Brian Bittner

Brian Bittner asked about the impact of severe weather on Sweetgreen's first-quarter trends, seeking an estimate of the storm's effect on Q1 comparable sales. He also requested a breakdown of the 2026 restaurant margin guidance, specifically how COGS and labor line items are expected to perform given anticipated negative comparable sales and limited price increases.

Answer

CFO Jamie McConnell stated that the storms had impacted Q1 comparable sales by approximately 320 basis points to date, noting that weeks without weather showed some business momentum. She explained that about half of the margin guidance is due to sales deleverage, with the other half coming from supplier diversification, supply chain refinements, and operational efficiencies like optimizing ordering tools and labor management.

Brian Bittner asked for an estimate of the headwind from severe weather on Q1 2026 trends and requested a breakdown of the building blocks for the 2026 restaurant margin guidance, focusing on COGS and labor line items.

Answer

CFO Jamie McConnell estimated the impact of storms to date at about 320 basis points, making Q1 challenging to assess, but noted positive momentum in non-weather-affected weeks. For restaurant margin, Jamie McConnell explained that over half is sales deleverage, with opportunities in protein portion optimization through supplier diversification and addressing operational inefficiencies. CEO Jonathan Neman added that optimizing a new labor management tool is expected to reduce overtime and improve efficiency.

Brian Bittner from Oppenheimer & Co. Inc. asked if the recent sales weakness could be attributed to a degradation in Sweetgreen's price-value perception and requested any guardrails for 2026 EBITDA expectations.

Answer

Co-Founder, CEO & Director Jonathan Neman asserted that the issue is more about inconsistent execution than price-value, stating that when the product is delivered to their high standards, the value is clear. CFO Mitch Reback added that while 2026 guidance will be provided in February, he believes the current headwinds are temporary and that the business will return to its prior trajectory as operations improve and factors like the loyalty program become tailwinds.

Brian Bittner of Oppenheimer sought to clarify if the mid-single-digit decline in April sales was driven by tougher year-over-year comparisons or true underlying consumer weakness. He also asked if the updated EBITDA guidance implies flat year-over-year G&A spending.

Answer

CFO Mitch Reback clarified that the April weakness was not due to lapping a difficult comparison but reflected a genuine shift in the external environment and consumer sentiment. Regarding guidance, he confirmed the company is focused on gaining leverage on G&A, as it has since going public, and will "relentlessly pursue" cost adjustments in the current environment without impacting strategic initiatives.

Brian Bittner asked about the drivers behind the stronger sales trends in September and October and questioned how to model new unit economics for 2025, given the accelerated growth and mix of Infinite Kitchen (IK) units.

Answer

CFO Mitch Reback attributed stronger sales to a post-summer acceleration, particularly on the East Coast. CEO Jonathan Neman added that the return of the popular Harvest Bowl was a good driver. For IK unit economics, Mitch Reback advised modeling a higher build-out cost by about $500k and a ~700 basis point margin improvement, noting that second-order benefits like higher sales are harder to quantify at this stage.

Brian Bittner asked about Papa John's 2026 same-store sales guidance, which projects a 2%-4% decline, contrasting with a competitor's view of a stable or growing QSR pizza industry, and inquired about the factors preventing Papa John's from maintaining or gaining market share.

Answer

Todd Penegor (President and CEO, Papa John's International) explained that the guidance reflects a focus on innovation (Pan Pizza, sandwiches, affordable sides, single-serve pizza) to recruit new customers, the impact of removing Papadia and Papa Bites, and efforts to strengthen local co-ops and compete better in third-party channels. Ravi Thanawala (CFO and President, North America, Papa John's International) added that 2025 comparable sales pressure stemmed from sides (180 basis points), channel mix (50 basis points), and a shift from larger/specialty pizzas to medium/Create Your Own.

Brian Bittner asked about Papa John's 2026 same-store sales guidance, which projects a 2%-4% decline, contrasting it with a competitor's view of a stable or growing QSR pizza industry. He sought clarification on factors preventing Papa John's from maintaining or gaining market share in 2026.

Answer

Todd Penegor, President and CEO, highlighted the innovation calendar (Pan Pizza, sandwiches, affordable sides, single-serve pizza) and the re-establishment of 50 co-ops to recruit new customers and compete locally. He also noted the impact of removing Papadias and Papa Bites for operational simplicity. Ravi Thanawala, CFO and President, North America, added that 2025 comp pressure stemmed from sides business, channel mix, and a shift from larger/specialty pizzas to medium/Create Your Own options.

Brian Bittner from Oppenheimer requested a breakdown of the investments embedded in the 2025 EBITDA guidance and asked how the company plans to balance value-driven promotions with franchisee profitability.

Answer

President and CEO Todd Penegor explained the balance involves a barbell menu strategy, strategic pricing, and long-term supply chain efficiencies. CFO Ravi Thanawala detailed the investments impacting the $200M-$220M EBITDA guide: up to $25M in marketing spend on the company P&L, $4M for the franchisee convention, and a $14M reset in performance-based compensation. These investments are aimed at winning consumer consideration and transactions.

Brian Bittner inquired about the primary driver of same-store sales underperformance versus peers and the strategy to protect franchisee profitability while increasing value offerings in 2025.

Answer

President and CEO Todd Penegor identified 'value perception' as the main issue, outlining a strategy to amplify the brand's quality message, enhance the loyalty program, and use data for targeted deals. CFO and EVP, International Ravi Thanawala noted that year-to-date corporate restaurant EBITDA dollars were stable and that the high gross margin per transaction underscores the long-term profit potential from driving volume.

Brian Bittner from Oppenheimer & Co. Inc. asked about BJ's Restaurants' anticipated comparable sales trends throughout 2026, given the strong Q4 2025 traffic growth and 1-3% full-year guidance. He also sought confirmation on the expected 50 basis point expansion in restaurant-level margins for 2026 and the key drivers behind this continued margin growth.

Answer

CFO Todd Wilson indicated no major quarterly shifts in comp trends for 2026, noting Q1 performance is in line with the annual guidance, and expects consistent comp sales and traffic growth. President and CEO Lyle Tick outlined three drivers for margin expansion: consistent sales growth, continued focus on KPIs and improving bottom-quartile performance (including gross-to-net initiatives), and the measured rollout of the activity-based labor model, with its full impact expected more in 2027. Wilson confirmed the approximate 50 basis point margin expansion expectation.

Brian Bittner asked about BJ's Restaurants' impressive Q4 traffic growth and the anticipated quarterly trends for 2026 comparable sales, as well as the drivers behind the projected 50 basis point expansion in restaurant-level operating margins for 2026.

Answer

CFO Todd Wilson stated that Q1 2026 results are in line with the 1-3% annual comparable sales guidance, with no significant quarterly movements expected, and a focus on growing comp sales and traffic every quarter. President and CEO Lyle Tick attributed margin expansion to consistent sales growth, accountability through KPIs, improving outlier performance, continued gross-to-net initiatives, and the measured rollout of the activity-based labor model, which is expected to have a greater impact in 2027.

Brian Bittner of Oppenheimer & Co. asked for a hypothesis on why the casual dining customer is holding up better than QSR and inquired about the drivers of the significant labor leverage and its sustainability.

Answer

President Lyle Tick suggested BJ's resilience stems from a higher-income customer base, improved execution, and a focus on 'social splurge' occasions, which are less transactional. Interim CEO Brad Richmond added that BJ's is taking share from weaker independent operators. Regarding labor, CFO Tom Houdek stated the performance is very sustainable, resulting from better scheduling, overtime management, and growing team member tenure, all while guest satisfaction scores are hitting multiyear highs.

Brian Bittner asked about the reasons for the Q3 restaurant margin underperformance versus guidance despite meeting sales targets, and what factors support the optimistic Q4 margin outlook. He also inquired about the long-term margin potential for the brand.

Answer

CFO Tom Houdek attributed the Q3 margin miss to a higher-than-expected promotional mix, specifically the Pizookie Pass, along with higher supply chain costs and reduced labor leverage. For Q4, he anticipates improvement from better food costs and refined labor models. Interim CEO Brad Richmond added that while the Pizookie Pass was inefficient, the newer Pizookie Meal Deal has strong margins and is successfully driving traffic. Regarding long-term potential, Richmond stated that the primary focus should be on growing same-restaurant sales to leverage the brand's high AUVs, rather than just cost-cutting, which presents a significant opportunity for margin expansion.

Brian Bittner asked about investor skepticism regarding Domino's ability to maintain solid performance in 2026 after a successful 2025, specifically inquiring about the biggest share drivers in 2025, opportunities to accelerate share gains due to competitive closures, and what's driving the stable growth of the QSR pizza industry.

Answer

CEO Russell Weiner explained that Domino's is not a 'one-and-done' company, with initiatives like carryout and loyalty having multi-year growth. He highlighted plans for 2+ product innovations, continued operational efficiencies, and renowned value promotions like 'Best Deal Ever' in 2026, along with growth from aggregators and a new e-commerce platform. CFO Sandeep Reddy added that the QSR pizza industry has consistently grown 1-2% since 2019, and Domino's expects to continue gaining market share due to consistent same-store sales growth and superior franchisee economics, especially with competitors announcing store closures.

Brian Bittner asked about investor skepticism regarding Domino's ability to sustain strong performance in 2026 after a successful 2025, inquiring about the biggest market share drivers, opportunities to accelerate share gains due to competitive closures, and factors contributing to the stable growth of the QSR pizza industry.

Answer

CEO Russell Weiner emphasized Domino's long-term strategy, highlighting multi-year growth drivers like carryout and loyalty, and upcoming initiatives including 2+ product innovations, operational efficiencies, and continued renowned value promotions. CFO Sandeep Reddy reiterated the QSR pizza industry's consistent 1-2% annual growth since 2019 and pointed to Domino's consistent market share gains and superior franchisee economics, further bolstered by competitor store closures.

Brian Bittner from Oppenheimer & Co. Inc. probed the long-term impact of the DoorDash partnership, asking whether management views it as a multi-year growth driver or a catalyst that will create challenging comparisons in future years.

Answer

CEO Russell Weiner asserted that Domino's is built to continuously take share in a slow-growing category, and aggregators are a key tool for this. He stated the goal is to achieve their 'fair share' on these platforms over time. CFO Sandeep Reddy underscored this by pointing to Domino's 5.1% retail sales growth in a flat market. Weiner also clarified that new products like stuffed crust are permanent additions, not limited-time offers, providing a sustainable growth platform.

Brian Bittner asked for details on the expected sales mix from the new DoorDash partnership relative to the existing Uber Eats relationship, in order to better model its potential contribution to the 3% U.S. comp guidance.

Answer

Chief Executive Officer Russell Weiner explained that DoorDash's pizza business is approximately twice the size of Uber's on their respective platforms, so the contribution to Domino's should be about double what was seen with Uber. He noted the meaningful impact is expected in the second half of the year.

Brian Bittner of Oppenheimer & Co. Inc. questioned the 2025 international same-store sales guidance, asking if the 1-2% range is conservative given the stronger-than-expected Q4 results and improving trends among peers.

Answer

CEO Russell Weiner acknowledged the positive Q4 but stated the company won't change its outlook after one quarter, emphasizing the focus on renowned value, aggregator leverage, and carryout growth. CFO Sandeep Reddy affirmed the guidance is not conservative, citing significant macroeconomic volatility.

Brian Bittner from Oppenheimer & Co. Inc. noted the encouraging growth in Uber Eats sales mix to 2.7% and asked about the potential for a future partnership with DoorDash. He questioned if DoorDash could contribute a stronger sales mix than Uber and whether its launch was contemplated in the 2025 outlook.

Answer

CEO Russell Weiner confirmed that the company's long-term goal of adding $1 billion in sales from aggregators contemplates being on all platforms, including DoorDash. He acknowledged that DoorDash is a larger platform than Uber, suggesting it would likely have a more significant impact. Weiner stated the company's goal is to exit the year with a 3% sales mix from Uber and will decide on exclusivity at the end of Q1.

Brian Bittner asked about the drivers behind the international segment's strong momentum, seeking to understand the balance between a healthier market backdrop, share gains, and specific bottom-up strategies for Burger King and Popeyes.

Answer

CEO Josh Kobza attributed the momentum to a combination of factors, including supportive structural market tailwinds in Europe and Asia Pacific, strong brand positioning with modern assets and digital enablement, and effective local operations. Executive Chairman Patrick Doyle added that Popeyes' international system sales grew from $927 million in 2023 to $1.7 billion in 2025, with a $2 billion run rate in Q4 2025, indicating stunning growth outside the U.S.

Brian Bittner from Oppenheimer asked for a detailed breakdown of the international segment's strong momentum, including over 6% comparable sales growth in Q4 2025. He sought to understand whether this performance was primarily driven by a healthier market backdrop or by specific share gains and bottom-up initiatives at Burger King and Popeyes internationally.

Answer

CEO Josh Kobza attributed the international segment's success to a combination of factors, including a decent market backdrop in European and Asia Pacific markets, structural tailwinds like workforce growth and middle-class expansion, and the brands' strong positioning with modern assets, digital enablement, and local partnerships. Executive Chairman Patrick Doyle highlighted Popeyes' international system sales growth from $927 million in 2023 to $1.7 billion in 2025, emphasizing its 'stunningly great business' outside the U.S.

Brian Bittner from Oppenheimer & Co. Inc. inquired about the drivers behind the significant same-store sales outperformance at Carrols restaurants and sought clarification on the accelerated timeline for refranchising these locations.

Answer

CEO Josh Kobza attributed the outperformance to superior operations, strong restaurant management, and the positive impact of well-executed remodels. Regarding refranchising, Kobza confirmed they have started the process earlier than the initially communicated three-to-seven-year window, driven by a desire to move at a 'reasonable pace' while ensuring the restaurants are placed with high-quality, local operators.

Brian Bittner noted Burger King U.S.'s strong relative same-store sales performance in Q1 and asked for specific drivers behind this outperformance. He also requested an outlook for the brand for the remainder of the year, considering the challenging environment for low and middle-income consumers.

Answer

Executive Chairman Patrick Doyle attributed the outperformance to fundamental improvements in guest experience, driven by better restaurant operations, new ownership, and rapid remodels. CEO Josh Kobza added that while operational progress is significant, there is still a long way to go with remodels and improving underperforming locations. Kobza confirmed that absolute same-store sales have improved in Q2 and highlighted an exciting upcoming calendar, including a new family promotion and a refreshed focus on the Whopper and value offerings.

Brian Bittner asked for the same-store sales range assumed to achieve the 8%+ adjusted operating income (AOI) growth target for 2025, and whether additional cost efficiencies were built into the forecast.

Answer

CFO Sami Siddiqui stated that while the company is confident in its 8%+ organic AOI growth guidance for 2025, it will not provide specific year-to-year top-line components of its 5-year algorithm. He affirmed that planned marketing programs and operational improvements are expected to drive this bottom-line growth.

Brian Bittner asked about the drivers behind Burger King International's outperformance compared to its global peer set, questioning whether it stems from a favorable market mix or genuine market share gains, and inquired about the reasons for the segment's accelerating trends into the fourth quarter.

Answer

CEO Josh Kobza attributed the success to taking market share in key countries like Australia, Japan, Spain, and Brazil. He emphasized that local teams are winning by focusing on fundamentals: excellent operations, high-quality locations, and superior product quality, particularly by elevating the Whopper. This focus on basics, rather than just market mix, is driving the outperformance.

Brian Bittner from Oppenheimer & Co. inquired about the Burger King U.S. remodel strategy, asking if the newly announced 1,100 remodels will be as impactful as the Carrols remodels and if more store closures are anticipated.

Answer

CEO Josh Kobza confirmed that no significant new wave of store closures is expected. He anticipates the remodels will be highly impactful, driven by the new 'Sizzle' image that integrates digital elements. Executive Chairman J. Patrick Doyle added that reaching a high percentage of modern restaurants creates a 'catalytic effect' for the brand's overall perception.

Brian Bittner asked about the 250 Pizza Hut unit closures planned for the first half of the year as part of the Hut Forward program, inquiring if this number represents the totality of needed closures and what the optimal number of U.S. stores for Pizza Hut might be moving forward.

Answer

CFO Ranjith Roy stated that the Hut Forward program and the 250 closures are focused on early 2026. He emphasized that these closures represent a very small portion of Pizza Hut's 20,000 global unit estate and are considered the 'right answer for the brand as we move through the strategic review.'

Brian Bittner from Oppenheimer questioned the Pizza Hut U.S. portfolio strategy, specifically if the planned 250 unit closures in the first half of 2026 represent the total anticipated closures, and what management considers the optimal number of U.S. stores for the brand moving forward.

Answer

CFO Ranjith Roy stated that the 250 targeted closures in early 2026, part of the Hut Forward program, are a very small portion of Pizza Hut's 20,000 global unit estate and are the right answer for the brand during the strategic review. He did not specify an optimal number of U.S. stores or confirm if these were the totality of anticipated closures.

Brian Bittner asked about the catalysts that led Yum! Brands to announce the strategic review of Pizza Hut, inquiring whether it was a new CEO vision or a long-standing consideration.

Answer

CEO Chris Turner stated that the company continuously evaluates what is best for each business. He acknowledged Pizza Hut's strengths, including its iconic global brand, best-tasting pizza, global footprint, strong franchise partners, and leading gross unit development in the pizza QSR space for most of the last four years. However, he explained that a multi-year effort might be needed to reposition the brand in some markets, and these efforts might be best executed under a different structure or outside ownership, which is what the strategic review will test. He confirmed it was a thoughtful process leading to the announcement.

Brian Bittner from Oppenheimer & Co. asked about the specific catalysts that led Yum! Brands to announce a strategic review for Pizza Hut, inquiring whether this decision was a direct part of the new CEO's vision or a culmination of a longer-standing process.

Answer

CEO Chris Turner explained that the decision stemmed from continuous evaluation of what is best for each business. He acknowledged Pizza Hut's significant strengths, including its iconic global brand, extensive footprint, strong franchise partners, and leadership in gross unit development. However, he noted that repositioning the brand for greater success in some markets might require a different structure, potentially under outside ownership, leading to the thoughtful initiation of the strategic review.

Brian Bittner sought clarity on the BITE by Yum! platform, asking how many units have the full platform, the expected rollout cadence through 2026, and the most significant benefits for franchisees.

Answer

CFO Chris Turner reported that while approximately 25,000 restaurants have at least one BITE component, very few have the complete ecosystem. Taco Bell U.S. is the most advanced in its deployment. He explained that the expansion strategy involves both adding more components to existing restaurants and entering new markets. Following a recent global franchisee convention, demand for the platform is now significant, and the company's focus is on managing the deployment process to meet this demand.

Brian Bittner questioned the sustainability of KFC International's accelerating same-store sales growth, citing investor concerns over potential geopolitical headwinds for American brands.

Answer

CEO David Gibbs confirmed the encouraging trends, noting that excluding China, international same-store sales were up 5%. He stated the company has not seen any anti-American sentiment impacting stores and that the issues from the Middle East are largely behind them. Gibbs credited the team's execution, including leaning into value and successful product innovation like the Double Down Zinger in the U.K. and Crispy Naan Burger in France, for driving the widespread recovery.

Brian Bittner asked for details on how Yum! Brands plans to achieve its 2025 core operating profit growth target of at least 8%, given that unit growth may be below the 5% algorithm due to closures in Turkey.

Answer

CEO David Gibbs stated that the 8% core operating profit target can be achieved through various combinations of performance. He clarified that the Turkey closures have a non-material financial impact due to low royalty income. Gibbs emphasized that the company's 'twin growth engines'—the recovery at KFC International and the sustained momentum at Taco Bell U.S.—provide strong confidence in hitting the 2025 target, deferring further details to the upcoming Investor Day.

Brian Bittner asked for confirmation on the global same-store sales assumptions behind the Q4 guidance and questioned how Taco Bell successfully protected its value leadership amid increased competition, as well as its plans for new value offerings in 2025.

Answer

CEO David Gibbs confirmed Taco Bell's strong momentum from Q3 continued into Q4, attributing its success to a unique ability to deliver innovative products at compelling value price points, which also benefits franchisee margins. He highlighted the '$7 Lux Cravings Box' as a current example of blending innovation with value. Regarding forward-looking sales guidance, Gibbs noted the difficulty of forecasting in the current global environment but reiterated that Q3 trends were generally continuing into Q4.

Brian Bittner asked about the anticipated impact of the lighter portions menu rollout at Olive Garden on sales, value perception, and internal metrics, and followed up on the reasons for labor margin deleverage despite strong comparable sales, inquiring about specific investments or mix issues and future leverage ability.

Answer

CEO Rick Cardenas explained that the lighter portions menu primarily impacts internal metrics like value perception and affordability, with long-term sales benefits from increased guest frequency. He noted a short-term check mix impact of 20-30 basis points in Q2, offset by strong delivery performance. CFO Raj Vennam clarified that labor leveraged in comparable restaurants due to productivity improvements, offsetting underpricing inflation, and that total Darden deleverage was due to growth and the Chuy's acquisition, expecting labor to be favorable in the back half.

Brian Bittner asked about the anticipated impact of the Olive Garden lighter portions menu rollout on sales, value perception, and other internal metrics, as well as the reasons behind recent labor margin deleverage despite strong comparable sales growth.

Answer

CEO Rick Cardenas explained that the lighter portions menu primarily impacts internal metrics like value perception and affordability, driving long-term frequency, with a short-term check mix impact offset by delivery performance. CFO Raj Vennam clarified that labor leverage was achieved in comparable restaurants through productivity, but total Darden labor margins were impacted by growth and the Chuy's acquisition, expecting improvement in the back half.

Brian Bittner questioned the implied flattish operating margins in the Q4 guidance, suggesting it seemed conservative given the strong sales outlook. He also requested an update on the performance and learnings from the Olive Garden delivery rollout.

Answer

CFO Raj Vennam explained that the Q4 margin outlook is shaped by a significant step-up in overall inflation to approximately 3%, which outpaces the company's pricing. President and CEO Ricardo Cardenas added that the delivery pilot has been successful, with pilot locations now seeing delivery mix at around 2.5% of sales and other restaurants following a similar growth trajectory, especially after initial digital marketing efforts.

Brian Bittner inquired about the potential sales impact of the new Uber partnership for Olive Garden, its exclusivity terms, and the drivers behind the recent sales improvement in September. He also asked about Olive Garden's future promotional strategy in a competitive environment.

Answer

President and CEO Rick Cardenas explained that while Uber's internal estimates for the partnership's impact are significant, Darden is taking a more conservative view, expecting incrementality to build over time. He confirmed a two-year exclusive agreement with Uber for Olive Garden, with options to expand to other brands. Cardenas attributed the September sales lift to a broader industry trend. Regarding promotions, he stated Olive Garden will focus on highlighting existing value and price points rather than engaging in deep discounting, ensuring any new offers align with their filters of being simple, brand-building, and not deeply discounted.

Brian Bittner asked about the main drivers for the anticipated sequential improvement in Jack in the Box's 2026 same-store sales guidance, particularly the shape of recovery in the first versus second half, and the assumptions for block closures and real estate sales within the EBITDA guidance.

Answer

CEO Lance Tucker explained that Q1 is expected to be soft, with improvement starting in Q2 driven by the 75th-anniversary promotions, innovation, softer comparisons in the second half, operational enhancements, and ongoing tech modernization. Regarding EBITDA, Lance Tucker confirmed that 60-100 block closures and $50-$70 million in real estate sales are built into the guidance, which CFO Dawn Hooper affirmed.

Brian Bittner inquired about Jack in the Box's 2026 same-store sales guidance, specifically the anticipated sequential improvement after a pressured Q1. He asked about the main drivers of this recovery, whether comparison-driven or otherwise, and the expected shape of the recovery throughout the year. He also followed up on the EBITDA guidance, asking about the assumptions for real estate sales and block closures within the current guidance and their impact.

Answer

CEO Lance Tucker explained that Q1 is expected to be soft, with improvement anticipated from Q2 due to the 75th-anniversary initiatives, innovation, returning customer favorites, and softer comparisons in the second half. He also cited ongoing efforts in the value equation, operational improvements, tech modernization, and a new culinary team. CFO Dawn Hooper confirmed that block closures (60-100) and $50 million to $70 million in real estate sales are built into the EBITDA guidance.

Brian Bittner of Oppenheimer & Co. Inc. asked for clarity on the wide guidance range for Q4 same-store sales and inquired about the strategy behind the $100 million real estate sale target within the 'Jack on Track' plan, particularly how it relates to the pending Del Taco strategic review.

Answer

CEO Lance Tucker explained that Q4 sales trends have improved in recent weeks following a pivot to value-focused promotions like the Bonus Jack combo, supported by incremental marketing. He clarified that the $100 million in real estate sales is a minimum target and will act as a 'balancer' to achieve leverage goals after the outcome of the Del Taco process and other cash flows are determined.

Brian Bittner asked about the company's high-level strategy regarding capital allocation, inquiring if the slight reduction in CapEx guidance was a sign of a broader effort to improve free cash flow. He also asked about the priorities for capital use and whether debt reduction was seen as a key factor in creating shareholder value.

Answer

Lance Tucker, Interim Principal Executive Officer, confirmed that improving free cash flow is a top priority and that the initial CapEx reduction is a precursor to more significant changes to be announced in May. Tucker agreed that reducing leverage is a key 'unlock' for shareholder value that the company will be examining closely, alongside ensuring necessary investments for growth.

Brian Bittner questioned the elevated level of store closures that are pressuring net unit growth, asking about the health of the bottom-quartile stores and the outlook for closures to subside.

Answer

CEO Darin Harris explained that the company accelerated some closures in Q4 but affirmed the overall health of the system, noting franchisee financials held flat year-over-year. He projected that future closures would normalize to the industry-standard rate of about 1% of the system, or 16-18 restaurants per year.

Brian Bittner asked about the company's resilient traffic trends in an environment where competitors are seeing choppier results. He inquired whether Texas Roadhouse is attracting new customers and, if so, from which segments (e.g., QSR, grocery, higher-end steakhouses).

Answer

Jerry Morgan, CEO, explained that while they don't directly measure new customers, their focus on reputation, a full parking lot, and energetic atmosphere attracts guests. He believes they draw from all segments due to their quality, made-from-scratch food, hand-cut steaks, and strong hospitality, which resonates with consumers.

Brian Bittner asked if Texas Roadhouse is attracting new customers and, if so, where these customers are originating from, such as QSR, grocery stores, or higher-end steakhouses.

Answer

Jerry Morgan, CEO, explained that the company does not specifically measure new customer acquisition in that manner. However, he believes Texas Roadhouse draws from a broad spectrum of consumers due to its strong reputation, made-from-scratch food, vibrant atmosphere, and high-quality hospitality.

Brian Bittner of Oppenheimer & Co. Inc. asked for clarification on the effective pricing run rate for 2025 after the planned 1.4% increase and whether to anticipate deleverage on the cost of sales line given the updated commodity outlook.

Answer

CFO David Monroe clarified the pricing cadence: 3.1% in Q1, dropping to 2.3% from Q2 onwards after a 2.2% increase rolls off and the new 1.4% is added. Executive Michael Bailen added that with the updated 3-4% commodity inflation guidance, the math implies some deleverage on the cost of sales line as the year progresses, particularly after the first quarter.

Brian Bittner from Oppenheimer asked about the company's pricing strategy for 2025. He noted the current ~3.1% pricing run-rate and questioned how the 2025 inflation guidance for commodities (2-3%) and wages (4-5%) would inform future pricing decisions.

Answer

CEO Gerald Morgan explained that Texas Roadhouse will adhere to its established process of reviewing pricing with operators after the new year and will make a decision based on the business environment at that time. Executive Michael Bailen confirmed the analyst's math, stating the company will have 3.1% pricing in Q4 and Q1, after which 2.2% will roll off, necessitating a new pricing decision for Q2 2025.

Brian Bittner noted that the low-end consumer cohort in the U.S. has been down double digits for nearly two years and is expected to continue into 2026. He asked what factors would be necessary to turn this segment from a headwind into a tailwind for comparable sales.

Answer

Chairman and CEO Chris Kempczinski explained that low-income consumers face significant inflation in non-discretionary spending areas like rent, food, and childcare, which impacts their sentiment and spending behavior across categories. He believes that a significant change would require consumers to feel relief from the cost of living pressures and experience real income growth, which is a broader macroeconomic question.

Brian Bittner noted that the low-end consumer cohort has been down double digits for nearly two years and is expected to remain pressured into 2026, despite McDonald's offering industry-leading value. He asked what it would take to transform this low-end consumer from a headwind into a tailwind for comparable sales.

Answer

CEO Chris Kempczinski explained that low-income consumers face significant inflation in non-discretionary spending, such as high rents, food prices (both restaurant and grocery), and childcare costs. This impacts their outlook, sentiment, and spending behavior across various product categories. He suggested that a change would require relief on the cost of living and growth in real incomes, which are macroeconomic factors. He does not expect significant change in this consumer cohort's behavior as long as real incomes remain under pressure, noting that recent changes to SNAP benefits could add further pressure.

Brian Bittner from Oppenheimer & Co requested an updated macro overview of the China restaurant industry and consumer spending, noting potential improving visibility. He also sought confirmation on the Q4 same-store sales outlook remaining similar to Q3 and additional color on this dynamic.

Answer

CEO Joey Wat observed good performance in Q3 and early October, with strong traffic, especially during holidays, but noted consumers remain value-cautious. She highlighted slightly better performance in lower-tier cities due to domestic travel and reiterated Yum China's focus on value-for-money, quality food, emotional value, and operational efficiency to drive same-store transaction growth.

Brian Bittner inquired about the current macro perspective on the China restaurant industry, consumer spending trends, and sought confirmation on the Q4 same-store sales outlook being similar to Q3.

Answer

CEO Joey Wat described Q3 and October holiday performance as good and in line with expectations, with strong traffic. She highlighted that consumers remain value-cautious, with lower-tier cities performing slightly better due to domestic travel. Yum China continues to focus on value-for-money, quality food, emotional value, and driving same-store transaction growth through innovation and operational efficiency.

Brian Bittner from Oppenheimer & Co. Inc. asked about the drivers behind the significant shift in KFC's average check, which improved from a 4% decline in Q1 to a 1% increase in Q2.

Answer

CFO Adrian Ding explained the increase was driven by a higher delivery mix, which carries a higher ticket average and more than offset the downward trend from smaller orders in both dine-in and delivery channels. CEO Joey Wat added this is part of a long-term strategy to expand into new occasions and lower-tier cities, with the primary focus remaining on driving same-store transaction growth while protecting margins.

Brian Bittner of Oppenheimer & Co. Inc. asked about the specific drivers behind KFC's average check turning from a 4% drag in Q1 to a 1% tailwind in Q2, and whether this positive trend is expected to continue.

Answer

CFO Adrian Ding clarified that the positive shift was driven by a higher delivery mix, which carries a higher ticket average, offsetting the downward trend in ticket sizes for both dine-in and delivery due to more small orders. He expects the overall ticket average to see a slight decrease in H2. CEO Joey Wat added that the ultimate focus remains on driving same-store transaction growth while protecting margins.

Brian Bittner asked for more detail on the consumer environment in China and how KFC's 4% transaction growth compares to the industry, in order to gauge market share gains.

Answer

CEO Joey Wat explained that consumers continue to favor wider price ranges and value, which is driving transaction growth. She highlighted strong performance in smaller delivery orders and a 20% increase in K-Coffee cup sales. Wat stated that based on available data in a fragmented market, both KFC and Pizza Hut are gaining meaningful market share, particularly in the delivery segment.

Brian Bittner asked about Chipotle's specific action plan for pricing in 2026, particularly how it will address the mid-single-digit cost inflation after the current 2% price increase rolls off in December. He also questioned if the accelerating unit growth elevates the risk to driving same-store traffic growth and what gives management confidence in executing on a same-store basis while opening so many new units.

Answer

Adam Rymer (CFO) outlined a slow and measured pricing approach for 2026, potentially rolling out over 4-12 months rather than all at once, to gauge consumer reaction. He noted that mid-single-digit inflation is higher than typical, warranting caution, and that updates will be provided quarterly. Scott Boatwright (CEO) added that Chipotle will also work with suppliers to mitigate inflation. Regarding unit growth, Adam Rymer (CFO) expressed confidence in driving same-store sales, noting that new restaurants' impact on overall comparable sales (around 100 basis points) will decrease over time. Scott Boatwright (CEO) added that cannibalized restaurants typically recover within 12-13 months, and new units often out-comp the existing base.

Brian Bittner sought clarification on Chipotle's action plan for pricing in 2026, specifically how the company intends to address mid-single-digit cost inflation when the current 2% price increase rolls off in December. He also asked about the impact of accelerating unit growth on the ability to drive same-store traffic growth.

Answer

CFO Adam Rymer explained that for 2026 pricing, Chipotle will adopt a slow and measured approach, rolling out price increases over several months rather than all at once, depending on consumer reaction. He noted that mid-single-digit inflation is higher than historical levels, leading to caution and a more patient approach to offsetting it. CEO Scott Boatwright added that the company is also exploring risk mitigation strategies with suppliers to offset inflation. Regarding unit growth, Rymer stated that new restaurants impact overall comps by about 100 basis points, but existing restaurants comp well, and this impact will decrease as growth levels off. Boatwright emphasized that cannibalized restaurants recover quickly (within 12-13 months), and new restaurants out-comp the base, giving confidence in executing same-store growth alongside high unit expansion.

Brian Bittner from Oppenheimer & Co. Inc. asked a high-level question for new CEO Scott Boatwright about any differences in his strategic view of the business or areas where he might lean in more compared to his predecessor.

Answer

CEO Scott Boatwright outlined three core focus areas while affirming the five key strategies remain unchanged. The focus areas are: 1) Being 'guest obsessed' to improve the total experience, 2) Modernizing the back-of-house with new equipment to drive efficiency and culinary consistency, and 3) Focusing on growth, not just in restaurants globally but also in people development to foster careers within Chipotle.

Brian Bittner requested a breakdown of the 90 basis points of COGS deleverage between portion investments and underlying inflation. He also asked how management is thinking about a base case for menu pricing heading into 2025.

Answer

CFO Adam Rymer provided a bridge for the cost of sales increase, attributing approximately 60 basis points to the portion investment, 50 basis points to an unfavorable avocado cost comparison, and 40-50 basis points to the mix impact from the premium brisket LTO. Regarding future pricing, he stated that after accounting for these factors, the underlying inflation would suggest a potential menu price increase in the 2% to 3% range would be needed to maintain margins.

Brian Bittner asked if the mix impact from the new, more affordable bites and bowls menu items was playing out as anticipated and how mix is expected to impact comparable sales in 2026.

Answer

Matt Clark, EVP and CFO, confirmed that the mix impact from bites and bowls was largely in line with forecasts, initially providing a low 1% benefit. He anticipated a negative 1% impact on mix for 2026 for modeling purposes, acknowledging ongoing economic pressure.

Brian Bittner asked if the impact of the new menu items, specifically bites and bowls, on mix was playing out as anticipated, given their more affordable price points, and how to project the mix impact on comparable sales moving into 2026.

Answer

Matt Clark, EVP and Chief Financial Officer, confirmed that the mix impact has been largely in line with forecasts, initially providing a low 1% benefit to mix. He anticipates holding that line, but for modeling purposes in 2026, he suggested expecting around a negative 1% impact on mix due to ongoing economic pressure and potential trade-down, despite being pleased with the initial performance.

Brian Bittner inquired about the primary drivers for the increased full-year 2025 net income margin guidance and whether the Q3 revenue outlook assumes a stable same-store sales trend for The Cheesecake Factory brand.

Answer

Matthew Clark, Executive VP & CFO, confirmed the improved margin outlook is driven by better-than-expected four-wall operational performance, as demonstrated in Q2. He also stated that the high end of the Q3 revenue guidance assumes a stable sales environment, consistent with recent trends, without forecasting any acceleration.

Brian Bittner of Oppenheimer & Co. Inc. sought to clarify the implied comparable sales assumptions within the Q2 revenue guidance. He also questioned why the full-year net income margin guidance was not raised despite strong Q1 restaurant margin performance, suggesting it might be due to conservatism around tariffs.

Answer

EVP and CFO Matt Clark clarified that the Q2 guidance implies comps closer to the 0% to 1% range, factoring in a restaurant closure and holiday timing. He confirmed that the full-year margin outlook remains unchanged because the company has proactively absorbed the anticipated impact of tariffs into its forecast, which offsets some of the underlying operational momentum.

Brian Bittner questioned why the 2025 revenue growth forecast of 6% is below the long-term target of 7-8% and asked about the company's confidence in the negative sales mix trend flattening out.

Answer

EVP and CFO Matt Clark explained that the 2025 growth rate is impacted by unique 2024 events (unplanned closures and relocations) and that the underlying new unit contribution is already at a run rate consistent with the long-term target. He expressed confidence that the sales mix will stabilize, supported by the new menu's attractive price points and a focus on non-alcoholic beverages.

Brian Bittner asked why limited-time offers (LTOs) and promotions like the SpongeBob collaboration are so effective, how Wendy's plans to convert that success into sustainable growth, and if similar catalysts are planned for 2025.

Answer

Kirk Tanner, President and CEO, emphasized that a balanced approach is crucial, focusing on the core menu, incremental innovation, and compelling value. He explained that collaborations like SpongeBob are effective because they connect the brand to culture and tap into consumer passion points, driving excitement and traffic. For 2025, he highlighted upcoming partnerships with brands like Oreo, Pop-Tarts, and Takis, which are intentionally chosen to target specific demographics like Gen Z and build long-term brand affinity.

Brian Bittner of Oppenheimer pointed out the change in 2025 unit growth guidance from 3-4% last quarter to 2-3% now, asking what caused the shift and if it reflects a new, more conservative guidance philosophy.

Answer

CEO Kirk Tanner acknowledged the change, attributing it to shifts in the timing of development, but affirmed the restaurants will still be built in the future. He reiterated high confidence in the 2-3% guidance for 2025, which still represents a 15-year high in new builds. He also confirmed that the new guidance philosophy is part of an effort to build credibility with investors.

Brian Bittner of Oppenheimer & Co. asked about the Burger King U.S. remodel strategy, questioning the impact of the new $300 million co-investment program and whether another round of store closures should be expected to optimize the portfolio.

Answer

CEO Josh Kobza stated that another sizable batch of closures is not expected. He anticipates all remodels will be highly impactful, particularly the new 'Sizzle' image which integrates more digital features. Executive Chairman Patrick Doyle added that reaching 85-90% modern image creates a 'catalytic effect' for the brand, improving overall consumer perception.

Brian Bittner from Oppenheimer & Co. inquired about the Burger King U.S. remodel strategy, asking if the newly announced franchise remodels will be as impactful as the Carrols remodels and whether another round of store closures should be expected.

Answer

CEO Josh Kobza stated that another sizable batch of closures is not expected. He anticipates all remodels will be highly impactful due to larger scopes and the new 'Sizzle' image, which integrates digital elements. Executive Chairman Patrick Doyle added that reaching a high percentage of modern restaurants creates a 'catalytic effect' for the brand's overall perception.