Kevin Hochman: It is important to note in this difficult operating environment that instead of using precious resource and investments on initiatives to drive short-term sales, we at Chili's focus our resource for long-term sustainable growth, improving food service and atmosphere, and the team member experience, as well as positioning our brand to be more relevant, easy, and distinctive. These experience improvements, coupled with our everyday value leadership, represented by a per person average spend that is $3 to $4 below competition, are supporting a powerful flywheel of traffic, sales growth, margin expansion, and reinvestment into our business. This steady approach is why the business will continue to win. The American consumer demands experience and great value, and they are showing up for those brands who consistently deliver that.

Speaker #3: Improving food service and atmosphere, and the team member experience, as well as positioning our brand to be more relevant, easy, and distinctive. These experience improvements, coupled with our everyday value leadership—represented by a per-person average spend that is $3 to $4 below competition—are supporting a powerful flywheel of traffic, sales growth, margin expansion, and then reinvestment into our business.

Kevin Hochman: These experience improvements, coupled with our everyday value leadership, represented by a per person average spend that is $3 to $4 below competition, are supporting a powerful flywheel of traffic, sales growth, margin expansion, and reinvestment into our business. This steady approach is why the business will continue to win. The American consumer demands experience and great value, and they are showing up for those brands who consistently deliver that.

Speaker #3: And this steady approach is why the business will continue to win. The American consumer demands experience and great value, and they are showing up for those brands who consistently deliver that.

Speaker #3: Third-party syndicated data confirms Chili's continues to be ranked in the top tier across key measures like value, quality, service, and overall experience. We still have room to improve, but our progress gives us confidence that we will sustain traffic gains and repeat business.

Kevin Hochman: Third-party syndicated data confirms Chili's continues to be ranked in the top tier across key measures like value, quality, service, and overall experience. We still have room to improve, but our progress gives us confidence that we will sustain traffic gains and repeat business. We are very appreciative and proud that Chili's is one of the small handful of brands the American consumer trusts and we are willing to increase their visits to. We will work hard for our guests to maintain both our value leadership and improving our guest experience year after year. Now I will give some updates on the Chili's business. We are now four months post Big Crispy launch, and we can share some more detail on how it is performing. The launch has been a success, over-delivering on our lofty estimates going in. We were selling 20 chicken sandwiches per restaurant per day pre-Big Crispy launch.

Speaker #3: We are very appreciative and proud that Chili's is one of the small handful of brands the American Consumer trusts and we're willing to increase their visits to.

Speaker #3: And we will work hard for our guests to maintain both our value leadership and to improve our guests' experience year after year. Now, I'll give some updates on the Chili's business.

Kevin Hochman: We will work hard for our guests to maintain both our value leadership and improving our guest experience year after year. Now I will give some updates on the Chili's business. We are now four months post Big Crispy launch, and we can share some more detail on how it is performing. The launch has been a success, over-delivering on our lofty estimates going in. We were selling 20 chicken sandwiches per restaurant per day pre-Big Crispy launch.

Speaker #3: We're now four months post-Big Crispy launch, and we can share some more detail on how it's performing. The launch has been a success, over-delivering on our lofty estimates going in.

Speaker #3: We were selling 20 chicken sandwiches per restaurant per day pre-Big Crispy launch. By the end of Q4, we were selling 55 sandwiches per restaurant per day.

Kevin Hochman: By the end of Q4, we were selling 55 sandwiches per restaurant per day, an increase of 175%, and that number continues to build in the current quarter. For perspective, the Big Crispy is bigger than the 2024 Big Smasher launch and the 2025 The Big QP Burger launch, and as you all know, those were two very successful launches. The customer reviews and social media comments have been excellent, declaring Chili's victorious for size, price, value, and taste versus fast food. The Big Crispy is now a signature sandwich and another important chapter in our Better Than Fast Food story that will continue to position Chili's uniquely as a restaurant destination. In addition to culinary upgrades, our team continues to deliver world-class marketing to drive traffic.

Speaker #3: An increase of 175%. And that number continues to build in the current quarter. For perspective, the Big Crispy is bigger than the 24 Big Smasher launch and the 25 Big QP launch.

Speaker #3: And as you all know, those were two very successful launches. The customer reviews and social media comments have been excellent, declaring Chili's victorious for size, price, value, and taste versus fast food.

Speaker #3: The Big Crispy is now a signature sandwich, and another important chapter in our better-than-fast-food story. That will continue to position Chili's uniquely as a restaurant destination.

Kevin Hochman: The Big Crispy is now a signature sandwich and another important chapter in our Better Than Fast Food story that will continue to position Chili's uniquely as a restaurant destination. In addition to culinary upgrades, our team continues to deliver world-class marketing to drive traffic.Q4 highlights include the successful Big Crispy launch, the remake of our famous 1985 Baby Back Ribs jingle commercial featuring pop star Lizzo, and a continued success with our Margarita of the Month program.

Speaker #3: In addition to culinary upgrades, our team continues to deliver world-class marketing to drive traffic. Q4 highlights include the successful Big Crispy launch, the remake of our famous 1985 baby back ribs jingle commercial featuring pop star Lizzo, and continued success with our Margarita of the Month program.

Kevin Hochman: Q4 highlights include the successful Big Crispy launch, the remake of our famous 1985 Baby Back Ribs jingle commercial featuring pop star Lizzo, and a continued success with our Margarita of the Month program. As a reminder, our marketing strategy is driving sales overnight and brand over time. It is clear the marketing is driving sales, but they are also doing an amazing job strengthening the brand's positioning over time. We are 2 and a half years removed from the initial viral cheese pull in early 2024, and YouGov's third-party data reported that Q4 was Chili's highest level of buzz across all cohorts ever recorded. Chili's is everywhere. It continues to be America's hottest restaurant brand, and the sustained relevance of the brand proves this repositioning has legs beyond one social event. Now let's talk about operations.

Speaker #3: As a reminder, our marketing strategy is driving sales overnight and building the brand over time. It's clear that marketing is driving sales, but they're also doing an amazing job strengthening the brand's positioning over time.

Kevin Hochman: As a reminder, our marketing strategy is driving sales overnight and brand over time. It is clear the marketing is driving sales, but they are also doing an amazing job strengthening the brand's positioning over time. We are 2 and a half years removed from the initial viral cheese pull in early 2024, and YouGov's third-party data reported that Q4 was Chili's highest level of buzz across all cohorts ever recorded.

Speaker #3: We are two and a half years removed from the initial viral cheese pull in early 24, and you've got third-party data reported that Q4 was Chili's highest level of buzz across all cohorts ever recorded.

Speaker #3: Chili's is everywhere. It continues to be America's hottest restaurant brand, and the sustained relevance of the brand proves this repositioning has legs beyond one social event.

Kevin Hochman: Chili's is everywhere. It continues to be America's hottest restaurant brand, and the sustained relevance of the brand proves this repositioning has legs beyond one social event. Now let's talk about operations.We continue to focus our efforts on both removing friction as well as improving restaurant throughput, as this is a key piece of our sustainable growth flywheel.

Speaker #3: Now let's talk about operations. We continue to focus our efforts on both removing friction as well as improving restaurant throughput. As this is a key piece of our sustainable growth flywheel, in addition to listening to our managers' ideas on how to make operations easier, we now have the North of Six team, our highest volume restaurant leaders, to formally source ideas from, too.

Kevin Hochman: We continue to focus our efforts on both removing friction as well as improving restaurant throughput, as this is a key piece of our sustainable growth flywheel. In addition to listening to our managers' ideas on how to make operations easier, we now have the North of Six team, our highest volume restaurant leaders, to formally source ideas from, too. I think the important thing to note is North of Six leaders typically have the additional perspective of increasing throughput because of their incredibly high volumes. We recently made some very significant changes to free up managers' time to coach teams to be with guests on the floor. The first is the ruthless simplification of our shift line checks, a set of tasks the manager is mandated to perform to know their team is ready to take on guests.

Kevin Hochman: In addition to listening to our managers' ideas on how to make operations easier, we now have the North of Six team, our highest volume restaurant leaders, to formally source ideas from, too. I think the important thing to note is North of Six leaders typically have the additional perspective of increasing throughput because of their incredibly high volumes. We recently made some very significant changes to free up managers' time to coach teams to be with guests on the floor.

Speaker #3: I think the important thing to note is north of six leaders typically have the additional perspective of increasing throughput because of their incredibly high volumes.

Speaker #3: We recently made some very significant changes to free up managers' time to coach teams to be with guests on the floor. The first is the ruthless simplification of our shift line checks, a set of tasks the managers mandated to perform to know their team is ready to take on guests.

Kevin Hochman: The first is the ruthless simplification of our shift line checks, a set of tasks the manager is mandated to perform to know their team is ready to take on guests.We have taken that bi-daily process down from eight pages to one page and freed up 30 minutes of manager time per day. Think about that as 22 years of manager time freed up annually across our system, and that is time much better spent side by side coaching their teams and in the dining room with our guests.

Speaker #3: We have taken that bi-daily process down from eight pages to one page, and freed up 30 minutes of manager time per day. Think about that as 22 years of manager time freed up annually across our system, and that's time much better spent side-by-side coaching their teams and in the dining room with our guests.

Kevin Hochman: We have taken that bi-daily process down from eight pages to one page and freed up 30 minutes of manager time per day. Think about that as 22 years of manager time freed up annually across our system, and that is time much better spent side by side coaching their teams and in the dining room with our guests. The second important change we made is upgrading HotSchedules, our tool managers use to schedule labor to make it easier to schedule the right number of team members per shift. We know the number one thing that can set up a shift for success is properly written labor schedules, and anything that makes the task easier to do correctly is a big win for our managers and improves our ability to take on more and more traffic.

Speaker #3: A second important change we made is upgrading hot schedules. Our tool managers used to schedule labor to make it easier to schedule the right number of team members per shift.

Kevin Hochman: The second important change we made is upgrading HotSchedules, our tool managers use to schedule labor to make it easier to schedule the right number of team members per shift. We know the number one thing that can set up a shift for success is properly written labor schedules, and anything that makes the task easier to do correctly is a big win for our managers and improves our ability to take on more and more traffic.Lastly, the VPs of operations have chosen their obsession metric for fiscal year 2027.

Speaker #3: We know the number one thing that can set up a shift for success is properly written labor schedules and anything that makes the task easier to do correctly is a big win for our managers and improves our ability to take on more and more traffic.

Speaker #3: And lastly, the VPs of Operations have chosen their obsession metric for fiscal year '27. This year, they have chosen traffic for a third year in a row, but have added a second metric: profit improvement.

Kevin Hochman: Lastly, the VPs of operations have chosen their obsession metric for fiscal year 2027. This year, they have chosen traffic for a third year in a row but have added a second metric, profit improvement. They chose a second to begin developing a stronger ownership culture on restaurant expense with things like R&M. We recently made profits a bigger percentage of their bonus structure, so it is even more important to field leadership to nail the flow through of all the incremental sales. Before I close out Chili's commentary, I do want to touch on one more important thing. Last quarter, I talked about a new initiative we have started with the objective of speeding up restaurant cycle time, meaning looking at everything that goes into the total time of kitchen prep and the dining experience and finding ways to remove time to serve as another traffic building block.

Kevin Hochman: This year, they have chosen traffic for a third year in a row but have added a second metric, profit improvement. They chose a second to begin developing a stronger ownership culture on restaurant expense with things like R&M. We recently made profits a bigger percentage of their bonus structure, so it is even more important to field leadership to nail the flow through of all the incremental sales. Before I close out Chili's commentary, I do want to touch on one more important thing.

Speaker #3: They chose a second to begin developing a stronger ownership culture on restaurant expense with things like R&M. We recently made profit a bigger percentage of their bonus structure, so it is even more important to field leadership to nail the flow-through of all the incremental sales.

Speaker #3: Before I close out Chili's commentary, I do want to touch on one more important thing. Last quarter, I talked about a new initiative we have started with the objective of speeding up restaurant cycle time, meaning looking at everything that goes into the total time of kitchen prep and the dining experience and finding ways to remove time to serve as another traffic building block.

Kevin Hochman: Last quarter, I talked about a new initiative we have started with the objective of speeding up restaurant cycle time, meaning looking at everything that goes into the total time of kitchen prep and the dining experience and finding ways to remove time to serve as another traffic building block.Most cycle time improvements may seem small but will continue to compound to make meaningful impacts as well as improve the guest and team member experience.

Speaker #3: Most cycle time improvements may seem small, but they will continue to compound to make meaningful impacts, as well as improve the guest and team member experience.

Kevin Hochman: Most cycle time improvements may seem small but will continue to compound to make meaningful impacts as well as improve the guest and team member experience. Remember, this is about attacking anything that gets in the way of a smooth dining experience, which should also improve overall guest satisfaction. The first of these initiatives have now been successfully rolled out, Supermarket Simple for loyalty reward redemption. In the newly rolled-out system, the guest simply puts the rewards telephone number into the Ziosk, and at the end of the meal, the discount that is available, like free chips and salsa, is automatically removed from the check. Then the Ziosk tells the guest how much they saved by being a rewards member, kind of like what happens when you put your loyalty number in at the supermarket.

Speaker #3: Remember, this is about attacking anything that gets in the way of a smooth dining experience, which should also improve overall guest satisfaction. The first of these initiatives has now been successfully rolled out.

Kevin Hochman: Remember, this is about attacking anything that gets in the way of a smooth dining experience, which should also improve overall guest satisfaction. The first of these initiatives have now been successfully rolled out, Supermarket Simple for loyalty reward redemption. In the newly rolled-out system, the guest simply puts the rewards telephone number into the Ziosk, and at the end of the meal, the discount that is available, like free chips and salsa, is automatically removed from the check.

Speaker #3: Supermarket Simple for loyalty reward redemption. In a newly rolled-out system, the guest simply puts their rewards telephone number into the Ziosk, and at the end of the meal, the discount that is available, like free chips and salsa, is automatically removed from the check.

Speaker #3: Then the Ziosk tells the guest how much they saved by being a rewards member, kind of like what happens when you put your loyalty number in at the supermarket.

Kevin Hochman: Then the Ziosk tells the guest how much they saved by being a rewards member, kind of like what happens when you put your loyalty number in at the supermarket.The Ziosk software upgrade will reduce the manager time needed to resolve check issues, deliver faster table turns, and more importantly, improve the guest dining experience.

Speaker #3: The Ziosk software upgrade will reduce the manager time needed to resolve check issues, deliver faster table turns, and more importantly, improve the guest dining experience.

Kevin Hochman: The Ziosk software upgrade will reduce the manager time needed to resolve check issues, deliver faster table turns, and more importantly, improve the guest dining experience. To summarize, Chili's long-term growth year after year is a result of deliberate set of choices we make to deploy resource and capital to improve the guest and team member experience while driving same-store sales now and over time. The traffic growth reinvestment flywheel continues to spin and create sustainable profitable growth. Now I will give a short update on Maggiano's. A reminder that given the success we have had focusing on Chili's, Maggiano's now only represents 8% of sales. For perspective, Chili's outside of the US, which is a licensed model, is expected to deliver 4% of Brinker profits this fiscal, and that will actually surpass Maggiano's profit contribution.

Speaker #3: To summarize, Chili's long-term growth year after year is a result of deliberate set of choices we make to deploy resource and capital to improve the guest and team member experience, while driving same-store sales now and reinvestment flywheel continues to spin and create sustainable profitable growth.

Kevin Hochman: To summarize, Chili's long-term growth year after year is a result of deliberate set of choices we make to deploy resource and capital to improve the guest and team member experience while driving same-store sales now and over time. The traffic growth reinvestment flywheel continues to spin and create sustainable profitable growth. Now I will give a short update on Maggiano's. A reminder that given the success we have had focusing on Chili's, Maggiano's now only represents 8% of sales.

Speaker #3: Now I'll give a short update on Maggiano's. A reminder that given the success we've had focusing on Chili's, Maggiano's not only represents 8% of sales for perspective, Chili's outside of the US, which is a licensed model, is expected to deliver 4% of Brinker profits this fiscal, and that will actually surpass Maggiano's profit contribution.

Kevin Hochman: For perspective, Chili's outside of the US, which is a licensed model, is expected to deliver 4% of Brinker profits this fiscal, and that will actually surpass Maggiano's profit contribution.While we are seeing some green shoots with financial results improvement and guest value scores, the turnaround at Maggiano's has been mixed. We have made progress on operational and culinary improvements, but some of that progress has been offset by losses with our core guests from our prior strategy.

Speaker #3: While we are seeing some green shoots with financial results improvement and guest value scores, the turnaround at Maggiano's has been mixed. We've made progress on operational and culinary improvements, but some of that progress has been offset by losses with our core guests from our prior strategy.

Kevin Hochman: While we are seeing some green shoots with financial results improvement and guest value scores, the turnaround at Maggiano's has been mixed. We have made progress on operational and culinary improvements, but some of that progress has been offset by losses with our core guests from our prior strategy. While we are headed in the right direction, the turnaround is happening slower than what we had planned. We think we are on the right strategy, but we need to be more focused on delivering a few important changes that could make the biggest impacts. These updates are all contemplated in the fiscal 2027 Brinker guidance we have provided today. Before I close, I want to share two weeks ago, we had our annual general managers conference in Arlington, Texas.

Speaker #3: So while we're headed in the right direction, the turnaround is happening slower than we had planned. We think we're on the right strategy, but we need to be more focused on delivering a few important changes that can make the biggest impacts.

Kevin Hochman: While we are headed in the right direction, the turnaround is happening slower than what we had planned. We think we are on the right strategy, but we need to be more focused on delivering a few important changes that could make the biggest impacts. These updates are all contemplated in the fiscal 2027 Brinker guidance we have provided today. Before I close, I want to share two weeks ago, we had our annual general managers conference in Arlington, Texas.

Speaker #3: These updates are all contemplated in the fiscal '27 Brinker guidance we have provided today. Before I close, I want to share that two weeks ago, we had our annual general managers' conference in Arlington, Texas.

Speaker #3: To summarize the event, the restaurant leaders are proud of their results, excited about the plans for fiscal '27, and ready to lead their teams for another year of growth significantly ahead of the industry.

Kevin Hochman: To summarize the event, the restaurant leaders are proud of their results, excited about the plans for fiscal 2027, and ready to lead their teams for another year of growth significantly ahead of the industry. Because of their leadership and their success, almost 80% of GMs now earn more than $100,000 this past fiscal, and that number keeps growing annually. Our stated goal to those GMs four years ago was to make their jobs more fun, easier, and more rewarding, and you could sure feel that in the room that we have collectively delivered on that commitment. Manager turnover has been well ahead of the industry for years now, and now hourly turnover recently moved ahead of the industry too.

Speaker #3: Because of their leadership and their success, almost 80% of GMs now earn more than $100,000 this past fiscal year, and that number keeps growing annually.

Speaker #3: Our stated goal to those GMs four years ago was to make their jobs more fun, easier, and more rewarding, and you could sure feel that in the room that we have collectively delivered on that commitment.

Kevin Hochman: Our stated goal to those GMs four years ago was to make their jobs more fun, easier, and more rewarding, and you could sure feel that in the room that we have collectively delivered on that commitment. Manager turnover has been well ahead of the industry for years now, and now hourly turnover recently moved ahead of the industry too.We also recognized our GM of the Year, PJ Tremblay, leader of the East Fort Myers Chili's, and our Above Restaurant Leader of the Year, Dale Balata, the VP who leads our California region.

Speaker #3: Manager turnover has been well ahead of the industry for years now, and now hourly turnover recently moved ahead of the industry too. We also recognized our GM of the year, PJ Tremblay, leader of the eSport Myers Chili's, and our above restaurant leader of the year, Dale Bellata, the VP who leads our California region.

Kevin Hochman: We also recognized our GM of the Year, PJ Tremblay, leader of the East Fort Myers Chili's, and our Above Restaurant Leader of the Year, Dale Balata, the VP who leads our California region. I also want to recognize Dale's colleague, the legendary vice president in the Northeast region, Todd Pierce, who was inducted into our Chili's Hall of Fame, along with 35-year Director of Operations in South Florida, Tony Viola. Congratulations to all four of these amazing leaders, and thank you for your years of making guests feel special and leading our restaurant team. To close, Chili's delivered another strong quarter, rolling very big numbers from the prior two years. The macro headwinds the industry is experiencing are still there, but Chili's is positioned to continue winning in this environment with improvements in food service and atmosphere, coupled with our industry-leading value.

Speaker #3: I also want to recognize Dale's colleague, the legendary vice president in the Northeast region, Todd Pierce, who was inducted into our Chili's Hall of Fame along with 35-year director of operations in South Florida, Tony Viola.

Kevin Hochman: I also want to recognize Dale's colleague, the legendary vice president in the Northeast region, Todd Pierce, who was inducted into our Chili's Hall of Fame, along with 35-year Director of Operations in South Florida, Tony Viola. Congratulations to all four of these amazing leaders, and thank you for your years of making guests feel special and leading our restaurant team. To close, Chili's delivered another strong quarter, rolling very big numbers from the prior two years.

Speaker #3: Congratulations to all four of these amazing leaders, and thank you for your years of making guests feel special and leading our restaurant team. To close, Chili's delivered another strong quarter, rolling very big numbers from the prior two years.

Speaker #3: The macro headwinds the industry is experiencing are still there, but Chili's is positioned to continue winning in this environment with improvements in food, service, and atmosphere, coupled with our industry-leading value.

Kevin Hochman: The macro headwinds the industry is experiencing are still there, but Chili's is positioned to continue winning in this environment with improvements in food service and atmosphere, coupled with our industry-leading value.

Speaker #3: That formula has proven quarter after quarter to be resilient in driving traffic, and outperforming the industry. And with all of the initiatives we have planned for fiscal 27 to continue improving the fundamentals, we are poised to have another year of profitable growth that's significantly outpaces the industry.

Kevin Hochman: That formula has proven quarter after quarter to be resilient in driving traffic and outperforming the industry. With all of the initiatives we have planned for fiscal 2027 to continue improving the fundamentals, we are poised to have another year of profitable growth that significantly outpaces the industry. Now I will hand the call over to Mika to walk you through fiscal 2026 Q4 numbers. Go ahead, Mika.

Speaker #3: Now I'll hand the call over to Micah to walk you through fiscal '26 fourth quarter numbers. Go ahead, Micah.

Speaker #2: Thank you, Kevin, and good morning. As we close fiscal 2026, today's results highlight major milestones in Chili's growth journey. The completion of five consecutive years of same-store sales growth, positively lapping all four quarters of double-digit same-store sales growth this past fiscal year, including two quarters that were above 30%, two consecutive years of traffic gains and average annual unit volumes increasing from just over 4.5 million at the end of last fiscal year to 5 million dollars this year.

Mika Ware: Thank you, Kevin, and good morning. As we close fiscal 2026, today's results highlight major milestones in Chili's growth journey. The completion of five consecutive years of same-store sales growth, positively lapping all four quarters of double-digit same-store sales growth this past fiscal year, including two quarters that were above 30%, two consecutive years of traffic gains, and average annual unit volumes increasing from just over $4.5 million at the end of last fiscal year to $5 million this year. Together, these results demonstrate the continued momentum and sustainability of our focus on the fundamental strategy. For the year, we reported total revenue growth of 7.9%, restaurant operating margin improvement of 30 basis points, and adjusted EPS growth of 20.6%. Turning to Q4, we continue to see strong year-over-year top-line growth, traffic well above industry averages, and restaurant margin expansion at Chili's.

Speaker #2: Together, these results demonstrate the continued momentum and sustainability of our focus on the fundamental strategy. For the year, we reported total revenue growth of 7.9%.

Mika Ware: Together, these results demonstrate the continued momentum and sustainability of our focus on the fundamental strategy. For the year, we reported total revenue growth of 7.9%, restaurant operating margin improvement of 30 basis points, and adjusted EPS growth of 20.6%. Turning to Q4, we continue to see strong year-over-year top-line growth, traffic well above industry averages, and restaurant margin expansion at Chili's.Brinker reported total revenues of $1,536,000,000, with consolidated comp sales of +5%.

Speaker #2: Restaurant operating margin improvement of 30 basis points and adjusted EPS growth of 20.6%. Turning to the fourth quarter, we continue to see strong year-over-year top-line growth, traffic well above industry averages, and restaurant margin expansion at Chili's.

Speaker #2: Brinker reported total revenues of 1 billion 536 million dollars with consolidated comp sales of positive 5%. Our adjusted diluted EPS for the quarter was $3.07, up from $2.49 last year a 23% increase.

Mika Ware: Brinker reported total revenues of $1,536,000,000, with consolidated comp sales of +5%. Our adjusted diluted EPS for the quarter was $3.07, up from $2.49 last year, a 23% increase. Chili's comps were +5.6% in the quarter, driven by price of 4.3% and positive traffic of 1.5%, partially offset by negative mix of -0.2%. Chili's continues to gain momentum through its strong everyday value platform, led by the success of the Big Smasher, The Big QP Burger, and now the Big Crispy Chicken Sandwich. July sales and traffic have significantly accelerated versus Q4, further widening our lead over the casual dining industry. For Maggiano's, the brand reported comp sales for the quarter of -2.5%, with -5.3% traffic, -0.1% of mix, partially offset by price of 2.9%.

Mika Ware: Our adjusted diluted EPS for the quarter was $3.07, up from $2.49 last year, a 23% increase. Chili's comps were +5.6% in the quarter, driven by price of 4.3% and positive traffic of 1.5%, partially offset by negative mix of -0.2%. Chili's continues to gain momentum through its strong everyday value platform, led by the success of the Big Smasher, The Big QP Burger, and now the Big Crispy Chicken Sandwich. July sales and traffic have significantly accelerated versus Q4, further widening our lead over the casual dining industry.

Speaker #2: Chili's comps were positive 5.6% in the quarter, driven by price of 4.3% and positive traffic of 1.5%, partially offset by negative mix of 0.2%.

Speaker #2: Chili's continues to gain momentum through its strong everyday value platform, led by the Big QP, and now the Big Crispy Chicken Sandwich. July sales and traffic have significantly accelerated versus the fourth quarter, further widening our lead over the casual dining industry.

Speaker #2: For Maggiano's, the brand-reported comp sales for the quarter were negative 2.5%, with negative 5.3% traffic, negative 0.1% mix, partially offset by price of 2.9%.

Mika Ware: For Maggiano's, the brand reported comp sales for the quarter of -2.5%, with -5.3% traffic, -0.1% of mix, partially offset by price of 2.9%.At the Brinker level, restaurant operating margins were 18%, a 20-basis-points improvement year over year, primarily driven by sales leverage, partially offset by unfavorable food and beverage costs, as well as higher advertising and insurance costs.

Speaker #2: At the Brinker level, restaurant operating margins were 18%, a 20 basis point improvement year-over-year, primarily driven by sales leverage, partially offset by unfavorable food and beverage costs, as well as higher advertising and insurance costs.

Mika Ware: At the Brinker level, restaurant operating margins were 18%, a 20-basis-points improvement year over year, primarily driven by sales leverage, partially offset by unfavorable food and beverage costs, as well as higher advertising and insurance costs. Food and beverage costs for the quarter increased by 80 basis points, driven by 4.4% commodity inflation, primarily from higher beef costs and a temporary spike in tomato prices following a late freeze in Florida. Tomato costs remained elevated longer than expected, but have since normalized and will not impact Q1 cost. Labor for the quarter was favorable 90 basis points year over year. Top-line sales growth offset wage rate inflation of approximately 3.1%, additional investments in labor, and higher health insurance costs.

Speaker #2: Food and beverage costs for the quarter increased by 80 basis points, driven by 4.4% commodity inflation, primarily from higher beef costs and a temporary spike in tomato prices following a late freeze in Florida.

Mika Ware: Food and beverage costs for the quarter increased by 80 basis points, driven by 4.4% commodity inflation, primarily from higher beef costs and a temporary spike in tomato prices following a late freeze in Florida. Tomato costs remained elevated longer than expected, but have since normalized and will not impact Q1 cost. Labor for the quarter was favorable 90 basis points year over year. Top-line sales growth offset wage rate inflation of approximately 3.1%, additional investments in labor, and higher health insurance costs.

Speaker #2: Tomato costs remained elevated longer than expected but have since normalized and will not impact Q1 cost. Labor for the quarter was favorable by 90 basis points year-over-year. Top-line sales growth offset wage rate inflation of approximately 3.1%, additional investments in labor, and higher health insurance costs.

Speaker #2: Restaurant expenses for the quarter were favorable 10 basis points year-over-year, with sales leverage and lower repairs and maintenance cost, partially offset by higher advertising cost and general inflation impacting expenses such as utilities, rent, to-go supplies, and delivery fees.

Mika Ware: Restaurant expenses for the quarter were favorable 10 basis points year-over-year, with sales leverage and lower repairs and maintenance costs partially offset by higher advertising costs and general inflation impacting expenses such as utilities, rent, to-go supplies, and delivery fees. Advertising expenses for the Q4 were 3% of sales and increased 20 basis points year-over-year to help support the rollout of the Big Crispy Chicken Sandwich campaign. G&A for the quarter came in at 3.9% of total revenues, 10 basis points favorable to prior year due to sales leverage and lower performance bonus accruals, partially offset by an increase in restaurant center support resources.

Speaker #2: Advertising expenses for the fourth quarter were 3% of sales and increased 20 basis points year-over-year to help support the rollout of the Big Crispy Chicken Sandwich campaign.

Speaker #2: G&A for the quarter came in at 3.9% of total revenues, 10 basis points favorable to prior year due to sales leverage and lower performance bonus accruals, partially offset by an increase in restaurant center support resources.

Mika Ware: G&A for the quarter came in at 3.9% of total revenues, 10 basis points favorable to prior year due to sales leverage and lower performance bonus accruals, partially offset by an increase in restaurant center support resources.Depreciation and amortization for the quarter came in at 3.6% of total revenues and decreased 40 basis points year-over-year due to sales leverage and the lapping of accelerated depreciation from the prior year due to the retirement of the CTX and Pinger ovens.

Speaker #2: Depreciation and amortization for the quarter came in at 3.6% of total revenues and decreased 40 basis points year-over-year due to sales leverage and the lapping of accelerated depreciation from the prior year due to the retirement of the CTX and Pendurevans.

Mika Ware: Depreciation and amortization for the quarter came in at 3.6% of total revenues and decreased 40 basis points year-over-year due to sales leverage and the lapping of accelerated depreciation from the prior year due to the retirement of the CTX and Pinger ovens. Q4 adjusted EBITDA was approximately $228 million, a 7.1% increase from prior year. Our adjusted tax rate declined year-over-year to 17.6% from 19.5%, primarily due to a benefit from our state income tax filing adjustments and a higher benefit from the FICA tip credit. Capital expenditures for the quarter were approximately $58.3 million, driven by capital maintenance spend. In our new Chili's reimage program, we completed a total of 11 reimages in fiscal 2026. Based on the learnings from these restaurants, we plan to complete another 60 to 80 during fiscal 2027.

Speaker #2: Fourth quarter adjusted EBITDA was approximately $228 million, a 7.1% increase from the prior year. Our adjusted tax rate declined year-over-year to 17.6% from 19.5%, primarily due to a benefit from our state income tax filing adjustments and a higher benefit from the FICA tip credit.

Mika Ware: Q4 adjusted EBITDA was approximately $228 million, a 7.1% increase from prior year. Our adjusted tax rate declined year-over-year to 17.6% from 19.5%, primarily due to a benefit from our state income tax filing adjustments and a higher benefit from the FICA tip credit. Capital expenditures for the quarter were approximately $58.3 million, driven by capital maintenance spend.

Speaker #2: Capital expenditures for the quarter were approximately $58.3 million, driven by capital maintenance spend. In our new Chili's reimage program, we completed a total of 11 reimages in fiscal 2026.

Mika Ware: In our new Chili's reimage program, we completed a total of 11 reimages in fiscal 2026. Based on the learnings from these restaurants, we plan to complete another 60 to 80 during fiscal 2027.In fiscal 2028, we will start a planned cadence of 10% of the fleet annually. Regarding new unit growth plans, our growth will be modest in fiscal 2027, but we already have sites in the pipeline to ramp up significantly in fiscal 2028, with expectations for our new run rate to be in place for fiscal 2029.

Speaker #2: Based on the learnings from these restaurants, we plan to complete another 60 to 80 during fiscal 27. In fiscal 28, we will start a planned cadence of 10% of the fleet annually.

Mika Ware: In fiscal 2028, we will start a planned cadence of 10% of the fleet annually. Regarding new unit growth plans, our growth will be modest in fiscal 2027, but we already have sites in the pipeline to ramp up significantly in fiscal 2028, with expectations for our new run rate to be in place for fiscal 2029. We expect to share more details on our strategy and plans at our 17 September Investor Day. Our strong free cash flow provides sufficient liquidity to maintain our disciplined capital allocation strategy, allowing us to invest in our restaurants, keep debt levels low, and return excess cash to shareholders. We continue to support this approach by repurchasing $100 million of common stock under our share repurchase program in the Q4, bringing our total for the year to almost $400 million.

Speaker #2: Regarding new unit growth plans, our growth will be modest in fiscal 2027, but we already have sites in the pipeline to ramp up significantly in fiscal 2028, with expectations for our new run rate to be in place for fiscal 2029.

Speaker #2: We expect to share more details on our strategy and plans at our September 17th investor day. Our strong free cash flow provides sufficient liquidity to maintain our disciplined capital allocation strategy allowing us to invest in our restaurants keep debt levels low, and return excess cash to shareholders.

Mika Ware: We expect to share more details on our strategy and plans at our 17 September Investor Day. Our strong free cash flow provides sufficient liquidity to maintain our disciplined capital allocation strategy, allowing us to invest in our restaurants, keep debt levels low, and return excess cash to shareholders. We continue to support this approach by repurchasing $100 million of common stock under our share repurchase program in the Q4, bringing our total for the year to almost $400 million.

Speaker #2: We continue to support this approach by repurchasing $100 million of common stock under our share repurchase program in the fourth quarter, bringing our total for the year to almost $400 million.

Speaker #2: In support of our capital allocation strategy, our Brinker Board of Directors authorized additional amounts under our current share repurchase program in August, bringing the total amount available to $750 million.

Mika Ware: In support of our capital allocation strategy, our Brinker Board of Directors authorized additional amounts under our current share repurchase program in August, bringing the total amount available to $750 million. Subsequent to year-end, we redeemed our outstanding $350 million 8.25% bonds using the liquidity on our $1 billion revolver, which will provide interest expense savings in fiscal 2027, and the flexibility to continue to reduce leverage if we choose. In this morning's press release, we shared that fiscal 2027 guidance includes a 53rd operating week in the Q4. We estimate the impact of the additional operating week to be an increase of approximately 2% in total revenues and $0.70 in incremental earnings per share. Regarding the guidance we expect, F27 annual revenues in the range of $6.15 billion to $6.27 billion. Adjusted diluted EPS in the range of $12.60 to $13.40.

Speaker #2: Subsequent to year-end, we redeemed our outstanding 350 million 8.25% bonds using the liquidity on our $1 billion revolver, which will provide interest expense savings in fiscal 2027 and the flexibility to continue to reduce leverage if we choose.

Speaker #2: In this morning's press release, we shared that fiscal 27 guidance includes a 53rd operating week in the fourth quarter, we estimate the impact of the additional operating week to be an increase of approximately 2% in total revenues and 70 cents in incremental earnings per share.

Mika Ware: In this morning's press release, we shared that fiscal 2027 guidance includes a 53rd operating week in the Q4. We estimate the impact of the additional operating week to be an increase of approximately 2% in total revenues and $0.70 in incremental earnings per share. Regarding the guidance we expect, F27 annual revenues in the range of $6.15 billion to $6.27 billion. Adjusted diluted EPS in the range of $12.60 to $13.40.Weighted average shares in the range of 42 million to 43 million.

Speaker #2: Regarding the guidance we expect: fiscal '27 annual revenues in the range of $6.15 billion to $6.27 billion, and adjusted diluted EPS in the range of $12.60 to $13.40.

Speaker #2: Weighted average shares in the range of 42 million to 43 million. And capital expenditures in the range of 265 million to 285 million. Assumptions underlying this guidance includes playing commodity and wage inflation in the low single digits, with commodity inflation higher in the first quarter, before moderating as the year progresses.

Mika Ware: Weighted average shares in the range of 42 million to 43 million. Capital expenditures in the range of $265 million to $285 million. Assumptions underlying this guidance includes planned commodity and wage inflation in the low single digits, with commodity inflation higher in the Q1 before moderating as the year progresses, a tax rate of approximately 19%, and three net new company-owned restaurant openings. Guidance also contemplates the planned acquisition of 12 Chili's franchise restaurants located in Alabama and Mississippi, including the real estate of six of the locations. The transaction is expected to close at the end of August. As previously mentioned, fiscal 2027 is off to a strong start in July and August, and we are confident our plans will enable us to continue to significantly outperform the industry in both sales and traffic while delivering another consecutive years of same-store sales growth.

Mika Ware: Capital expenditures in the range of $265 million to $285 million. Assumptions underlying this guidance includes planned commodity and wage inflation in the low single digits, with commodity inflation higher in the Q1 before moderating as the year progresses, a tax rate of approximately 19%, and three net new company-owned restaurant openings. Guidance also contemplates the planned acquisition of 12 Chili's franchise restaurants located in Alabama and Mississippi, including the real estate of six of the locations.

Speaker #2: A tax rate of approximately 19% and three net new company-owned restaurant openings. Guidance also contemplates the planned acquisition of 12 Chili's franchise restaurants located in Alabama and Mississippi, including the real estate of six of the locations.

Speaker #2: The transaction is expected to close at the end of August. As previously mentioned, fiscal 27 is off to a strong start in July and August, and we are confident our plans will enable us to continue to significantly outperform the industry in both sales and traffic while delivering another consecutive years of same-store sales growth.

Mika Ware: The transaction is expected to close at the end of August. As previously mentioned, fiscal 2027 is off to a strong start in July and August, and we are confident our plans will enable us to continue to significantly outperform the industry in both sales and traffic while delivering another consecutive years of same-store sales growth.Before I wrap up, I will just say this. The results we delivered this year give us a lot of confidence in where Chili's is headed. The strategy is working, and we believe there is still plenty of runway ahead.

Speaker #2: Before I wrap up, I'll just say this: the results we delivered this year give us a lot of confidence in where Chili's is headed.

Mika Ware: Before I wrap up, I will just say this. The results we delivered this year give us a lot of confidence in where Chili's is headed. The strategy is working, and we believe there is still plenty of runway ahead. We will keep building on the momentum by bringing in new guests, giving them more reasons to come back, and staying focused on the things that matter most, strong execution in our restaurants, great value, and world-class marketing and innovation. I look forward to providing further details at our upcoming Investor Day, scheduled in Dallas for Thursday, 17 September. With our comments now complete, I will turn the call back to Holly to moderate questions. Holly?

Speaker #2: The strategy is working, and we believe there's still plenty of runway ahead. We'll keep building on the momentum by bringing in new guests, giving them more reasons to come back, and staying focused on the things that matter most: strong execution in our restaurants, great value, and world-class marketing and innovation.

Mika Ware: We will keep building on the momentum by bringing in new guests, giving them more reasons to come back, and staying focused on the things that matter most, strong execution in our restaurants, great value, and world-class marketing and innovation. I look forward to providing further details at our upcoming Investor Day, scheduled in Dallas for Thursday, 17 September. With our comments now complete, I will turn the call back to Holly to moderate questions. Holly?

Speaker #2: I look forward to providing further details at our upcoming Investor Day, scheduled in Dallas for Thursday, September 17. With our comments now complete, I'll turn the call back to Holly to moderate questions.

Speaker #2: Holly?

Speaker #3: Certainly. At this time, we will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time.

Operator: Certainly. At this time, we will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Your first question for today is from Dennis Geiger with UBS.

Speaker #3: We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions.

Speaker #3: Your first question for today is from Dennis Geiger with UBS.

Speaker #4: Thank you. And congrats on another great quarter and year, guys. I wanted to ask a bit more on fiscal 27 guidance. I know we can back into select items, but anything more to share on specific assumptions for Chili's same-store sales for the year?

Dennis Geiger: Thank you, and congrats on another great quarter and year, guys. I wanted to ask a bit more on fiscal 2027 guidance. I know we can back into select items, but anything more to share on specific assumptions for Chili's same-store sales for the year? Then just shifting over to margins and earnings flow through, helpful with the inflation. But anything more on some of the key pieces there as far as reinvestment opportunities go, maybe versus prior years?

Speaker #4: And then just shifting over to margins and earnings flow-through—helpful with the inflation—but anything more on some of the key pieces there as far as reinvestment opportunities go, maybe versus prior years?

Speaker #2: Sure. Hi, Dennis. So what we've done, and what's implied in this guidance, is we've built in a little bit of upside for July. But basically, for the remainder of the year, we have assumed mid-single-digit same-store sales and positive traffic for Chili's.

Mika Ware: Sure. Hi, Dennis. What we've done and what's implied in this guidance is we built in a little bit of upside for July, but basically for the remainder of the year, we have assumed mid-single digit same-store sales and positive traffic for Chili's. We feel really confident that we can continue to deliver those results. If this momentum continues that we started in the beginning of this fiscal year, there's absolutely opportunity to exceed those expectations. That is what we have built into the guidance. As far as the margins go and the flow through, we are very protective of our value proposition. We've been very mindful of that. We are very aware of driving positive traffic over time. We have built in inflation. I've talked about the inflation for commodities and for labor. There's also some inflation in some other pieces of the P&L.

Speaker #2: So, we feel really confident that we can continue to deliver those results. If this momentum continues that we've started at the beginning of this fiscal year, there's absolutely an opportunity to exceed those expectations.

Speaker #2: But that is what we have built into the guidance. As far as the margins go and the flow through, we are very protective of our value proposition.

Mika Ware: As far as the margins go and the flow through, we are very protective of our value proposition. We've been very mindful of that. We are very aware of driving positive traffic over time. We have built in inflation. I've talked about the inflation for commodities and for labor. There's also some inflation in some other pieces of the P&L.For example, we have some inflation in rent, we have some inflation in advertising, inflation in our insurance costs.

Speaker #2: We've been very mindful of that. We are very aware of driving positive traffic over time. So we have built in inflation. I talked about the inflation for commodities and for labor.

Speaker #2: There's also some inflation in some other pieces of the P&L. For example, we have some inflation in rent. We have some inflation in advertising.

Mika Ware: For example, we have some inflation in rent, we have some inflation in advertising, inflation in our insurance costs. We've been just really mindful of baking in all those expenses and making sure that we're not putting too much pressure on the guest and the pricing strategy on the top line. So, we feel really good about the numbers that we built in. I think we've been very conservative about the inflation that we've put in. We feel good about delivering the results and the double-digit EPS that we promised.

Speaker #2: Inflation in our insurance costs, so we've been just really mindful of baking in all those expenses and making sure that we're not putting too much pressure on the guest and the pricing strategy on the top line.

Mika Ware: We've been just really mindful of baking in all those expenses and making sure that we're not putting too much pressure on the guest and the pricing strategy on the top line. So, we feel really good about the numbers that we built in. I think we've been very conservative about the inflation that we've put in. We feel good about delivering the results and the double-digit EPS that we promised.

Speaker #2: So we feel really good about the numbers that we've built in. I think we've been very conservative about the inflation that we put in.

Speaker #2: So we feel good about delivering the results in the double-digit EPS that we promised.

Speaker #4: Thanks, Micah. Congrats.

Dennis Geiger: Thanks, Mika. Congrats.

Speaker #2: Thank you, Dennis.

Mika Ware: Thank you, Dennis.

Speaker #3: Your next question is from David Palmer with Evercore ISI.

Operator: Your next question is from David Palmer with Evercore ISI.

David Palmer: Great. Thank you. Good morning, and congrats on the accelerating sales. I had a question about that. I wonder what reasons you would give for this pretty big acceleration you are seeing in July and August. I have heard a lot of theories, but would love your analysis and what part or parts do you think are more clearly not sustainable in your mind?

Speaker #4: Great, thank you. Good morning, and congrats on the accelerating sales. I had a question about that. I wonder what reasons you would give for this pretty big acceleration you're seeing in July and August. There are a lot of theories, but I would love your analysis, and what part or parts do you think are more clearly not sustainable in your mind?

Speaker #5: Yeah. So we've seen lifts like this in the past during this turnaround, David, and what we've seen this be is we bring people in and then it just kind of becomes their habit and we just don't look back.

Kevin Hochman: Yeah. We know we have seen lifts like this in the past, during this turnaround, David, and what we seem to be is we bring people in, and then it just kind of becomes their habit, and we just do not look back. To answer your question more specifically about what we think is driving it right now, number one is chicken sandwich. The chicken sandwich continues to build. It is doing everything that we thought it would do. It was part of our plan to continue the Better Than Fast Food campaign, continue to drive our value leadership in the industry, but most importantly, continue to give the guests unbelievable, abundant value that tastes great, and that is exactly what it is doing. We have had a couple of other things that happened from a social standpoint.

Speaker #5: So to answer your question more specifically about what we think is driving it right now, number one is chicken sandwich. So the chicken sandwich continues to build.

Speaker #5: It's doing everything that we thought it would do. It was part of our plan to continue the Better Than Fast Food campaign, and to continue to drive our value leadership in the industry.

Kevin Hochman: It was part of our plan to continue the Better Than Fast Food campaign, continue to drive our value leadership in the industry, but most importantly, continue to give the guests unbelievable, abundant value that tastes great, and that is exactly what it is doing. We have had a couple of other things that happened from a social standpoint.We had some pretty good success with our Bombshell Marg, which was the Margarita of the Month in July that we saw some younger guests come in for.

Speaker #5: But most importantly, continue to give the guest unbelievable, abundant value that tastes great. And that's exactly what it's doing. We've had a couple of other things that happened from a social standpoint.

Speaker #5: So we had some pretty good success with our Bombshell mark, which was the mark of the month in July, that we saw some younger guests come in for.

Kevin Hochman: We had some pretty good success with our Bombshell Marg, which was the Margarita of the Month in July that we saw some younger guests come in for. And then we also seized upon a social media thing that we did not do. Guests started asking for Molten's on top of skillet cookies. The marketing team wanted to get after it immediately. We said, "Hey, let us make sure we are operationally ready to do that before we turn that on." We were hard at work making sure we had the proper supplies on cookies and Molten's and ice cream. And then we recently put that into the business, allowing the servers to have keys to ring it up properly, as well as train the teams on how to make it consistently versus just looking at social media on how to make it. And that is also been very successful.

Speaker #5: And then we also seized upon a social media thing that we did not do. So guests started asking for moltens on top of skillet cookies.

Kevin Hochman: And then we also seized upon a social media thing that we did not do. Guests started asking for Molten's on top of skillet cookies. The marketing team wanted to get after it immediately. We said, "Hey, let us make sure we are operationally ready to do that before we turn that on." We were hard at work making sure we had the proper supplies on cookies and Molten's and ice cream.

Speaker #5: The marketing team wanted to get after it immediately. We said, "Hey, let's make sure we're operationally ready to do that before we turn that on." So we were hard at work making sure we had the proper supplies on cookies and molten cakes and ice cream.

Speaker #5: And then we recently put that into the business, allowing the service to have keys to ring it up properly, as well as train the teams on how to make it consistently, versus just looking at social media on how to make it.

Kevin Hochman: And then we recently put that into the business, allowing the servers to have keys to ring it up properly, as well as train the teams on how to make it consistently versus just looking at social media on how to make it. And that is also been very successful.It is actually reversed our incidence decline on desserts, between that and then also upgrading a couple of our other desserts. So, we feel like it is just a collection, and then obviously the continued operational initiatives on removing friction and improving throughput.

Speaker #5: And that's also been very successful. It's actually reversed our incidents to client on desserts, between that and then also upgrading a couple of our other desserts.

Kevin Hochman: It is actually reversed our incidence decline on desserts, between that and then also upgrading a couple of our other desserts. So, we feel like it is just a collection, and then obviously the continued operational initiatives on removing friction and improving throughput. They are very hard things to pinpoint because, like I said in my prepared comments, the throughput stuff is a collection of small things that add up. But for example, when you make the reduction of our loyalty reward supermarket simple and it reduces the number of times the manager has to come and change checks, that turns tables faster. And we know, especially on the weekend, turning tables is traffic in the till.

Speaker #5: So, we feel like it's just a collection, and then obviously the continued operational initiatives on removing friction and improving throughput. They're very hard things to pinpoint because, like I said in my prepared comments, the throughput stuff is a collection of small things that add up.

Kevin Hochman: They are very hard things to pinpoint because, like I said in my prepared comments, the throughput stuff is a collection of small things that add up. But for example, when you make the reduction of our loyalty reward supermarket simple and it reduces the number of times the manager has to come and change checks, that turns tables faster. And we know, especially on the weekend, turning tables is traffic in the till.

Speaker #5: But for example, when you make the redemption of our loyalty reward supermarket simple and it reduces the number of times the manager has to come and change checks, that turns tables faster.

Speaker #5: And we know especially on the weekend, turning tables is traffic in the till. So it's a collection of all the things that we're doing and we've been relatively consistent continuing to deliver comps on top of comps on top of comps.

Kevin Hochman: So, it is a collection of all the things that we are doing, and we have been relatively consistent continuing to deliver comps on top of comps on top of comps, and it is because our strategy is built to just continue to plow through all of this.

Speaker #5: And it's because our strategy is built to just continue to plow through all of this.

Speaker #4: Great. I'll pass it on. Thank you.

David Palmer: Great. I will pass it on. Thank you.

Speaker #3: Your next question for today is from Jeff Farmer with Gordon Haskett.

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

Speaker #5: Greg, good morning. Micah, what is your expectation for the restaurant-level margin in '27? And how should we be thinking about the benefit from the 53rd week?

Jeff Farmer: Greg, good morning. Michaela, what is your expectation for the restaurant level margin in 2027, and how should we be thinking about the benefit from the 53rd week?

Speaker #2: That's a great question. So, what I would say is on a 52-week basis, I'm going to expect 20 to 40 basis points of margin improvement.

Mika Ware: That is a great question. So what I would say on a 52-week basis, I am going to expect 20 to 40 basis points of margin improvement. Depending on where it falls in that range, the 53rd week could get you up to 50 basis points of margin improvement year over year. So, that is where we are now, Jeff.

Speaker #2: Depending on where it falls in that range, the 53rd week could get you up to 50 basis points of margin improvement year over year.

Speaker #2: So that's where we are now, Jeff.

Speaker #5: Okay. And then just one more quick one. As it relates to the—it sounds like you guys have made the change in the compensation structure for the restaurant-level manager.

Jeff Farmer: Okay. Then just one more quick one as it relates to the, it sounds like you guys made the change in the compensation structure for the restaurant level manager. How are you guys thinking about the impact that would have on the business?

Speaker #5: How are you guys thinking about the impact that would have on the business? Yeah, so a couple of things. And to answer that question, Gordon—I'm sorry, Jeff.

Kevin Hochman: Yeah. So a couple of things to answer that question, Gordon. I am sorry, Jeff. So number one, we are trying to simplify the amount of reports and the measurements that the managers use so that they can focus more on the behaviors, which is in terms of coaching the team members as well as being in the dining room with the guests. So, they are still going to have access to the GWOP metric, and they will be able to see it on a weekly basis, and they will be able to get verbatims from guest comments. We are going to use AI to help cultivate that for them so they do not have to go through all of the verbatims. But we are not going to give them GWOP per shift on a daily basis because we found that they were kind of overly consumed with the daily metric.

Speaker #5: So, number one, we're trying to simplify the amount of reports and the measurements that the managers use so that they can focus more on the behaviors, which is in terms of coaching the team members as well as being in the dining room with the guests.

Speaker #5: So, they're still going to have access to the GWAP metric, and they'll be able to see it on a weekly basis. They'll also be able to get verbatims from guest comments.

Speaker #5: And we're going to use AI to help cultivate that for them so they don't have to go through all of the verbatims. But we're not going to give them GWAP per shift.

Kevin Hochman: We are going to use AI to help cultivate that for them so they do not have to go through all of the verbatims. But we are not going to give them GWOP per shift on a daily basis because we found that they were kind of overly consumed with the daily metric.They were using that more often with their teams, posting them up, and the team members didn't feel great about it. Even though we've been making incredible progress on GWOP with guests with a problem, we felt like it was taking them away from the things that we wanted to do.

Speaker #5: On a daily basis, because we found that they were kind of overly consumed with the daily metric. They were using that more often with their teams, posting them up and the team members didn't feel great about it.

Kevin Hochman: They were using that more often with their teams, posting them up, and the team members didn't feel great about it. Even though we've been making incredible progress on GWOP with guests with a problem, we felt like it was taking them away from the things that we wanted to do. We're not going to have them look at it on a daily basis. We removed that from the bonus. The bonus is totally focused now on sales and profits. We co-designed this with them. We started with our vice presidents of operations, and we trickled it down. Overall, the feedback's been incredibly positive. It's like, hey, we can focus on the behaviors that we need to focus on, and we don't necessarily have to look at this thing and be consumed with reporting.

Speaker #5: And so even though we've been making incredible progress on GWAP, but guess where the problem is? We felt like it was taking them away from the things that we wanted to do.

Speaker #5: So we're not going to have them look at it on a daily basis. We remove that from the bonus. The bonus is solely focused now on sales and profits.

Kevin Hochman: We're not going to have them look at it on a daily basis. We removed that from the bonus. The bonus is totally focused now on sales and profits. We co-designed this with them. We started with our vice presidents of operations, and we trickled it down. Overall, the feedback's been incredibly positive. It's like, hey, we can focus on the behaviors that we need to focus on, and we don't necessarily have to look at this thing and be consumed with reporting.We also dramatically simplified the reports that they get on a daily basis.

Speaker #5: We co-designed this with them. We started with our vice president of operations. And we trickled it down. And overall, the feedback has been incredibly positive.

Speaker #5: It's like, "Hey, we can focus on the behaviors that we need to focus on. And we don't necessarily have to look at this thing and be consumed with reporting." We also dramatically simplified the reports that they get.

Kevin Hochman: We also dramatically simplified the reports that they get on a daily basis. We got this laundry list of reports down to two main reports that help them with throughput, labor scheduling, and some other key things like guest metrics that they need to be able to see. I feel like that change is going to make them focus, number one, most importantly, on the behaviors to deliver a great guest experience. Then number two, because profits are a higher percentage of their total bonus, we think that's going to help us with that middle of the P&L, to be able to flow through more of the dollars that we get with incremental sales. It doesn't mean we're not going to continue to invest in the business.

Speaker #5: On a daily basis, we got kind of this laundry list of reports down to two main reports that helped them with throughput, labor scheduling, and some other key things like guest metrics that they need to be able to see.

Kevin Hochman: We got this laundry list of reports down to two main reports that help them with throughput, labor scheduling, and some other key things like guest metrics that they need to be able to see. I feel like that change is going to make them focus, number one, most importantly, on the behaviors to deliver a great guest experience. Then number two, because profits are a higher percentage of their total bonus, we think that's going to help us with that middle of the P&L, to be able to flow through more of the dollars that we get with incremental sales.

Speaker #5: So I feel like that that change is going to make them focus, number one, most importantly, on the behaviors to deliver a great guest experience.

Speaker #5: And then number two, because profits are a higher percentage of their total bonus, we think that's going to help us with that middle of the P&L.

Speaker #5: To be able to flow through more of the dollars that we get with incremental sales. And it doesn't mean we're not going to continue to invest in the business.

Kevin Hochman: It doesn't mean we're not going to continue to invest in the business.Michaela talked about that in her prepared comments, but we feel like this is just a continuation of dramatic simplification in order to allow the restaurant teams to do their job, which is making guests feel special.

Speaker #5: So Micah talked about that in their prepared comments. But we feel like this is just a continuation of dramatic simplification in order to allow the restaurant teams to do their job, which is making guests feel special.

Kevin Hochman: Michaela talked about that in her prepared comments, but we feel like this is just a continuation of dramatic simplification in order to allow the restaurant teams to do their job, which is making guests feel special.

Speaker #5: Okay. Thank you for that.

Jeff Farmer: Okay. Thank you for that.

Speaker #3: Your next question is from Andrew Strelzik with BMO.

Operator: Your next question is from Andrew Strelzik with BMO.

Speaker #4: Hey, good morning. Thanks for taking the question. And maybe following up on that last answer, if you feel like you're going to be able to get more flow through because of the change in the compensation structure, why is 20 to 40 basis points still the right starting point for margin expansion?

Andrew Strelzik: Hey, good morning. Thanks for taking the question. Maybe following up on that last answer, if you feel like you are going to be able to get more flow through because of the change in the compensation structure, why is 20 to 40 basis points still the right starting point for margin expansion?

Speaker #2: So, Andrew, I'll start with that. Like I said, 20 to 40 basis points is what we have built into the model. Again, we've been very mindful of how much price we're taking.

Mika Ware: Andrew, I will start with that. Like I said, 20 to 40 basis points is what we have built in the model. Again, we have been very mindful of how much price we are taking. So our pricing strategy had been 3% to 5%. We are on the lower end of that, and we actually have just a lot of inflationary pressure. So I talked about the commodities, even though they are in the low single digits, that is going to start at the beginning of the year. Probably, I am going to give you some nice round numbers, where commodities will probably be 4% in Q1, 3% inflation in Q2, 2% inflation in Q3, and 1% in Q4. That is what we are modeling now. So we do have a little bit of earlier pressure on that.

Speaker #2: So our pricing strategy had been 3 to 5 percent. We're on the lower end of that. And we actually have just a lot of inflationary pressure.

Speaker #2: So I've talked about the commodities. Even though they're in the low single digits, that's going to start at the beginning of the year. Probably, I'm going to give you some nice round numbers.

Mika Ware: Probably, I am going to give you some nice round numbers, where commodities will probably be 4% in Q1, 3% inflation in Q2, 2% inflation in Q3, and 1% in Q4. That is what we are modeling now. So we do have a little bit of earlier pressure on that.Also, we have had some inflation in some other areas, such as insurance, such as delivery fees, things like that we have built in that we are not necessarily passing all the way through to the guest. So we have been very mindful of driving long-term traffic over time.

Speaker #2: We're modeling commodities at probably 4% in Q1, 3% inflation in Q2, 2% inflation in Q3, and 1% in Q4. That's what we're modeling now.

Speaker #2: So we do have a little bit of earlier pressure on that. Also, we've had some inflation in some other areas such as insurance, such as delivery fees.

Mika Ware: Also, we have had some inflation in some other areas, such as insurance, such as delivery fees, things like that we have built in that we are not necessarily passing all the way through to the guest. So we have been very mindful of driving long-term traffic over time. When I take a step back and just look at the whole model, we know if we deliver mid-single digits, same store sales over time, we deliver 20 to 40 basis points of margin improvement, and we deliver double-digit EPS growth, that we are going to deliver significant earnings and growth to the shareholders, if we can deliver those consistently over time. So we are not as concerned. We do not want to overpressure the guests in the short term. You have heard a lot of our competitors have that same mindset, where you do not want to overprice the guest right now.

Speaker #2: Things like that, we've built in that we're not necessarily passing all the way through to the guest. So we've been very mindful of driving long-term traffic over time.

Speaker #2: When I take a step back and just look at the whole model, we know if we deliver mid-single digits same-store sales over time, we deliver 20 to 40 basis points of margin improvement, and we deliver double-digit EPS growth, that we're going to deliver significant earnings and growth to the shareholders.

Mika Ware: When I take a step back and just look at the whole model, we know if we deliver mid-single digits, same store sales over time, we deliver 20 to 40 basis points of margin improvement, and we deliver double-digit EPS growth, that we are going to deliver significant earnings and growth to the shareholders, if we can deliver those consistently over time. So we are not as concerned. We do not want to overpressure the guests in the short term.

Speaker #2: And if we can deliver those consistently over time. So we're not as concerned. We don't want to overpressure the guests in the short term.

Speaker #2: You've heard a lot of our competitors have that same mindset where you don't want to overprice the guests right now. We have a lot of inflation that we're facing.

Mika Ware: You have heard a lot of our competitors have that same mindset, where you do not want to overprice the guest right now.We have a lot of inflation that we're facing, so we're being more conservative in those assumptions. Now, as the year progresses out, if our sales exceed our expectations or some of those inflation assumptions are a little bit less, I think we have the opportunity to outperform those metrics. But that's what we have guided and worked in the model for now to start the year.

Mika Ware: We have a lot of inflation that we're facing, so we're being more conservative in those assumptions. Now, as the year progresses out, if our sales exceed our expectations or some of those inflation assumptions are a little bit less, I think we have the opportunity to outperform those metrics. But that's what we have guided and worked in the model for now to start the year.

Speaker #2: So we're being more conservative in those assumptions. Now, as a year progresses out, if our sales exceed our expectations or some of those inflation assumptions, our little bit less, I think we have the opportunity to outperform those metrics.

Speaker #2: But that's what we have guided in and worked in the model for now to start the year.

Speaker #4: Got it. Okay, that makes sense. And maybe if I zoom out on the margins—obviously, you've transformed the restaurant-level margins of the business. Is there a level at which you think about kind of shifting how much flows through versus how much you reinvest?

Andrew Strelzik: Got it. Okay. That makes sense. Maybe if I zoom out on the margins, obviously, you've transformed the restaurant level margins of the business. Is there a level at which you think about kind of shifting how much flows through versus how much you reinvest, kind of like a ceiling on restaurant margins for this business over time as you've kind of continued to make these continuous improvements? How you think about that? Thank you.

Speaker #4: Kind of like a ceiling on restaurant margins for this business over time as you've kind of continued to make these continuous improvements. How do you think about that?

Speaker #4: Thank you.

Speaker #2: You know what, Andrew? That is also an excellent point that I should have made, too. So, as you called out, we have had, since this turnaround started, over 600 basis points of margin improvement over time.

Mika Ware: You know what, Andrew? That is also an excellent point that I should have made too. As you called out, we had, since this turnaround started, over 600 basis points of margin improvement over time. So we've significantly improved the margin profile of this business. Now, that is a reason why, because we have an invest to grow strategy that as we move forward, you're going to see the margin growth moderate a little bit. Really what that means is we're not trying to flow through every dollar. We're trying to make sure that we're mindful to invest back in food service and atmosphere.

Speaker #2: So we have significantly improved the margin profile of this business. Now, that is a reason why, because we have an investor growth strategy that as we move forward, you're going to see the margin growth moderate a little bit.

Speaker #2: And really, what that means is we're not trying to flow through every dollar. We're trying to make sure that we're mindful to invest back in food, service, and atmosphere.

Mika Ware: We're trying to make sure that we're mindful to invest back in food service and atmosphere.What that means is we are investing back in the guest experience, the team member experience, and we don't want to overprice the guest, and we want to make sure we continue to make that value proposition as strong as it can be, because we know that is a secret to driving positive traffic over time.

Speaker #2: What that means is we are investing back in the guest experience and the team member experience, and we don't want to overprice the guest. We want to make sure we continue to make that value proposition as strong as it can be, because we know that is the secret to driving positive traffic over time.

Mika Ware: What that means is we are investing back in the guest experience, the team member experience, and we don't want to overprice the guest, and we want to make sure we continue to make that value proposition as strong as it can be, because we know that is a secret to driving positive traffic over time.

Andrew Strelzik: Great. Thank you.

Speaker #2: There's not a cap. So, I said all of that, and you did say, "Is there a cap?" We do think if we continue to grow the top line and the AUVs, we still think we can expand it.

Mika Ware: There is not a cap. I said all of that, and you did say, "Is there a cap?

Andrew Strelzik: Yeah.

Mika Ware: We do think if we continue to grow the top line and the AUVs, we still think we can expand it. It is just not going to be as material as it has been during this turnaround. So there will be a point as the AUVs grow. But right now, we still have plenty of capacity. Our restaurants are only at 80% capacity of our historical guest count. So we have plenty of capacity to continue to grow traffic and grow some margins.

Speaker #2: It's just not going to be as material as it has been during this turnaround. So there will be a point as the AUVs grow.

Speaker #2: But right now, we still have plenty of capacity. Our restaurants are only at 80% of our historical guest count, so we have plenty of capacity to continue to grow traffic and grow some margins.

Kevin Hochman: And just one thing I would add is when we first started this turnaround, what I told the leadership team was, "Boy," and we were like at $3 million AUVs, "We just get the $4 million AUVs, we will have enough labor to service the guests. We will have better restaurant margins. We will have enough money to plow back into the business." That happened, and now we are at 5 million now, and you just get more of that. At the end of the day, when we study these North of Six restaurants, they have dramatically higher margins than the balance of the system.

Speaker #5: And just one thing I would add is, when we first started this turnaround, what I told the leadership team was, "Boy," and we were at $3 million AUVs, "if we just get to $4 million AUVs, we'll have enough labor to service the guest."

Speaker #5: We'll have better restaurant margins. We'll have enough money to plow back into the business. And that happened. And now we're beginning to see a fight. We're at $5 million now.

Kevin Hochman: That happened, and now we are at 5 million now, and you just get more of that. At the end of the day, when we study these North of Six restaurants, they have dramatically higher margins than the balance of the system.

Speaker #5: And you just get more of that. And at the end of the day, when we study these North to six restaurants, they have dramatically higher margins than the balance of the system.

Speaker #5: So as long as we continue to invest in the business and grow those AUVs, and delight the guest, good things will happen with margin.

Mika Ware: Right.

Kevin Hochman: So as long as they continue to invest in the business and grow those AUVs and delight the guests, good things will happen with margin. Every year, we start out the year with a pretty reasonable guidance on our margin growth, but then we have blown through it. We have blown through it because we keep delivering on the top line because we are winning with the guests. I do not know why we would change that approach, and I would expect that if we deliver on the upside on sales based on the acceleration that we have seen in the first part of the year, I would expect to see that also expand on restaurant margins.

Speaker #5: And every year, we start out the year with a pretty reasonable expectation, or a reasonable guidance, on our margin growth. But then we've blown through it.

Speaker #5: We've blown through it because we keep delivering on the top line, because we're winning with the guest. So I don't know why we would change that approach.

Kevin Hochman: We have blown through it because we keep delivering on the top line because we are winning with the guests. I do not know why we would change that approach, and I would expect that if we deliver on the upside on sales based on the acceleration that we have seen in the first part of the year, I would expect to see that also expand on restaurant margins.

Speaker #5: And I would expect that if we deliver on the upside on the sales based on the acceleration that we've seen, and the first part of the year, then I would expect to see that also expand on restaurant margins.

Speaker #4: Great. Thank you very much.

Andrew Strelzik: Great. Thank you very much.

Speaker #3: Your next question for today is from John Ivankoe with JP Morgan.

Operator: Your next question for today is from John Ivankoe with JPMorgan.

Speaker #6: Hi, thank you so much. First, I think, some housekeeping, and second may be a little bit more important. In terms of the remodels at 60 to 80 units, I know you've looked at a number of different packages in terms of what you would spend per unit.

John Ivankoe: Hi. Thank you so much. The first, I think housekeeping, and the second may be a little bit more important. In terms of the remodels at 60 to 80 units, I know you have looked at a number of different packages in terms of what you would spend per unit. Where are we kind of landing in 2027 on a per remodel basis, and is that the right number to assume going forward as well with normal type of inflation?

Speaker #6: Where are we kind of landing in '27 on a per-remodel basis? And is that the right number to assume going forward as well, with normal type of inflation?

Speaker #2: So John, that's a number that we're still finalizing right now. But what I will tell you is we have taken our capital guidance up.

Mika Ware: John, that is a number that we are still finalizing right now. What I will tell you is we have taken our capital guidance up. The majority of that increase year-over-year is due to the reimages, and we said we are going to do between 60 and 80. You will get an estimate there. We are continuing to refine that number. We are going to talk about it on Investor Day and give some more details around it then. I am pretty happy with the number. The first 250 are probably a little bit elevated because we have talked about those being some of the 911 restaurants that probably need a little bit of extra love.

Speaker #2: The majority of that increase year over year is due to the re-images. And we said we're going to do between 60 and 80. So you'll get an estimate there.

Speaker #2: We're continuing to refine that number. We're going to talk about it on Investor Day and give some more details around it then. But I'm pretty happy with the number.

Speaker #2: The first 250 are probably a little bit elevated because we talked about those being some of the 911 restaurants that probably need a little bit of extra love.

Mika Ware: The first 250 are probably a little bit elevated because we have talked about those being some of the 911 restaurants that probably need a little bit of extra love.They also have, a lot of those are older prototypes. In some of the early reimages, if they have the lower ceilings in the bar, we do an extra step where we open up the bar and actually remove a wall. That also has an incremental cost.

Speaker #2: They also have a lot of—those are older prototypes. And some of the early re-images, if they have the lower ceilings and the bar, we do an extra step where we open up the bar and actually remove a wall.

Mika Ware: They also have, a lot of those are older prototypes. In some of the early reimages, if they have the lower ceilings in the bar, we do an extra step where we open up the bar and actually remove a wall. That also has an incremental cost. Over time, I think this number is going to continue to evolve and come down as we get more scale, and then we work through the balance of the system. Again, more details on Investor Day, but the bulk of that increase in the year-over-year CapEx is for the reimage.

Speaker #2: So that also has an incremental cost. So, over time, I think this number is going to continue to evolve and come down as we get more scale.

Mika Ware: Over time, I think this number is going to continue to evolve and come down as we get more scale, and then we work through the balance of the system.Again, more details on Investor Day, but the bulk of that increase in the year-over-year CapEx is for the reimage.

Speaker #2: And then we kind of work through the balance of the system. But again, more details on Investor Day. But the bulk of that increase in the year-over-year capex is for the re-image.

Speaker #6: Well, we're definitely looking forward to the 17th. Okay. So let me ask another question on the menu. We've talked in the past about maybe opportunity maybe today wouldn't be the time, but we talked about the opportunity to kind of relaunch salads, bowls, maybe improving steak to kind of take another modern re-hit at the guiltless grill for how people are eating today.

John Ivankoe: Well, we are definitely looking forward to the 17th. Okay, let me ask another question on the menu. We have talked in the past about maybe opportunity, maybe today wouldn't be the time, but we have talked about the opportunity to kind of relaunch salads, bowls, maybe improving steak, to kind of take another modern re-hit at the Guiltless Grill for how people are eating today. Can you kind of talk about any major menu categories that could be addressed in the near term and could lead to future sales growth beyond 2027?

Speaker #6: So can you kind of talk about any major menu categories that could be addressed in the near term and could lead to future sales growth beyond '27?

Speaker #5: Yeah. We have shuffled a little bit of our priorities in '27 based on just what's happening in the zeitgeist. So let me just tell you what food innovation will be for '27.

Kevin Hochman: Yeah. We have shuffled a little bit of our priorities in 2027 based on just what is happening in the zeitgeist. Let me just tell you what food innovation will be for 2027, and then I will share with you what we are planning for 2028. Number one, we are going to continue to ride the chicken sandwich all year. That was certainly up in the air as we were launching. The plan was, if it does well, we are going to continue to drive it. That is the plan from an out-of-store marketing standpoint, and then we are going to continue each quarter to remind the teams on how to make the best sandwiches. It is not an easy thing to make a hand-breaded sandwich, so we are going to stay focused on that operationally. Secondly, we are in process of revamping the kids menu. We have launched the new kids menu.

Speaker #5: And then I'll share with you what we're planning for '28. So number one, we're going to continue to ride the chicken sandwich all year.

Speaker #5: So that certainly was—if it does well, we're going to continue to drive it. And so that's the plan from an out-of-store marketing standpoint.

Kevin Hochman: That is the plan from an out-of-store marketing standpoint, and then we are going to continue each quarter to remind the teams on how to make the best sandwiches. It is not an easy thing to make a hand-breaded sandwich, so we are going to stay focused on that operationally. Secondly, we are in process of revamping the kids menu. We have launched the new kids menu.This is about how we continue to get young families into Chili's. We know that kids are talking about Chili's.

Speaker #5: And then we're going to continue each quarter to remind the teams on how to make the best sandwiches. It's not an easy thing to make a hand-breaded sandwich.

Speaker #5: So, we're going to stay focused operationally. Secondly, we're in the process of revamping the kids' menu. So, we've launched a new kids' menu, and this is about how do we just continue to get young families into Chili's.

Kevin Hochman: This is about how we continue to get young families into Chili's. We know that kids are talking about Chili's. There's a very common thing we see in social media where if a kids team wins X, they want to all go to Chili's. We think the time is right to go after the kids menu. We have a new kids menu. We brought back grilled chicken tenders, which is a parent and kid favorite. Next quarter, we're going to be adding mini moltens back to that lineup as well as cheese quesadillas. We've recently launched new floats with our new Blue Bell ice cream, so we've upgraded our ice cream to a much more premium ice cream. We've also added a mocktail for kids, a Shirley Temple that's made with Sprite.

Speaker #5: We know that kids are talking about Chili's. We see there's a very common thing on social media where if a kids' team wins X, they all want to go to Chili's.

Kevin Hochman: There's a very common thing we see in social media where if a kids team wins X, they want to all go to Chili's. We think the time is right to go after the kids menu. We have a new kids menu. We brought back grilled chicken tenders, which is a parent and kid favorite. Next quarter, we're going to be adding mini moltens back to that lineup as well as cheese quesadillas. We've recently launched new floats with our new Blue Bell ice cream, so we've upgraded our ice cream to a much more premium ice cream.

Speaker #5: So we think the time is right to go after the kids' menu. So we have a new kids' menu. We brought back grilled chicken tenders, which is a parent and kid favorite.

Speaker #5: And then, next quarter, we're going to be adding Moltens back to that lineup as well as cheese quesadillas. And then, we've recently launched new floats with our new Blue Bell ice cream.

Speaker #5: So we've upgraded our ice cream to a much more premium ice cream. And then we've also added a top mocktail for kids—a Shirley Temple—that's made with Sprite.

Kevin Hochman: We've also added a mocktail for kids, a Shirley Temple that's made with Sprite.The new kids menu, part of that has happened now, and the rest of it will be finished next quarter. We finished renovating our pasta platform, so we've added sausage as a protein. We are hearing our chicken and sausage in our Q2 menu. We retrained teams on what we call pasta perfection. We did that last quarter. The pasta is now going to be featured in Q2 in a bigger way.

Speaker #5: So the new kids' menu part of that has happened now, and the rest of it will be finished next quarter. We've finished renovating our pasta platform.

Kevin Hochman: The new kids menu, part of that has happened now, and the rest of it will be finished next quarter. We finished renovating our pasta platform, so we've added sausage as a protein. We are hearing our chicken and sausage in our Q2 menu. We retrained teams on what we call pasta perfection. We did that last quarter. The pasta is now going to be featured in Q2 in a bigger way. We also have a new cooking process to make it a little bit hotter. On a dessert standpoint, we've got a couple things coming which we haven't done in a while. We just recently upgraded our skillet cookie. If you go in a restaurant now, you'll probably see it being advertised on our little table tent.

Speaker #5: So, we've added sausage as a protein. We are airing our chicken and sausage in our Q2 menu. And then we retrained teams on what we call Pasta Perfection.

Speaker #5: We did that last quarter. So the pasta is now going to be featured in Q2 in a bigger way. And then we also have a new cooking process to make it a little bit hotter.

Kevin Hochman: We also have a new cooking process to make it a little bit hotter. On a dessert standpoint, we've got a couple things coming which we haven't done in a while. We just recently upgraded our skillet cookie. If you go in a restaurant now, you'll probably see it being advertised on our little table tent.It's been upgraded with more premium ingredients, chocolate, brown sugar, and butter, to make them ooier and gooier. We've obviously upgraded the ice cream, which I talked about earlier, to Blue Bell ice cream.

Speaker #5: And then on a dessert standpoint, we've got a couple of things coming, which we haven't done in a while. We just recently upgraded our skillet cookie.

Speaker #5: So if you go into a restaurant now, you'll probably see it being advertised on our little table tent. It's been upgraded with more premium ingredients, chocolate, brown sugar, and butter to make them ooier and gooier.

Kevin Hochman: It's been upgraded with more premium ingredients, chocolate, brown sugar, and butter, to make them ooier and gooier. We've obviously upgraded the ice cream, which I talked about earlier, to Blue Bell ice cream. Lastly, we added this social media phenomenon, the molten on top of the cookie, and that is now something that we're selling in the restaurants. Next quarter, we're actually going to bring back cheesecake as a non-chocolate option for folks that want dessert. The other thing I would tell you about desserts that we're learning operationally is a lot of times in casual dining, servers don't sell dessert because they want to turn the tables on a busy Friday or Saturday, and we think we have an unlock on that one.

Speaker #5: We've obviously upgraded the ice cream, which I talked about earlier, to Blue Bell ice cream. And then, lastly, we added this social media phenomenon—the molten on top of the cookie.

Kevin Hochman: Lastly, we added this social media phenomenon, the molten on top of the cookie, and that is now something that we're selling in the restaurants. Next quarter, we're actually going to bring back cheesecake as a non-chocolate option for folks that want dessert. The other thing I would tell you about desserts that we're learning operationally is a lot of times in casual dining, servers don't sell dessert because they want to turn the tables on a busy Friday or Saturday, and we think we have an unlock on that one.

Speaker #5: And that is now something that we're selling in the restaurants. And then next quarter, we're actually going to bring back cheesecake as a non-chocolate option for folks that want dessert.

Speaker #5: The other thing I would tell you about desserts that we're learning operationally is, a lot of times in casual dining, servers don't sell desserts because they want to turn the tables on a busy Friday or Saturday.

Speaker #5: And if we think we have an unlock on that one, the feedback that we've been getting from the servers is like, "Hey, when I get the dessert, it goes to the bottom of the kitchen display system on zone three."

Kevin Hochman: The feedback that we've been getting from the servers is, "Hey, when I get to dessert, it goes to the bottom of the kitchen display system on zone 3. That's where we make desserts. It might take 15 minutes to make a dessert, so I really don't want to sell a dessert if it's going to take 15 minutes." What we're doing is we're going to test it first. Bump the desserts to the top of the screen so that desserts get priority, so we actually can get that sale. There's a lot of good things happening on the menu. in 2028, that's when we're going to launch in the fun half. We're going to launch salads, so we pushed that out a little bit based on what's happening.

Speaker #5: That's where we make desserts. And so, it might take 15 minutes to make a dessert. So I really don't want to sell a dessert if it's going to take 15 minutes.

Speaker #5: And so what we're doing is we're going to start we're going to test it first, bump the desserts to the top of the screen so that desserts get priority.

Speaker #5: So we actually can get that sale. So, there's a lot of good things happening on the menu. In '28, that's when we're going to launch into Fun Half.

Kevin Hochman: There's a lot of good things happening on the menu. in 2028, that's when we're going to launch in the fun half. We're going to launch salads, so we pushed that out a little bit based on what's happening.Then we'll have steaks and Guiltless Grill, hopefully in the back half of 2028 also.

Speaker #5: We're going to launch salads, so we pushed that out a little bit based on what's happening. And then we'll have steaks and Guiltless Grill, hopefully in the back half of '28 also.

Kevin Hochman: Then we'll have steaks and Guiltless Grill, hopefully in the back half of 2028 also.

Speaker #6: A lot going on. Thank you so much.

John Ivankoe: A lot going on. Thank you so much.

Speaker #1: Your next question is from Brian Harbour with Morgan Stanley.

Operator: Your next question is from Brian Harbour with Morgan Stanley.

Speaker #7: Yeah, thanks. Good morning. Micah, just a quick clarification. So is it correct that you expect to run roughly 3% price through this year? And then do you have any kind of directional call on mix impact that you're expecting?

Brian Harbour: Yeah, thanks. Good morning. Mica, just a quick clarification. Is it correct that you expect to run roughly 3% price through this year? Do you have any kind of directional color on mix impact that you're expecting?

Speaker #2: Yes. So what I would say as far as price goes, like I said, for the full year, it's going to be on the lower end, maybe just over 3%.

Mika Ware: Yes. So what I would say as far as price goes, like I said, for the full year, it is going to be on the lower end, maybe just over 3%. If you are thinking about the cadence by quarter, it is going to be a little elevated in Q1, so I would model, again, nice round numbers, 4, 3, 3, if you wanted just some general numbers on how the pricing will go at Chili's. As far as mix goes, like we said, it was slightly negative in Q4. We had the 0.2 that was driven by alcohol and appetizers. For the full year, the assumption, I would say it is basically flattish. We see Kevin Hochman talk, we have had a little momentum in the dessert category. But really, our strategy this year is to focus on driving traffic.

Speaker #2: If you're thinking about the cadence by quarter, it's going to be a little elevated in Q1. So I would model, again, nice round numbers.

Speaker #2: Four, three, three, three, if you wanted just some general numbers on how the pricing will go at Chili's. As far as mix goes, like we said, it was slightly negative in Q4.

Speaker #2: We had the 0.2—that was driven by alcohol and appetizers. For the full year, the assumption I would say is basically flattish. As Kevin talked about, we've had a little momentum in the dessert category.

Mika Ware: For the full year, the assumption, I would say it is basically flattish. We see Kevin Hochman talk, we have had a little momentum in the dessert category. But really, our strategy this year is to focus on driving traffic.We have talked about that a little bit with the flow through, but it is really about the Big Crispy Chicken Sandwich. The Big Crispy Chicken Sandwich is designed to drive traffic.

Speaker #2: But really, our strategy this year is to focus on driving traffic. We've talked about that a little bit with the flow-through, but it's really about the chicken sandwich.

Mika Ware: We have talked about that a little bit with the flow through, but it is really about the Big Crispy Chicken Sandwich. The Big Crispy Chicken Sandwich is designed to drive traffic. We have built up all these other businesses over the years, and those are all built into the run rate, and now we are really leaning into this one to drive traffic, and that is exactly what it is doing. So flattish mix for the year. You got the price just over 3%, and the balance of your sales will be from traffic.

Speaker #2: The chicken sandwich is designed to drive traffic. We've built up all these other businesses over the years. And those are all built into the run rate.

Mika Ware: We have built up all these other businesses over the years, and those are all built into the run rate, and now we are really leaning into this one to drive traffic, and that is exactly what it is doing. So flattish mix for the year. You got the price just over 3%, and the balance of your sales will be from traffic.

Speaker #2: And now we're really leaning into this one to drive traffic, and that's exactly what it's doing. So, flattish mix for the year—you've got the price just over 3%, and the balance of your sales will be from traffic.

Speaker #7: Okay, got it. Maybe I'll talk about this next month. But I guess, any of the North of Six initiatives that you'd expect to see visibly this fiscal year? Or, I guess, are any of those that you're kind of giving yourself credit for sooner at this point?

Brian Harbour: Okay, got it. Maybe you will talk about this next month, but I guess any of the North of Six initiatives that you would expect to see visibly this fiscal year, or I guess any of those that you are kind of giving yourself credit for sooner at this point?

Speaker #2: Well, let me tell you one thing we've done. So really, we look at north of six to really study their throughput. And so as traffic continues to increase, we want to capture all that traffic.

Mika Ware: Well, let me tell you one thing we have done. Really, we look at North of Six to really study their throughput. As traffic continues to increase, we want to capture all that traffic. We just talked about we are really excited about the start of the fiscal year. When we think about the labor model, that is the main place that we are learning from then. For example, in Q4, we just talked about that flow through was a little bit challenged. I talked about tomatoes. We saw that food and beverage is up a little bit, and also beef. But in our labor model, I will say, hey, we thought that labor would be a little bit more efficient. We have been telling our operators to staff for the sales they want.

Speaker #2: We just talked about how we're really excited about the start of the fiscal year. And when we think about the labor model, that's the main place that we're learning from then.

Speaker #2: So, for example, in Q4, we just talked about how flow-through was a little bit challenged. I mentioned tomatoes. We saw that food and beverage is up a little bit.

Speaker #2: And also beef. But in our labor model, I will say, hey, we thought that labor would be a little bit more efficient. We have been telling our operators to staff for the sales they want. So, we did have a little bit of—let’s say they weren’t as efficient as we wanted in labor.

Mika Ware: But in our labor model, I will say, hey, we thought that labor would be a little bit more efficient. We have been telling our operators to staff for the sales they want.We did have a little bit of, let's say, they weren't as efficient as we wanted in labor, but thank goodness we did that because traffic ramped up so quickly in July and August that they were all ready for it, and they're capturing it. We have actually built in a lot of that, where they exceeded the labor model last year. We built that into the model this year.

Mika Ware: We did have a little bit of, let's say, they weren't as efficient as we wanted in labor, but thank goodness we did that because traffic ramped up so quickly in July and August that they were all ready for it, and they're capturing it. We have actually built in a lot of that, where they exceeded the labor model last year. We built that into the model this year. A lot of it was built in the year-over-year already because they overspent. But we learned all that again from where are they leaning into this labor model. We're working on getting the base labor model exactly how we have it.

Speaker #2: But thank God, thank goodness we did that, because traffic ramped up so quickly in July and August that they were ready for it, and they're capturing it.

Speaker #2: So we have actually built in a lot of that, where they exceeded the labor model last year. We built that into the model this year.

Speaker #2: Now, a lot of it was built in the year, for the year already, because they overspent. But we learned all that again from, where are they leaning into this labor model?

Mika Ware: A lot of it was built in the year-over-year already because they overspent. But we learned all that again from where are they leaning into this labor model. We're working on getting the base labor model exactly how we have it.It's a great problem to have that every year we're growing the business so quickly that we're adjusting that labor model to make sure that we can capture all the guests and have the throughput improve. But that's kind of where we're focused on.

Speaker #2: We're working on getting the base labor model exactly how we have it. I mean, it's a great problem to have that every year we're growing the business so quickly that we're adjusting that labor model.

Mika Ware: It's a great problem to have that every year we're growing the business so quickly that we're adjusting that labor model to make sure that we can capture all the guests and have the throughput improve. But that's kind of where we're focused on.

Speaker #2: To make sure that we can capture all the guests and have the throughput improve. But that's kind of where we're focused.

Speaker #5: Yeah. And like I said in my prepared comments, it's going to be a lot of little initiatives that are going to help with throughput.

Kevin Hochman: Yes. Like I said in my prepared comments, it's a lot of little initiatives that are going to help with throughput. The major one I think that we're mostly focused on in the front half is going to be host stand. This is this idea that when we're on a wait, the average wait of our guests is 15 to 20 minutes. Even if we can't reduce that, we're going to try to reduce that. But even if we couldn't reduce that, even just managing the host stand better makes a huge difference for that guest. There's very different ways you can experience 15 to 20 minutes, and one way it can be a delighter, and another way it can be just the opposite.

Speaker #5: The main one I think that we're mostly focused on in the front half is going to be host stand. So this is the idea that when we're on a wait, the average wait for our guests is 15 to 20 minutes.

Speaker #5: And even if we can't reduce that, we're going to try to reduce that. But even if we couldn't reduce that, even just managing the host stand better makes a huge difference for that guest.

Kevin Hochman: There's very different ways you can experience 15 to 20 minutes, and one way it can be a delighter, and another way it can be just the opposite.We're going to focus on how they use the software to seat guests and to manage the seating of the restaurant, retraining the hosts on how to better work with the guests on waits. We're obviously going to work on how do we get tables seated faster, how do we get tables bussed faster. There's a whole host stand initiative coming in Q2, and then there's going to be just things throughout the year.

Speaker #5: There are very different ways you can experience 15 to 20 minutes. In one way, it can be a delighter, and in another way, it can be just the opposite.

Speaker #5: So we're going to focus on how they use the software to seat guests and to manage the seating of the restaurant, retraining the hosts on how to better work with the guests.

Kevin Hochman: We're going to focus on how they use the software to seat guests and to manage the seating of the restaurant, retraining the hosts on how to better work with the guests on waits. We're obviously going to work on how do we get tables seated faster, how do we get tables bussed faster. There's a whole host stand initiative coming in Q2, and then there's going to be just things throughout the year. For example, one of the pieces of feedback we've been getting from North of Six restaurants is some have tried to put in a second soda machine, but the reality is we just have a bottleneck on refills because we give a lot of free refills to our guests. During a busy Friday, Saturday night, that station can get clogged with both servers and food runners trying to get drinks.

Speaker #5: On weights, we're obviously going to work on how do we get tables seated faster? How do we get tables bused faster? So there's a whole host stand initiative coming in Q2.

Speaker #5: And then there's going to be just things throughout the year. So, for example, one of the pieces of feedback we've been getting for the north of six restaurants is to try to put in a second soda machine.

Kevin Hochman: For example, one of the pieces of feedback we've been getting from North of Six restaurants is some have tried to put in a second soda machine, but the reality is we just have a bottleneck on refills because we give a lot of free refills to our guests. During a busy Friday, Saturday night, that station can get clogged with both servers and food runners trying to get drinks.We have got some initiatives that will help us with the KDS to unclog that.

Speaker #5: But the reality is we just have a bottleneck on refills because we give a lot of free refills to our guests. And so during a busy Friday, Saturday night, that can get that station can get clogged with both servers and food runners trying to get drinks.

Speaker #5: And so we've got some initiatives that will help us with the KDF to unclog that. So, there's a lot of little things like that that are going to improve throughput.

Kevin Hochman: We have got some initiatives that will help us with the KDS to unclog that. There is a lot of little things like that that are going to improve throughput, but it is very clear that those North of Six restaurants that take on so much more traffic than our rest of our restaurants, they have the similar sized boxes, but they do things differently, and we are going to just continue to roll those things out, plus take new ideas from those North of Six restaurants into what we need to work on from a system standpoint.

Kevin Hochman: There is a lot of little things like that that are going to improve throughput, but it is very clear that those North of Six restaurants that take on so much more traffic than our rest of our restaurants, they have the similar sized boxes, but they do things differently, and we are going to just continue to roll those things out, plus take new ideas from those North of Six restaurants into what we need to work on from a system standpoint.

Speaker #5: But it's very clear that those north of six restaurants that take on so much more traffic than our rest of our restaurants, they have the similar size boxes, but they do things differently.

Speaker #5: And we're going to just continue to roll those things out, plus take new ideas from those north of six restaurants, and what we need to work on from a systems standpoint.

Speaker #1: Your next question.

Operator: Your next.

Mika Ware: Brian, are you good? Okay, there we go.

Speaker #2: Brian, are you good? Okay. There we go.

Speaker #1: Your next question is from Brian Vaccaro with Raymond James.

Operator: Your next question is from Brian Vaccaro with Raymond James.

Speaker #3: Hi. Thanks, good morning. Just on the quarter-to-date, just to kind of make sure we're all on the same page and setting reasonable first quarter expectations, would you be willing to share what the quarter-to-date comp is at Chili's or provide a guardrail there?

Brian Vaccaro: Hi. Thanks, and good morning. Just on the quarter to date, to kind of make sure we are all on the same page and setting reasonable Q1 expectations, would you be willing to share what the quarter to date comp is at Chili's or provide a guardrail there? In the Q4, could you also share what the 3 For Me mix was and the split between the $10.99 and higher tiers?

Speaker #3: And in the fourth quarter, could you also share what the "three for me" mix was and the split between the 1099 and higher tiers?

Speaker #2: Yep. Sure. So Brian, what I'll say and what I said in my prepared comments is that we did significantly accelerate in July and August.

Mika Ware: Yep, sure. Brian, what I will say, and what I said in my prepared comments is that we did significantly accelerate in July and August. If Chili's was 6% in Q4, that means it is higher than that in Q1. I am happy to talk about all of that when the quarter ends. We will go over all of the results in Q1. We are just really, really pleased with the strong start to the year and the traffic drivers. Again, like Kevin said, the chicken sandwich is outperforming. The Margarita of the Month has been fantastic. It continues to help us drive traffic. The Triple Dipper, I wanted to mention that, the Triple Dipper is something that has grown our business year-after-year-after-year and continues to grow today and is up even in Q1 year-over-year. We are happy with that.

Speaker #2: And so, if Chili's was 6% in Q4, that means it's higher than that in Q1. So I'm happy to talk about all of that when the quarter ends.

Speaker #2: We'll go over all of the results in Q1. But we're just really, really pleased with the strong start to the year and the traffic drivers.

Speaker #2: And so, again, like Kevin said, the chicken sandwich is outperforming. The Margaret of the Month has been fantastic. It continues to help us drive traffic.

Mika Ware: It continues to help us drive traffic. The Triple Dipper, I wanted to mention that, the Triple Dipper is something that has grown our business year-after-year-after-year and continues to grow today and is up even in Q1 year-over-year. We are happy with that.That is also built into our everyday value proposition. That is the first thing. The second thing you just asked is on the 3 For Me mix, and I am very pleased to say that it is very stable.

Speaker #2: And the Triple Dipper—I wanted to mention that. The Triple Dipper is something that has grown our business year after year after year.

Speaker #2: And continues to grow today and is up even in Q1, year over year. So we're happy with that. That's also built into our everyday value.

Mika Ware: That is also built into our everyday value proposition. That is the first thing. The second thing you just asked is on the 3 For Me mix, and I am very pleased to say that it is very stable. In Q3, it was just under 21%, and in Q4, it is just over 21% of our guests are opting in on the total platform for 3 For Me. Of that 21%, about 40% of the people are opting in to the $10.99 tier, which is very stable. That is what we reported every quarter. The takeaway would be 3 For Me continues to be very stable. We are very pleased that the chicken sandwich, and before that, the QP and the Smasher, they drive in new guests.

Speaker #2: A proposition. So, that is the first thing. The second thing you just asked is on the three-for-me mix, and I'm very pleased to say that it's very stable.

Speaker #2: So in Q3, it was just under 21%. And in Q4, it's just over 21% of our guests are opting in on the total platform for Three for Me.

Mika Ware: In Q3, it was just under 21%, and in Q4, it is just over 21% of our guests are opting in on the total platform for 3 For Me. Of that 21%, about 40% of the people are opting in to the $10.99 tier, which is very stable. That is what we reported every quarter. The takeaway would be 3 For Me continues to be very stable. We are very pleased that the chicken sandwich, and before that, the QP and the Smasher, they drive in new guests.

Speaker #2: And of that, 21%, about 40 of those 40% of the people are opting into the 1099 tier, which is very stable. That's what we reported every quarter.

Speaker #2: So the takeaway would be, three for me continues to be very stable. We are very pleased that the chicken sandwich, and before that, the QP and the Smasher, they're driving new guests.

Speaker #2: But the guests, some guests opt into the $10.99 that want it, but the majority of the guests then eat all over the menu and enjoy anything else. They upgrade to whatever they want on the premium options.

Mika Ware: Some guests opt into the $10.99 that want it, but the majority of the guests then eat all over the menu and enjoy anything else they upgrade to whatever they want on the premium options. That strategy continues to play out, and we are very, very pleased with it.

Speaker #2: So that strategy continues to play out, and we're very, very pleased with it.

Speaker #3: That's very helpful. Thank you. And I guess as a follow-up, if I could, just on the topic of accelerating unit growth and which you've obviously talked about in recent quarters and this morning, I guess can you just give us a sneak peek on just the opportunity you see there in the US?

Brian Vaccaro: That's very helpful. Thank you. As a follow-up, if I could, just on the topic of accelerating unit growth, which you've obviously talked about in recent quarters and this morning, can you just give us a sneak peek on just the opportunity you see there in the US? It would seem that there are some pretty large states in the Midwest and Pacific Northwest. I saw you are acquiring Alabama this morning.

Speaker #3: It would seem that there are some pretty large states in the Midwest and Pacific Northwest. And I saw you are acquiring Alabama this morning, as well.

Mika Ware: Yeah

Speaker #3: There are several states out there where the stores per pop might be one and a half to two instead of three and a half plus, like the system average.

Brian Vaccaro: There's several states out there where the stores per pop might be 1.5 to 2 instead of 3.5 plus, like the system average. So any early thoughts on the TAM in the US

Speaker #3: So any early thoughts on the TAM in the US that you could be thinking about?

Mika Ware: Yeah

Brian Vaccaro: that you could be thinking about?

Speaker #2: Yep. What I'll tell you about is we do think there's an opportunity to build to definitely build more chilies. We talked about kind of the new unit growth as a percent of revenues ramping up.

Mika Ware: Well, what I'll tell you about is we do think there's an opportunity to definitely build more Chili's. We talked about the new unit growth as a percent of revenues ramping up. So we're going to share all those details. Again, we got to save something for Investor Day. What I will tell you, Brian, is that what I really love about it is we still have opportunity to expand in our three biggest states, California, Texas, and Florida. We have a lot of opportunity in the Southeast to expand, like you said. We really have opportunity all over the United States. There's a lot of markets where we can continue to build out Chili's in just kind of those gray areas that we haven't built yet. There's a little bit of white space still in the Pacific Northwest, where we know we have opportunity there.

Speaker #2: So we're going to share all those details again. We've got to save something for Investor Day. But what I will tell you, Brian, is that what I really love about it is we still have opportunity to expand in our three biggest states: California, Texas, and Florida.

Speaker #2: We have a lot of opportunity in the Southeast to expand. Like you said, I mean, we really have opportunity all over the United States.

Mika Ware: We really have opportunity all over the United States. There's a lot of markets where we can continue to build out Chili's in just kind of those gray areas that we haven't built yet. There's a little bit of white space still in the Pacific Northwest, where we know we have opportunity there.

Speaker #2: And so, there's a lot of markets where we can continue to build out Chili's and just kind of those gray areas that we haven't built yet.

Speaker #2: There's a little bit of white space still in the Pacific Northwest where we know we have opportunity there. So we have a great opportunity.

Mika Ware: We have a great opportunity. I think we are going to be able to grow units over many, many years at Chili's and have a nice growth rate to build into our growth algorithm and a nice lever to pull for years to come. We are excited about the total opportunity for Chili's.

Speaker #2: I think we're going to be able to grow units over many, many years at Chili's and have a nice growth rate to build into our growth algorithm, and a nice lever to pull for years to come.

Speaker #2: So we are excited about the total opportunity for Chili's.

Speaker #3: All right. We'll look forward to the analyst day. Thanks for your time.

Brian Vaccaro: All right. Well, look forward to the Analyst Day. Thanks for your time.

Mika Ware: Okay. Thank you.

Speaker #2: Okay. Thank you.

Speaker #1: Your next question for today is from Andrew Charles with TD Cowen.

Operator: Your next question for today is from Andrew Charles with TD Cowen.

Speaker #4: Great, thanks so much. Mike, I had two different questions about the guidance. So just first, what contributes to the $0.70 53rd week impact?

Andrew Charles: Great. Thanks so much. Mike, I had two different questions about the guidance. First, what contributes to the $0.70, I think, sort of weak impact? It is a pretty large impact relative to the revenue guidance. Is the interest savings piece of it from the new debt structure a piece of it? Just curious more about how the $0.70 came to be.

Speaker #4: It's a pretty large impact relative to the revenue guidance. It's the interest savings piece of it from the new debt structure. Just curious, more about how the $0.70 came to be.

Speaker #2: Yeah. So what I would tell you is that at a very high level, this is how we did it. And we'll continue to refine that as the year goes on.

Mika Ware: Yeah. What I would tell you is at a very high level, this is how we did it, and we will continue to refine that as the year goes on. But it is just an incremental week of sales. You will look at what our sales volumes are at the end of the year, and it is just a flow-through assumption. It is going to be probably at restaurant level margins, it is probably going to be in that 30% to 35% range, and at the net income, it will probably be in the 20% to 25% range. It is just a flow-through assumption on that final week of sales.

Speaker #2: But it's just an incremental week of sales. So, you'll look at what our sales volumes are at the end of the year, and it's just a flow-through assumption.

Speaker #2: It's going to be—probably at restaurant-level margins, it's probably going to be in that 30% to 35% range. And at the net income line, it'll probably be in the 20% to 25% range.

Speaker #2: So it's just a flow-through assumption on that final week of sales.

Speaker #4: Okay. And then the other piece is, how does the impact of the 12-store franchise acquisition—how does that impact EPS guidance? And if you could also provide the purchase price you guys are paying for that as well, it'd be helpful.

Andrew Charles: Okay. The other piece is, the impact of the 12-store franchise acquisition, how does that impact EPS guidance? If you could also provide the purchase price you guys are paying for that as well, it would be helpful.

Speaker #2: So let me tell you how it impacted the guidance. And so I'm glad you asked that so I could clarify. So, we did get the 12 restaurants back.

Mika Ware: Let me tell you how it impacted the guidance. I am glad you asked that so I could clarify. We did get the 12 restaurants back. They are a little bit lower performing than the brand average. Also, remember, we have to net out the royalties we were already getting. The incremental revenues from those restaurants is probably around $30 million year over year. It is going to have a flat impact to EPS, basically, because it is a very small acquisition and with the opportunity of share purchase versus buying those back, it is probably a flat EPS impact. I do not know if I am going to share all the price on that. I think we will give some more details as it comes.

Speaker #2: They are a little bit lower performing than the brand average. And also, remember, we have to net out the royalties we were already getting.

Speaker #2: So the incremental revenues from those restaurants is probably around $30 million year-over-year. And then it's going to have a flat impact to EPS, basically.

Speaker #2: Because it's a very small acquisition, and with the opportunity of share purchase versus buying those back, it's probably a flat EPS impact. I don't know if I'm going to share all the price on that.

Mika Ware: I do not know if I am going to share all the price on that. I think we will give some more details as it comes.But we didn't put it in now, but we got a really great price on those restaurants, and we're really happy to welcome them back.

Speaker #2: I think we'll give some more details as it comes, but we didn't put it in now. But we got a really great price on those restaurants.

Mika Ware: But we didn't put it in now, but we got a really great price on those restaurants, and we're really happy to welcome them back.

Speaker #2: And we're really happy to welcome them back.

Speaker #4: Very good. Thank you for that.

Andrew Charles: Very good. Thank you for that.

Speaker #1: Your next question is from Sara Senatore with Bank of America.

Operator: Your next question is from Sara Senatore with Bank of America.

Sara Senatore: Oh, thank you. Maybe just a quick follow-up on that and then a question about Maggiano's. I noticed you're acquiring real estate. Is that a signal about how you're thinking about growth ahead in terms of approaching unit growth? I know there have been periods of real estate acquisition, but also sale leaseback. So just as I contemplate how you think about kind of the outlook as you're accelerating unit growth. So that was one quick question, and then I do have a follow-up.

Speaker #5: Oh, thank you. Maybe just a quick follow-up on that, and then a question about Maggiano's. I noticed you're acquiring real estate. Is that a signal about how you're thinking about growth ahead, in terms of approaching unit growth?

Speaker #5: I know there have been periods of real estate acquisition, but also sale-leaseback. So just as I contemplate how you think about the outlook as you're accelerating unit growth—

Speaker #5: So that was one quick question, and then I do have a follow-up. Okay. So really,

Mika Ware: Okay. Really, our approach to growing Chili's in the future is going to be that we are open. I will tell you, the majority of the opportunities are going to be to continue to lease our locations and have operating leases, which is what we are going to continue to do. I guess what I would signal is, if there is an opportunity that we could purchase the land, if it makes sense, we are not against that if it helps us to continue to grow Chili's and it makes sense in certain areas. When we did the deal with Valenti, they own that real estate, and we were happy to take it back. We will continue to hold it. We will look at it to see what we think the long term is. I do not know that we have a lot of sell leasebacks in our future.

Speaker #2: Our approach to growing Chili's in the future is going to be that we're open. Now, I will tell you, the majority of the opportunities are going to be to continue to lease.

Speaker #2: Our locations have operating leases, which is what we're going to continue to do. But I guess what I would signal is if there's an opportunity that we could purchase the land, if it makes sense, we're not against that.

Speaker #2: If it helps us to continue to grow Chili's and it makes sense in certain areas. When we did the deal with Valente, they own that real estate.

Mika Ware: When we did the deal with Valenti, they own that real estate, and we were happy to take it back. We will continue to hold it. We will look at it to see what we think the long term is. I do not know that we have a lot of sell leasebacks in our future.

Speaker #2: And we were happy to take it back. We'll continue to hold it. We'll look at it to see what we think the long term is.

Speaker #2: I don't know that we have a lot of sale-leasebacks in our future. We probably prefer just to hold the real estate. Some of these are older units.

Mika Ware: We prefer probably just to hold the real estate. Some of these are older units. We do not want to burden them with some really high and long rents on there. That is not going to be a big strategy moving forward. What I would say is, primarily, we are going to lease. If the opportunity comes to buy, we are not against it, but we are not overhauling our strategy to be an all-buy strategy by any means.

Speaker #2: We don't want to burden them with some really high and long rents on there, so that's not going to be a big strategy moving forward.

Speaker #2: But what I would say is, primarily, we're going to lease. If the opportunity comes to buy, we're not against it. But we're not overhauling our strategy to be an all-buy strategy by any means.

Speaker #5: Got it. Thank you. And then I guess maybe just two quick modeling questions. One is, the negative mix—is that sort of a continuation of the check management you saw in April?

Sara Senatore: Got it. Thank you. I guess maybe just two quick modeling questions. One is, the negative mix, is that sort of a continuation of the check management you saw in April? Can you give any color on Maggiano's? You mentioned it was being contemplated in the 2027 guidance. I know to Kevin's point, it is less than 4% of operating profit, but just curious about that. Thank you.

Speaker #5: And then can you give any color on Maggiano's? You mentioned it was being contemplated in the 2027 guidance. I know Kevin's point is less than 4% of operating profit, but just curious about that.

Speaker #5: Thank you.

Speaker #2: Yeah. So as we move forward on mix, I think because the chicken sandwich is just going so great, we're just really—again, we're just modeling, I would say, flattish for the next year.

Mika Ware: Yeah. As we move forward on mix, I think because the Big Crispy Chicken Sandwich is just going so great, we are just really, again, we are just modeling, I would say, flattish for the next year. The negative 0.2 was just a continuation of, like we said, a little bit of check management with alcohol and appetizers. Kevin talked about desserts. Those are hanging in there a little bit better. So we feel good about mix. Again, I like to remind everyone that we have spent so many years building the mix up. When we built up the Chicken Crispers business, we built up the Triple Dipper business, the fajita, the rib, and all those are maintaining, which is wonderful. That is why we are back to this flattish. There is a little bit of check management, but it is very, very small.

Speaker #2: The negative 0.2 was just a continuation of, like we said, a little bit of check management with alcohol and appetizers. Also, Kevin talked about desserts.

Speaker #2: Those are hanging in there a little bit better, so we feel good about mix. And again, I like to remind everyone that we've spent so many years building the mix up when we built up the CRISPR business.

Mika Ware: When we built up the Chicken Crispers business, we built up the Triple Dipper business, the fajita, the rib, and all those are maintaining, which is wonderful. That is why we are back to this flattish. There is a little bit of check management, but it is very, very small.As far as Maggiano's goes, I will give you some high-level assumptions. What we have done is we have basically assumed in this guidance that Maggiano's is going to have flat revenues and flat profits year over year.

Speaker #2: We built up the Triple Dipper business, the Fajita, the Rib, and all those are maintaining, which is wonderful. And so that's why we're back to this flattish.

Speaker #2: But there is a little bit of check management, but it's very, very small. As far as Maggiano's goes, I'll give you some high-level assumptions.

Mika Ware: As far as Maggiano's goes, I will give you some high-level assumptions. What we have done is we have basically assumed in this guidance that Maggiano's is going to have flat revenues and flat profits year over year. That just gives us a little bit of room so that we have seen some green shoots, like Kevin said, so that we just have room to have Maggiano's to be able to kind of have the pressure off of them where they can just really focus on improving their food service and atmosphere, and they can get that traffic rolling again. But those are the assumptions at high level built in for Maggiano's.

Speaker #2: And what we've done is we've basically assumed in this guidance that Maggiano's is going to have flat revenues, and flat profits, year over year.

Speaker #2: That just gives us a little bit of room so that we've seen some green shoots, like Kevin said, so that we just have room to have Maggiano's be able to kind of have the pressure off of them, where they can just really focus on improving their food service and atmosphere.

Mika Ware: That just gives us a little bit of room so that we have seen some green shoots, like Kevin said, so that we just have room to have Maggiano's to be able to kind of have the pressure off of them where they can just really focus on improving their food service and atmosphere, and they can get that traffic rolling again. But those are the assumptions at high level built in for Maggiano's.

Speaker #2: And they can get that traffic rolling again. But those are the assumptions at a high level built in for Maggiano's.

Speaker #5: Thank you.

Sara Senatore: Thank you.

Speaker #1: Your next question is from Chris Carrill with KeyBank Capital Markets.

Operator: Your next question is from Chris Carril with KeyBanc Capital Markets.

Chris Carril: Hi. Good morning, and thanks for the question. Just on the chicken sandwich platform, can you maybe expand a little bit more, in terms of what you saw around guest demand, around the different tiers and price levels you offer, maybe relative to your expectations? Kevin, you gave us some detail around the number of chicken sandwiches sold per day and how that is continuing to build. Could you talk maybe about how advertising and awareness drove that growth versus maybe other factors, and how the trajectory of chicken sandwich compares to what you saw with Big Smasher and Big QP? Thanks.

Speaker #6: Hi, good morning, and thanks for the question. So, just on the chicken sandwich platform, can you maybe expand a little bit more in terms of what you saw around guest demand across the different tiers and price levels you offer?

Speaker #6: Maybe relative to your expectations. And Kevin, you gave us some detail around the number of chicken sandwiches sold per day and how that's continuing to build.

Chris Carril: Kevin, you gave us some detail around the number of chicken sandwiches sold per day and how that is continuing to build. Could you talk maybe about how advertising and awareness drove that growth versus maybe other factors, and how the trajectory of chicken sandwich compares to what you saw with Big Smasher and Big QP? Thanks.

Speaker #6: So, can you talk maybe about how advertising and awareness drove that growth versus maybe other factors? And how the trajectory of the chicken sandwich compares to what you saw with Big Smasher and Big QP?

Speaker #6: Thanks.

Speaker #2: I'll start with the Three-for-Me question on the chicken sandwich. So, we're very mindful about maintaining our $10.99 level for the Three-for-Me. When something new comes in, the other one moves out.

Mika Ware: I'll start with the 3 For Me question on the chicken sandwich. We're very mindful about maintaining our $10.99 level of the 3 For Me. When something new comes in, the other one moves out. In this case, the Big Smasher moved up to $12.99, and the Big Crispy moved in at $10.99, and The Big QP Burger. Like I said, those levels have stayed very similar. As far as the 3 For Me goes, we're selling about a similar amount as we did before of The Big QP Burger and the Big Smasher. The rest of the chicken sandwiches and the increases that Kevin talked about are really on the base menu because we have all the sauced versions, we have the premium, the deluxe, and that's where we're selling the bulk of our incremental chicken sandwiches are on, I would say, the base menu.

Speaker #2: And so, in this case, the Big Smasher moved up to $12.99. And the Big Crispy moved to $10.99. And then the Big QP, like I said, those levels have stayed very similar.

Speaker #2: So as far as the Three-for-Me goes, we're selling about a similar amount as we did before. The Big QP and the Big Smasher. The rest of the chicken sandwiches and the increases that Kevin talked about are really on the base menu, because we have all the sauce versions.

Mika Ware: The rest of the chicken sandwiches and the increases that Kevin talked about are really on the base menu because we have all the sauced versions, we have the premium, the deluxe, and that's where we're selling the bulk of our incremental chicken sandwiches are on, I would say, the base menu.

Speaker #2: We have the premium, the deluxe. And so that's where we're selling the bulk of our incremental chicken sandwiches—on, I would say, the base menu.

Speaker #6: Yeah. And then as far as the driving trial and awareness, the curve—when you look at the curve, it looks almost exactly like the QP and the Smasher curve, just higher.

Kevin Hochman: Yeah. As far as the driving trial and awareness, when you look at the curve, it looks almost exactly like The Big QP Burger and the Smasher curve, just higher. It started off at a certain level, and then a few months in, it starts to accelerate, which is what we saw on the others too. That makes us feel good that it's kind of behaving like the other two. That's why we'll just continue to drive advertising on it. A lot of folks have seen it quite a few times in the investment community or in our four walls, but the reality is the vast majority of our guests haven't seen a Chili's ad. I hate to tell the marketing team. As they continue to drive and build the awareness of it with a very similar campaign, that awareness will compound over time.

Speaker #6: So it started off at a certain level, and then a few months in, it starts to accelerate, which is what we saw on the others too.

Speaker #6: So that makes us feel good that it's kind of behaving like the other two. So that's why we've just continued to drive advertising on it.

Speaker #6: I mean, a lot of folks have seen it quite a few times in the investment community or within our four walls. But the reality is, the vast majority of our guests haven't seen a Chili's ad.

Kevin Hochman: A lot of folks have seen it quite a few times in the investment community or in our four walls, but the reality is the vast majority of our guests haven't seen a Chili's ad. I hate to tell the marketing team. As they continue to drive and build the awareness of it with a very similar campaign, that awareness will compound over time.That's why we stay on these things. We don't do it for four weeks and then move on to something else. That's had incredible success for us since we've started the 3 For Me campaign.

Speaker #6: I hate to tell the marketing team, but as they continue to drive and build awareness of it with a very similar campaign, that awareness will compound over time.

Speaker #6: So that's why we stay on these things. We don't do it for four weeks and then move on to something else. That's had incredible success for us since we started the Three-for-Me campaign.

Kevin Hochman: That's why we stay on these things. We don't do it for four weeks and then move on to something else. That's had incredible success for us since we've started the 3 For Me campaign. We don't plan to change that. As long as the customer's responding well to the item, which is what it appears to be on the Big Crispy, we're going to continue to drive that. Then we'll reassess whether in year 2 of Big Crispy, do we continue to advertise that? Do we bring new news to Big Crispy, or do we move to another item on $10.99? We've done the same thing every year for the last almost four years now, and we've had success, so we don't plan on changing that formula. We think that is creating value certainty for the guest and really repositioning us in the market.

Speaker #6: So we don't plan to change that. As long as the customer is responding well to the item, which is what it appears to be on the Big Crispy, we're going to continue to drive that.

Kevin Hochman: We don't plan to change that. As long as the customer's responding well to the item, which is what it appears to be on the Big Crispy, we're going to continue to drive that. Then we'll reassess whether in year 2 of Big Crispy, do we continue to advertise that? Do we bring new news to Big Crispy, or do we move to another item on $10.99?

Speaker #6: And then we'll reassess whether, in year two of Big Crispy, do we continue to advertise that? How do we bring new news to Big Crispy, or do we move to another item on 1099?

Speaker #6: But we do that. We've done the same thing every year for the last almost four years now, and we've had success. So, we don't plan on changing that formula.

Kevin Hochman: We've done the same thing every year for the last almost four years now, and we've had success, so we don't plan on changing that formula. We think that is creating value certainty for the guest and really repositioning us in the market.

Speaker #6: We think that is creating value certainty for the guest and really repositioning us in the market. Great. Thank you. I'll pass it along.

Chris Carril: Great. Thank you. I'll pass it along.

Speaker #1: Your next question is from Jon Tower with Citi.

Operator: Your next question is from Jon Tower with Citi.

Speaker #6: All right. Thanks for taking the question. Kevin, you earlier had talked about the cycle time efforts and what you’ve got lined up for 2027 in terms of what you’re tackling.

Jon Tower: Great. Thanks for taking the question. Kevin, you earlier talked about the cycle time efforts and what you got lined up for 2027, in terms of what you are tackling. I am just curious how you are thinking beyond that. Are there larger chunks or areas that you can go after in 2028 and beyond? I am just trying to get an idea of how long this runway is for you to kind of continue to improve the cycle times.

Speaker #6: I'm just curious how you're thinking beyond that. Are there larger chunks or areas that you can go after in 2028 and beyond? I'm just trying to get an idea of how long this runway is for you to continue to improve the cycle times.

Speaker #6: Yeah. I think there are two areas I think that we will continue to work on, that we're going to learn about, which is the actual dining experience.

Kevin Hochman: Yeah. I think there are two areas I think that we will continue to work on that we are going to learn about, which is the actual dining experience. In that one, I think there is a ton of upside just because it is a big part of the business, and we continue to uncover basically places where things bottleneck. We are just going to continue to walk through those things. For example, host stand is a big one. That is a major initiative for us. But we also know that the order time is a little bit of a blockage. We are finally finishing rolling out the new UX for the order tablets. That is going to speed up ordering. What we are learning at the soft drink station, the fact that it is harder to get refills as fast, and that is going to speed up time.

Speaker #6: And so, in that one, I think there's a ton of upside just because it's a big part of the business, and we continue to uncover, basically, places where things bottleneck.

Speaker #6: And so we're just going to continue to walk through those things. So, for example, host stand's a big one that is a major initiative for us.

Speaker #6: But we also know that the order time is a little bit of a blockage. And so, when we're finally finishing rolling out the new UX for the order tablets, that's going to speed up ordering.

Kevin Hochman: We are finally finishing rolling out the new UX for the order tablets. That is going to speed up ordering. What we are learning at the soft drink station, the fact that it is harder to get refills as fast, and that is going to speed up time.Then this idea of dessert bottlenecks. When people do order dessert, it ends up being a long time. That is going to improve cycle time, but it is also going to improve the server being more willing to sell desserts, right?

Speaker #6: And what we're learning at the soft drink station is the fact that it's harder to get refills as fast, and that's going to speed up time.

Speaker #6: And then this idea of dessert bottlenecks, so when people do order dessert, it ends up being a long time. That's going to improve cycle time.

Kevin Hochman: Then this idea of dessert bottlenecks. When people do order dessert, it ends up being a long time. That is going to improve cycle time, but it is also going to improve the server being more willing to sell desserts, right? So I think we are just going to continue to uncover things from a dining room standpoint, and I think we got at least three years of runway on that one. The other one, which we have not even scratched the surface on, is to go. It is 25% of our business, and we have a huge opportunity to figure out how to get friction out of that to make it seamless.

Speaker #6: But it's also going to improve the server being more willing to sell desserts, right? So I think we're just going to continue to uncover things from a dining room standpoint.

Kevin Hochman: So I think we are just going to continue to uncover things from a dining room standpoint, and I think we got at least three years of runway on that one. The other one, which we have not even scratched the surface on, is to go. It is 25% of our business, and we have a huge opportunity to figure out how to get friction out of that to make it seamless.

Speaker #6: And I think we've got at least three years of runway on that one. The other one, which we haven't even scratched the surface on, is to-go.

Speaker #6: It's 25% of our business, and we have a huge opportunity to figure out how to get friction out of that to make it seamless.

Speaker #6: When you look at the players in QSR that win on digital, meaning they create habits with their guests that they can rely on to get a quick take-home meal.

Kevin Hochman: When you look at the players in QSR that win on digital, meaning they create habits of their guests that they can rely on to get a quick take-home meal, it is all about a fast app, a seamless pickup experience, and accurate pack-outs. We think those three things we can go nail over the next couple of years, and we think that we are uniquely positioned in casual dining to go after those transactions because if you look at the things that we are winning with, it is all around the Better Than Fast Food campaign. These are things that people think about when they think about take-home meals. So burgers and chicken sandwiches and Chicken Crispers and some of our Tex-Mex offerings. These are all things that we think are positioning ourselves well, but we have got to figure out that operation. I think that is a huge task.

Speaker #6: It's all about a fast app, a seamless pickup experience, and accurate packouts. And we think those three things we can go nail over the next couple of years.

Speaker #6: And we think that we're uniquely positioned in casual dining to go after those transactions, because if you look at the things that we're winning with, it's all around the Better than Fast Food campaign.

Speaker #6: So these are things that people think about when they think about take-home meals—so burgers and chicken sandwiches, and chicken tenders, and some of our Tex-Mex offerings.

Kevin Hochman: These are things that people think about when they think about take-home meals. So burgers and chicken sandwiches and Chicken Crispers and some of our Tex-Mex offerings. These are all things that we think are positioning ourselves well, but we have got to figure out that operation. I think that is a huge task.

Speaker #6: These are all things that we think are positioning ourselves well. What we've got to figure out is that operation. I think that's a huge task.

Speaker #6: We're going to talk a little bit more about it when you guys come in for Investor Day. But that's the next big frontier I'm excited about, because there are so many more transactions in QSR that we could go after with the off-premise occasion.

Kevin Hochman: We are going to talk a little bit more about it when you guys come in for Investor Day, but that is the next big frontier I am excited about because there are so many more transactions in QSR that we could go after with the off-premise occasion.

Speaker #6: Awesome, thank you for that. I guess one more follow-up. Well, I guess I've asked this question before in previous calls. I'm curious if you have any data behind it now in terms of the guests who lapsed and have now come back to Chili's over the years—how they're using the brand, perhaps differently than maybe you thought, or maybe they're using the brand or the menu as you had expected.

Jon Tower: Awesome. Thank you for that. I guess one more follow-up. Well, I guess I have asked this question before in previous calls, but I am curious if you have any data behind it now in terms of the guest behavior. A lot of those guests that had been lapsed and now have come back to Chili's over the years, how they are using the brand perhaps differently than maybe you thought, or maybe they are using the brand or the menu as you had expected. I am curious if you have got that customer journey, how they have been coming back in.

Speaker #6: I'm curious if you've got kind of that customer journey—how they've been coming back in. Yeah, we don't really have that detail. I mean, the level that we have with the token data is basically that we're bringing a lot of new guests in.

Kevin Hochman: Yeah. We do not really have that detail. The level that we have with the token data is basically that we are bringing a lot of new guests in, so a little bit more than half of the tokens that we see each month are new. Then when we track them, now we can do it within 9 months, we can understand what their repeat behavior is, and it looks a lot like existing guests. So that is basically what we know. We have some broad things of younger guests tend to order more Triple Dippers. Older guests tend to order more of the 3 For Me. So we have some of that, but I do not have the data to answer your specific question of how our lapsed users, when they come back to the brand, using the brand differently. We do not have it to that level.

Speaker #6: So a little bit more than half of the tokens that we see each month are new. And then, when we track them—now we can do it within nine months—we can understand what their repeat behavior is.

Speaker #6: And it looks a lot like existing guests. So that's basically what we know. We have some broad things on younger guests; they tend to order more Triple Dippers.

Kevin Hochman: We have some broad things of younger guests tend to order more Triple Dippers. Older guests tend to order more of the 3 For Me. So we have some of that, but I do not have the data to answer your specific question of how our lapsed users, when they come back to the brand, using the brand differently. We do not have it to that level.

Speaker #6: Older guests tend to order more of the three-for-me. So we have some of that. But we don't really I don't know how to answer your I don't have the data to answer your specific question of our how our lapsed users when they come back to the brand using the brand differently.

Speaker #6: We don't have it to that level.

Speaker #2: You know what, John? But what we do know is we continue to draw in new guests every quarter. And then we talk about how three-for-me is pretty stable.

Mika Ware: You know what, John, what we do know is we continue to draw in new guests every quarter. Then we talk about how 3 For Me is pretty stable, so we are not seeing an over-index to value. All of the categories, they have grown over time, but then they are all pretty stable. We are not seeing any huge mix shifts in the menu with new guests. It is kind of like we said, we are attracting new guests in, and they quickly fall and look like existing guests over time and then just keep coming back. But they are utilizing the menu basically the same. We are not seeing any big changes in the run rates of all the different particular categories or a run-up in 3 For Me.

Speaker #2: So we're not seeing an over-index to value. And all of the categories, they've grown over time, but then they're all pretty stable. And so we're not seeing any huge mix shifts in the menu with new guests.

Speaker #2: It's kind of like we said, we're attracting new guests in, and they quickly fall and look like existing guests over time and then just keep coming back.

Mika Ware: It is kind of like we said, we are attracting new guests in, and they quickly fall and look like existing guests over time and then just keep coming back.But they are utilizing the menu basically the same. We are not seeing any big changes in the run rates of all the different particular categories or a run-up in 3 For Me.

Speaker #2: But they're utilizing the menu basically the same. We're not seeing any big changes in the run rates of all the different particular categories or a run-up in three-for-me.

Speaker #6: Awesome. Thank you for the time.

Jon Tower: Awesome. Thank you for the time.

Speaker #1: Your next question is from Margaret-May Burstock with Wolf Research.

Operator: Your next question is from Margaret-May Binshtok with Wolfe Research.

Speaker #4: Good morning. Thanks for taking my question. This is two-parter. I want to ask, I know you guys have talked about the success of the big crispy platform, but anything to call in terms of the incremental traffic?

Margaret-May Binshtok: Good morning. Thanks for taking my question. This is a two-parter. I wanted to ask, I know you guys have talked about the success of the Big Crispy platform, but anything to call out in terms of the incremental traffic? Is that a younger guest? Anything between the different income cohorts, the type of guests that that is bringing in? The second part I just wanted to ask, since you guys launched the Margarita of the Month Club earlier this year, have you seen any sort of sequential improvement in alcohol incidence? Thank you.

Speaker #4: Is that a younger guest? Anything between the different co-income cohorts, the type of guests that that's bringing in? And then the second part, I just want to ask, since you guys launched the Margarita of the Month Club earlier this year, have you seen any sort of sequential improvement in alcohol incidence?

Speaker #4: Thank you.

Speaker #2: Thanks for the question. Margaret, so you know what the great thing is about chilies and about burgers and chicken sandwiches? Everybody loves them. So our traffic's been up, and we're growing all we're growing all income levels, low, medium, high.

Mika Ware: Thanks for the question, Margaret. So you know what the great thing is about Chili's and about burgers and chicken sandwiches? Everybody loves them. Our traffic's been up, and we're growing all. We're growing all income levels, low, medium, high. We're growing all of our different demographics. Historically, we had a little pop in our younger guests with the initial success of the Triple Dipper. We've maintained that. We continue to grow and attract all the different demographics and cohorts. So we're really pleased. The chicken sandwich, again, has behaved just like the burgers. It's a huge segment, and it's broadly appealing to everyone. We're not seeing one particular group drive the traffic. It's all the groups, which we love because it's not very specific to one group. It's very broadly appealing.

Speaker #2: We're growing all of our different demographics. And so, historically, we had a little pop in our younger guests with the initial success of the Triple Dipper.

Speaker #2: We've maintained that. And we continue to grow and attract all the different demographics and cohorts. So we're really pleased. The chicken sandwich, again, has behaved just like the burgers.

Mika Ware: So we're really pleased. The chicken sandwich, again, has behaved just like the burgers. It's a huge segment, and it's broadly appealing to everyone. We're not seeing one particular group drive the traffic. It's all the groups, which we love because it's not very specific to one group. It's very broadly appealing.As far as the Margarita of the Month Club goes, it's been a huge success for us just in general as an everyday value platform for us. I know our guests really appreciate that $6 margarita.

Speaker #2: It's a huge segment, and it's broadly appealing to everyone. And so we're not seeing one particular group drive the traffic. It's all the groups, which we love, because it's not very specific to one group.

Speaker #2: It's very broadly appealing. As far as a Margarita of the Month Club goes, it's been a huge success for us just in general as an everyday value platform for us.

Mika Ware: As far as the Margarita of the Month Club goes, it's been a huge success for us just in general as an everyday value platform for us. I know our guests really appreciate that $6 margarita. It's fun. It's colorful. They enjoy seeing what's next. It's culturally relevant. The one we had in July, Kevin mentioned it was really successful. I would say overall, the Margarita of the Months have been very successful. They're driving margarita incidents. They're driving traffic. Now, if you take a bigger step back and look at the whole alcohol category, we're feeling a little pressure like everybody else. For the category as a whole, we continue to sell market share, and we're topping market share, but we're feeling a little bit of that macro pressure like everyone else is. But Margarita of the Month, specifically, great value in helping us drive traffic.

Speaker #2: So, I know our guests really appreciate that $6 Margarita. It's fun, it's colorful, they enjoy seeing what's next, and it's culturally relevant. The one we had in July—Kevin mentioned it.

Mika Ware: It's fun. It's colorful. They enjoy seeing what's next. It's culturally relevant. The one we had in July, Kevin mentioned it was really successful. I would say overall, the Margarita of the Months have been very successful. They're driving margarita incidents. They're driving traffic. Now, if you take a bigger step back and look at the whole alcohol category, we're feeling a little pressure like everybody else.

Speaker #2: It was really successful. So I would say overall, the Margarita of the Months have been very successful. They're driving Margarita incidence. They're driving traffic.

Speaker #2: Now, if you take a bigger step back and look at the whole alcohol category, we're feeling a little pressure like everybody else. As the whole category, for the category as a whole, we continue to sell market share, and we're a top-end market share.

Mika Ware: For the category as a whole, we continue to sell market share, and we're topping market share, but we're feeling a little bit of that macro pressure like everyone else is. But Margarita of the Month, specifically, great value in helping us drive traffic.

Speaker #2: But we're feeling a little bit of that macro pressure like everyone else is. But Margarita of the Month specifically is a great value and helping us drive traffic.

Speaker #6: Yeah. And then one other thing I would add is, I think maybe five years ago, the prior team viewed Margarita of the Month as just like a, how do we get more drink attachment?

Kevin Hochman: Yeah. Then one other thing I would add is I think maybe five years ago, the prior team viewed Margarita of the Month as just like a, how do we get more drink attachment? It does play a great role to do that, still does. We tested it years ago when I first got here. We tried to take it off the table, and it was a mistake. We know that it drives drink attachment, even if the broader macro trends are against alcohol attachment and what's going on with gas prices. The second thing I think that is important to note is the new marketing team has done a phenomenal job of figuring out what are different Margarita of the Month we can use to drive traffic. We saw that in last November, with our witch-themed margs.

Speaker #6: And it does play a great role to do that. It still does. So we tested it years ago when I first got here, which I took it off the table, and it was a mistake.

Speaker #6: So we know that it drives drink attachment, even if the broader macro trends are against alcohol attachment and what's going on with gas prices.

Speaker #6: So but the second thing I think that is important to note is the new marketing team has done a phenomenal job of figuring out what are different Margaritas of the Month we can use to drive traffic.

Kevin Hochman: The second thing I think that is important to note is the new marketing team has done a phenomenal job of figuring out what are different Margarita of the Month we can use to drive traffic. We saw that in last November, with our witch-themed margs.We saw it with the most recent Bombshell Marg in July. I think they're doing a better job. Not every month is going to be this big traffic creating margarita. These guys are very planful about which ones they're going to do and how they're going to surround it with advertising and social.

Speaker #6: We saw that within last November with our witch-themed marks. We saw it with the most recent bombshell mark in July. And so I think they're doing a better job.

Kevin Hochman: We saw it with the most recent Bombshell Marg in July. I think they're doing a better job. Not every month is going to be this big traffic creating margarita. These guys are very planful about which ones they're going to do and how they're going to surround it with advertising and social. But they've done an exceptional job of creating a second growth lever on Margarita of the Month, so it's not just about attachment and an entry price point, but it's also now about traffic driving for certain margs, and I think that's going to continue. When I look at the innovations they have planned, I think it's not going to be every month, but often they're going to be looking at things that are actually going to drive the total box traffic, not just alcohol attachment.

Speaker #6: Not every month's going to be this big traffic-creating Margarita. These guys are very planful about which ones they're going to do and how they're going to surround it with advertising and social.

Speaker #6: But they've done an exceptional job of creating a second growth lever on Margarita of the Month. So it's not just about attachment and entry price point, but it's also now about traffic driving for certain marks.

Kevin Hochman: But they've done an exceptional job of creating a second growth lever on Margarita of the Month, so it's not just about attachment and an entry price point, but it's also now about traffic driving for certain margs, and I think that's going to continue. When I look at the innovations they have planned, I think it's not going to be every month, but often they're going to be looking at things that are actually going to drive the total box traffic, not just alcohol attachment.

Speaker #6: And I think that's going to continue. When I look at the innovations they have planned, I think it's not going to be every month, but often they're going to be looking at things that are actually going to drive the total box traffic, not just alcohol attachment.

Speaker #4: Thank you.

Margaret-May Binshtok: Thank you.

Speaker #1: We have reached the end of the question-and-answer session. I will now turn the call over to Kim Sanders for closing remarks.

Operator: We have reached the end of the question and answer session. I will now turn the call over to Kim Sanders for closing remarks.

Speaker #2: Thank you, Holly. That concludes our call for today. We appreciate everyone joining us and look forward to presenting an update on our long-term growth plans that are upcoming investor day in September and updating you on our first quarter fiscal year 2027 results in October.

Kim Sanders: Thank you, Holly. That concludes our call for today. We appreciate everyone joining us and look forward to presenting an update on our long-term growth plans at our upcoming Investor Day in September and updating you on our Q1 fiscal year 2027 results in October. Have a wonderful day.

Speaker #2: Have a wonderful day.

Speaker #1: Thank you. This concludes today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

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