Brian Mullan

Brian Mullan of Piper Sandler Companies asked about CAVA's investment in Hyphen, an automated make-line company, inquiring what makes the technology attractive and what would define success for the upcoming pilot.

Answer

CEO Brett Schulman explained that the investment aims to make restaurants easier to run and improve the guest experience. The pilot will focus on the second digital make-line to enhance order accuracy, speed, and convenience, freeing up team members to focus on hospitality. Success will be measured by improved guest experience and the ability to reallocate labor.

Alison, on behalf of Brian Mullan from Piper Sandler, requested an update on the chicken shawarma test, including consumer reception, operational impact, and the potential for a wider rollout.

Answer

CEO Brett Schulman reported that the chicken shawarma test is progressing very well. He described the item as a core Mediterranean staple that offers a complementary texture to existing chicken options. Operationally, it is a 'light lift' with minimal complexity. Schulman indicated that if its current positive trajectory continues, it will be rolled out across the system in coming quarters.

Brian Mullan of Piper Sandler asked for an update on the priorities for the catering channel in 2025 and the potential timeline for a broader rollout.

Answer

CFO Tricia Tolivar explained that CAVA is taking a patient, stage-gate approach to catering. In 2025, the plan is to expand the test to an entire major metro market to refine production models, packaging, and technology. A national launch is not expected in early 2026, as the focus remains on ensuring operational success first.

Brian Mullan asked about Cracker Barrel's marketing plan for the year, specifically if spending levels would change given recent traffic performance, and sought clarification on the back-of-house initiatives, inquiring if food quality improvements were always planned or a reaction to recent feedback.

Answer

President and CEO Julie Felss Masino stated that marketing as a percentage of sales would be slightly higher in fiscal 2026, particularly in Q1, to drive traffic. She confirmed that food quality has always been a core focus of the plan, alongside process simplification, with Phase One rolled out in Q3 and Phase Two testing in Q4, continuously evaluating processes and guest feedback.

Brian Mullan inquired about Cracker Barrel's marketing plan and spending strategy for the upcoming year, particularly how it might adapt to recent traffic performance following the logo change. He also asked if the focus on improving food quality and back-of-house processes was a pre-existing plan or a reaction to recent feedback.

Answer

Julie Felss Masino (President & CEO) stated that marketing as a percentage of sales is expected to be higher in fiscal 2026, especially in Q1, to drive traffic. She clarified that food quality has always been a core focus of the multi-year plan, alongside process simplification, with Phase 1 rolled out in Q3 and Phase 2 testing in Q4, continuously evaluating processes and guest feedback.

Brian Mullan asked about Cracker Barrel's marketing plan and spending strategy for the upcoming year, especially in light of recent traffic performance following the logo change, and whether the company plans to leverage the recent attention. He also inquired about the timeline and drivers for food quality improvements and back-of-house process changes, specifically if these were pre-planned or a reaction to recent feedback.

Answer

Julie Masino, President and CEO, stated that marketing as a percentage of sales is expected to be slightly higher in fiscal 2026, particularly in Q1, to drive traffic. She clarified that food quality has always been a 'North Star' in their multi-year plan, alongside process simplification, and that back-of-house initiatives are complex, multi-phase, and continuously evaluated based on learnings and feedback. Craig Pommells, SVP and CFO, did not directly address this question.

Brian Mullan from Piper Sandler Companies asked about the back-of-house optimization initiative, specifically regarding permanent labor reductions and the flow-through of savings. He also requested an update on learnings from the store remodel program.

Answer

President & CEO Julie Felss Masino outlined the three phases of the back-of-house initiative, focusing on process, ingredients, and equipment. SVP and CFO Craig Pommels confirmed that savings are expected to flow to the bottom line, contributing to the company's overall cost-saving targets. Regarding remodels, Masino stated it is still a 'test and learn' year and a comprehensive update on learnings and future plans will be provided in September.

Brian Mullan asked for specifics on the P&L impact from back-of-house efficiency initiatives and questioned the outlook for the retail business during the holiday season, including full-year gross margin expectations.

Answer

CFO Craig Pommells explained that the initial benefits from back-of-house work will primarily impact labor productivity and improve employee job satisfaction, representing the early stages of a multiyear cost-saving plan. CEO Julie Masino addressed retail, noting the team is managing well despite industry headwinds, with lower inventory and higher margins in Q1. She highlighted a new 'Seasons of Savings' promotion for the holidays. However, Mr. Pommells cautioned that full-year retail margins are expected to be slightly unfavorable.

Brian Mullan inquired about Cracker Barrel's fiscal 2025 remodel plans, asking for details on the differences between the high, medium, and low-cost options. He also sought information on the new, lower-cost 'refresh' option and followed up on the drivers behind the fiscal 2025 menu pricing guidance.

Answer

CFO Craig Pommells explained the remodel tiers, noting the 'refresh' involves paint and decor, while the 'low' adds furniture and lighting, and 'medium' and 'high' options include progressively more extensive flooring and other work. He emphasized that fiscal 2025 is a testing year to determine the best ROI. Pommells also confirmed the 5% pricing guidance for the year is a blend of all pricing actions, including stores moving to higher and lower tiers.

Brian Mullan asked if Dave & Buster's needs to significantly increase the dollar amount of marketing investments to drive traffic, beyond just refining the media mix and messaging.

Answer

Tarun Lal, CEO & Board Director, stated that he does not believe the company needs to change the current run rate of marketing investments at this time. He emphasized that the focus is on further refining the media mix to make the existing spend more effective.

Brian Mullan asked if the business needs to significantly increase the dollar amount of marketing investments to drive traffic, beyond just changing the media mix and messaging.

Answer

Tarun Lal (CEO) stated he does not believe they need to change the run rate of marketing investments at this time, focusing instead on refining the media mix for effectiveness.

Brian Mullan asked CEO Tarun Lal for his assessment on whether Dave & Buster's needs to significantly increase its dollar amount of marketing investments to effectively drive traffic back to stores, beyond just changing the media mix and messaging.

Answer

CEO Tarun Lal stated that he does not believe the company needs to change the run rate of marketing investments at this time. The focus is on refining the existing media mix to make the spend more effective.

Brian Mullan of Piper Sandler Companies inquired about tests to extend game play time for consumers and asked about recent changes to the menu design and the response.

Answer

CFO Darin Harper highlighted the 'all you can play' option and tests of a simplified kiosk rate card to extend play time. Interim CEO Kevin Sheehan explained a two-phase menu strategy: first, a successful 'reskin' of the current menu, and second, a new menu featuring historical best-sellers, which is currently in testing for a fall rollout.

Brian Mullan asked for an assessment of the current competitive environment and whether the growth of competitors has been a significant factor in recent top-line struggles, or if the issues are primarily related to internal execution.

Answer

Interim CEO Kevin Sheehan asserted that the recent struggles were "mostly our own execution" rather than a result of competitive pressures. He expressed confidence that if the company executes its strategy correctly, it will not need to be overly concerned about competition. He then highlighted internal opportunities to drive revenue, such as focusing on underutilized dayparts like lunch and late-night happy hour.

Brian Mullan of Piper Sandler asked about the sales mix evolution of the core menu items (now 'Five to Try') and whether other platforms like steaks and salads would be addressed in fiscal 2026.

Answer

CEO Kevin Hochman confirmed the 'Five to Try' platform, which includes the Triple Dipper, continues to grow its sales mix. He outlined the fiscal 2026 food innovation plan, which focuses on a full year of upgraded Ribs, a new Queso platform, a major chicken sandwich relaunch, and base ingredient upgrades. Major steak and salad platform upgrades are planned for fiscal 2027.

Brian Mullan of Piper Sandler Companies asked if, separate from promotions, anything needs to be done to address the pricing of Wendy's everyday core menu, referencing a competitor's view that value perception comes from the menu board.

Answer

Interim CEO & CFO Ken Cook responded that core menu pricing is something the company will evaluate more precisely with its new data analytics capabilities. He emphasized that value is a combination of price, food quality, and customer experience, and reiterated the plan to re-emphasize Wendy's superior quality story as a key part of its value proposition.

Brian Mullan asked about the breakfast daypart, inquiring where the next phase of growth will come from, particularly regarding innovation and the role of the beverage offering.

Answer

Kirk Tanner, President and CEO, affirmed that breakfast remains a top priority with significant upside potential. He announced that a key innovation is coming to the beverage platform this summer with a new lineup of 'exceptional' cold brew coffees. Additionally, he noted that the '100 days of summer' program will feature value offerings on morning beverages to help drive traffic to the daypart, with a longer-term innovation pipeline also in place.

Brian Mullan of Piper Sandler asked for an assessment of the breakfast daypart, including key learnings, the long-term strategy, and whether it will require sustained corporate investment.

Answer

CEO Kirk Tanner confirmed that breakfast remains a high priority due to its significant growth potential. He reported that breakfast sales grew 6% in 2024, outpacing the category. The strategy moving forward involves continued investment in awareness with an outsized advertising share, product innovation planned for later in the year, and a focus on executional excellence. Tanner stated that breakfast will continue to be a tailwind for top-line growth.

Brian Mullan of Piper Sandler Companies inquired about the beverage component of the breakfast offering, asking if management is satisfied with the current platform and if it represents an area for future innovation.

Answer

CEO Kirk Tanner confirmed that beverages are a significant opportunity for Wendy's, both at breakfast and throughout the day. He emphasized that it is a profit-driving category and that the company intends to innovate across its entire beverage portfolio.

Brian Mullan of Piper Sandler Companies asked about the performance of the Monday LTOs and the potential for menu innovation in categories like beverages, desserts, or handhelds, questioning if testing could occur alongside the 'Project One Best Way' operational focus.

Answer

Co-Founder, CEO & Director Jonathan Neman described the LTOs as very successful in driving frequency through a combination of price and newness. He affirmed that menu innovation will continue under a more rigorous stage-gate process to ensure operational feasibility. He noted a house-made beverage test is already live and performing well in three markets, with plans for a broader rollout, demonstrating that disciplined innovation can proceed alongside operational improvements.

Brian Mullan from Piper Sandler asked for the key drivers behind the strong and sustained growth of the third-party marketplace sales channel, which has outpaced other channels for several quarters.

Answer

CEO Jonathan Neman attributed the strength in the marketplace channel to three factors: the product travels well, making it suitable for delivery; optimized relationships and marketing on the platforms; and the previous lack of a compelling native loyalty program, which gave customers less reason to order directly. He noted the new SG Rewards program should help shift some volume to their own digital channels over time.

Brian Mullan of Piper Sandler asked about progress in reducing the core store build-out cost for the class of '25 and '26, and whether the planned menu innovation necessitates operational simplification.

Answer

CEO Jonathan Neman confirmed a strong focus on reducing development costs, with a target of $1.4 million to $1.5 million for the core build-out and expectations for further improvements in 2026. He affirmed that menu innovation is paired with simplification efforts, stating they are constantly looking to streamline operations through upstreaming prep, implementing new tools, and optimizing recipes to manage complexity in the restaurants.

Brian Mullan asked about the manufacturing cost for Infinite Kitchen (IK) units in 2025 and the timeline for cost reductions. He also sought clarification on whether the Penn Plaza retrofit has lifted sales or if benefits have been isolated to margin.

Answer

CEO Jonathan Neman confirmed the incremental IK cost of $450k-$550k and expects savings over time with scale and manufacturing maturity, noting a focus on reducing total build-out costs. CFO Mitch Reback clarified that the Penn Plaza store has seen sales growth, which has accelerated over the months since the retrofit.

Brian Mullan from Piper Sandler Companies requested background on the 85-unit refranchising deal and asked about the broader strategy for future transactions, particularly regarding development agreements.

Answer

President & CEO Todd Penegor confirmed that refranchising is a core strategy and future deals will include development and reimaging commitments. EVP & CFO Ravi Thanawala specified the transaction is in the Mid-Atlantic with a well-capitalized existing franchisee (not the current JV partner) who has a strong transaction-driving mindset, aiming to accelerate market share gains.

Brian Mullan of Piper Sandler inquired about the company's plans for remodeling stores, particularly for the company-owned asset base, and efforts to encourage franchisees to pursue remodels to boost the carryout business.

Answer

President and CEO Todd Penegor stated that the company is in the 'early innings' of developing the business case for store 'reimaging,' with tests underway in the Orlando market. He noted that a significant rollout is not expected until 2026-2027 as they refine the economics for franchisees. An executive, likely CFO Ravi Thanawala, added that conviction around the carryout opportunity is growing, with order growth seen in Q1 and quarter-to-date in Q2, viewing it as an incremental sales layer.

Brian Mullan from Piper Sandler asked for an update on operational simplification efforts, specifically regarding the removal of 'rhythm breakers' from the menu and the timeline for addressing oven-related issues.

Answer

President and CEO Todd Penegor confirmed the company is moving with speed, having already removed several low-volume SKUs and tested removing items like Papadias during peak periods like Valentine's Day. He stated the company is running hard to address oven temperature and gas pressure issues this year to improve pizza quality and enable future innovation, setting up for success into next year.

Brian Mullan asked whether the current 15% company-owned store mix is optimal long-term and if refranchising with development agreements could be a future strategy.

Answer

President and CEO Todd Penegor confirmed they are actively evaluating the optimal ownership mix, stating the goal is to partner with growth-minded operators. He noted that while owning some stores is crucial for being a brand steward, the right level is likely 'something less than we have today.' He indicated that refranchising is a tool to stimulate system growth.

Brian Mullan of Piper Sandler Companies asked for an evaluation of the food test against its key goals, inquiring which aspects (e.g., broista satisfaction, throughput) have been seamless and which, if any, have been more challenging.

Answer

CEO Christine Barone reported that they are pleased with performance across all metrics. She noted that throughput is strong, with food execution fitting within the beverage service time. Broista satisfaction is high and has grown with systemized training, and customer satisfaction with the simple, eight-item assortment is also high. Crucially, she highlighted that they are seeing both a ticket and a transaction lift, validating the strategy to capture customers who previously went elsewhere for food.

Brian Mullan from Piper Sandler asked about the IHOP 'House Faves' value platform, questioning its impact on franchisee profitability and the rationale for expanding it from five to seven days a week. He also followed up on progress made in reducing operational complexity at IHOP.

Answer

Lawrence Kim, President of IHOP, explained that the decision to expand 'House Faves' to seven days was driven by successful in-market tests that produced positive traffic and sales, earning franchisee support. Regarding operational complexity, Kim highlighted key wins, including leveraging server tablets (now in over 96% of restaurants) and reducing the number of LTOs by more than half. These changes have improved order accuracy and sped up table turns by over four minutes year-to-date.

Brian Mullan asked for impactful examples of IHOP's operational simplification initiatives and inquired about franchisee receptivity to these changes under new leadership.

Answer

IHOP President Lawrence Kim provided examples such as optimizing server tablets to improve table turns by two minutes and simplifying food prep procedures. He also mentioned using short-form videos for more effective training. Kim described franchisee receptivity as 'fantastic,' emphasizing that a franchisee task force was engaged early in the process to ensure the initiatives were practical and well-received.

Brian Mullan from Piper Sandler asked new IHOP President Lawrence Kim what attracted him to the role, especially considering the challenging traffic trends within the family dining segment.

Answer

IHOP President Lawrence Kim stated he saw 'amazing potential' in the iconic brand, citing the passion in food preparation and deep consumer love for IHOP. He shared an anecdote of a highly loyal guest as an example of the brand's strength, expressing confidence that the negative transaction trends are reversible and that significant growth opportunities exist.

Brian Mullan from Piper Sandler Companies inquired about the impact of Outback's menu reduction on guest and employee experience, and also asked about the drivers of Carrabba's strong same-store sales performance.

Answer

CEO Mike Spanos stated that the Outback menu reduction simplified operations for employees and improved execution consistency for guests, with plans for further reductions. Regarding Carrabba's, he credited its success to strong daypart conversion strategies, including experiential wine dinners, catering growth driven by new products, and robust off-premise sales.

Brian Mullan asked for feedback from guests and employees on the recent 10% menu reduction at Outback and the criteria used for item removal. He also questioned when marketing might play a more significant role in the brand's turnaround strategy.

Answer

CEO Mike Spanos explained that menu items are being removed based on low satisfaction scores, high operational complexity, and inconsistent execution, with feedback gathered from both guests via Ziosk and employees. Regarding marketing, he stated that while brand positioning is a key part of the strategic plan, the primary marketing tool will be the tangible improvements in food quality, value, and the guest experience.

Brian Mullan of Piper Sandler inquired about the plan to reach the long-term G&A target of 5% of sales and asked if further dividend reductions were being considered to fund other capital priorities.

Answer

CEO Mike Spanos acknowledged that 2025 G&A would be above the 5% goal, likely in the 5.5%-5.8% range, and stated the path to the target involves both driving profitable sales and finding productivity. Regarding the dividend, he affirmed the current capital allocation priorities are reinvesting in the business, reducing debt, and then returning cash to shareholders, positioning the dividend as a reliable method for the latter.

Brian Mullan questioned the company's dividend policy, noting the high yield might suggest the market isn't giving credit for it, and asked if more strategic domestic store closures could be expected given the tough industry trends.

Answer

CEO Mike Spanos suggested the high dividend yield is a function of an undervalued stock price, which he is confident will improve over time. He confirmed the company's commitment to the dividend, which was just re-approved, but noted that detailed capital allocation plans will be shared after the strategic review. Regarding closures, Spanos stated the focus is first on improving operations within the four walls, and any decisions on remodels, relocations, or closures will be part of a disciplined process during long-range planning.

Brian Mullan of Piper Sandler Companies inquired about the drivers behind Benihana's positive same-store sales, the key learnings from the successful San Mateo restaurant opening, and the strategy for managing the STK brand's traffic versus average check in the current consumer environment.

Answer

President & CEO Emanuel Hilario explained that Benihana's Q3 outlook is strong due to proactive HVAC improvements, avoiding last year's post-acquisition issues. He detailed that the new San Mateo prototype's success stems from design changes like removing the sushi bar for more tables, a brighter aesthetic, and a dedicated takeout station. For STK, Hilario confirmed the focus remains on driving traffic through value offerings like happy hour, while using a barbell menu strategy to also promote premium items.

Brian Mullan of Piper Sandler Companies asked for an update on the Chicago breakfast test's incrementality and inquired about the learnings from the limited menu strategy used in Houston.

Answer

CEO Michael Osanloo reported that the breakfast test is performing well, appearing to be incremental without cannibalizing core business, with a decision on its future to be made by year-end. Regarding the Houston menu, he noted that while some simplifications were successful, removing items like beer was a mistake as it eliminated a key guest occasion, and it has since been reinstated.

Brian Mullan inquired about how breakfast awareness is being communicated during the current test and whether the limited menu used in Houston might be adopted for future openings.

Answer

CEO Michael Osanloo explained that the breakfast test is in 'stealth mode,' with marketing limited to in-store materials to prioritize the operational test. He confirmed a wider rollout would require a dedicated marketing push. Regarding the limited menu, he noted positive impacts on the P&L and operations and stated the company is seriously considering using a similar leaner menu for future new restaurants.

Brian Mullan requested an update on the development of drive-thru-only formats and asked about the strategic rationale for choosing an 'app-less' loyalty program.

Answer

CEO Michael Osanloo stated that the drive-thru-only concept is being fine-tuned for thoughtful growth in dense markets and that the company is also exploring in-line and airport locations. Regarding loyalty, he explained the app-less approach, which integrates with a user's digital wallet, is designed to avoid 'app fatigue' and enable more convenient, one-to-one marketing and customer relationship management.

Brian Mullan of Piper Sandler inquired about the performance of the initial Houston restaurant and what learnings from the Dallas expansion are being applied to the new market.

Answer

CEO Michael Osanloo reported that the first Houston location is performing 'exceptionally well.' A key learning from Dallas is to open subsequent locations in closer succession to better manage initial volume spikes and build market momentum. He also noted that Houston is serving as a test market for a slightly rationalized menu to reduce kitchen complexity.

Brian Mullan of Piper Sandler Companies asked if consumers are noticing and appreciating in-restaurant value enhancements like the improved Trifecta and 'surprise and delight' initiatives. He also inquired about the drivers of sales mix during the quarter.

Answer

President & CEO Chris Tomasso stated that he believes consumers are absolutely noticing these efforts, especially as they seek hospitality, quality, and value. He emphasized that these actions, combined with conservative pricing and increased portion sizes, are an opportunity for First Watch to stand out. He also clarified that sales mix was slightly positive for the quarter, with any PPA impact coming from the reduction of the third-party surcharge.

Brian Mullan of Piper Sandler asked for an update on the testing of an expanded beverage line and inquired about the number of franchise stores remaining that are subject to purchase rights.

Answer

Chief Brand Officer Matt Eisenacher reported that the company is in the final stages of moving the expanded beverage test into the market, with the goal of driving incremental beverage attachment. CFO Mel Hope stated that after the current acquisitions, 67 franchise locations will remain, with 8 of them being subject to purchase rights.

Brian Mullan of Piper Sandler Companies inquired about the company's strategy for its off-premise business and whether there was any consideration of offering the Pizookie Meal Deal on weekends.

Answer

CEO & President Lyle Tick outlined three key opportunities for off-premise: reducing friction in the ordering process, improving order accuracy, and optimizing the online menu for the off-premise occasion. Regarding the Pizookie Meal Deal, Tick explained that it is strategically used to drive traffic during weekdays when there is more capacity and is not needed on weekends when demand is already high. SVP Daniel Duran added that the deal has a halo effect, driving repeat visits on weekends.

Brian Mullan of Piper Sandler requested a history of the pizza platform's importance to the brand, its potential impact upon renovation, and the planned communication strategy for its relaunch.

Answer

President Lyle Tick described pizza as a core brand association and a top traffic driver, especially in California, that serves a complementary group occasion. CFO Tom Houdek noted that pizza mix is currently in the mid-to-high single digits but is nearly double that in Southern California, indicating a significant opportunity. Tick confirmed that the relaunch will be supported by external marketing to tell a reenergizing story, while Interim CEO Brad Richmond highlighted its potential to expand the occasions for which the brand is relevant.

Brian Mullan of Piper Sandler asked about the scope and timing of menu simplification and sought an assessment of current service levels, including whether labor hours might be reallocated.

Answer

President Lyle Tick confirmed plans to streamline the menu by removing underperforming items, likely starting in H2 2025, to make room for innovation. He noted that while service can be a differentiator, consistency is an issue. The focus is on simplification and training rather than a net increase in labor, with data suggesting opportunities to reallocate hours from shoulder periods to peak times. Interim CEO Carl Richmond emphasized this is about optimizing, not cutting, labor.

Brian Mullan asked about the renewed focus on menu simplification, questioning if prior efforts were insufficient. He also inquired about the company's current brand awareness levels and the strategy to improve them.

Answer

President Lyle Tick explained that menu simplification involves both short-term operational tweaks and a longer-term, data-driven menu architecture review. On brand awareness, Tick acknowledged that BJ's trails competitors, especially outside California, but sees significant opportunity. He cited the success of the Pizookie Meal Deal with limited media spend as evidence of strong brand affinity and headroom for growth, noting that media markets significantly outperformed non-media markets.

Brian Mullan of Piper Sandler inquired about the key priorities for the Del Taco brand while it undergoes a review of strategic alternatives and asked for CEO Lance Tucker's fresh perspective on opportunities for the brand.

Answer

CEO Lance Tucker outlined three key priorities for Del Taco: maintaining strong operational execution, revamping the marketing strategy for a new tone, and introducing exciting menu innovations that may draw from the brand's successful past. He emphasized the focus on driving marketing, innovation, and operations.

Brian Mullan asked about the Del Taco restaurant-level margin guidance for the year, the path to normalized margins, and management's confidence in improvement strategies amid headwinds like AB1228.

Answer

CEO Darin Harris acknowledged that while operational fundamentals like inventory management have improved food costs, significant labor inflation from AB1228 and rising utility costs are pressuring margins. He emphasized that driving top-line sales is the key to margin improvement and noted that a new menu rollout, which performed well in tests, is expected to boost both top and bottom-line performance.

Brian Mullan from Piper Sandler inquired about the menu pricing assumptions embedded in the long-term margin expansion target and whether there is flexibility to take less pricing if traffic remains weak.

Answer

CFO Katherine Fogertey responded that the confidence in margin expansion is primarily driven by operational improvements and supply chain opportunities, not pricing assumptions. She noted that Q1 results demonstrated their ability to expand margins even with pressured traffic, and this focus on controllables is expected to create significant leverage when macro conditions improve.

Brian Mullan of Piper Sandler asked about the roadmap for a loyalty program and how the company plans to balance standard loyalty features with its unique 'enlightened hospitality' brand ethos.

Answer

CEO Rob Lynch explained that the focus is on moving beyond simple points-based discounting. The strategy is to use guest data for 'surgical incentives' and to enhance the in-Shack experience, such as prompting a guest at a kiosk about a new LTO they might enjoy based on past purchases. Lynch stated the goal is to drive self-selection trade-up and improve the guest experience, avoiding a pure discounting program which they feel is unnecessary for the brand.

Brian Mullan of Piper Sandler asked for details on the 2025 development pipeline, specifically the number of planned drive-thru units and how new learnings are being incorporated.

Answer

CEO Rob Lynch confirmed that drive-thrus are a significant part of the future strategy but did not disclose a specific mix for 2025. He stated the top operational priority is improving process flows and speed of service, which is critical for drive-thru success. Future formats will incorporate optimized kitchen flows and equipment to enhance productivity across different real estate types.

Brian Mullan asked about the P&L impact of outsourcing U.S. logistics and the scope of the international refranchising strategy, including which markets are being considered.

Answer

CFO Jeremiah Ashukian stated that while there will be transition costs, the goal for logistics outsourcing is to be EBIT-neutral for the year, with costs contemplated in the guide. CEO Josh Charlesworth explained that the company is evaluating refranchising all of its company-owned international markets (U.K./Ireland, Australia/New Zealand, Japan, Mexico, Canada) to find strong local partners and focus corporate resources on U.S. expansion.

Brian Mullan asked about the targeted store volumes in smaller DMAs and requested a clarification of the traffic and price/mix components of the quarter's comparable sales.

Answer

Hajime Uba, speaking through interpreter Benjamin Porten, explained that the company's primary focus for site selection, including in smaller DMAs, is on achieving target cash-on-cash returns rather than a specific average unit volume (AUV). Benjamin Porten then provided the Q1 comparable sales breakdown as -2.3% traffic and +4.1% price and mix.

Brian Mullan from Piper Sandler inquired about the potential for Domino's to launch a stuffed-crust pizza in the U.S. market. He asked about the operational factors that would need to be considered and whether management believes the product would be well-received by consumers.

Answer

CEO Russell Weiner acknowledged that stuffed crust is a large pizza sub-category where Domino's U.S. does not compete, despite offering it in many international markets. He explained that the decision not to launch it domestically has been based on maintaining operational excellence and quality given the significant store volumes. However, he stated that it is 'not off the table' but would require the right circumstances in the store to execute properly.

On behalf of Brian Mullan, Ally Arfstrom asked for an update on the potential remodels for the Keke's fleet in Florida, specifically regarding the timeline and cost per unit.

Answer

CEO Kelli Valade explained that it is too early to provide a definitive timeline or cost for the Keke's remodel program, as the first test location is only six weeks into its post-remodel period. She stated they need to test more units to optimize costs and scale the program effectively. CFO Robert Verostek added that since the brand has never had a remodel program, the potential for a significant sales lift is high.

Brian Mullan of Piper Sandler asked for an update on speed of service at Tim Hortons Canada, questioning if it was a benefit in Q1, where the brand is in its improvement journey, and its potential as a future traffic driver.

Answer

CEO Josh Kobza confirmed that speed of service at Tim Hortons Canada continued to improve, with drive-thru times down 8% year-over-year. He noted the new Flatbread Pizza launch might create a temporary headwind as teams adjust, but they expect to learn the process quickly and get back on track with improvements.

Brian Mullan of Piper Sandler asked for an update on Tim Hortons Canada's speed of service, its improvement in Q1, its historical context, and its potential as a future traffic driver.

Answer

CEO Josh Kobza confirmed that speed of service at Tim Hortons Canada continued to improve, with drive-thru times down 8% year-over-year. He noted a potential short-term slowdown due to the new Flatbread Pizza launch but expects a quick recovery, as seen in market tests, allowing the positive trend to continue.

Brian Mullan of Piper Sandler asked for an update on speed of service at Tim Hortons Canada, questioning if it was a positive contributor in Q1, how current times compare to historical bests, and its potential as a future traffic driver.

Answer

CEO Josh Kobza confirmed continued progress, citing an 8% year-over-year improvement in drive-thru speed. He noted that the new Flatbread Pizza launch might create a temporary slowdown, as seen in market tests, but expects the teams to adapt quickly and resume the positive trend.