Andrew Charles

Andrew Charles asked what conditions would lead Chipotle to slow its development plans, specifically if negative comparable sales in 2026 would trigger a reconsideration. He also inquired if the four new LTOs planned for the year would be evenly spaced, or if hero LTOs like Chicken Al Pastor might run for a longer duration.

Answer

Scott Boatwright, CEO, stated that development would slow if cannibalization exceeded historical levels, new restaurants performed below 80% of the existing asset base, or if margins/ROI were marginalized, none of which are currently observed. He indicated that LTOs would run between 8-12 weeks in total, with flexibility to extend or reduce based on market trends, implying varied cadences.

Andrew Charles asked what conditions would lead Chipotle to slow development to intensify focus on improving traffic, specifically if negative 2026 comps would trigger a reconsideration of development plans. He also inquired if the four new LTOs this year would be roughly evenly spaced or if hero items like Chicken Al Pastor might run longer.

Answer

Scott Boatwright, Chief Executive Officer, stated that a slowdown would occur if cannibalization exceeded historical levels, new restaurants performed below 80% of the existing asset base, or if margins/ROI were marginalized, none of which are currently observed. He clarified that LTOs would run between 8-12 months in total, with varying cadences and the flexibility to extend or reduce timelines based on market trends.

Andrew Charles of TD Cowen inquired about the quantifiable sales and margin benefits observed from the high-efficiency equipment pilot and the impact of resolving prep time delays.

Answer

CFO Adam Rymer explained it's early for specific sales lift numbers but expects a labor efficiency of 2-3 hours per day per restaurant, driving a strong return. He highlighted that improved prep enables better deployment, with 70% of restaurants now having an expo in place during peak times. This operational improvement is expected to drive throughput and unlock future platforms like catering.

Andrew Charles inquired about management's confidence in achieving positive traffic in the second half of the year despite rising fast-casual competition, and asked about the impact of tariffs on new store capital expenditures.

Answer

CEO Scott Boatwright expressed high confidence, attributing it to Chipotle's superior value proposition, speed of service, and the fact that new competitors do not materially impact sales. CFO Adam Rymer added that tariffs are expected to increase new store CapEx in the mid-single-digit range, but noted the situation remains fluid.

Andrew Charles from TD Cowen questioned the decision to launch the upcoming chicken promotion in March rather than accelerating it to offset a weak start to the year. He also asked about the primary obstacle to increasing expediter position staffing from 60% to 100%.

Answer

CEO Scott Boatwright explained the March timing was chosen to align with stronger reach and frequency on linear TV, comparing it to 'fishing when the fish are biting.' Regarding the expediter, he said the main challenge is getting all prep done and breaks deployed before peak hours. He believes the back-of-house equipment innovation will drive efficiency to solve this and create a step change in throughput.

Andrew Charles inquired about the company's decision-making process for a potential Q4 price increase given strong traffic and labor pressures, and also asked for the rationale behind the 2025 new restaurant opening guidance being slightly below the previously stated 10% growth aspiration.

Answer

Interim CEO Scott Boatwright stated that no price increase is currently planned due to the competitive environment, but the company is monitoring inflation. CFO Adam Rymer added that underlying inflation is in the low single-digits. Regarding development, Scott Boatwright explained that the 2025 guidance represents significant year-over-year growth, moving closer to the 10% target, and the 8-10% range ensures high-quality execution for new locations.

Andrew Charles asked if the updated same-restaurant sales guidance incorporates any incremental pricing, given the higher inflation forecast. He also questioned whether Rick Cardenas's past hesitations regarding listing Olive Garden on third-party delivery platforms, such as data sharing and tip sharing, are now better addressable.

Answer

CFO Raj Vennam confirmed a slight increase in pricing, expecting it to be closer to mid-threes in the back half for a full-year average near 3%. CEO Rick Cardenas stated that third-party delivery providers are aware of Darden's concerns, and the company would consider it if solutions for those issues are found.

Andrew Charles asked if the updated same-restaurant sales guidance incorporates any incremental pricing, given the higher inflation forecast. He also inquired if Rick Cardenas's past hesitations regarding listing Olive Garden on third-party delivery platforms, such as data sharing, tip sharing, and throttling, are now better addressed.

Answer

CFO Raj Vennam confirmed a slight increase in pricing, expecting it to be closer to mid-threes in the back half and around 3% for the full year, up from 2.2% in Q1 and 2.6% in Q2. CEO Rick Cardenas stated that the two major third-party delivery providers are aware of Darden's concerns, and a satisfactory solution to those issues would prompt Darden to reconsider third-party delivery for Olive Garden.

Andrew Charles of TD Cowen asked whether Darden's priority is expanding Uber Direct to other brands or exploring placing Olive Garden on the Uber marketplace. He also requested a breakdown of the fiscal 2026 inflation outlook.

Answer

President & CEO Rick Cardenas clarified that the current priority is to continue monitoring the performance of Uber Direct at Olive Garden and Cheddar's, as the marketplace model still presents challenges. CFO Raj Vennam provided the inflation breakdown for fiscal 2026, projecting approximately 2.5% for food and 3.5% for labor.

Andrew Charles requested an update on the full-year guidance for G&A, interest expense, and depreciation and amortization following the Chuy's acquisition.

Answer

Executive Rajesh Vennam provided updated expectations: G&A is now forecasted at approximately $470 million, interest expense for the second half is expected to be around $47 million per quarter, and D&A as a percentage of sales will be slightly higher year-over-year.

Andrew Charles asked for the franchisee store-level cash flow in 2025 and its change from 2024, and inquired about the targeted cash-on-cash return for smaller scope remodels and how franchisees would fund these given current industry cash flow challenges.

Answer

CFO Dawn Hooper stated that franchisee profitability is not disclosed but should align with company-owned store trends. CEO Lance Tucker explained that the smaller remodels involve modest investments (under $20,000-$25,000) and are expected to yield low single-digit cash-on-cash returns, which are attainable for franchisees even in a challenging year, serving as a 'spruce-up' rather than a major overhaul.

Andrew Charles asked for the franchisee store-level cash flow in 2025 and its change versus 2024, seeking confirmation if it aligned with the approximately 15% decline seen in company stores. He then asked about the targeted cash-on-cash return for smaller scope remodels and how franchisees could fund these given challenging industry cash flows.

Answer

CFO Dawn Hooper stated that franchisee profitability is not disclosed but should be in line with company performance. CEO Lance Tucker explained that smaller scope remodels involve very modest investments (under $20,000-$25,000) and are expected to yield low single-digit cash-on-cash returns. He believes franchisees can fund these 'spruce-ups' even in a difficult year.

Andrew Charles from TD Cowen asked about the recent increase in the allowance for doubtful accounts and whether the upcoming store closure program could pose a risk for elevated bad debt expense impacting adjusted EBITDA.

Answer

Interim CFO Dawn Hooper clarified that the Q2 increase was similar to Q1's and related to a single, specific franchise matter. She stated that she does not anticipate the planned store closure program will accelerate or increase this expense.

Andrew Charles asked how Jack in the Box plans to protect traffic amid aggressive competitor value offerings and whether a competitor's recent food safety issues provided a quantifiable sales lift.

Answer

CEO Darin Harris stated the strategy is to remain 'uniquely Jack' by leveraging its all-day menu, innovation, and advancing its digital capabilities. CFO Brian Scott acknowledged that while the competitor's issues likely provided some industry-wide lift, Jack's positive sales trend had already begun, so it was not the primary driver. He noted this uncertainty contributes to their cautious full-year guidance.

Andrew Charles asked Ian Borden about the US McOpCo margin contraction in Q3, seeking to understand if general inflation or customers opting for lower-margin value items was a bigger headwind. He also requested an outlook on beef prices within that response.

Answer

CFO Ian Borden explained that strong top-line growth is fundamental for margin growth, and the 2.4% US comparable sales growth in Q3 was insufficient to offset inflationary pressures in areas like wages and food and paper costs. He reiterated confidence in driving margin accretion over time with stronger top-line growth, despite the current environment of subdued sales and higher-than-historic inflation. For food and paper in the US, he expects low to mid-single-digit inflation for the year. While beef inflation is up, McDonald's supply chain strength means its beef costs are elevated less than most competitors. He concluded that the focus is on building baseline momentum through value and affordability across the menu, with a decent start to Q4 and the EVM relaunch helping to solidify missing components.

Andrew Charles asked about the U.S. McOpCo margin contraction in Q3, seeking to understand if general inflation or customers opting for lower-margin value items was a bigger headwind, and requested an outlook on beef prices.

Answer

CFO Ian Borden explained that while U.S. comparable sales growth was solid at 2.4% in Q3, it was insufficient to offset inflationary pressures in wages and food and paper costs, leading to margin contraction. He reiterated confidence in driving margin accretion over time with stronger top-line growth. He noted that food and paper inflation for the year is expected in the low to mid-single-digit range, with beef inflation elevated but managed by McDonald's supply chain to be less than most competitors.

Andrew Charles asked what key metrics McDonald's will be monitoring during the upcoming U.S. specialty beverage test to determine a potential expansion, and what the timeline for a broader rollout might look like.

Answer

Chairman & CEO Chris Kempczinski stated that the primary focus of the test will be on consumer reaction, product uptake, and its interaction with the rest of the menu, such as whether it drives add-on purchases. He expressed confidence in the operational aspects of the test. The goal is to use the 500-restaurant pilot to validate the scale of the opportunity and inform a decision on a full market launch, rather than pursuing a slower, incremental expansion.

Andrew Charles asked if the outlook for 'moderate' U.S. same-store sales growth in 2025 still holds after a challenging Q1 and what the expectation is for 2025 U.S. McOpCo margins.

Answer

An executive, likely CEO Christopher Kempczinski, stated that the full-year 2025 U.S. McOpCo margins are expected to be slightly up on a percentage basis compared to 2024. While acknowledging environmental uncertainty, he expressed confidence in the marketing and innovation pipeline for the remainder of the year, noting that strong top-line growth is the ultimate driver of margins.

Andrew Charles asked if an estimated 4% decline in 2024 U.S. McOpCo store cash flow was a fair proxy for franchisee performance and inquired about the outlook for U.S. store-level cash flow growth in 2025 amid a competitive value environment.

Answer

CFO Ian Borden acknowledged inflationary pressures for 2025 but expressed confidence in driving cash flow improvement through top-line volume and slightly higher McOpCo margins. CEO Christopher Kempczinski added that despite 2024 headwinds, U.S. franchisee cash flows remained strong, averaging north of $500,000 per unit, and are expected to improve as headwinds subside and momentum returns.

Andrew Charles inquired about opportunities to accelerate investment in marketing for brand awareness and improving speed of service, and the clearest action items for the incoming COO.

Answer

Brett Schulman, CEO, acknowledged speed of service as an opportunity, aiming to improve it while balancing the experience for new guests. He noted that growing scale allows for more upper-funnel marketing. The incoming COO's focus will be on deepening the people development pipeline, including the new Assistant General Manager (AGM) role, and elevating speed of service without rushing guests.

Andrew Charles inquired about opportunities to accelerate investment in marketing and improve speed of service, and asked for the clearest action items for the incoming Chief Operating Officer.

Answer

CEO Brett Schulman acknowledged speed of service as an opportunity, emphasizing the need to balance speed with the guest experience, especially for new customers. He stated that the COO's primary focus will be on deepening and broadening the people development pipeline, including the new Assistant General Manager (AGM) role, and elevating speed of service without making guests feel rushed.

Andrew Charles of TD Cowen asked what drove the sales improvement in July and whether the trend of strong new store openings implies a long-term same-store sales algorithm closer to the low-single-digits.

Answer

CFO Tricia Tolivar attributed the July improvement to getting past the difficult comparison of the prior year's steak launch. Regarding the long-term sales algorithm, she acknowledged the outsized early returns from new stores and stated they will continue to monitor the dynamic but sees no cause for concern about the business.

Zack Ogden, on behalf of Andrew Charles from TD Cowen, asked about the sales mix component, noting it appeared to be lower than in recent quarters and asking for the underlying drivers.

Answer

CFO Tricia Tolivar countered the premise, stating that after accounting for the 1.7% menu price increase, the remaining mix impact was still 'fairly healthy.' She emphasized that mix continues to be supported by strong and increasing premium attachments, including high incidence for items like steak.

Andrew Charles of TD Cowen asked about the potential traffic opportunity from CAVA's new focus on improving speed of service without compromising the guest experience.

Answer

CEO Brett Schulman acknowledged a significant opportunity to reduce walkaways at high-volume locations but stressed the importance of maintaining a positive guest experience, especially for new customers. He noted that the new labor deployment model is already showing early improvements in speed and service scores.

Zack Acton, on behalf of Andrew Charles, asked for an analysis of the sequential increase in same-store sales from Q2 to Q3, questioning if it was due to underlying acceleration or an easier comparison.

Answer

CFO Tricia Tolivar clarified that on a two-year stacked basis, the trend was very consistent, at approximately 33% in Q2 and 32% in Q3. She highlighted the strong 12.9% traffic growth in Q3 as a clear indicator of sustained business momentum and guest enjoyment of the brand.

Andrew Charles sought to understand the mid-single-digit outperformance from Smart Kitchens in the Southwest, specifically how it relates to the widening gap between company-operated and system-wide same-store sales. He also asked about Wingstop's strategy to emphasize value to help traffic, particularly the role of the '20 for 20' promotion in future plans.

Answer

President and CEO Michael Skipworth clarified that the Southwest region's outperformance, encompassing over 600 restaurants, demonstrates operational progress. He noted that the DFW market, with its longest Smart Kitchen tenure and unique demographics, serves as a strong indicator of the strategy's potential. Skipworth emphasized Wingstop's focus on protecting unit economics and long-term investments rather than leaning into discounting or short-term promotions, given its strong growth over the past two years.

Andrew Charles asked for more detail on the mid-single-digit outperformance of Smart Kitchens in the Southwest, considering the widening gap between company-operated and system-wide same-store sales. He also questioned the future role of value promotions like the '20 for 20' in driving traffic amidst a challenging industry environment.

Answer

President and CEO Michael Skipworth clarified that the Southwest region's performance, encompassing over 600 restaurants, demonstrates operational progress. He highlighted the DFW market as a case study, benefiting from Smart Kitchen's longest tenure, higher brand awareness, and favorable demographics. Regarding value, he stated Wingstop's focus on long-term strategies and protecting unit economics, rather than relying on promotions or discounting, given its strong development pace.

Andrew Charles of TD Cowen asked about the mechanics of the reiterated full-year guidance, questioning what offset the weaker-than-expected industry trends in July. He also inquired about the tools available to address challenges in specific consumer pockets, beyond nationwide value deals, such as increased advertising or flavor innovation.

Answer

SVP & CFO Alex Kaleida clarified that the guidance does not factor in any potential benefit from the Smart Kitchen or a worsening of macro pressures, and confidence in their strategies supports the outlook. President and CEO Michael Skipworth added that the company's playbook, including flavor innovation like the recent Mexican Street Spice, is the primary tool to engage guests, and he reiterated the belief that the softness in certain consumer pockets is temporary.

Andrew Charles asked if increased development was causing a more pronounced sales transfer impact on mature stores within the reported comp. He also questioned the rationale for moving from existing CRM efforts to a formal loyalty program, seeking to understand the key learnings that prompted the shift.

Answer

CEO Michael Skipworth acknowledged that some sales transfer is intentional to relieve high-volume stores but stated the overall impact on comps is not materially different from historical levels. Executive Alex Kaleida explained the shift to a loyalty program is a natural evolution to drive frequency and retention. The design is informed by insights from the 50 million-user WingID database, particularly the desire of Gen Z and Millennial consumers for experiential brand engagement, allowing for a unique, non-transactional approach.

Asked if increased development is leading to a more pronounced sales transfer impact on mature stores, and questioned the learnings from CRM efforts that prompted the move to a formal loyalty program.

Answer

The company stated that any sales transfer from new unit openings is not materially different from historical levels and is not the primary driver of current trends. The move to a formal loyalty program is a natural evolution of their hyper-personalization strategy, informed by the rich data from their 50 million-user database. The program will be designed with an experiential aspect to appeal to key demographics like Gen Z and Millennials.

Andrew Charles asked whether accelerated development was creating a more pronounced sales transfer impact on mature stores. His follow-up question explored the strategic rationale for evolving from existing CRM efforts to launching a formal loyalty program.

Answer

CEO Michael Skipworth stated that while some intentional openings occur to relieve high-volume stores, the overall impact from sales transfer on comps is not materially different from historical levels. CFO Alex Kaleida explained that launching a loyalty program is a natural evolution built upon the foundation of their WingID platform. He noted the program will be designed to be more experiential than transactional, leveraging deep customer insights to appeal to their growing Gen Z and Millennial base and drive frequency.

Asked for a specific metric to model the 2025 quarterly comp cadence and requested details on Q4 user growth for the CRM database and early learnings from the MyWingstop platform.

Answer

The company stated there is no simple metric like a multi-year stack to model 2025 comps; the cadence will be a function of lapping difficult prior-year comparisons. Early results from the MyWingstop CRM are very positive, showing record new guest growth, increased frequency and check, higher satisfaction, and growth in heavy users.

Andrew Charles asked if the recent three-year comp trends suggest that mid-single-digit comps are the right expectation for 2025 and beyond. He also questioned if there is a ceiling for new store AUVs, which are already opening at a strong $1.6 million.

Answer

CEO Michael Skipworth declined to provide 2025 guidance but expressed confidence in the long-term runway of strategies like brand awareness and the MyWingstop platform, which is driving record digital guest retention. He stated there is "a lot of gas left in the tank" for AUV growth, citing strong performance from the newest vintage and double-digit comps across all vintages as support for the $3 million AUV target.

Andrew Charles from TD Cowen requested an update on the Live Más Café concept, specifically its integration into existing stores and the necessary conditions for a broader system-wide rollout.

Answer

CEO Chris Turner expressed excitement about Live Más Café, noting 13 locations are currently open and the pilot group is expanding to about 30. He reported positive consumer response and indicated that a broader rollout would depend on the pilot's results. Turner also highlighted that the system is already benefiting from Live Más Café innovations, such as the refrescas launched in Q3.

Andrew Charles requested an update on Taco Bell's Live Más Café concept, particularly after its integration into stores, and what conditions are necessary for its broader rollout.

Answer

CEO Chris Turner expressed excitement about Live Más Café, seeing it as an opportunity to strengthen beverage attachment and create a new destination use case for Taco Bell. He reported that 13 Live Más Cafés are currently open, with a pilot group targeting 30 units. He noted positive consumer response and stated that a broader rollout would depend on the expected results from this pilot. He also highlighted that the refrescas launched system-wide in Q3 were a direct lift from Live Más Café piloting.

Andrew Charles asked if Taco Bell's significant outperformance could realistically be sustained through 2025 amid a challenging U.S. consumer environment.

Answer

CEO David Gibbs praised Taco Bell's 'standout' 9% growth and confirmed that the general trends from Q1 continued into April. While not giving specific full-year guidance, he noted the current environment favors Taco Bell due to its strong value proposition (e.g., $5, $7, $9 boxes), increasing customer penetration, and unique innovation like Cantina Chicken, which he described as a 'category of one.' He acknowledged that year-over-year comparisons get tougher as they lap the Cantina Chicken launch.

Andrew Charles asked how improved value perceptions influence Starbucks' 2026 pricing plans and if pricing strategies account for the expectation of building same-store sales throughout the year. He also requested an outlook for North America same-store sales in Q1.

Answer

Brian Niccol, Chairman and CEO, stated that pricing will be strategic and targeted, not broad-scale, while monitoring inflation and value ratings. Cathy Smith, EVP and CFO, provided a Q1 outlook, noting that positive trends from September continued through October, expecting the quarter to be led by positive transaction comps. She reiterated that earnings would lag due to the annualization of Green Apron Service investments, partially offset by cost structure work.

Andrew Charles asked how improved value perceptions will influence Starbucks' 2026 pricing plans, whether pricing contemplates expected same-store sales growth, and requested an outlook for North America same-store sales in Q1.

Answer

Brian Niccol, Chairman and CEO, Starbucks, stated that pricing will be strategic and targeted, avoiding broad-scale increases, while continuously monitoring inflation and value ratings. Cathy Smith, EVP and CFO, Starbucks, noted that positive comp trends from September continued through October, expecting Q1 to be led by positive transaction comps. She reiterated that earnings will lag top-line growth due to Green Apron Service investment annualization, partially offset by cost structure work.

Andrew Charles of TD Cowen asked for the number of mobile order and pay-only stores being sunsetted and for details on the recently disclosed bonus contingent on reducing operating expenses.

Answer

CEO Brian Niccol stated there are 'roughly eighty, ninety stores' in the mobile order pickup-only format. Regarding the bonus, he described incentives as a 'powerful tool' to galvanize the organization around cost reduction. The goal is to create a better cost structure so that future top-line growth flows more efficiently to the bottom line.

Andrew Charles from TD Cowen asked for the number of mobile order and pickup-only stores and inquired about the level of operating expense reduction required to trigger the bonus mentioned in a recent 8-K filing.

Answer

Chairman & CEO Brian Niccol stated there are approximately 80-90 mobile order and pickup-only stores, which are planned to be sunset. Regarding the bonus, he described incentives as a 'powerful tool' to motivate the organization to focus on cost savings but did not disclose the specific financial targets, reiterating the goal is to build a better long-term cost structure.

Andrew Charles asked about the levers Starbucks can pull to protect U.S. traffic in a potential recession and which elements of the 'Back to Starbucks' plan could be accelerated if the macro environment worsens.

Answer

Brian Niccol, Chairman and Chief Executive Officer, responded that the company's best offense is to focus on its 'third place' value proposition: providing a great experience, connection, and speed. He positioned this as an 'everyday luxury' that can remain resilient. He also mentioned that the innovation pipeline contains items that could be accelerated to 'cut through in any environment' if necessary.

Andrew Charles from TD Cowen inquired about the new marketing strategy to reintroduce the brand and asked for guidance on the anticipated advertising spend for fiscal year 2025 compared to the previous year's $600 million.

Answer

CEO Brian Niccol explained the strategy involves shifting funds from discounting to 'working dollars' for brand experience, highlighting recent ads focused on the barista-customer connection. CFO Rachel Ruggeri clarified that while marketing as a percentage of revenue is nearly doubling, the reduction in discounts makes the overall promotional spend neutral to the business, though it will appear differently on the P&L.

Andrew Charles asked for the CEO's perspective on the Siren System automated technology, inquiring if its rollout would be accelerated to create production capacity and improve both operations and the barista experience.

Answer

CEO Brian Niccol described the Siren Craft system as a 'key unlock' for achieving the sub-4-minute service goal for cafe orders and for better sequencing of mobile orders. He stated the rollout will be prioritized based on which stores have the biggest throughput bottlenecks, rather than a one-size-fits-all approach. The focus is on using the system as a tool to solve the specific problem of throughput.

Andrew Charles of TD Cowen asked why Sweetgreen isn't slowing its development plans to focus on turning around same-store sales and preserving cash. He also asked for the key drivers behind the 200 basis point reduction in the restaurant-level margin guidance.

Answer

Co-Founder, CEO & Director Jonathan Neman responded that the company maintains strong conviction in its long-term growth potential of at least 1,000 stores and is being highly disciplined with its 2026 pipeline. CFO Mitch Reback explained the margin guidance reduction is primarily due to sales deleverage, compounded by a roughly 120 basis point impact from the protein portioning investment and a 40 basis point impact from tariffs.

Andrew Charles of TD Cowen asked for more detail on the expected sales cadence for 2025, particularly the quantified impact of headwinds in Los Angeles and from weather, and whether handhelds are included in the guidance.

Answer

CEO Jonathan Neman confirmed that handheld menu items are not included in the 2025 guidance but will be tested this year. CFO Mitch Reback detailed that Q1 faced significant headwinds from the L.A. wildfires, weather, and a holiday calendar shift, collectively impacting comps by approximately 700 basis points. He noted the underlying business comp was about +1% through February and expects sales to strengthen sequentially throughout the year driven by new initiatives.

Andrew Charles asked how early results from the Penn Plaza Infinite Kitchen (IK) retrofit are informing the 2025 retrofit strategy, and questioned if the 700 basis points of labor savings could be higher in other high-wage, urban locations.

Answer

CFO Mitch Reback explained that retrofit decisions are based on store AUVs, concentrated sales periods, and challenging labor markets. He confirmed the 700 basis points of labor savings at Penn Plaza and suggested there is likely more room for improvement over time as teams become more efficient with the new system, similar to the labor ramp period in new store openings.

Andrew Charles of TD Cowen questioned how RBI could accelerate the pace of Burger King remodels to capture more market share, considering headwinds like a soft sales backdrop, beef inflation, and a challenging lending environment.

Answer

CEO Josh Kobza responded that the company's vision to modernize approximately 85% of the U.S. system remains unchanged. He stressed that the consistent mid-teen sales uplifts from completed remodels provide the confidence to 'stay the course' with the current strategy, despite short-term market fluctuations, and there are no immediate plans to alter the pace or increase CapEx beyond the plan.

Andrew Charles sought clarity on the timeline for returning to 5% net restaurant growth (NRG), asking if this target is achievable by 2027 or more likely in 2028. He also questioned the confidence in this goal, given its reliance on a contribution from Burger King China, which currently lacks a permanent partner.

Answer

CFO Sami Siddiqui affirmed high confidence in reaching 5% NRG towards the end of the 2027-2028 timeframe. He broke down the path, targeting 400 net new units from North America (driven by Tims and Firehouse), 1,100 from international markets excluding China (with Popeyes contributing over a third), and 300 from China in aggregate. Siddiqui noted that RBI achieved 300 units from China in 2022-23 even without all brands firing on all cylinders, expressing confidence in the region's long-term potential post-cleanup.

Andrew Charles asked if the stated priority of deleveraging precludes share repurchases in 2025 and requested the specific number of Burger King U.S. remodels planned for the year.

Answer

CFO Sami Siddiqui confirmed that deleveraging is the current priority but did not rule out opportunistic share repurchases. He stated the company plans to complete around 400 Burger King U.S. remodels in 2025, an increase from 2024, to advance toward its long-term modern image goal.

Andrew Charles of TD Cowen questioned if the long-term guidance for 3%+ same-store sales remains on track for 2024, particularly for the U.S. market, given the challenging restaurant macro-environment.

Answer

CEO Josh Kobza acknowledged the broader industry softening but expressed confidence, pointing to RBI's strong Q1 consolidated comparable sales of 4.6%, which was well ahead of the 3% target. He indicated they feel good about the full-year outlook and will continue to provide updates.

Andrew Charles of TD Cowen asked why the expanded food program is planned for a phased rollout throughout 2026 instead of an immediate, system-wide launch, given the positive pilot results.

Answer

CEO Christine Barone explained the deliberate pace is to ensure proper training and set teams up for success, similar to their successful mobile order rollout. She also cited logistical factors, including the time required to install necessary equipment like freezers and ovens in shops and to coordinate with distributors in each market. This staged approach also allows them to test the program under different market conditions.

Andrew Charles asked about the pacing of the food program's system-wide rollout in 2026 following its expansion to 32 stores. He also followed up on mobile order, asking if the mix of walk-up window sales is used as a metric to gauge incrementality.

Answer

CEO Christine Barone explained that the current focus is on the 32-shop market test to validate assumptions before mapping out a full 2026 rollout plan. Regarding mobile order, she clarified that while the walk-up window helps balance production, it is not the primary tool for measuring incrementality; instead, they analyze pre- and post-adoption customer behavior.

Andrew Charles sought more detail on the rationale behind the 2% to 4% same-store sales guidance for 2025, given current momentum. He also asked about the 2025 advertising plan and if it included a step-up in spending.

Answer

CFO Josh Guenser explained the guidance accounts for a 3-point net pricing roll-off and a very difficult comparison in Q1, but still assumes positive traffic. CEO Christine Barone outlined that the 2025 advertising plan will apply learnings from 2024, focusing on targeted digital ads to acquire new customers and drive Rewards enrollment. She noted they will lean into more spending if ROI proves favorable.

Andrew Charles of TD Cowen sought to quantify the incrementality of the mobile order channel and asked for reassurance that recent traffic gains are organic rather than just a result of competitor weakness.

Answer

CEO Christine Barone detailed three ways mobile order incrementality is measured: a 5% frequency lift in existing users, new customer acquisition through rewards sign-ups, and early signs of improved throughput. She attributed traffic gains to the successful execution of their own playbook, emphasizing that the brand's focus on iced drinks, customization, speed, and authentic service is resonating strongly with customers.

Andrew Charles of TD Cowen inquired about the potential for Domino's to expand more deeply into the faster-growing chicken category, possibly through new equipment like fryers, beyond standard menu innovation.

Answer

CEO Russell Weiner acknowledged the importance of the chicken category and stated that while there are no immediate plans for a new cooking platform, the company is strategically prepared for such a move. He noted that operational changes have created more space in stores and the DomOS technology platform is capable of integrating a second cooking line if consumer demand warranted it in the long term.

Andrew Charles asked how Domino's will ensure the launch of DoorDash does not cannibalize the incrementality from its existing Uber Eats partnership, given the new overall 50% incrementality expectation for third-party delivery.

Answer

Chief Executive Officer Russell Weiner explained that the company now views its third-party presence as a single, holistic delivery business. He believes a customer's choice of platform is based on their loyalty to that app, not Domino's, necessitating a presence on both. Chief Financial Officer Sandeep Reddy added that they will no longer break out mix by aggregator.

Andrew Charles of TD Cowen asked about the 2024 U.S. franchisee cash flow coming in at $162,000, below the $170,000 target. He questioned if the miss was purely sales-driven and how franchisees feel about the "renowned value" strategy.

Answer

CFO Sandeep Reddy attributed the shortfall to sales softness and promotional intensity in the second half of 2024, compounded by a high food basket in Q4. CEO Russell Weiner added that franchisees are invested for the long term and their approval of new promotions demonstrates their conviction in the strategy.

Andrew Charles from TD Cowen asked for clarification on the positive sales and traffic trends in March and April, considering the Easter holiday shift, and questioned the strategy of driving traffic through lower-margin third-party delivery initiatives.

Answer

CFO Mel Hope confirmed that underlying traffic trends were positive even after accounting for holiday shifts. CEO Chris Tomasso added that the focus on driving traffic is working, as evidenced by encouraging results, and stated that the associated cost pressures are viewed as temporary, justifying the focus on top-line growth.

Andrew Charles asked for specifics on the high single-digit commodity inflation, particularly concerning eggs, and questioned the company's willingness to adjust its modest pricing strategy later in the year if inflationary pressures persist.

Answer

CFO Mel Hope explained that eggs and potatoes constitute about 15% of their commodity basket and that supplemental spot market egg purchases are driving inflation. CEO Chris Tomasso stated they will maintain their disciplined pricing cadence with a mid-year review, preferring not to implement permanent price hikes for what they view as transitory inflation, a strategy that has previously helped them gain market share.

Andrew Charles inquired about Wendy's chicken portfolio in light of increased industry focus, asking if permanent menu news is forthcoming. He also asked for more details on the $4 million claim settlement mentioned in the company's quarterly filing.

Answer

Kirk Tanner, President and CEO, confirmed that chicken is a 'major opportunity' and that the company will announce plans later in the year to 'holistically look at' the category, teasing a future 'best chicken sandwich in the industry.' Ken Cook, CFO, then explained that the $4 million claim was a planned settlement with credit card providers that was anticipated and came in as expected.

Andrew Charles of TD Cowen inquired about the early learnings from the voice AI drive-thru pilot, specifically focusing on its impact on speed of service and average check lift.

Answer

CEO Kirk Tanner expressed strong satisfaction with the AI pilot's results, leading to an expansion from 100 to 500-600 locations in the current year. He noted the technology continuously improves, provides an 'exceptional' experience, and drives sales by intelligently upselling and building orders. Tanner also highlighted that order accuracy is improving, providing a strong proof point for a broader system rollout.

Andrew Charles of TD Cowen asked for a reconciliation of the mid-single-digit growth in the breakfast daypart against the backdrop of flat overall comps, specifically questioning the incrementality of those breakfast sales.

Answer

CEO Kirk Tanner reiterated that breakfast sales are 'incredibly incremental' to the rest of the business. He explained that the daypart leverages existing restaurant assets and labor, and its growth rate—ahead of the overall business and the category—provides a strong tailwind and reinforces the company's long-term commitment to the strategy.

Andrew Charles inquired about the quarterly performance cadence, asking if trends improved from January through March, and questioned if the 20% restaurant-level operating profit margin target for fiscal 2025 is still achievable.

Answer

Hajime Uba, via interpreter Benjamin Porten, explained that both January and February faced significant weather pressure, but March performance was very smooth until recent tariff announcements created uncertainty. Regarding margins, Uba stated that while 20% remains the goal, tariff uncertainty and higher-than-expected wage inflation (high single-digits) have reduced visibility. He noted that technology initiatives are key levers to offset these pressures.

Andrew Charles of TD Cowen asked about the level of advertising spend embedded in the 2025 guidance, following a significant increase in 2024.

Answer

CFO Katie Fogertey confirmed that while advertising investment will grow in 2025, the rate of increase will be less significant than in 2024. She noted the spend will be more evenly paced throughout the year, impacting both other operating expenses and G&A. CEO Rob Lynch added that the strategy is to balance marketing spend with foundational investments in operations, development, and tech to ensure a higher lifetime value from marketing-driven customer acquisition.

Andrew Charles of TD Cowen asked about the new brand campaign, inquiring if it drove outperformance in New York and Miami and what criteria are needed for a broader rollout.

Answer

CEO Rob Lynch explained the campaign was a strategic, non-promotional effort to build long-term brand equity and differentiation, even in a mature market like New York. He confirmed they are seeing positive movement on marketing metrics like awareness and consideration, and the analysis of its sales impact will guide how the campaign is scaled in the future.

Andrew Charles of TD Cowen questioned if the long-term guidance of 3%+ same-store sales growth remains on track for 2024, especially for the U.S. market, given the softening macro environment reported by peers.

Answer

CEO Josh Kobza acknowledged the overall industry softening but expressed confidence in the outlook. He pointed to RBI's Q1 consolidated comparable sales of 4.6% as evidence that the company's strategies are allowing it to outperform the market and remain on track to meet its guidance.

Andrew Charles from TD Cowen questioned whether the long-term guidance of 3%+ same-store sales growth remains on track for 2024, especially for the U.S. market, given the challenging macroeconomic environment.

Answer

CEO Josh Kobza acknowledged the softening industry trends but highlighted that RBI's consolidated same-store sales were strong at 4.6% in Q1, well above the 3% target. He expressed confidence in the outlook for the year and committed to providing updates as the year progresses.