NASDAQ:BLMN Bloomin' Brands Q3 2024 Earnings Report $7.95 +0.44 (+5.86%) Closing price 04/17/2025 04:00 PM EasternExtended Trading$7.88 -0.07 (-0.88%) As of 04/17/2025 05:54 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Bloomin' Brands EPS ResultsActual EPS$0.21Consensus EPS $0.19Beat/MissBeat by +$0.02One Year Ago EPS$0.44Bloomin' Brands Revenue ResultsActual Revenue$1.03 billionExpected Revenue$1.04 billionBeat/MissMissed by -$19.62 millionYoY Revenue Growth-5.10%Bloomin' Brands Announcement DetailsQuarterQ3 2024Date11/8/2024TimeBefore Market OpensConference Call DateFriday, November 8, 2024Conference Call Time8:30AM ETUpcoming EarningsBloomin' Brands' Q1 2025 earnings is scheduled for Wednesday, May 7, 2025, with a conference call scheduled on Tuesday, May 6, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfilePowered by Bloomin' Brands Q3 2024 Earnings Call TranscriptProvided by QuartrNovember 8, 2024 ShareLink copied to clipboard.There are 15 speakers on the call. Operator00:00:00Thank you and good morning everyone. With me on today's call are Mike Spanos, our Chief Executive Officer and Michael Healy, Chief Financial Officer and Executive Vice President. By now, you should have access to our fiscal Q3 2024 earnings release. It can also be found on our website at www.blumonbrands. Com in the Investors section. Operator00:00:21Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release on our website as previously described. Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward looking statements. Some of these risks are mentioned in our earnings release. Operator00:00:59Others are discussed in our SEC filings, which are available at www.sec.gov. During today's call, we will provide a brief recap of our financial performance for the fiscal Q3 2024, an overview of company highlights and current thoughts on fiscal 2024 guidance. Once we've completed these remarks, we'll open the call up for questions. With that, I would now like to turn the call over to Mike Spanos. Speaker 100:01:24Thanks, Tara, and good morning, everyone. It is a privilege to be leading the Bloomin' Brands team. We have iconic brands, passionate and resilient team members and a culture grounded in taking care of our people, our employees, customers, suppliers and communities. I am excited and wanted to be part of this tremendous team for two reasons. First, my family and I are longtime loyals of all of the Bloomin' Brands, including my late father who always felt so special going to Outback with my mom every Friday night to have a high quality steak and a beer at a great value in a fun casual environment. Speaker 100:02:06Whether it has been a great steak with my wife and kids at Outback, a dinner with my in laws for Italian Carrabba's, a birthday dinner for my mom at Bonefish for fresh seafood or an elevated steak dinner at Fleming's, our brands have provided my family with fun and memorable experiences. The excitement to be part of the team has only increased after spending time working in our restaurants with our great team members, From cutting fillets to shaking handcrafted cocktails, nothing beats the hands on approach to learning the operations of a business. 2nd, I believe in the strategic growth potential of the business. Bloomin' Brands is a great business with great brands and a great team. When we consistently execute with excellence and the guest experience is right, our brands generate profitable traffic growth. Speaker 100:02:59Our brands have a high right to succeed and steak and Italian casual dining are on trend and are big categories. Within steak, we compete with strong players and good competition enhances category growth and pushes us to deliver a better guest experience. I have a lot of confidence in the long term value of the company with the financial resources, including a good balance sheet with ample cash flows. With an operating mindset, we will deliberately and quickly make the necessary strategic steps to unlock that value. Now that you hopefully understand my motivation to be part of the Bloomin' Brands team, I want to recognize and thank our dedicated Outbackers, Mekkos, associates and anglers. Speaker 100:03:47In addition to being outstanding operators, I've been impressed with their resiliency and capability after dealing with both Hurricane Helene and Hurricane Milton in the span of 2 weeks. Our teams demonstrated leadership and dedication to each other, our guests and our communities. The examples of serving, leading and doing what is right in the face of such adversity has been inspiring. Despite flooded and damaged homes and cars, power outages and gas shortages, our teams took care of each other and safely reopened our restaurants to serve our communities. This kindness and support have been so impressive, and I thank and appreciate each and every one of you. Speaker 100:04:28We also donated $500,000 to the American Red Cross to support hurricane recovery in addition to feeding 1,000 of our first responders and those in need to support community recovery. I also want to thank and acknowledge the legacy and contribution of Dave Deno. He is a superb leader in person and has been invaluable during my onboarding. We've executed a smooth transition and have spent detailed time together to ensure the strategic work that the team has been working on remains on track and accelerates, especially in Outback Steakhouse. As you get to know me, directly leading frontline team members in both the Marine Corps and in the Pepsi system was foundational for me. Speaker 100:05:11I spent the majority of my PepsiCo career on the bottling side in asset and people intensive workplaces, starting on delivery trucks and servicing both retailers and restaurants. I also led broad and complex portfolio businesses at PepsiCo, Six Flags and Delta. In addition to my operational experience, I've led marketing, consumer insights, revenue management and food service teams. We will manage the business with an operational focus and a guest centric lens. My time in these roles reinforce 3 guiding principles. Speaker 100:05:48First, leadership is a privilege focused on the team member experience. We have a unique culture at Bloomin' Brands, one that originates from our founders. Our principles and beliefs states success is measured by growth in sales and profit and is the result of taking care of our people. Our success is based on our belief that people want to be part of something they can be proud of, is fun and that includes and values them. Throughout my career, I focused on building performance based cultures, balancing employee well-being and driving accountability for best in class performance. Speaker 100:06:25Listening to and learning from our restaurant operators is important in order to support them working more effectively and efficiently. We will stay close to our managing partners and joint venture partners as well as our franchise leaders as they have the greatest insight into what we can do to better improve the guest experience. I will spend the majority of my time and how we can improve our team member experience, which in turn inspires a high quality, welcoming, elevated and caring experience for our guests. The second guiding principle is to focus on the guest experience. Our ability to consistently execute a memorable experience for our guests with a high quality meal at a great value in a relaxing environment is what drives repeat visits and loyalty to our iconic brands. Speaker 100:07:16Consumers want memorable experiences in away from home occasions. Every moment matters when guests choose to spend their hard earned money and their precious time with us. The 3rd principle is to have a growth mindset by focusing on the core. I found every market, whether domestic or international, and every category has growth potential in terms of traffic, revenue and profitability. It is important to control what we can control, have a clear definition of success and execute on targeted initiatives that drive growth. Speaker 100:07:52This leads to disciplined capital investments, simplification of the agenda and being great on what is important to our guests. Bloomin' Brands is a portfolio of iconic brands that have strong growth potential. By focusing on the core of our brands and operational excellence, there is a long runway ahead. As I initially evaluate our portfolio, I see 2 primary scalable areas for growth. The first and our biggest brand is Outback Steakhouse. Speaker 100:08:23This is a global brand in an on trend steak category. However, we have not sustainably grown traffic. We are closely evaluating all elements of the guest experience. I am personally committed to material improvement at Outback Steakhouse will sustainably grow traffic, comparable sales and profitability. This brand has a high right to succeed within the steak category. Speaker 100:08:48I'm excited about the strategic work that we have underway, and I will take an active role in operationalizing the work. Our 2nd scaled growth opportunity is Carrabba's. I've been impressed with this team's capability to grow both traffic and comparable sales and to meet our guests' needs across various day parts and occasions. The team is focused on the in restaurant experience and is assessing the white space opportunity to strategically scale the brand with margins and returns that deliver shareholder value. We plan to share a meaningful update on the Outback and Bloomin' Brands strategy on our next earnings call. Speaker 100:09:30Before I turn it over to Michael to discuss our financials, there are two last items that I want to address. First is our Q3 results and balance of year and full year guidance. It is reflective of the broader challenging industry trends, recent impact from the hurricanes and our current execution. Our team is working hard, but we are not pleased with our performance and we know we can do better. We have work to do and are committed to providing accurate and transparent forecasts of our performance. Speaker 100:10:022nd, I am pleased to announce our strategic partnership with VINCI Partners for our Brazil operations. We have a scaled and leadership position in Brazil and are excited to have VINCI as our partner to grow the business in the future. VINCI is a significant asset management firm with a successful track record of partnerships in the restaurant space. We are retaining 33% ownership of the business. It has been my experience living and working internationally with franchise partners that combine powerful classic brands with local capability and expertise is the optimal business model to maximize future growth. Speaker 100:10:39We have also created aligned economic interest for both parties with a material equity stake to grow the business and to grow it in a profitable way. This transaction will allow us to simplify and focus on our domestic operations. We anticipate closing the transaction this year and Mike will walk through more of the financial implications of the transaction. Next year, Bloomin' Brands will be a more focused and simpler company. As I leave the company, you have my following commitments. Speaker 100:11:12First, I will be strategic and grounded in our operations and decisions we need to make. 2nd, I will communicate our path and progress in a transparent way. And third, I will hold my team and myself accountable for delivering strong results. And with that, over to you Michael to discuss our Q3 financial performance and updated 2024 guidance. Speaker 200:11:36Thank you, Mike, and hello everyone. I would like to start by providing a recap of our financial performance for the fiscal Q3 of 2020 4. Total revenues in Q3 were $1,000,000,000 which is down 4% from 2023. This was primarily driven by a decline in comparable restaurant sales, the FX translation of the Brazilian dollar relative to the U. S. Speaker 200:11:58Dollar and the net impact of restaurant openings and closures. U. S. Comparable restaurant sales were negative 150 basis points and traffic was negative 4.40 basis points, which was in line with the casual dining industry. At Outback, we introduced greater value in our LTOs beginning in Q3. Speaker 200:12:18While this allowed Outback to outperform Black Box on traffic in a very promotional environment, our focus is on building sustainable traffic growth, particularly at Outback. Average check was up 2.9% in Q3 versus 2023, in line with expectations. Value is critical right now and we are committed to take the least amount of pricing as necessary. Q3 off premises was approximately 23% of total U. S. Speaker 200:12:47Sales. Our 3rd party delivery business is 13% of total U. S. Sales, which is an increase from 12% in Q3 2023, driven by our growth in catering. Our Q3 GAAP diluted earnings per share for the quarter was $0.08 versus $0.45 in 2023. Speaker 200:13:07Our Q3 adjusted diluted earnings per share was $0.21 versus $0.41 in 2023. The primary difference between GAAP and adjusted diluted earnings per share is due to the asset impairment and closure related charges associated with the decision we made in Q2 to close 9 restaurants in Hong Kong, executive transition costs and professional fees related to our revenue growth management strategic efforts. Q3 adjusted operating margins were 3% versus 5.3% last year. There were a number of factors contributing to the margin decline this quarter. Overall, restaurant level margins declined by 150 basis points. Speaker 200:13:52110 basis points were driven by labor, primarily due to hourly and field management wage rate inflation. Labor wage inflation for the quarter was 3.8%. Other restaurant operating margin declined 90 basis points, driven by higher operating and supply expenses, primarily due to inflation as well as higher pre open expenses as we open more restaurants this year. Cost of goods was 50 basis points favorable from pricing benefits and supply chain productivity initiatives. Commodities were better than expected in Q3 at approximately 2%, driven by more modest inflationary expectations across seafood, oil and dairy. Speaker 200:14:35We continue to see positive signs within our beef program, but this category remains inflationary. Depreciation expense was higher in Q3, consistent with our increased levels of capital spending in recent years and our investments in infrastructure to support growth. We are operating in a challenging market environment and we are focused on managing the costs that are in our control. Turning to our capital structure. Total debt net of cash was $1,000,000,000 at the end of Q3. Speaker 200:15:06During the quarter, we upsized our revolver to $1,200,000,000 which provides additional liquidity for our business and provides broader financial flexibility. Importantly, we remain committed to being at or below our long term lease adjusted leverage ratio target of 3 times. Year to date, we have repurchased a total of 10,100,000 shares of stock for approximately $266,000,000 This included shares issued in connection with the repurchase in March of a portion of our convertible notes. We have $97,000,000 remaining under our share authorization program. The board also declared a quarterly dividend of $0.24 a share that is payable on December 11. Speaker 200:15:52Now turning to our full year 2024 guidance. We are updating our full year guidance to reflect the continued industry softness and our trends. As a result, we are updating our comp guidance range to be down 100 basis points to down 50 basis points. We are being very mindful of pricing and have not contemplated pricing actions above prior guidance. Given the volatility the industry is seeing in traffic trends, we are updating our adjusted diluted earnings per share guidance to be between $1.72 $1.82 Prior guidance assumed industry trends would strengthen, but our updated view assumes no improvement. Speaker 200:16:34Additionally, the hurricanes have had a negative impact on our business and were a distraction for our teams. U. S. Domestic comparable sales were negatively affected by approximately 30 basis points in the Q4 and a total impact to profitability of approximately $0.03 on an earnings per share basis. Both of these are included in our updated full year guidance. Speaker 200:16:57We are updating our commodity inflation guidance to be approximately 1%. We are updating our adjusted tax rate to be between 6% 7%. As we mentioned on the last call, the negative calendar shift experienced in Q1 of $0.05 is recaptured in Q4. The Brazil tax benefit is expected to be approximately $0.15 for the year. As it relates to the Q4 of 2024, we expect U. Speaker 200:17:26S. Comparable restaurant sales to be down 200 basis points to down 100 basis points on a comparable calendar basis. This reflects the current environment and what we are seeing in the restaurant industry as well as the approximate 30 basis points impact from the hurricane experienced at the start of the Q4. We expect Q4 adjusted diluted earnings per share to be between $0.32 $0.42 Importantly, this guidance includes the revised Brazil value added tax exemption benefit of approximately $0.07 and an approximate $0.05 benefit from the calendar shift, offset by an FX headwind of 0 point 0 $2 and a $0.03 impact from the hurricane. This morning, we announced a strategic partnership with VINCI Partners for our Brazil operations. Speaker 200:18:15Total enterprise value for the business is BRL2.06 billion or 6.5 times trailing 12 months EBITDA net of royalties through Q3 2024. VINCI will purchase a 67% ownership interest based on this valuation and as Mike mentioned, we will retain 33% ownership in the business. We believe our economic interests are aligned and expect the business to continue to grow. We have an option to monetize our remaining equity stake in 20 28. We anticipate the transaction to close in 2024. Speaker 200:18:51We will receive 52% of the proceeds upon closing and the remaining 48% 1 year later. We will provide more details on the use of those proceeds on our February earnings call after we complete our strategic planning efforts later this year. Additionally, the ongoing royalty stream will allow us to continue to benefit from a high growth market leading business. In summary, we are not satisfied with our results in 2024 and we are committed to the actions necessary to deliver consistent long term sales and profit growth. While Outback is our primary focus, all of our brands play a role in the success of Bloomin' Brands. Speaker 200:19:31And with that, we will open up the call for questions. Speaker 300:19:37Thank you. We will now begin the question and answer session. And today's first question comes from Jeffrey Bernstein with Barclays. Please proceed. Speaker 400:20:09Great. Thank you very much. I have to be careful now with 2 mics here. My first question is just in terms of the operations and the opportunity you talked about. I know in the press release you talked about consistent and elevated guest experience, which was key. Speaker 400:20:27I'm just wondering in your early days, what do you think Outback has been falling short on that, which presumably has pressured repeat traffic? I know you mentioned deliberately and quickly taking action. I'm just wondering whether you think there's any low hanging fruit that we could see being implemented over the next quarter or 2 to stem the tide. And then I had one follow-up question. Speaker 100:20:52Thanks, Jeffrey. Yes, it might be better just to say Spanos for our CEO and Healy for CFO to keep you all keep it simple for everybody. But good morning. I'll start with your point or your question on the operations and what I'm seeing with Outback. I'd start with, 1st of all, we are seeing if I start with the problem, we are seeing declining same store sales and we're seeing declining traffic and we have been losing share in the state category. Speaker 100:21:23That is our reality right now. If I look at what I think are the positives on the balance sheet, so to speak, we've got a great iconic brand. We've got a great team. The team is very passionate about the guest experience and they're very rooted in what I think is that Aussie spirit, that reverence, that no rules just right, the core ethos of the brand that's out there. And we're very much on trend in the state category. Speaker 100:21:53So that I feel very good about. And as I said, we've got ample liquidity. We've got cash flows are also ample and we've got a really good balance sheet. So I feel very good about that. If I look at where I'd like us to lean further in and accelerate, it is starts with the guest experience. Speaker 100:22:15We've got to create just a great meal and a great value in a fun casual environment, which is also the core of the brand. And to me, I look at operational excellence as consistency. The team has told me that. To me, that means we've got to be thoughtful about controlling what we can control, simplifying the agenda and the menu. In addition to that, we've been really looking at our brand positioning. Speaker 100:22:40We don't want to be a bar and grill, in terms of how we go to market. And, the work is we're going to get better every day. And we're going to create a differentiating experience back to our roots. But we'll give you more in February. But I will tell you this, I am personally very hands on with Outback. Speaker 100:23:00I'm working very closely with the team. And the the strategic work the team did, we're accelerating that and we're going to get that moving. And again, it's an everyday process getting better and that starts with coaching, leading accountability. Speaker 400:23:17Got it. And Spanos, you mentioned Outback and you mentioned Carrabba's in terms of near term priorities. I'm wondering if you could just talk about thoughts on the portfolio more broadly the pros and cons, whether it's keeping Carrabba's or just the thought process around Bonefish? Any thoughts there, especially we're aware that there's an activist in the names. I'm just wondering if there's any thoughts you could share in terms of your relationship or your priorities or whatnot relative to that of an activist investor? Speaker 400:23:50Thank you. Speaker 100:23:51You got it. A few questions there. Let me start in reverse order. I think you were asking about Starboard in terms of that relationship. What I'd say there is we have a What I'd say there is we have a very collaborative relationship with Starboard. Speaker 100:24:06They're incredibly insightful. And what I've really liked about the Board members, they're passionate about the guest experience and how the team member experience unlocks that guest experience. And they want us to do what's right for the business, and they're especially focused on sustainability of the business through a fantastic guest experience. So I'll start there. 2nd on the portfolio, maybe what's inferred a bit in your question is Brazil. Speaker 100:24:35Now I'll come to the domestic piece. I would not link or connect our decision on Brazil to the domestic portfolio. I've lived and worked internationally many years, both in company owned businesses, franchise businesses. And what I found is you unlock the maximum future value when you have an iconic brand with a great set of capability combined with the local capability, community, local savviness, that combination is your best synergy for growth. If I go to the domestic portfolio, we're committed to our domestic portfolio and I do think there's 2 scaled growth opportunities, Outback, which I already spoke about and that is primarily our biggest opportunity. Speaker 100:25:24That is all about the guest experience enabled through the team member experience. And we just got to Speaker 300:25:29be Speaker 100:25:29really tight on our operational excellence to get there. Carrabba's is to me is really an exciting business. What we've seen on a sustained basis, good steady traffic and good steady same store sales with that business. I do want the team I know Pat Hafton, who leads that business, the team has done a great job since about 2019 elevating that brand in a better way. They're very focused on in restaurant traffic. Speaker 100:26:00The brand does a nice job across day parts and converting occasions, which I think is very positive. And to me, what's exciting is exploring in a very deliberate manner the white space growth opportunity of that brand. And we'll do that smartly because you got to have the right margin profile and the right return profile on that. The last part of your question, I think, was specific to Bonefish. Bonefish to me is all about, again, at its core of the brand, it's a polished dine, fresh seafood around an energetic bar experience. Speaker 100:26:35And that's what the team is focused on, Jeffrey. They're focused on simplifying that menu in a good way that pivots back to fresh seafood, really going off that energy of the bar that we saw in the very first bone pieces that were out there and that's where we're at. Speaker 300:26:59The next question comes from Alex Slagle with Jefferies. Please proceed. Speaker 500:27:05Thanks. Good morning and welcome aboard, Mike. I thought it was interesting you talked about your history with the brands as a consumer. As you dug in and worked with the operators, I mean, what are you hearing that sort of stands out differs from what you initially expected kind of coming in? Speaker 100:27:27Alex, good morning. Very the operators, our managing partners, our JVPs, our franchisees, they're incredibly consistent in their feedback. The first is they want simplification in the simplest terms. The second is they want to get back to that guest experience. They're giving me feedback around center of the plate improvements. Speaker 100:27:54They're giving me feedback around how we remove barriers by simplifying the agenda and what we can do to improve that guest experience, very consistent feedback there. The second is on what I would call the brand positioning. As one Outbacker said to me, they want to be great at a few things and not average at a lot of things. That's very clear. So they want to have a really strong value every day that the guest knows from a brand trust that they can get out there in a big way. Speaker 100:28:25The other thing they've talked to me about in terms of the brand positioning is and I agree with them on this, is about frequency. Our average Outback guest comes about twice a year and their point is let's get that number to 3. So increase the frequency of our loyal guests and retain them. And what they're also telling me is to recruit new guests, we should recruit the right new guests that want to lean into the steak category, steak and seafood. And the last thing is they believe in the brand. Speaker 100:29:03They believe passionately in the brand. They believe passionately in the potential of the brand. And they love serving our guests and serving each other. Speaker 500:29:15Helpful. I mean, I guess it's early, but I mean, do you expect any investments back into the brand around food quality, marketing, labor, other areas that could have an impact on margins or just that sort of reinvestment as we look ahead to 2025? Speaker 100:29:35Yes, Alex. I won't get into 2025. We'll be real clear with you on what we're doing as we finish our long range planning into February. But maybe I'll give you a framework on how I think about this in terms of how you lead the P and L and lead the team. I start with 1. Speaker 100:29:53I'm a believer you can reward yourself with a free dividend. What I mean by that is step 1 is coaching, leading, controlling what you can control, focusing on the guest, that accountability factor can Operator00:30:05unleash a lot of potential Speaker 100:30:05when the team is focused. I start there. 2nd, team as well. We also should be looking at reducing wherever we have costs or any type of costs we don't think is driving revenue or top line growth. We've got to take a hard look at that. Speaker 100:30:35And then after that, I think it's fair to say we can look at reinvestments, but those reinvestments have got to be sharp. They got to be targeted. They got to have clear returns on them. So we have revenue outgrowing our cost growth sustainably. Speaker 500:30:53Great. Thanks. Speaker 300:30:57Today's next question comes from John Ivankoe with JPMorgan. Please proceed. Speaker 600:31:04Hi, thank you. I want to grab that last word reinvestment and apply it to your existing asset base. Obviously, the majority of your sales are presumably always will be on premise, a modern experience at least relative to expectations really matters. And at least in previous conversations with the company, we've heard anywhere between 30% 50% of the asset base is considered to be modern. In other words, the majority are considered not to be modern. Speaker 600:31:35So I wanted you to just kind of address the asset base. How much of a front burner needopportunity is there? And are you willing to make that investment even if it doesn't necessarily pencil out from a financial return perspective just because it's the right thing for the brand, your employees, your customers longer term? Thanks. Speaker 100:31:58Yes, you bet. Good morning, John. So I think that's a really fair question. And that is very much part of the work we're doing is asset condition and asset quality across all the brands and how we think about that. But I would also start with the one thing I've learned over the years calling on foodservice customers and servicing them and what I've learned here so far is the best results inside the four walls of a restaurant start with the leadership of our managing partners. Speaker 100:32:31What I've seen is results that tell me when we get the right leadership with the right accountability and we simplify the agenda, we can unlock growth everywhere. What I think you're also getting to is capital allocation. And again, we'll be clear on that. But what you're getting at is what I would call is investment in the base business. To me, that's always where you start in terms of capital allocation. Speaker 100:32:58And part of that is repair and maintenance, part of that can be a remodel, part of it can be a relocation, etcetera. But we're going to make those right moves because it does pencil out if you're doing the right things with sustainability and if you have the right process, which we do and Michael's team is leading that process. And we'll do those things. Beyond that, our capital allocation, which I think is a bit of the inference to your question, we're going to continue to be thoughtful on that. We're going to obviously stay focused on paying down debt to lease net leverage ratio, a long term of 3.0 as Michael pointed out. Speaker 100:33:34We'll be disciplined in new store openings. And then after that, we'll look at how we properly return cash to shareholders. But it pencils out. What I found, I've been leading asset heavy in people intensive companies for a lot of years. You have to reinvest in the base of the business for sustainable growth and we're committed Speaker 200:33:52to that. And John, just to piggyback on that, I think the focus on better operations and better execution works when we reinvest in the restaurants as well. And so it has to be an end as we think about the investments or what we would need to do to support Outback. And that's how we're prioritizing them as we go through this strategic planning. Certainly an asset component is part of that conversation. Speaker 600:34:20Thank you. And I think a follow-up on the reinvestment side. I mean, you've mentioned a couple of interesting a lot of interesting things. But really trying to constrain the amount of pricing you take going forward, but not wanting to be a bar and grill, I get both of those comments. But how do we feel about the overall average ticket? Speaker 600:34:40Is the opportunity to go lower to bring that frequency from 2 times to 3 times when you kind of take a clean slate look at the business and look at prices on an absolute basis relative to consumers' expectations, how are we feeling about the current price levels and overall average ticket that the customer pays? Speaker 100:34:59Yes, John. So I'll add her up to what I've always found to be your levers on revenue management. There is a volume lever, which is traffic. There's obviously an inflationary price lever and there's a mix lever. And what I found is you got to be balanced on all three levers. Speaker 100:35:19In terms of what you got to do internally on the P and L as well as being thoughtful externally on what's going on competitively and what the guest or consumer gives you credit for between a price and benefits equation. So we're going to be balanced moving forward and we're going to have a very sharp lens on all those levers. Speaker 600:35:42Okay. Thank you. Speaker 300:35:47The next question comes from Brian Harbour with Morgan Stanley. Please proceed. Speaker 700:35:55Yes. Thank you. Good morning. Maybe just wanted to start with the 4Q, obviously, you did change your annual EPS guide quite a bit. And part of that is sales. Speaker 700:36:04It sounds like the hurricane impact wasn't too significant from an earnings perspective. But could you help us on some of the pieces that are kind of driving that change to your 4Q outlook? Speaker 100:36:17Ryan, good morning. It's Thanos. So I'll start with we're not happy with our results. And if you look at the forecast for the initial forecast for Q4, we were arguably optimistic. We assumed casual dining would improve and we assumed our performance would improve in terms of grabbing share or growing faster than some of the folks out there, and that did not happen. Speaker 100:36:48So our quarter 4 forecast is reflective and consistent with our year to date Q3 trends. If you're looking same store sales, traffic pricing and what we internally look at in terms of EBIT, that's where we're at. So again, we're not happy with it. What I would tell you moving forward, you're going to find with me, we'll and I know Mike feels exactly the same way. We're going to be very transparent and candid on the forecast. Speaker 100:37:16I tend to take a balanced center cut approach. We'll give you what we think are some of the moving parts and the pluses and minuses of that. And to me, what's going to really drive the business in terms of forecasting is just getting back to that outstanding guest experience enabled by a great team member experience. And that's where we're going to go. Speaker 200:37:38Yes. The only thing I'd say, I mean, it for the most part, it's a pretty clean bridge for us as far as the traffic is a more a lower perspective on where we think Q4 traffic would be. We do have a few unique things. We spoke about the hurricane, the Brazilian tax component that will one hurts, one helps, as well as the calendar shift. There's a couple of new unique things in there. Speaker 200:38:04But other than that, for the most part, it's just traffic. We anticipate to run pretty much what it's been running and that's how we think about the finish of the year. Speaker 100:38:14Yes. Brian, the last piece, just one last point on the hurricane. And I am saying this as well to acknowledge our teams again. This was a consuming 3 weeks during the hurricanes. If you look at whether it was Helene or Milton, we still have team members that are in the land of remediation and recovery and all the fun that goes with putting your lives back together and they're still getting through it. Speaker 100:38:40So it was a big drain of capacity and bandwidth and energy of the team and where everybody's been positive. But that has been one of the distractions and it's good to be past that. Speaker 700:38:56Yes, understood. I appreciate that. Maybe this is something you want to comment on later, but just on kind of like menu, thinking about Outback specifically, do you think there need to be there have been changes there I know. Do you think there needs to be more of a change from a menu perspective? You kind of mentioned some simplification, but what's kind of your view on just the food offering at Outback today? Speaker 100:39:24I like your question, Brian. Again, I think it starts with simplification and getting back to the core of that Aussie spirit, that steak, seafood core and being all things to some people on the menu and not necessarily being all things to all people on the menu. Our operators want that simplification in the back of the house, and we are looking at that. And I found over the years, just fewer items executed more consistently drives a way better guest experience. Speaker 800:40:01Thank you. Speaker 300:40:05The next question comes from Jeffrey Farmer with Gordon Haskett. Please proceed. Speaker 900:40:11Great. Thank you. Mike, in answering some of the earlier questions, you pointed out the importance of value. Can you just elaborate on where you see the core Outback concept currently positioned on the value front? Speaker 100:40:29Good morning, Jeffrey. We so if I think about where we're at, first, I'll start with value. To me, value has always been a function again of what's the price and what's the benefit and that value is accentuated with the fantastic outstanding guest experience. And I start there and it's that great meal, great value, great experience, a fun casual environment that enhances that value because part of that value is that benefit, that feel, that memory you get when you walk out of an outback. As I said, what I am drilling into and what the team has given me feedback on is how we execute LTOs relative to other innovation versus everyday value. Speaker 100:41:20And that's part of the work we're doing right now is can we simplify the value or promotional equation and also simplify the menu, which was where Brian was going as well before in his question, to make it a simpler offering for not only the guests, but our team members. Speaker 900:41:41Okay. So just to follow-up on that and I'll leave it at this. In terms of thinking about I think in the 3Q, you basically Outback moved to a $14.99 promo price point from I think it was like $16.99 So in terms of something as simplistic as that is lowering the prices, is that sort of within your strategy vision? Or is that not how you see this happening moving forward? Speaker 100:42:10Yes. You're talking about Great Barrier Eats in terms of Q3 and affordability. So we are looking at that. We've also in the past run the 3 course offerings. We're just broadly looking at our affordability and our entry price points and how we think about it. Speaker 100:42:29What I would say with this is these types of LTOs, we want to be core to we want to execute them core to our menu. What I don't want to be doing, and the team has given me this feedback, is more and more, we don't want to be bringing in a lot of new items to execute in these programs. We want to pivot off the core of the menu with the right value to attract sustainable traffic. Speaker 200:42:54Yes. And the team is fully focused. We know we had to have more value, right? So we made the intentional shift to lower our opening price points on LTOs beginning in Q3 down to $14.99 The team is able to engineer those offers. We those offers drive a lot of mix, but the entry price point lower in mix, some of our more featured, more iconic items tend to drive the mix. Speaker 200:43:22And so we're able to engineer them. So the overall economics are in a good place. But we know that we had to lower those opening price points. We know that affordability matters. We know that how we how our prices compare to other state competitors matter. Speaker 200:43:38And so all of those are things that we're looking at and especially as we think about some of the longer term strategic work of just what's the appropriate pricing for us as we think about our business. Speaker 100:43:50Yes. Jeffrey, last piece on that is Michael is exactly right in terms of making it work financially, engineering it. My bigger focus based on feedback from the team members is whatever we offer, we want to make sure it's generating traffic that retains our loyals or recruits the right kind of guests we want long term. That's the focus for me as we look at pricing and promotions. Speaker 1000:44:21All right. Helpful. Thank you. Speaker 300:44:25The next question is from Sara Senatore with Bank of America. Please proceed. Speaker 1100:44:31Thanks. Two questions, please. The first is, you mentioned sort of having anticipated that the demand environment would improve as well as your perhaps your relative performance. I guess, I'm a little I wanted to get into that because my understanding is that the demand environment has improved. If I look at some of the industry trends, for example, it looks like sort of July was the softest and then we've seen pretty consistent improvement into and through October by across segments. Speaker 1100:45:04So I wanted to clarify that comment if you had anticipated more improvement or if it really is a relative performance question? And then I did want to ask about your the comment one of the mics, I think, Spanish made on managing partners. Speaker 200:45:25Yes. I can kind of jump in on how we thought about the forecast. So certainly July was the low point from an industry standpoint. So I think everybody assumed that we would have some rebound off of that and we did have some rebound off of that. If we look at sequentially how we performed versus Black Box, we performed better in Q3 versus Black Box than we did in Q2. Speaker 200:45:47So we saw some improvement, especially as we move to some of the lower price point LTOs. In our prior guidance, we assumed that trajectory would continue through Q4 and our gap to the industry would continue. I think some of that optimism is now not contemplated in our guidance and we're sort of assuming the industry is what the industry is. And so we continue to fight for share with that. We still think we have some very compelling offers that can take share. Speaker 200:46:16But we sit pretty much flattened that expectation as we think about finishing the year. That's just mechanically how the forecast was rebuilt. Speaker 1100:46:26Okay. Thank you. And then, on the sort of getting the right managing partners and I think that makes perfect sense. The general manager role is the most important in the system. But I guess, I'm wondering how you do that in the sense that I think they participate in the economics of the box. Speaker 1100:46:44So it seems like your approach to aligning incentives is about as good or as sort of optimal. And I'm curious, what you see as an opportunity to make sure that you do have the best partners there if it's not an incentive if it's not a change in how you incentivize them, is there something else, because that model has worked very well for others? Speaker 100:47:16Yes, Sarah, good morning. So it has worked well and I like aligned economic interests and I like the model and that's the feedback I've been given by our managing partners. What many of them have also said to me is their aligned economic interests and ours in the model also need to incent sales growth and profit growth, in addition to a percent or a mix of the discounted cash flow. But the bottom line we're seeing with our managing partners when we get great results is we have retention of our good MPs, we have their engagement and we line of And I do to your point, we feel good about that model where they have aligned economic interests and they get contribution from our profitability and our growth. Speaker 1100:48:16Thanks. Speaker 300:48:19The next question comes from Dennis Geiger with UBS. Please proceed. Speaker 1200:48:26Great. Thank you. I wanted to ask a bit more on marketing. I know it's early and we'll hear more from you on the next call. But curious if anything high level to share today. Speaker 1200:48:35We've seen really good traction from a couple of others in the industry who have leaned in and made some enhancements to marketing. They've tied it into social media, etcetera. So I'm curious how you guys think about the current marketing, where the brand is positioned in that marketing, in the ad spots and relative maybe to how you should be positioned and Mike relative to your thoughts earlier on what the brand stands for? Speaker 100:48:58Good morning, Dennis. I'll start maybe with the bigger picture. And I think you've got questions in how we're positioned for Q3 and Q4 as well. And I'll give you that insight as well. To me, with the brand, when you're building brand trust or brand loyalty, you're usually going down a curve of awareness to trial to repeat into loyalty. Speaker 100:49:21So for me, I start with the loyals and retaining the loyals and getting the loyal guest frequency up. So if the average is 2, as I said, I want to get them to 3. And you do that with a great guest experience. That's the foundation of a brand trust and that's the foundation of an intent to return. I also then look at in that same sort of curve is recruiting. Speaker 100:49:49We want to recruit the right guests that also want that great experience. If it's Outback, again, it's going to be a focused steak and seafood experience with that Aussie spirit at irreverence where they get that great meal at that great value, that great experience. And then we want to get them past the trial. We want to get them into repeat. On both of those, regardless of what we're saying, whether it's social or traditional TV, we've got to be consistent in our operational excellence to deliver a great guest experience. Speaker 100:50:23To me, that's really important. More tactically, if you look at Q3 or Q4, our spends year over year are basically flat. Our weeks year over year are basically flat and our TRPs year over year are basically flat specific for those quarters. Speaker 200:50:41Yes. And just to jump in, I think we have pretty good analytical capability to evaluate our marketing spend, what the ROIs are, what channel, what message is most relevant. And we look at those every quarter. There's no doubt there are some other players Share of Voices is very competitive right now as others have leaned into broader marketing spend. And that's certainly a consideration for us as we think about our larger strategic plan, right? Speaker 200:51:09And operationalizing accelerating the work that we're doing at Outback. When we get to the other side of that, we are going to have to be able to communicate who Outback is, what Outback is and really drive trial when we have a much better experience. And so that's certainly a consideration as we think about that longer strategic plan. Speaker 100:51:27Yes. I mean, Dennis, to me, I last thing again, I'll say on this. I think the foundation of any brand in any push or pull marketing starts with service and that's guest experience. And that to me is what we've got to focus on and first get right as we think about spends in terms of our voice to the consumer base. Speaker 1200:51:53Good color. Thanks guys. Just one more. Just on Brazil maybe and the re franchising transaction and that partnership. Anything more to share right now on thinking about modeling that, whether it's royalty looking ahead, more near in, when roughly in the Q4 we should think about that closing and impact to the Q4? Speaker 1200:52:14Any more details on that today? Thanks guys. Speaker 200:52:18Yes. I think we shared most of details already as far as the enterprise value against selling 2 thirds of the business. We would expect to close or hope to close by end of this year the end of this calendar year. We're not going to disclose the royalty rate, but we will get a royalty as that business continues to grow. But just mechanically, we sold 2 thirds of the business at 2.06 Brazilian dollars. Speaker 200:52:43We get 52% of the proceeds that close. We get 48% of the proceeds a year later. We have an option to sell the remaining third of the business in 20 28. We certainly expect that business to continue to grow. We've chosen the right partner, right, to really lead and grow that business and augment it with talent and capability. Speaker 200:53:03And so, we're really excited about obviously, we love that business. We're really excited about it, but it allows us to focus on our core domestic and we have a great partner down there that can focus 100% of their time on growing that business. So, economics were good for us. We're able to benefit in the growth. And so it was a great opportunity for us. Speaker 300:53:30The next question comes from Brian Mullen with Piper Sandler. Please proceed. Speaker 1300:53:37Hey, thank you. Just want to come back to capital allocation. I wanted to ask specifically on the dividend. That's about an $85,000,000 annual cash outflow. You might make the case the market maybe isn't giving you credit for it given where it looks like the yield is. Speaker 1300:53:52Mike Spano, I was just wondering how you feel about the dividend, if that is under any kind of review, if there might be a better use of cash, whether that be remodels or debt pay down or share repurchases? Any early thoughts on that? Speaker 100:54:05Hey, Brian, good morning. Well, you mentioned a point about, are we getting credit forward? Arguably, I would say we're undervalued and that's part of the challenge with the yield if that's where you're going. So I'm confident and optimistic over time we're going to get back to the right levels there. We're not going to I'm not going to get into the details of the capital allocation on the LRP. Speaker 100:54:29But as I said, once we're confident we've done the right things on the base business, we've been doing the right things on debt and we're through the strategic plan, we'll be clear on what cash goes back to shareholders and how. But as you know, we just approved a dividend in as part of this quarter. We're committed to it. And again, I think the key here is, as I said, we got to be really sharp on our investments, our use of cash with the right returns operationally and also the right to shareholders when we don't think we have those kind of returns to give that cash back to our shareholders. Speaker 1300:55:11Okay. Thank you. And then just a question on the domestic store base. In the Q1, there were some strategic closures, Mike Spanos, that was before you got here. Just my question is given the tough industry trends since then and the fresh set of eyes, do you think there could be some more closures here in the next year or 2 as you do this asset review? Speaker 1300:55:32Just any early thoughts? Speaker 100:55:35Ryan, as we've always done every year as I've learned here in other places, we're obviously always looking at our assets, as I said, the condition and the quality. But again, I'm going to start with our what our management partner is telling us, what's working or not working inside the four walls before we make any decisions about shutting down a restaurant. I start there. And if it is if that's the issue, we'll get that right. If we do have an asset that we don't feel is right from a guest experience standpoint, then we're going to get to the next question, which is are we remodel or relocating, which is part of our normal process. Speaker 100:56:16And we're working that very much in a process manner as part of the long range planning we're doing right now. And of course, obviously, Brian, that also goes for new store openings, if we consider that. We go through the same disciplined process and how we think about that cash. Speaker 1000:56:33Thank you. Speaker 300:56:37The next question comes from Jon Tower with Citigroup. Please proceed. Speaker 800:56:46Sorry about that. I got to figure out how to use my mute button. Apologies. So just quickly going back to the Brazil business, can you just I know you're not wanting to provide too much more details by way of royalties, but can you at least tell us what the CapEx over the past 12 months was allocated to that business? Speaker 200:57:06About $40,000,000 Speaker 800:57:08All right. Thank you. And then one part, Spanos, so I'll be referred to as Tower from this point forward. One thing you had spoke about was the idea of speaking with managers and so far meeting with them at the Outback brand and what they liked about the business, what they wanted to have improved and what was absent in your comments was any commentary regarding the off premise business or delivery. And Outback, it's a much larger chunk of the business than it is for some of your direct competitors. Speaker 800:57:43So I'm just curious what feedback you heard from them and frankly, your own thoughts on that channel going forward? Speaker 100:57:50Absolutely. And thanks for the correct enunciation on the Greek American name. I appreciate that. So John, what I would say on your question on off premise, first I'd start with we've been absolute pioneers in this space. I go back to my days as a consumer many times calling in the order at Outback and then picking it up. Speaker 100:58:12We were first on that forefront and that has worked well. And to your point, we have a good mix of that business. But again, I go back to the guest experience here. We will what the operators and managers telling me is, they want the guests to have a great experience on or off premise. What that implies is, we got to be really thoughtful around the menu we offer in terms of off premise and which food travels the best off premise and making sure we also feel good about the delivery and how that guest interaction happens as well. Speaker 100:58:53And that's part of the work we're doing. So we're going to continue to be committed to off premise, but we're also going to be very balanced and thoughtful where whatever we do there, it's got to be a great guest experience. It's got to be a great meal, great tasting food, still at a great value and you got to have that guest experience. Speaker 800:59:15Got it. Thank you for taking the questions. Speaker 300:59:19And the next question comes from Brian Vaccaro with Raymond James. Please proceed. Speaker 1400:59:25Hi, thanks. Just a couple of quick follow ups, if I could. Back to the Brazil transaction, can you share what the expected tax bill or after tax proceeds will be? And also can you remind us how much of the annual G and A budget is in Brazil? Speaker 200:59:42Yes. We're not going to get into the after tax as we still have to close and go through all of those components at this time. I don't have their G and A on me, but we can get back to you with that. Speaker 1400:59:54Okay. And then, I guess back to capital allocation, I think more than half of your CapEx budget has grown towards new unit growth in recent years. And you mentioned you highlighted the $40,000,000 towards Brazil, but also some domestic obviously. So can you speak to kind of the returns you're seeing on your domestic unit growth? Are they hitting your targets? Speaker 1401:00:16And just any thoughts on the potential to optimize your CapEx budget, maybe just maintenance and remodels to help bolster free cash flow? Speaker 201:00:26Yes. I mean, the restaurants that we've opened over the past couple of years are certainly hitting our expectations. So we're excited to see the success of those new restaurants. Obviously, it's a combination of new restaurants and relocations as well. I think and we've shared, I think in the past couple of quarters, we've seen costs increase on build costs. Speaker 201:00:47And if those costs push to the point where we aren't going to get our returns we're going to walk away from those deals. So I mean our priority is to return or deliver the expected return to our shareholders and not just to open stores to open stores. And so that's our focus. But we do think that opening stores is appropriate for us. We think whether it's relocations or additional restaurants for Outback are out there. Speaker 201:01:11We've talked about Carrabba's being a larger growth engine. The team has done great work to date to grow sales and revenue. The team is doing some good work now around how do I really refine and improve the return on that investment because we certainly have a lot more geography for Crabbe's that we can open restaurants. Fleming's is a great business, great returns, obviously higher volume. So we'll definitely open a couple of Fleming's each year, but there's a capacity there given kind of the magnitude of the builds and whatnot. Speaker 201:01:44But we're satisfied with the returns, but we're always scrutinizing them and we'll make sure that we continue to deliver those returns. As far as, we'll make sure that we continue to deliver those returns. As far as what was your question around capital allocation for remodels Speaker 401:02:00defining that? Speaker 1401:02:01Yes, potential to just optimize CapEx to bolster free cash flow. Obviously, you want to stay focused on maintenance and remodels, but you see any opportunities there as you think about the CapEx. But I understand you don't turn these things off like a light switch, but over the next year or 2, perhaps just optimize free cash flow. Speaker 201:02:20Yes. I mean that and that will be a key component of the strategic work we're doing. Ultimately, how we're our entire capital allocation will be important. But certainly, as we think about CapEx, that will be a key consideration. So we want to open restaurants, but we want to open restaurants with great returns. Speaker 201:02:38We can't open as many restaurants because we can't achieve those returns and that certainly could impact the allocation. But right now we think we're confident we can continue to open restaurants. The magnitude of that is still to be determined as we go through this process. But to your point, obviously, you have to maintain the restaurants. So that's a non negotiable. Speaker 201:02:58And then there is a remodel component to our restaurant base that's going to be necessary. And so that's how we're thinking about it, at least as far as prioritization. Speaker 1401:03:07Okay. Thank you. And last one just on pricing if I could. Can you remind us what was pricing in the Q3? And maybe you could level set how you see pricing trending if you don't take any additional pricing in the next couple of quarters? Speaker 1401:03:20Thanks again. Speaker 201:03:21Yes. We are pretty much 4% in Q3. We would expect to be kind of in that range in Q4. I think obviously our pricing has kind of rolled off especially compared to 2023 and we're going to do everything we can. We're trying to price as little as possible. Speaker 201:03:40Certainly, we think we're in line with industry on pricing and we still have a beef headwind, although beef better than we expected, it's still the most inflationary part of our basket. And so but we're going to be intentional on our pricing and make sure that we can continue to provide value to our guests. And so we don't think we have extra pricing opportunities. We'll see where our commodities and other inflationary components come in next year. But our goal would be to take as little pricing as possible as we get into next year for sure. Speaker 301:04:23And the next question comes from Andrew Strelzik with BMO. Please proceed. Speaker 1001:04:29Hey, good morning. Thanks for taking the questions. Just two quick ones for me. You talked about growing revenue faster than costs. The company has always spoken to like a $50 plus 1,000,000 productivity run rate. Speaker 1001:04:42Is that still the right way to think about productivity in your opinion? And kind of high level where those buckets remain outside of menu simplification, which you've certainly spoken to? Speaker 201:04:51Yes. Certainly productivity is always a key component for us. I think as we go through our strategic planning and our annual planning, we'll align. I would say $50,000,000 is probably too high for where we are going forward. But a lot of it is technology enabled. Speaker 201:05:12As we think about the evolution of productivity over time, some of it was just kind of base efficiencies, then it was deploying technology, whether it's front of house or back of house technology in the restaurants to not only improve operations, but deliver efficiencies. And that's how we're continuing to look at it. We still think there's plenty of opportunity in supply chain and plenty of opportunity in simplification. So there's definitely opportunities there, but magnitude probably less than sort of that historical $50,000,000 run rate, but still material and we can we'll get back to you as we get into next year. Speaker 1001:05:53Okay. That's helpful. And then, actually a question on Fleming's. That was the only segment that saw comp acceleration in the quarter. So I was curious, kind of, what you thought was driving that? Speaker 1001:06:03And more broadly, what you're seeing from a consumer perspective? And if you think you're seeing a shift maybe in how consumers interacting with fine dining? Thanks. Speaker 101:06:13Yes. Good morning, Andrew. I would agree with you on Fleming's. Shailina, Henry and the team have done a really, really nice job. And to me, what they've told me and I agree is Fleming's is a reputational brand. Speaker 101:06:28And as you're as we're in the fine dining space there on that reputational brand, that is all about elevating the experience. And that is the team has been so, so dialed in on everything from the attentiveness to the pace, the experience. And it's just really a phenomenal experience. And I really do want to compliment them on our flagship opening here in Tampa is just a tremendous new Fleming's and it's very high energy and the guest experience is tremendous. And that's how we think about Fleming's. Speaker 101:07:05And as Michael said, to get that fine dining experience right, we're going to be thoughtful. We got 63 Fleming's and the bandwidth of the team would suggest it's 2 or 3 a year if we get them right on the new store because we don't want to sacrifice the fine dining elevated experience there. Speaker 301:07:30Thank you. This concludes today's question and answer session. I would now like to turn the conference back over to Mr. Mike Spanos for any closing remarks. Speaker 101:07:41We appreciate everyone for joining us today. We look forward to updating you on our progress at our next earnings call. Thank you. Speaker 301:07:51The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBloomin' Brands Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Bloomin' Brands Earnings HeadlinesBloomin' Brands (BLMN): Buy, Sell, or Hold Post Q4 Earnings?April 17 at 10:02 AM | msn.comBloomin' Brands, Inc. to Host Fiscal 2025 First Quarter Earnings Conference Call at 8:30 AM EST ...April 17 at 9:40 AM | gurufocus.comNew “Trump” currency proposed in DCFormer Presidential Advisor, Jim Rickards, says Trump could “rewire our economy and hand millions of Americans a chance at true financial independence in the months ahead.” We recently sat down with Rickards to capture all the key details on tape. April 20, 2025 | Paradigm Press (Ad)Bloomin' Brands, Inc. to Host Fiscal 2025 First Quarter Earnings Conference Call at 8:30 AM EST ...April 17 at 9:40 AM | gurufocus.comBloomin' Brands, Inc. to Host Fiscal 2025 First Quarter Earnings Conference Call at 8:30 AM EST on May 7, 2025April 17 at 8:30 AM | businesswire.comMorgan Stanley Remains a Hold on Bloomin’ Brands (BLMN)April 15, 2025 | markets.businessinsider.comSee More Bloomin' Brands Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Bloomin' Brands? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Bloomin' Brands and other key companies, straight to your email. Email Address About Bloomin' BrandsBloomin' Brands (NASDAQ:BLMN) engages in the acquisition, operation, design, and development of restaurant concepts. It operates through the U.S. and International geographical segments. The U.S. segment operates in the USA and Puerto Rico. The International segment operates in Brazil, South Korea, Hong Kong, and China. Its brands include Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse and Wine Bar. The company was founded by Chris Thomas Sullivan, Robert Danker Basham and John Timothy Gannon in March 1988 and is headquartered in Tampa, FL.View Bloomin' Brands ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? Why Analysts Boosted United Airlines Stock Ahead of EarningsLamb Weston Stock Rises, Earnings Provide Calm Amidst ChaosIntuitive Machines Gains After Earnings Beat, NASA Missions Ahead Upcoming Earnings Tesla (4/22/2025)Intuitive Surgical (4/22/2025)Verizon Communications (4/22/2025)Canadian National Railway (4/22/2025)Novartis (4/22/2025)RTX (4/22/2025)3M (4/22/2025)Capital One Financial (4/22/2025)General Electric (4/22/2025)Danaher (4/22/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 15 speakers on the call. Operator00:00:00Thank you and good morning everyone. With me on today's call are Mike Spanos, our Chief Executive Officer and Michael Healy, Chief Financial Officer and Executive Vice President. By now, you should have access to our fiscal Q3 2024 earnings release. It can also be found on our website at www.blumonbrands. Com in the Investors section. Operator00:00:21Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release on our website as previously described. Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ in a material way from our forward looking statements. Some of these risks are mentioned in our earnings release. Operator00:00:59Others are discussed in our SEC filings, which are available at www.sec.gov. During today's call, we will provide a brief recap of our financial performance for the fiscal Q3 2024, an overview of company highlights and current thoughts on fiscal 2024 guidance. Once we've completed these remarks, we'll open the call up for questions. With that, I would now like to turn the call over to Mike Spanos. Speaker 100:01:24Thanks, Tara, and good morning, everyone. It is a privilege to be leading the Bloomin' Brands team. We have iconic brands, passionate and resilient team members and a culture grounded in taking care of our people, our employees, customers, suppliers and communities. I am excited and wanted to be part of this tremendous team for two reasons. First, my family and I are longtime loyals of all of the Bloomin' Brands, including my late father who always felt so special going to Outback with my mom every Friday night to have a high quality steak and a beer at a great value in a fun casual environment. Speaker 100:02:06Whether it has been a great steak with my wife and kids at Outback, a dinner with my in laws for Italian Carrabba's, a birthday dinner for my mom at Bonefish for fresh seafood or an elevated steak dinner at Fleming's, our brands have provided my family with fun and memorable experiences. The excitement to be part of the team has only increased after spending time working in our restaurants with our great team members, From cutting fillets to shaking handcrafted cocktails, nothing beats the hands on approach to learning the operations of a business. 2nd, I believe in the strategic growth potential of the business. Bloomin' Brands is a great business with great brands and a great team. When we consistently execute with excellence and the guest experience is right, our brands generate profitable traffic growth. Speaker 100:02:59Our brands have a high right to succeed and steak and Italian casual dining are on trend and are big categories. Within steak, we compete with strong players and good competition enhances category growth and pushes us to deliver a better guest experience. I have a lot of confidence in the long term value of the company with the financial resources, including a good balance sheet with ample cash flows. With an operating mindset, we will deliberately and quickly make the necessary strategic steps to unlock that value. Now that you hopefully understand my motivation to be part of the Bloomin' Brands team, I want to recognize and thank our dedicated Outbackers, Mekkos, associates and anglers. Speaker 100:03:47In addition to being outstanding operators, I've been impressed with their resiliency and capability after dealing with both Hurricane Helene and Hurricane Milton in the span of 2 weeks. Our teams demonstrated leadership and dedication to each other, our guests and our communities. The examples of serving, leading and doing what is right in the face of such adversity has been inspiring. Despite flooded and damaged homes and cars, power outages and gas shortages, our teams took care of each other and safely reopened our restaurants to serve our communities. This kindness and support have been so impressive, and I thank and appreciate each and every one of you. Speaker 100:04:28We also donated $500,000 to the American Red Cross to support hurricane recovery in addition to feeding 1,000 of our first responders and those in need to support community recovery. I also want to thank and acknowledge the legacy and contribution of Dave Deno. He is a superb leader in person and has been invaluable during my onboarding. We've executed a smooth transition and have spent detailed time together to ensure the strategic work that the team has been working on remains on track and accelerates, especially in Outback Steakhouse. As you get to know me, directly leading frontline team members in both the Marine Corps and in the Pepsi system was foundational for me. Speaker 100:05:11I spent the majority of my PepsiCo career on the bottling side in asset and people intensive workplaces, starting on delivery trucks and servicing both retailers and restaurants. I also led broad and complex portfolio businesses at PepsiCo, Six Flags and Delta. In addition to my operational experience, I've led marketing, consumer insights, revenue management and food service teams. We will manage the business with an operational focus and a guest centric lens. My time in these roles reinforce 3 guiding principles. Speaker 100:05:48First, leadership is a privilege focused on the team member experience. We have a unique culture at Bloomin' Brands, one that originates from our founders. Our principles and beliefs states success is measured by growth in sales and profit and is the result of taking care of our people. Our success is based on our belief that people want to be part of something they can be proud of, is fun and that includes and values them. Throughout my career, I focused on building performance based cultures, balancing employee well-being and driving accountability for best in class performance. Speaker 100:06:25Listening to and learning from our restaurant operators is important in order to support them working more effectively and efficiently. We will stay close to our managing partners and joint venture partners as well as our franchise leaders as they have the greatest insight into what we can do to better improve the guest experience. I will spend the majority of my time and how we can improve our team member experience, which in turn inspires a high quality, welcoming, elevated and caring experience for our guests. The second guiding principle is to focus on the guest experience. Our ability to consistently execute a memorable experience for our guests with a high quality meal at a great value in a relaxing environment is what drives repeat visits and loyalty to our iconic brands. Speaker 100:07:16Consumers want memorable experiences in away from home occasions. Every moment matters when guests choose to spend their hard earned money and their precious time with us. The 3rd principle is to have a growth mindset by focusing on the core. I found every market, whether domestic or international, and every category has growth potential in terms of traffic, revenue and profitability. It is important to control what we can control, have a clear definition of success and execute on targeted initiatives that drive growth. Speaker 100:07:52This leads to disciplined capital investments, simplification of the agenda and being great on what is important to our guests. Bloomin' Brands is a portfolio of iconic brands that have strong growth potential. By focusing on the core of our brands and operational excellence, there is a long runway ahead. As I initially evaluate our portfolio, I see 2 primary scalable areas for growth. The first and our biggest brand is Outback Steakhouse. Speaker 100:08:23This is a global brand in an on trend steak category. However, we have not sustainably grown traffic. We are closely evaluating all elements of the guest experience. I am personally committed to material improvement at Outback Steakhouse will sustainably grow traffic, comparable sales and profitability. This brand has a high right to succeed within the steak category. Speaker 100:08:48I'm excited about the strategic work that we have underway, and I will take an active role in operationalizing the work. Our 2nd scaled growth opportunity is Carrabba's. I've been impressed with this team's capability to grow both traffic and comparable sales and to meet our guests' needs across various day parts and occasions. The team is focused on the in restaurant experience and is assessing the white space opportunity to strategically scale the brand with margins and returns that deliver shareholder value. We plan to share a meaningful update on the Outback and Bloomin' Brands strategy on our next earnings call. Speaker 100:09:30Before I turn it over to Michael to discuss our financials, there are two last items that I want to address. First is our Q3 results and balance of year and full year guidance. It is reflective of the broader challenging industry trends, recent impact from the hurricanes and our current execution. Our team is working hard, but we are not pleased with our performance and we know we can do better. We have work to do and are committed to providing accurate and transparent forecasts of our performance. Speaker 100:10:022nd, I am pleased to announce our strategic partnership with VINCI Partners for our Brazil operations. We have a scaled and leadership position in Brazil and are excited to have VINCI as our partner to grow the business in the future. VINCI is a significant asset management firm with a successful track record of partnerships in the restaurant space. We are retaining 33% ownership of the business. It has been my experience living and working internationally with franchise partners that combine powerful classic brands with local capability and expertise is the optimal business model to maximize future growth. Speaker 100:10:39We have also created aligned economic interest for both parties with a material equity stake to grow the business and to grow it in a profitable way. This transaction will allow us to simplify and focus on our domestic operations. We anticipate closing the transaction this year and Mike will walk through more of the financial implications of the transaction. Next year, Bloomin' Brands will be a more focused and simpler company. As I leave the company, you have my following commitments. Speaker 100:11:12First, I will be strategic and grounded in our operations and decisions we need to make. 2nd, I will communicate our path and progress in a transparent way. And third, I will hold my team and myself accountable for delivering strong results. And with that, over to you Michael to discuss our Q3 financial performance and updated 2024 guidance. Speaker 200:11:36Thank you, Mike, and hello everyone. I would like to start by providing a recap of our financial performance for the fiscal Q3 of 2020 4. Total revenues in Q3 were $1,000,000,000 which is down 4% from 2023. This was primarily driven by a decline in comparable restaurant sales, the FX translation of the Brazilian dollar relative to the U. S. Speaker 200:11:58Dollar and the net impact of restaurant openings and closures. U. S. Comparable restaurant sales were negative 150 basis points and traffic was negative 4.40 basis points, which was in line with the casual dining industry. At Outback, we introduced greater value in our LTOs beginning in Q3. Speaker 200:12:18While this allowed Outback to outperform Black Box on traffic in a very promotional environment, our focus is on building sustainable traffic growth, particularly at Outback. Average check was up 2.9% in Q3 versus 2023, in line with expectations. Value is critical right now and we are committed to take the least amount of pricing as necessary. Q3 off premises was approximately 23% of total U. S. Speaker 200:12:47Sales. Our 3rd party delivery business is 13% of total U. S. Sales, which is an increase from 12% in Q3 2023, driven by our growth in catering. Our Q3 GAAP diluted earnings per share for the quarter was $0.08 versus $0.45 in 2023. Speaker 200:13:07Our Q3 adjusted diluted earnings per share was $0.21 versus $0.41 in 2023. The primary difference between GAAP and adjusted diluted earnings per share is due to the asset impairment and closure related charges associated with the decision we made in Q2 to close 9 restaurants in Hong Kong, executive transition costs and professional fees related to our revenue growth management strategic efforts. Q3 adjusted operating margins were 3% versus 5.3% last year. There were a number of factors contributing to the margin decline this quarter. Overall, restaurant level margins declined by 150 basis points. Speaker 200:13:52110 basis points were driven by labor, primarily due to hourly and field management wage rate inflation. Labor wage inflation for the quarter was 3.8%. Other restaurant operating margin declined 90 basis points, driven by higher operating and supply expenses, primarily due to inflation as well as higher pre open expenses as we open more restaurants this year. Cost of goods was 50 basis points favorable from pricing benefits and supply chain productivity initiatives. Commodities were better than expected in Q3 at approximately 2%, driven by more modest inflationary expectations across seafood, oil and dairy. Speaker 200:14:35We continue to see positive signs within our beef program, but this category remains inflationary. Depreciation expense was higher in Q3, consistent with our increased levels of capital spending in recent years and our investments in infrastructure to support growth. We are operating in a challenging market environment and we are focused on managing the costs that are in our control. Turning to our capital structure. Total debt net of cash was $1,000,000,000 at the end of Q3. Speaker 200:15:06During the quarter, we upsized our revolver to $1,200,000,000 which provides additional liquidity for our business and provides broader financial flexibility. Importantly, we remain committed to being at or below our long term lease adjusted leverage ratio target of 3 times. Year to date, we have repurchased a total of 10,100,000 shares of stock for approximately $266,000,000 This included shares issued in connection with the repurchase in March of a portion of our convertible notes. We have $97,000,000 remaining under our share authorization program. The board also declared a quarterly dividend of $0.24 a share that is payable on December 11. Speaker 200:15:52Now turning to our full year 2024 guidance. We are updating our full year guidance to reflect the continued industry softness and our trends. As a result, we are updating our comp guidance range to be down 100 basis points to down 50 basis points. We are being very mindful of pricing and have not contemplated pricing actions above prior guidance. Given the volatility the industry is seeing in traffic trends, we are updating our adjusted diluted earnings per share guidance to be between $1.72 $1.82 Prior guidance assumed industry trends would strengthen, but our updated view assumes no improvement. Speaker 200:16:34Additionally, the hurricanes have had a negative impact on our business and were a distraction for our teams. U. S. Domestic comparable sales were negatively affected by approximately 30 basis points in the Q4 and a total impact to profitability of approximately $0.03 on an earnings per share basis. Both of these are included in our updated full year guidance. Speaker 200:16:57We are updating our commodity inflation guidance to be approximately 1%. We are updating our adjusted tax rate to be between 6% 7%. As we mentioned on the last call, the negative calendar shift experienced in Q1 of $0.05 is recaptured in Q4. The Brazil tax benefit is expected to be approximately $0.15 for the year. As it relates to the Q4 of 2024, we expect U. Speaker 200:17:26S. Comparable restaurant sales to be down 200 basis points to down 100 basis points on a comparable calendar basis. This reflects the current environment and what we are seeing in the restaurant industry as well as the approximate 30 basis points impact from the hurricane experienced at the start of the Q4. We expect Q4 adjusted diluted earnings per share to be between $0.32 $0.42 Importantly, this guidance includes the revised Brazil value added tax exemption benefit of approximately $0.07 and an approximate $0.05 benefit from the calendar shift, offset by an FX headwind of 0 point 0 $2 and a $0.03 impact from the hurricane. This morning, we announced a strategic partnership with VINCI Partners for our Brazil operations. Speaker 200:18:15Total enterprise value for the business is BRL2.06 billion or 6.5 times trailing 12 months EBITDA net of royalties through Q3 2024. VINCI will purchase a 67% ownership interest based on this valuation and as Mike mentioned, we will retain 33% ownership in the business. We believe our economic interests are aligned and expect the business to continue to grow. We have an option to monetize our remaining equity stake in 20 28. We anticipate the transaction to close in 2024. Speaker 200:18:51We will receive 52% of the proceeds upon closing and the remaining 48% 1 year later. We will provide more details on the use of those proceeds on our February earnings call after we complete our strategic planning efforts later this year. Additionally, the ongoing royalty stream will allow us to continue to benefit from a high growth market leading business. In summary, we are not satisfied with our results in 2024 and we are committed to the actions necessary to deliver consistent long term sales and profit growth. While Outback is our primary focus, all of our brands play a role in the success of Bloomin' Brands. Speaker 200:19:31And with that, we will open up the call for questions. Speaker 300:19:37Thank you. We will now begin the question and answer session. And today's first question comes from Jeffrey Bernstein with Barclays. Please proceed. Speaker 400:20:09Great. Thank you very much. I have to be careful now with 2 mics here. My first question is just in terms of the operations and the opportunity you talked about. I know in the press release you talked about consistent and elevated guest experience, which was key. Speaker 400:20:27I'm just wondering in your early days, what do you think Outback has been falling short on that, which presumably has pressured repeat traffic? I know you mentioned deliberately and quickly taking action. I'm just wondering whether you think there's any low hanging fruit that we could see being implemented over the next quarter or 2 to stem the tide. And then I had one follow-up question. Speaker 100:20:52Thanks, Jeffrey. Yes, it might be better just to say Spanos for our CEO and Healy for CFO to keep you all keep it simple for everybody. But good morning. I'll start with your point or your question on the operations and what I'm seeing with Outback. I'd start with, 1st of all, we are seeing if I start with the problem, we are seeing declining same store sales and we're seeing declining traffic and we have been losing share in the state category. Speaker 100:21:23That is our reality right now. If I look at what I think are the positives on the balance sheet, so to speak, we've got a great iconic brand. We've got a great team. The team is very passionate about the guest experience and they're very rooted in what I think is that Aussie spirit, that reverence, that no rules just right, the core ethos of the brand that's out there. And we're very much on trend in the state category. Speaker 100:21:53So that I feel very good about. And as I said, we've got ample liquidity. We've got cash flows are also ample and we've got a really good balance sheet. So I feel very good about that. If I look at where I'd like us to lean further in and accelerate, it is starts with the guest experience. Speaker 100:22:15We've got to create just a great meal and a great value in a fun casual environment, which is also the core of the brand. And to me, I look at operational excellence as consistency. The team has told me that. To me, that means we've got to be thoughtful about controlling what we can control, simplifying the agenda and the menu. In addition to that, we've been really looking at our brand positioning. Speaker 100:22:40We don't want to be a bar and grill, in terms of how we go to market. And, the work is we're going to get better every day. And we're going to create a differentiating experience back to our roots. But we'll give you more in February. But I will tell you this, I am personally very hands on with Outback. Speaker 100:23:00I'm working very closely with the team. And the the strategic work the team did, we're accelerating that and we're going to get that moving. And again, it's an everyday process getting better and that starts with coaching, leading accountability. Speaker 400:23:17Got it. And Spanos, you mentioned Outback and you mentioned Carrabba's in terms of near term priorities. I'm wondering if you could just talk about thoughts on the portfolio more broadly the pros and cons, whether it's keeping Carrabba's or just the thought process around Bonefish? Any thoughts there, especially we're aware that there's an activist in the names. I'm just wondering if there's any thoughts you could share in terms of your relationship or your priorities or whatnot relative to that of an activist investor? Speaker 400:23:50Thank you. Speaker 100:23:51You got it. A few questions there. Let me start in reverse order. I think you were asking about Starboard in terms of that relationship. What I'd say there is we have a What I'd say there is we have a very collaborative relationship with Starboard. Speaker 100:24:06They're incredibly insightful. And what I've really liked about the Board members, they're passionate about the guest experience and how the team member experience unlocks that guest experience. And they want us to do what's right for the business, and they're especially focused on sustainability of the business through a fantastic guest experience. So I'll start there. 2nd on the portfolio, maybe what's inferred a bit in your question is Brazil. Speaker 100:24:35Now I'll come to the domestic piece. I would not link or connect our decision on Brazil to the domestic portfolio. I've lived and worked internationally many years, both in company owned businesses, franchise businesses. And what I found is you unlock the maximum future value when you have an iconic brand with a great set of capability combined with the local capability, community, local savviness, that combination is your best synergy for growth. If I go to the domestic portfolio, we're committed to our domestic portfolio and I do think there's 2 scaled growth opportunities, Outback, which I already spoke about and that is primarily our biggest opportunity. Speaker 100:25:24That is all about the guest experience enabled through the team member experience. And we just got to Speaker 300:25:29be Speaker 100:25:29really tight on our operational excellence to get there. Carrabba's is to me is really an exciting business. What we've seen on a sustained basis, good steady traffic and good steady same store sales with that business. I do want the team I know Pat Hafton, who leads that business, the team has done a great job since about 2019 elevating that brand in a better way. They're very focused on in restaurant traffic. Speaker 100:26:00The brand does a nice job across day parts and converting occasions, which I think is very positive. And to me, what's exciting is exploring in a very deliberate manner the white space growth opportunity of that brand. And we'll do that smartly because you got to have the right margin profile and the right return profile on that. The last part of your question, I think, was specific to Bonefish. Bonefish to me is all about, again, at its core of the brand, it's a polished dine, fresh seafood around an energetic bar experience. Speaker 100:26:35And that's what the team is focused on, Jeffrey. They're focused on simplifying that menu in a good way that pivots back to fresh seafood, really going off that energy of the bar that we saw in the very first bone pieces that were out there and that's where we're at. Speaker 300:26:59The next question comes from Alex Slagle with Jefferies. Please proceed. Speaker 500:27:05Thanks. Good morning and welcome aboard, Mike. I thought it was interesting you talked about your history with the brands as a consumer. As you dug in and worked with the operators, I mean, what are you hearing that sort of stands out differs from what you initially expected kind of coming in? Speaker 100:27:27Alex, good morning. Very the operators, our managing partners, our JVPs, our franchisees, they're incredibly consistent in their feedback. The first is they want simplification in the simplest terms. The second is they want to get back to that guest experience. They're giving me feedback around center of the plate improvements. Speaker 100:27:54They're giving me feedback around how we remove barriers by simplifying the agenda and what we can do to improve that guest experience, very consistent feedback there. The second is on what I would call the brand positioning. As one Outbacker said to me, they want to be great at a few things and not average at a lot of things. That's very clear. So they want to have a really strong value every day that the guest knows from a brand trust that they can get out there in a big way. Speaker 100:28:25The other thing they've talked to me about in terms of the brand positioning is and I agree with them on this, is about frequency. Our average Outback guest comes about twice a year and their point is let's get that number to 3. So increase the frequency of our loyal guests and retain them. And what they're also telling me is to recruit new guests, we should recruit the right new guests that want to lean into the steak category, steak and seafood. And the last thing is they believe in the brand. Speaker 100:29:03They believe passionately in the brand. They believe passionately in the potential of the brand. And they love serving our guests and serving each other. Speaker 500:29:15Helpful. I mean, I guess it's early, but I mean, do you expect any investments back into the brand around food quality, marketing, labor, other areas that could have an impact on margins or just that sort of reinvestment as we look ahead to 2025? Speaker 100:29:35Yes, Alex. I won't get into 2025. We'll be real clear with you on what we're doing as we finish our long range planning into February. But maybe I'll give you a framework on how I think about this in terms of how you lead the P and L and lead the team. I start with 1. Speaker 100:29:53I'm a believer you can reward yourself with a free dividend. What I mean by that is step 1 is coaching, leading, controlling what you can control, focusing on the guest, that accountability factor can Operator00:30:05unleash a lot of potential Speaker 100:30:05when the team is focused. I start there. 2nd, team as well. We also should be looking at reducing wherever we have costs or any type of costs we don't think is driving revenue or top line growth. We've got to take a hard look at that. Speaker 100:30:35And then after that, I think it's fair to say we can look at reinvestments, but those reinvestments have got to be sharp. They got to be targeted. They got to have clear returns on them. So we have revenue outgrowing our cost growth sustainably. Speaker 500:30:53Great. Thanks. Speaker 300:30:57Today's next question comes from John Ivankoe with JPMorgan. Please proceed. Speaker 600:31:04Hi, thank you. I want to grab that last word reinvestment and apply it to your existing asset base. Obviously, the majority of your sales are presumably always will be on premise, a modern experience at least relative to expectations really matters. And at least in previous conversations with the company, we've heard anywhere between 30% 50% of the asset base is considered to be modern. In other words, the majority are considered not to be modern. Speaker 600:31:35So I wanted you to just kind of address the asset base. How much of a front burner needopportunity is there? And are you willing to make that investment even if it doesn't necessarily pencil out from a financial return perspective just because it's the right thing for the brand, your employees, your customers longer term? Thanks. Speaker 100:31:58Yes, you bet. Good morning, John. So I think that's a really fair question. And that is very much part of the work we're doing is asset condition and asset quality across all the brands and how we think about that. But I would also start with the one thing I've learned over the years calling on foodservice customers and servicing them and what I've learned here so far is the best results inside the four walls of a restaurant start with the leadership of our managing partners. Speaker 100:32:31What I've seen is results that tell me when we get the right leadership with the right accountability and we simplify the agenda, we can unlock growth everywhere. What I think you're also getting to is capital allocation. And again, we'll be clear on that. But what you're getting at is what I would call is investment in the base business. To me, that's always where you start in terms of capital allocation. Speaker 100:32:58And part of that is repair and maintenance, part of that can be a remodel, part of it can be a relocation, etcetera. But we're going to make those right moves because it does pencil out if you're doing the right things with sustainability and if you have the right process, which we do and Michael's team is leading that process. And we'll do those things. Beyond that, our capital allocation, which I think is a bit of the inference to your question, we're going to continue to be thoughtful on that. We're going to obviously stay focused on paying down debt to lease net leverage ratio, a long term of 3.0 as Michael pointed out. Speaker 100:33:34We'll be disciplined in new store openings. And then after that, we'll look at how we properly return cash to shareholders. But it pencils out. What I found, I've been leading asset heavy in people intensive companies for a lot of years. You have to reinvest in the base of the business for sustainable growth and we're committed Speaker 200:33:52to that. And John, just to piggyback on that, I think the focus on better operations and better execution works when we reinvest in the restaurants as well. And so it has to be an end as we think about the investments or what we would need to do to support Outback. And that's how we're prioritizing them as we go through this strategic planning. Certainly an asset component is part of that conversation. Speaker 600:34:20Thank you. And I think a follow-up on the reinvestment side. I mean, you've mentioned a couple of interesting a lot of interesting things. But really trying to constrain the amount of pricing you take going forward, but not wanting to be a bar and grill, I get both of those comments. But how do we feel about the overall average ticket? Speaker 600:34:40Is the opportunity to go lower to bring that frequency from 2 times to 3 times when you kind of take a clean slate look at the business and look at prices on an absolute basis relative to consumers' expectations, how are we feeling about the current price levels and overall average ticket that the customer pays? Speaker 100:34:59Yes, John. So I'll add her up to what I've always found to be your levers on revenue management. There is a volume lever, which is traffic. There's obviously an inflationary price lever and there's a mix lever. And what I found is you got to be balanced on all three levers. Speaker 100:35:19In terms of what you got to do internally on the P and L as well as being thoughtful externally on what's going on competitively and what the guest or consumer gives you credit for between a price and benefits equation. So we're going to be balanced moving forward and we're going to have a very sharp lens on all those levers. Speaker 600:35:42Okay. Thank you. Speaker 300:35:47The next question comes from Brian Harbour with Morgan Stanley. Please proceed. Speaker 700:35:55Yes. Thank you. Good morning. Maybe just wanted to start with the 4Q, obviously, you did change your annual EPS guide quite a bit. And part of that is sales. Speaker 700:36:04It sounds like the hurricane impact wasn't too significant from an earnings perspective. But could you help us on some of the pieces that are kind of driving that change to your 4Q outlook? Speaker 100:36:17Ryan, good morning. It's Thanos. So I'll start with we're not happy with our results. And if you look at the forecast for the initial forecast for Q4, we were arguably optimistic. We assumed casual dining would improve and we assumed our performance would improve in terms of grabbing share or growing faster than some of the folks out there, and that did not happen. Speaker 100:36:48So our quarter 4 forecast is reflective and consistent with our year to date Q3 trends. If you're looking same store sales, traffic pricing and what we internally look at in terms of EBIT, that's where we're at. So again, we're not happy with it. What I would tell you moving forward, you're going to find with me, we'll and I know Mike feels exactly the same way. We're going to be very transparent and candid on the forecast. Speaker 100:37:16I tend to take a balanced center cut approach. We'll give you what we think are some of the moving parts and the pluses and minuses of that. And to me, what's going to really drive the business in terms of forecasting is just getting back to that outstanding guest experience enabled by a great team member experience. And that's where we're going to go. Speaker 200:37:38Yes. The only thing I'd say, I mean, it for the most part, it's a pretty clean bridge for us as far as the traffic is a more a lower perspective on where we think Q4 traffic would be. We do have a few unique things. We spoke about the hurricane, the Brazilian tax component that will one hurts, one helps, as well as the calendar shift. There's a couple of new unique things in there. Speaker 200:38:04But other than that, for the most part, it's just traffic. We anticipate to run pretty much what it's been running and that's how we think about the finish of the year. Speaker 100:38:14Yes. Brian, the last piece, just one last point on the hurricane. And I am saying this as well to acknowledge our teams again. This was a consuming 3 weeks during the hurricanes. If you look at whether it was Helene or Milton, we still have team members that are in the land of remediation and recovery and all the fun that goes with putting your lives back together and they're still getting through it. Speaker 100:38:40So it was a big drain of capacity and bandwidth and energy of the team and where everybody's been positive. But that has been one of the distractions and it's good to be past that. Speaker 700:38:56Yes, understood. I appreciate that. Maybe this is something you want to comment on later, but just on kind of like menu, thinking about Outback specifically, do you think there need to be there have been changes there I know. Do you think there needs to be more of a change from a menu perspective? You kind of mentioned some simplification, but what's kind of your view on just the food offering at Outback today? Speaker 100:39:24I like your question, Brian. Again, I think it starts with simplification and getting back to the core of that Aussie spirit, that steak, seafood core and being all things to some people on the menu and not necessarily being all things to all people on the menu. Our operators want that simplification in the back of the house, and we are looking at that. And I found over the years, just fewer items executed more consistently drives a way better guest experience. Speaker 800:40:01Thank you. Speaker 300:40:05The next question comes from Jeffrey Farmer with Gordon Haskett. Please proceed. Speaker 900:40:11Great. Thank you. Mike, in answering some of the earlier questions, you pointed out the importance of value. Can you just elaborate on where you see the core Outback concept currently positioned on the value front? Speaker 100:40:29Good morning, Jeffrey. We so if I think about where we're at, first, I'll start with value. To me, value has always been a function again of what's the price and what's the benefit and that value is accentuated with the fantastic outstanding guest experience. And I start there and it's that great meal, great value, great experience, a fun casual environment that enhances that value because part of that value is that benefit, that feel, that memory you get when you walk out of an outback. As I said, what I am drilling into and what the team has given me feedback on is how we execute LTOs relative to other innovation versus everyday value. Speaker 100:41:20And that's part of the work we're doing right now is can we simplify the value or promotional equation and also simplify the menu, which was where Brian was going as well before in his question, to make it a simpler offering for not only the guests, but our team members. Speaker 900:41:41Okay. So just to follow-up on that and I'll leave it at this. In terms of thinking about I think in the 3Q, you basically Outback moved to a $14.99 promo price point from I think it was like $16.99 So in terms of something as simplistic as that is lowering the prices, is that sort of within your strategy vision? Or is that not how you see this happening moving forward? Speaker 100:42:10Yes. You're talking about Great Barrier Eats in terms of Q3 and affordability. So we are looking at that. We've also in the past run the 3 course offerings. We're just broadly looking at our affordability and our entry price points and how we think about it. Speaker 100:42:29What I would say with this is these types of LTOs, we want to be core to we want to execute them core to our menu. What I don't want to be doing, and the team has given me this feedback, is more and more, we don't want to be bringing in a lot of new items to execute in these programs. We want to pivot off the core of the menu with the right value to attract sustainable traffic. Speaker 200:42:54Yes. And the team is fully focused. We know we had to have more value, right? So we made the intentional shift to lower our opening price points on LTOs beginning in Q3 down to $14.99 The team is able to engineer those offers. We those offers drive a lot of mix, but the entry price point lower in mix, some of our more featured, more iconic items tend to drive the mix. Speaker 200:43:22And so we're able to engineer them. So the overall economics are in a good place. But we know that we had to lower those opening price points. We know that affordability matters. We know that how we how our prices compare to other state competitors matter. Speaker 200:43:38And so all of those are things that we're looking at and especially as we think about some of the longer term strategic work of just what's the appropriate pricing for us as we think about our business. Speaker 100:43:50Yes. Jeffrey, last piece on that is Michael is exactly right in terms of making it work financially, engineering it. My bigger focus based on feedback from the team members is whatever we offer, we want to make sure it's generating traffic that retains our loyals or recruits the right kind of guests we want long term. That's the focus for me as we look at pricing and promotions. Speaker 1000:44:21All right. Helpful. Thank you. Speaker 300:44:25The next question is from Sara Senatore with Bank of America. Please proceed. Speaker 1100:44:31Thanks. Two questions, please. The first is, you mentioned sort of having anticipated that the demand environment would improve as well as your perhaps your relative performance. I guess, I'm a little I wanted to get into that because my understanding is that the demand environment has improved. If I look at some of the industry trends, for example, it looks like sort of July was the softest and then we've seen pretty consistent improvement into and through October by across segments. Speaker 1100:45:04So I wanted to clarify that comment if you had anticipated more improvement or if it really is a relative performance question? And then I did want to ask about your the comment one of the mics, I think, Spanish made on managing partners. Speaker 200:45:25Yes. I can kind of jump in on how we thought about the forecast. So certainly July was the low point from an industry standpoint. So I think everybody assumed that we would have some rebound off of that and we did have some rebound off of that. If we look at sequentially how we performed versus Black Box, we performed better in Q3 versus Black Box than we did in Q2. Speaker 200:45:47So we saw some improvement, especially as we move to some of the lower price point LTOs. In our prior guidance, we assumed that trajectory would continue through Q4 and our gap to the industry would continue. I think some of that optimism is now not contemplated in our guidance and we're sort of assuming the industry is what the industry is. And so we continue to fight for share with that. We still think we have some very compelling offers that can take share. Speaker 200:46:16But we sit pretty much flattened that expectation as we think about finishing the year. That's just mechanically how the forecast was rebuilt. Speaker 1100:46:26Okay. Thank you. And then, on the sort of getting the right managing partners and I think that makes perfect sense. The general manager role is the most important in the system. But I guess, I'm wondering how you do that in the sense that I think they participate in the economics of the box. Speaker 1100:46:44So it seems like your approach to aligning incentives is about as good or as sort of optimal. And I'm curious, what you see as an opportunity to make sure that you do have the best partners there if it's not an incentive if it's not a change in how you incentivize them, is there something else, because that model has worked very well for others? Speaker 100:47:16Yes, Sarah, good morning. So it has worked well and I like aligned economic interests and I like the model and that's the feedback I've been given by our managing partners. What many of them have also said to me is their aligned economic interests and ours in the model also need to incent sales growth and profit growth, in addition to a percent or a mix of the discounted cash flow. But the bottom line we're seeing with our managing partners when we get great results is we have retention of our good MPs, we have their engagement and we line of And I do to your point, we feel good about that model where they have aligned economic interests and they get contribution from our profitability and our growth. Speaker 1100:48:16Thanks. Speaker 300:48:19The next question comes from Dennis Geiger with UBS. Please proceed. Speaker 1200:48:26Great. Thank you. I wanted to ask a bit more on marketing. I know it's early and we'll hear more from you on the next call. But curious if anything high level to share today. Speaker 1200:48:35We've seen really good traction from a couple of others in the industry who have leaned in and made some enhancements to marketing. They've tied it into social media, etcetera. So I'm curious how you guys think about the current marketing, where the brand is positioned in that marketing, in the ad spots and relative maybe to how you should be positioned and Mike relative to your thoughts earlier on what the brand stands for? Speaker 100:48:58Good morning, Dennis. I'll start maybe with the bigger picture. And I think you've got questions in how we're positioned for Q3 and Q4 as well. And I'll give you that insight as well. To me, with the brand, when you're building brand trust or brand loyalty, you're usually going down a curve of awareness to trial to repeat into loyalty. Speaker 100:49:21So for me, I start with the loyals and retaining the loyals and getting the loyal guest frequency up. So if the average is 2, as I said, I want to get them to 3. And you do that with a great guest experience. That's the foundation of a brand trust and that's the foundation of an intent to return. I also then look at in that same sort of curve is recruiting. Speaker 100:49:49We want to recruit the right guests that also want that great experience. If it's Outback, again, it's going to be a focused steak and seafood experience with that Aussie spirit at irreverence where they get that great meal at that great value, that great experience. And then we want to get them past the trial. We want to get them into repeat. On both of those, regardless of what we're saying, whether it's social or traditional TV, we've got to be consistent in our operational excellence to deliver a great guest experience. Speaker 100:50:23To me, that's really important. More tactically, if you look at Q3 or Q4, our spends year over year are basically flat. Our weeks year over year are basically flat and our TRPs year over year are basically flat specific for those quarters. Speaker 200:50:41Yes. And just to jump in, I think we have pretty good analytical capability to evaluate our marketing spend, what the ROIs are, what channel, what message is most relevant. And we look at those every quarter. There's no doubt there are some other players Share of Voices is very competitive right now as others have leaned into broader marketing spend. And that's certainly a consideration for us as we think about our larger strategic plan, right? Speaker 200:51:09And operationalizing accelerating the work that we're doing at Outback. When we get to the other side of that, we are going to have to be able to communicate who Outback is, what Outback is and really drive trial when we have a much better experience. And so that's certainly a consideration as we think about that longer strategic plan. Speaker 100:51:27Yes. I mean, Dennis, to me, I last thing again, I'll say on this. I think the foundation of any brand in any push or pull marketing starts with service and that's guest experience. And that to me is what we've got to focus on and first get right as we think about spends in terms of our voice to the consumer base. Speaker 1200:51:53Good color. Thanks guys. Just one more. Just on Brazil maybe and the re franchising transaction and that partnership. Anything more to share right now on thinking about modeling that, whether it's royalty looking ahead, more near in, when roughly in the Q4 we should think about that closing and impact to the Q4? Speaker 1200:52:14Any more details on that today? Thanks guys. Speaker 200:52:18Yes. I think we shared most of details already as far as the enterprise value against selling 2 thirds of the business. We would expect to close or hope to close by end of this year the end of this calendar year. We're not going to disclose the royalty rate, but we will get a royalty as that business continues to grow. But just mechanically, we sold 2 thirds of the business at 2.06 Brazilian dollars. Speaker 200:52:43We get 52% of the proceeds that close. We get 48% of the proceeds a year later. We have an option to sell the remaining third of the business in 20 28. We certainly expect that business to continue to grow. We've chosen the right partner, right, to really lead and grow that business and augment it with talent and capability. Speaker 200:53:03And so, we're really excited about obviously, we love that business. We're really excited about it, but it allows us to focus on our core domestic and we have a great partner down there that can focus 100% of their time on growing that business. So, economics were good for us. We're able to benefit in the growth. And so it was a great opportunity for us. Speaker 300:53:30The next question comes from Brian Mullen with Piper Sandler. Please proceed. Speaker 1300:53:37Hey, thank you. Just want to come back to capital allocation. I wanted to ask specifically on the dividend. That's about an $85,000,000 annual cash outflow. You might make the case the market maybe isn't giving you credit for it given where it looks like the yield is. Speaker 1300:53:52Mike Spano, I was just wondering how you feel about the dividend, if that is under any kind of review, if there might be a better use of cash, whether that be remodels or debt pay down or share repurchases? Any early thoughts on that? Speaker 100:54:05Hey, Brian, good morning. Well, you mentioned a point about, are we getting credit forward? Arguably, I would say we're undervalued and that's part of the challenge with the yield if that's where you're going. So I'm confident and optimistic over time we're going to get back to the right levels there. We're not going to I'm not going to get into the details of the capital allocation on the LRP. Speaker 100:54:29But as I said, once we're confident we've done the right things on the base business, we've been doing the right things on debt and we're through the strategic plan, we'll be clear on what cash goes back to shareholders and how. But as you know, we just approved a dividend in as part of this quarter. We're committed to it. And again, I think the key here is, as I said, we got to be really sharp on our investments, our use of cash with the right returns operationally and also the right to shareholders when we don't think we have those kind of returns to give that cash back to our shareholders. Speaker 1300:55:11Okay. Thank you. And then just a question on the domestic store base. In the Q1, there were some strategic closures, Mike Spanos, that was before you got here. Just my question is given the tough industry trends since then and the fresh set of eyes, do you think there could be some more closures here in the next year or 2 as you do this asset review? Speaker 1300:55:32Just any early thoughts? Speaker 100:55:35Ryan, as we've always done every year as I've learned here in other places, we're obviously always looking at our assets, as I said, the condition and the quality. But again, I'm going to start with our what our management partner is telling us, what's working or not working inside the four walls before we make any decisions about shutting down a restaurant. I start there. And if it is if that's the issue, we'll get that right. If we do have an asset that we don't feel is right from a guest experience standpoint, then we're going to get to the next question, which is are we remodel or relocating, which is part of our normal process. Speaker 100:56:16And we're working that very much in a process manner as part of the long range planning we're doing right now. And of course, obviously, Brian, that also goes for new store openings, if we consider that. We go through the same disciplined process and how we think about that cash. Speaker 1000:56:33Thank you. Speaker 300:56:37The next question comes from Jon Tower with Citigroup. Please proceed. Speaker 800:56:46Sorry about that. I got to figure out how to use my mute button. Apologies. So just quickly going back to the Brazil business, can you just I know you're not wanting to provide too much more details by way of royalties, but can you at least tell us what the CapEx over the past 12 months was allocated to that business? Speaker 200:57:06About $40,000,000 Speaker 800:57:08All right. Thank you. And then one part, Spanos, so I'll be referred to as Tower from this point forward. One thing you had spoke about was the idea of speaking with managers and so far meeting with them at the Outback brand and what they liked about the business, what they wanted to have improved and what was absent in your comments was any commentary regarding the off premise business or delivery. And Outback, it's a much larger chunk of the business than it is for some of your direct competitors. Speaker 800:57:43So I'm just curious what feedback you heard from them and frankly, your own thoughts on that channel going forward? Speaker 100:57:50Absolutely. And thanks for the correct enunciation on the Greek American name. I appreciate that. So John, what I would say on your question on off premise, first I'd start with we've been absolute pioneers in this space. I go back to my days as a consumer many times calling in the order at Outback and then picking it up. Speaker 100:58:12We were first on that forefront and that has worked well. And to your point, we have a good mix of that business. But again, I go back to the guest experience here. We will what the operators and managers telling me is, they want the guests to have a great experience on or off premise. What that implies is, we got to be really thoughtful around the menu we offer in terms of off premise and which food travels the best off premise and making sure we also feel good about the delivery and how that guest interaction happens as well. Speaker 100:58:53And that's part of the work we're doing. So we're going to continue to be committed to off premise, but we're also going to be very balanced and thoughtful where whatever we do there, it's got to be a great guest experience. It's got to be a great meal, great tasting food, still at a great value and you got to have that guest experience. Speaker 800:59:15Got it. Thank you for taking the questions. Speaker 300:59:19And the next question comes from Brian Vaccaro with Raymond James. Please proceed. Speaker 1400:59:25Hi, thanks. Just a couple of quick follow ups, if I could. Back to the Brazil transaction, can you share what the expected tax bill or after tax proceeds will be? And also can you remind us how much of the annual G and A budget is in Brazil? Speaker 200:59:42Yes. We're not going to get into the after tax as we still have to close and go through all of those components at this time. I don't have their G and A on me, but we can get back to you with that. Speaker 1400:59:54Okay. And then, I guess back to capital allocation, I think more than half of your CapEx budget has grown towards new unit growth in recent years. And you mentioned you highlighted the $40,000,000 towards Brazil, but also some domestic obviously. So can you speak to kind of the returns you're seeing on your domestic unit growth? Are they hitting your targets? Speaker 1401:00:16And just any thoughts on the potential to optimize your CapEx budget, maybe just maintenance and remodels to help bolster free cash flow? Speaker 201:00:26Yes. I mean, the restaurants that we've opened over the past couple of years are certainly hitting our expectations. So we're excited to see the success of those new restaurants. Obviously, it's a combination of new restaurants and relocations as well. I think and we've shared, I think in the past couple of quarters, we've seen costs increase on build costs. Speaker 201:00:47And if those costs push to the point where we aren't going to get our returns we're going to walk away from those deals. So I mean our priority is to return or deliver the expected return to our shareholders and not just to open stores to open stores. And so that's our focus. But we do think that opening stores is appropriate for us. We think whether it's relocations or additional restaurants for Outback are out there. Speaker 201:01:11We've talked about Carrabba's being a larger growth engine. The team has done great work to date to grow sales and revenue. The team is doing some good work now around how do I really refine and improve the return on that investment because we certainly have a lot more geography for Crabbe's that we can open restaurants. Fleming's is a great business, great returns, obviously higher volume. So we'll definitely open a couple of Fleming's each year, but there's a capacity there given kind of the magnitude of the builds and whatnot. Speaker 201:01:44But we're satisfied with the returns, but we're always scrutinizing them and we'll make sure that we continue to deliver those returns. As far as, we'll make sure that we continue to deliver those returns. As far as what was your question around capital allocation for remodels Speaker 401:02:00defining that? Speaker 1401:02:01Yes, potential to just optimize CapEx to bolster free cash flow. Obviously, you want to stay focused on maintenance and remodels, but you see any opportunities there as you think about the CapEx. But I understand you don't turn these things off like a light switch, but over the next year or 2, perhaps just optimize free cash flow. Speaker 201:02:20Yes. I mean that and that will be a key component of the strategic work we're doing. Ultimately, how we're our entire capital allocation will be important. But certainly, as we think about CapEx, that will be a key consideration. So we want to open restaurants, but we want to open restaurants with great returns. Speaker 201:02:38We can't open as many restaurants because we can't achieve those returns and that certainly could impact the allocation. But right now we think we're confident we can continue to open restaurants. The magnitude of that is still to be determined as we go through this process. But to your point, obviously, you have to maintain the restaurants. So that's a non negotiable. Speaker 201:02:58And then there is a remodel component to our restaurant base that's going to be necessary. And so that's how we're thinking about it, at least as far as prioritization. Speaker 1401:03:07Okay. Thank you. And last one just on pricing if I could. Can you remind us what was pricing in the Q3? And maybe you could level set how you see pricing trending if you don't take any additional pricing in the next couple of quarters? Speaker 1401:03:20Thanks again. Speaker 201:03:21Yes. We are pretty much 4% in Q3. We would expect to be kind of in that range in Q4. I think obviously our pricing has kind of rolled off especially compared to 2023 and we're going to do everything we can. We're trying to price as little as possible. Speaker 201:03:40Certainly, we think we're in line with industry on pricing and we still have a beef headwind, although beef better than we expected, it's still the most inflationary part of our basket. And so but we're going to be intentional on our pricing and make sure that we can continue to provide value to our guests. And so we don't think we have extra pricing opportunities. We'll see where our commodities and other inflationary components come in next year. But our goal would be to take as little pricing as possible as we get into next year for sure. Speaker 301:04:23And the next question comes from Andrew Strelzik with BMO. Please proceed. Speaker 1001:04:29Hey, good morning. Thanks for taking the questions. Just two quick ones for me. You talked about growing revenue faster than costs. The company has always spoken to like a $50 plus 1,000,000 productivity run rate. Speaker 1001:04:42Is that still the right way to think about productivity in your opinion? And kind of high level where those buckets remain outside of menu simplification, which you've certainly spoken to? Speaker 201:04:51Yes. Certainly productivity is always a key component for us. I think as we go through our strategic planning and our annual planning, we'll align. I would say $50,000,000 is probably too high for where we are going forward. But a lot of it is technology enabled. Speaker 201:05:12As we think about the evolution of productivity over time, some of it was just kind of base efficiencies, then it was deploying technology, whether it's front of house or back of house technology in the restaurants to not only improve operations, but deliver efficiencies. And that's how we're continuing to look at it. We still think there's plenty of opportunity in supply chain and plenty of opportunity in simplification. So there's definitely opportunities there, but magnitude probably less than sort of that historical $50,000,000 run rate, but still material and we can we'll get back to you as we get into next year. Speaker 1001:05:53Okay. That's helpful. And then, actually a question on Fleming's. That was the only segment that saw comp acceleration in the quarter. So I was curious, kind of, what you thought was driving that? Speaker 1001:06:03And more broadly, what you're seeing from a consumer perspective? And if you think you're seeing a shift maybe in how consumers interacting with fine dining? Thanks. Speaker 101:06:13Yes. Good morning, Andrew. I would agree with you on Fleming's. Shailina, Henry and the team have done a really, really nice job. And to me, what they've told me and I agree is Fleming's is a reputational brand. Speaker 101:06:28And as you're as we're in the fine dining space there on that reputational brand, that is all about elevating the experience. And that is the team has been so, so dialed in on everything from the attentiveness to the pace, the experience. And it's just really a phenomenal experience. And I really do want to compliment them on our flagship opening here in Tampa is just a tremendous new Fleming's and it's very high energy and the guest experience is tremendous. And that's how we think about Fleming's. Speaker 101:07:05And as Michael said, to get that fine dining experience right, we're going to be thoughtful. We got 63 Fleming's and the bandwidth of the team would suggest it's 2 or 3 a year if we get them right on the new store because we don't want to sacrifice the fine dining elevated experience there. Speaker 301:07:30Thank you. This concludes today's question and answer session. I would now like to turn the conference back over to Mr. Mike Spanos for any closing remarks. Speaker 101:07:41We appreciate everyone for joining us today. We look forward to updating you on our progress at our next earnings call. Thank you. Speaker 301:07:51The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.Read morePowered by