Chris O'Cull

Chris O'Cull followed up on CAVA's media mix strategy, asking about the evaluation of paid advertising, the ROI on these investments, and the appetite to expand marketing efforts.

Answer

CFO Tricia Tolivar stated that CAVA continuously learns from media mix modeling to optimize investments and monitor ROAS. She noted no significant change in overall marketing spend but a focus on optimization, which contributed to a significant increase in brand awareness from 55% to 62% over the past year.

Chris O'Cull asked for an update on CAVA's media mix strategy, specifically regarding the increased focus on paid advertising, the ROI of these investments, and the company's appetite to expand these efforts.

Answer

CFO Tricia Tolivar stated that CAVA continuously evaluates and tweaks its marketing investments based on media mix modeling and ROAS. She highlighted a significant increase in brand awareness from 55% to 62% over the past year, attributing it to optimized media investments and new restaurant openings, while noting the brand's inherent appeal reduces the need for extensive media spend.

Chris O'Cull inquired if CAVA has assessed the value perception among non-CAVA users in more mature markets and what factors might be preventing them from visiting.

Answer

Brett Schulman, CEO, stated that CAVA's value perception is strong, corroborated by internal biannual brand health surveys and third-party analyst studies, often ranking CAVA near the top. He attributed this to the holistic value proposition, including the relevance of Mediterranean cuisine, quality ingredients, convenience, exceptional experience, and consistently underpricing inflation compared to peers.

Chris O'Cull inquired if CAVA has assessed the value perception among non-CAVA users in more mature markets, and what factors might be preventing them from visiting the restaurants.

Answer

CEO Brett Schulman affirmed that CAVA's value perception is strong, supported by biannual brand health surveys and external analyst reports. He described CAVA's value proposition as holistic, encompassing relevant cuisine, high-quality fresh ingredients, convenience, and the overall guest experience. He also highlighted that CAVA has consistently underpriced inflation and peers, taking less than 17% in price increases since 2019 compared to the industry's 34% aggregate average.

Chris O'Cull asked about the percentage of Wingstop restaurants consistently achieving 10-minute ticket times and the strategies to improve this, along with the reasons for slower progress in delivery time reductions compared to in-house speed improvements.

Answer

President and CEO Michael Skipworth reported that approximately 50% of restaurants achieve 10-minute ticket times on average, with a 10 percentage point improvement in 2026 due to operations scorecards and incentive programs. SVP and CFO Alex Kaleida attributed slower delivery time improvements to evolving algorithms and driver performance, noting a 15% year-over-year reduction in delivery times.

Chris O'Cull inquired about the percentage of Wingstop's system consistently achieving the 10-minute ticket time and the necessary initiatives or training to bring the remaining restaurants up to speed. He also asked why delivery times were not showing the same level of improvement as the back-of-house speed of service.

Answer

President and CEO Michael Skipworth reported that roughly 50% of restaurants are hitting the 10-minute average daily/weekly, emphasizing the focus on achieving this for every order. He detailed initiatives like operations scorecards and incorporating metrics into brand partner incentive programs, noting a 10 percentage point improvement since the start of 2026. SVP and CFO Alex Kaleida explained that while delivery times have reduced by 15% year-over-year, further optimization is needed with delivery partners on algorithms and driver performance.

Chris O'Cull asked about the new ad campaign, specifically if testing has been conducted to confirm its resonance with consumers, particularly new ones, and what gives Wingstop confidence in its success. He also inquired about the recently finalized agreement for India, seeking details on the selected partner, the agreement structure, and the rationale behind the choice.

Answer

President and CEO Michael Skipworth expressed strong encouragement from early feedback and testing of the new ad campaign, noting its effectiveness in showcasing moments, quality, and abundance, and educating new guests with a voiceover. Regarding India, he highlighted the opportunity for over 1,000 restaurants and confirmed the partner is a proven multinational operator with extensive experience in India, promising more details as plans finalize.

Chris O'Cull asked about the testing and consumer feedback for the new 'Wingstop is here' ad campaign, seeking to understand the basis for confidence in its success. He also inquired about the finalized agreement for Wingstop in India, specifically the chosen partner, agreement structure, and rationale for their selection.

Answer

President and CEO Michael Skipworth expressed strong encouragement from early feedback and testing of the new campaign, noting its effectiveness in showcasing diverse moments, quality, abundance, and educating new guests about Wingstop's brand. Regarding India, he expressed excitement for the 1,000+ restaurant opportunity, describing the partner as a proven multinational operator with extensive experience in the market, with more details to be shared as plans finalize.

Chris O'Cull asked about the rationale for launching a national ad fund in fiscal 2027, the potential efficiency of national advertising, and how quickly the system could grow. He also inquired about an estimate for the fund's contribution rate and the variance in new store sales ramps between high and low brand awareness markets.

Answer

Lori Flees, President and CEO, Valvoline, explained that a national ad fund drives significant efficiency with network growth and densification, with some company marketing spend already shifted to national funding. She deemed it premature to estimate the fund's size or specific contribution rate, referring to the FDD for initial details. For new store ramps, Lori Flees noted faster ramps in the first three years in high brand awareness markets, with marketing spend modulated accordingly, and strong mid-teen IRR returns factored into forecasts.

Chris O'Cull asked about the rationale for potentially launching a national ad fund in fiscal 2027, the efficiency of national advertising, and how quickly the system could grow. He also inquired about the variance in new store sales ramp between high and low brand awareness markets.

Answer

Lori Flees, President and CEO of Valvoline, explained that network growth and densification make a national fund more efficient, and they are proving its benefits to franchisees. She stated it's premature to give a specific contribution rate. Flees added that new store ramps are faster in high brand awareness markets, which is factored into their strong IRR forecasts.

Chris O'Cull asked about the specific next-level expertise Chipotle is seeking in its new Chief Marketing Officer (CMO) to drive the next phase of growth. He also inquired about the strategy for communicating with lapsed users, especially those who may not see first-party loyalty offers.

Answer

Scott Boatwright, CEO, stated that they are looking for a CMO to evolve key messaging, highlight differentiation, drive strong on-brand menu innovation, and support digital commerce strategies including loyalty, third-party aggregators, and white-label experiences. For lapsed users, he mentioned accelerating personalization using AI to identify them, create re-engagement journeys, and offer personalized deals based on past frequency and anticipated lifetime value.

Chris O'Cull asked about the specific next-level expertise Chipotle is seeking in its Chief Marketing Officer (CMO) search to drive the next phase of growth. He also inquired about the strategy for communicating with lapsed users who may not see first-party loyalty offers.

Answer

Scott Boatwright, Chief Executive Officer, stated they are looking for expertise to evolve key messaging, drive strong on-brand menu innovation, and support digital commerce strategies, including reimagining loyalty and optimizing third-party aggregator partnerships. For lapsed users, he explained they are leveraging AI models to identify them and create personalized journeys with targeted deals and offers based on past frequency and anticipated lifetime value.

Chris O'Cull inquired about Brinker's strategy to prevent the $10.99 price point from becoming a structural ceiling on Chili's pricing power, especially given the barbell strategy and significant traffic gains.

Answer

Kevin Hochman, CEO and President of Brinker International, explained the importance of the barbell strategy with good, better, best price tiers, ensuring innovation across various price points, such as the new three-tier chicken sandwich lineup. He emphasized maintaining the $10.99 sales mix constant to manage margins and noted that guests generally gravitate to specific price points rather than frequently trading up or down.

Chris O'Cull asked for clarification on the embedded comp cadence for the back half of the fiscal year. He also questioned the long-term risk of the $10.99 price point becoming a structural ceiling on pricing power, given the barbell strategy and massive traffic gains.

Answer

CFO Mika Ware stated that after January's storm and holiday flip impacts, the comp cadence is expected to be very steady, mid-single digit, with similar performance across quarters. CEO Kevin Hochman explained that the barbell strategy, with good, better, best price tiers and continuous innovation at higher price points (like ribs and margaritas), prevents the $10.99 mix from growing too much. He noted that guests tend to stick to their preferred price points, with '3 For Me' consumers visiting more often and higher-priced guests spending more per visit.

Chris O'Cull asked about Chili's strategy to leverage tokenized consumer data for enhanced engagement and growth, and the performance of their value promotions, specifically comparing the Triple Dipper advertising to the $10.99 value platform, and future innovation plans.

Answer

CEO Kevin Hochman explained that new capabilities allow tracking monthly cohorts to understand guest retention and the impact of investments and menu initiatives on frequency. He noted that Triple Dipper advertising brought in more new guests but the overall lift was not as great as the $10.99 value platform, leading them to return to value messaging. He also mentioned significant innovation planned for the $10.99 platform in Q3/Q4.

Chris O'Cull asked if Darden plans to implement the smaller portion approach, similar to Olive Garden's lighter portions menu, with any other brands. He also inquired about the company's research on GLP-1 usage and whether additional menu changes beyond smaller portions are needed to accommodate these consumers.

Answer

CEO Rick Cardenas confirmed another brand is testing smaller portions of existing menu items in a different way, and other brands already offer varying sizes. He stated Darden monitors GLP-1 usage, noting its impact more on drinking than eating, and while lighter portions are helpful, they are not solely for GLP-1 users. He highlighted Darden's protein-rich menus and Seasons 52 as well-suited for these consumers.

Chris O'Cull questioned the impact of increased competition from emerging beverage brands, particularly in markets with significant overlap, and how Starbucks is strategizing to address this new competitive landscape.

Answer

Brian Niccol, Chairman and CEO, Starbucks, stated that the company's approach is to be on its 'best offense,' focusing on the craft of its coffee, drinks, and food, alongside customer connection and experience. He emphasized Starbucks' scale in drive-thru, mobile order, digital, and cafe businesses, believing competition will drive the organization to continuously improve.

Chris O'Cull asked about the impact of increased competition from emerging beverage brands on Starbucks, particularly in markets with significant overlap, and how Starbucks views these new beverage concepts in its competitive landscape.

Answer

Brian Niccol, Chairman and CEO, stated that Starbucks' best offense is its focus on craft, connection, and customer experience. He highlighted Starbucks' existing scale across all access points (drive-thru, mobile, cafe) and its unique brand positioning. He views competition as a motivator to continuously improve, aiming to be better than the previous day.