Chris O'cull

Chris O'Cull sought to understand why the 2026 comp guide of 4%-5% is expected to slow from Q4 2025's nearly 6%, despite anticipated benefits from Black Card pricing, increased media impressions, and residual Classic Card pricing. He also asked about joint marketing plans for the Ro partnership and whether the Perks discount is a one-time or ongoing benefit aimed at retention.

Answer

CFO Jay Stasz explained that clubs enter the comp base after 13 months, and 2024 was a lower opening year (150 clubs), impacting 2026 comps. He noted that a large installed base makes moving the comp needle challenging, and higher attrition since the national rollout also factored in, expected to moderate after Q2. CEO Colleen Keating added that 2025's 181 openings were heavily back-end loaded (over 100 in Q4), delaying their comp benefit. The most pronounced impact of the Classic Card price lift has been experienced, and while the Black Card price lift is modeled, its timing after peak season reduces its immediate impact. Regarding the Ro partnership, Ms. Keating described it as mutually beneficial, providing Ro access to 20.8 million members and offering discounts to Planet Fitness members. Early results show high download and conversion rates, but it's too soon to detail future plans.

Chris O'Cull questioned why Planet Fitness's 2026 comp guide of 4%-5% is expected to slow compared to Q4 2025's nearly 6% growth, despite anticipated benefits from Black Card pricing and increased ad dollars. He also asked about the marketing strategy and retention goals for the Ro partnership.

Answer

CFO Jay Stasz explained the comp slowdown is partly due to 2024 being a lower club opening year, impacting 2026 comps, and the challenge of moving the needle on a large installed base. CEO Colleen Keating added that back-end loaded 2025 openings will primarily benefit 2027 comps, and the most pronounced impact of the Classic Card price lift has already been experienced. Regarding the Ro partnership, Keating described it as mutually beneficial, offering discounts to members and positioning Planet Fitness to support GLP-1 users with strength training. She noted high click-through and conversion rates in the early days of the partnership.

Chris O'cull asked for an update on efforts to reduce new club investment costs and whether adding high-value services like spray tanning could justify creating a new, higher-priced membership tier.

Answer

CEO Colleen Keating detailed cost-saving measures such as smaller lobbies and optimized equipment packages, while stressing that driving top-line revenue is the most critical factor for franchisee economics. She stated that the company is not currently considering new pricing tiers but is focused on the timing of a Black Card price increase.

Chris O'Cull asked about the instrumental role of broad-based marketing in improving engagement with non-rewards customers. He also asked Cathy Smith to clarify how much of the 420 basis points margin contraction in North America from marketing step-up should be considered a permanent rebasing of G&A/OpEx versus temporary turnaround costs.

Answer

Brian Niccol, Chairman and CEO, attributed the marketing efforts to increasing brand affinity, trust, and value scores, leading to increased visitation across all age cohorts. Cathy Smith, Executive Vice President and Chief Financial Officer, explained that marketing investment is an ongoing expense, reallocated from less effective discounts, and is included in the company's guidance, representing a permanent investment in the brand.

Chris O'Cull asked about the instrumental role of broad-based marketing in turning the tide for non-Rewards customers and whether the marketing step-up should be modeled as a permanent rebasing of G&A OpEx or temporary turnaround costs.

Answer

Brian Niccol, Chairman and CEO, stated that marketing has effectively re-engaged all customers, leading to improvements in brand affinity, trust, and value scores. He noted increased visitation across every age cohort, demonstrating the brand's relevance and leadership. Catherine Park, CFO, clarified that marketing investment is an ongoing expense, funded by reallocating less effective discounts, and should be considered a permanent rebasing within guidance.

Chris O'Cull of Stifel Institutional asked what Starbucks would gain from a strategic partner in China, given that capital is not the primary issue, questioning if the goal is operational or marketing expertise.

Answer

Chairman & CEO Brian Niccol clarified that the search for a partner is not about capital. The primary goal is to find a partner who shares Starbucks' mission and values and can provide local expertise to help the company operate more effectively. He believes this is key to ensuring the long-term health and growth of the brand in China, which he sees as having potential for thousands of additional stores.

Chris O’Cull from Stifel Institutional asked for the strategic rationale behind seeking a partner in China, questioning what Starbucks would gain beyond capital.

Answer

CEO Brian Niccol clarified that the search for a partner is not about capital. The primary goal is to find a partner who shares Starbucks' mission and values and can provide local expertise to help the company operate more effectively. He believes a local partner is crucial for ensuring the brand's long-term health and capturing the significant growth opportunity of opening thousands more stores in China.

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

Answer

CEO Rick Cardenas confirmed that another brand is testing smaller portions of existing menu items, though in a different manner without a separate menu section, and other brands already offer varying portion sizes. He stated that Darden continues to monitor GLP-1 usage and its impact, noting that the lighter portions menu helps but is not solely for GLP-1 users. He observed that GLP-1s impact drinking more than eating, and while some mix changes in appetizers and desserts might be related, Darden's broad menus, including protein-rich options and brands like Seasons 52, cater well to these consumers.

Chris O'Cull asked about Darden's perspective on the ramping conversation around eliminating the tip wage, the perceived risk of its elimination, and any potential impact on the business.

Answer

Rick Cardenas, President and CEO, emphasized the diversity of business models in the industry and Darden's belief that its full-service model is best for guests and team members. He expressed confidence that Darden would be able to adapt and navigate any changes if the tip wage were to be eliminated.

Chris O'cull of Stifel Financial Corp asked if the updated long-term framework, particularly the new margin expansion target, indicates a revised perspective on the long-term restaurant margin potential or the expected rate of business reinvestment.

Answer

CFO Raj Vennam confirmed that the updated framework reflects a more holistic view by using earnings after tax (EAT) margin and signals a greater emphasis on driving sales growth. He explained that this may involve reinvestments that result in restaurant-level EBITDA margins not growing at the same rate as targeted in the past, prioritizing long-term growth.

Chris O'Cull asked if Chipotle has observed any concerning trends in customer satisfaction metrics for the general chain (excluding HEAP locations), particularly regarding speed of service or food quality.

Answer

Scott Boatwright (CEO) stated there were no divergent trends but acknowledged struggles with digital order accuracy. He explained that a shift in the annual incentive plan to focus on 'on-time' rather than 'accuracy' led to a decline in accuracy. Chipotle is redesigning the incentive plan to prioritize accuracy, along with on-time delivery, high quality, and abundance, as accuracy is deemed more critical for the consumer experience.

Chris O'Cull asked if Chipotle had observed any concerning trends in customer satisfaction metrics for the rest of the chain, specifically regarding speed of service or food quality, outside of the locations equipped with the new High-Efficiency Equipment Package (HEAP).

Answer

CEO Scott Boatwright stated that nothing stands out as divergent for the rest of the chain. However, he acknowledged struggles with digital order accuracy, attributing it to a shift in the annual incentive plan that previously prioritized "on-time" over "accuracy." He explained that the incentive plan is being redesigned to target accuracy, which is more critical for consumer needs in digital orders (accurate, on time, high quality, abundant).

Chris O'cull of Stifel Financial Corp. asked about the planned LTO cadence for the upcoming year and the strategic mix between launching new products versus reintroducing proven favorites.

Answer

CEO Scott Boatwright stated that returning LTOs consistently perform better with each subsequent launch, giving the company a strong pantry of proven items. He confirmed that in addition to these favorites, the innovation team is actively developing new center-of-the-plate items, sides, and dips to create a full and compelling calendar for 2026 and beyond.

Chris O'Cull asked about Chili's strategy to leverage tokenized consumer data for enhanced engagement and growth, and the performance of recent value promotions, including the Triple Dipper, against expectations, inquiring about second-half innovation for the value platform.

Answer

Kevin Hochman, President and CEO of Brinker International, explained that new capabilities allow tracking monthly cohorts to understand guest retention and the impact of menu investments on frequency. He noted the Triple Dipper advertising brought in more new guests but had a lower overall lift than the $10.99 value platform, leading to a return to value messaging. He also mentioned significant new innovation under the $10.99 platform for Q3/Q4.

Chris O’Cull from Stifel asked if the company plans to update its three-year growth targets and inquired about future marketing investment strategies and the innovation pipeline for its value offerings.

Answer

CEO Kevin Hochman and CFO Mika Ware stated that while the current long-term algorithm of 3-5% revenue growth and double-digit EPS growth remains relevant, the potential for accelerated new unit development is a key difference from three years ago. They confirmed marketing spend will remain around 3% of revenue, with continued focus on value news, including new $6 margaritas and a new message for the $10.99 platform in the back half of the year.

Chris O’Cull of Stifel Institutional inquired about the same-store sales trend in the third quarter to date and asked if CAVA has re-evaluated its marketing and media mix given its increased brand awareness.

Answer

CFO Tricia Tolivar confirmed that the two-year same-store sales stack continued to accelerate into Q3. CEO Brett Schulman added that while marketing spend is low, they have tested media mix models with positive results and can lean into it if needed, while maintaining a long-term strategic focus.

Patrick, on behalf of Chris O'Cull from Stifel, requested more detail on the new labor deployment model, including opportunities for further efficiency and how savings are being reinvested into the restaurants.

Answer

CEO Brett Schulman explained that the new labor model has improved productivity across dayparts. The primary goal is not cost cutting but redistributing hours to create less stressful shifts, enable GMs to coach, and allow team members more time for guest interaction. He noted the opportunity lies in driving better adherence to the model, which will lead to further productivity gains and an enhanced human connection in the restaurants.

Chris O'cull questioned why the company isn't opening Club Pilates units more aggressively, asked for details on the brand's first-ever marketing campaign, and requested a bridge for the revised system sales guidance.

Answer

President, North America John Kawaja responded that they plan to accelerate Club Pilates growth, citing strong unit economics and a recent 60-pack license sale. He noted the marketing campaign spend would be over $20 million in H2 2025. CFO John Meloun clarified that $120 million of the guidance reduction was due to divestitures, with the rest from a softer core brand outlook.

Chris O’Cull of Stifel inquired about the strategy for lapping the significant incremental marketing investment in the coming year and asked for more details on the supply chain optimization plan.

Answer

President & CEO Todd Penegor explained that learnings from this year's marketing tests will lead to more effective and efficient spending in 2026. On supply chain, he detailed a plan to achieve over $50 million in savings by 2028 by optimizing fixed cost utilization, improving transportation logistics, and leveraging procurement savings from contract renewals, all without sacrificing product quality.

Chris O'cull of Stifel Financial Corp. noted seeing fewer email offers and asked if marketing was being pulled back due to strong sales. He also requested more detail on the magnitude and timeframe of the improvements in brand awareness.

Answer

CEO Christine Barone clarified that the change in offers is not a pullback but a shift towards more sophisticated customer segmentation. Instead of mass offers, the company is now sending targeted promotions based on individual customer patterns. Regarding the awareness study, she stated it's conducted annually and has shown "quite material improvements," especially in new markets, but did not disclose specific figures.

Chris O'cull of Stifel asked if management was surprised by the potential need to divest some Breeze stores for FTC approval and if this alters their future M&A strategy. He also questioned the risk of converting the Breeze brand to Valvoline.

Answer

CEO Lori Flees acknowledged initial surprise but now views the FTC review as a normal process that does not change their long-term growth strategy. She described the discussions as constructive. On brand conversion, she stated that while they are currently focused on closing the deal, they recognize the Breeze brand's loyalty and will leverage Valvoline's experience in thoughtfully integrating acquired chains to retain both employees and customers.

Chris O'cull of Stifel Financial Corp. asked for details on actions being taken to improve the performance of the 2024 new store class and questioned the rationale for continuing new unit growth that requires increased borrowing.

Answer

CFO Michelle Hook stated that marketing campaigns and new field marketers are being deployed to support the 2024 store class, which has seen a slower ramp-up in Texas. CEO Michael Osanloo defended the development pipeline, emphasizing a focus on strong cash-on-cash returns driven by significantly lower build costs for new prototypes, which are down over $1 million per unit compared to 2024.

Chris O'Cull of Stifel asked about the key findings from the CEO's listening tour regarding the Take 5 business and inquired about the financial health of franchisees in the Meineke, Maaco, and Carstar brands.

Answer

President & CEO Danny Rivera explained the tour was more about solidifying his understanding as the new CEO rather than uncovering new findings, reaffirming Take 5's strength. EVP & CFO Mike Diamond and Rivera both commented on franchisee health, stating that despite some top-line pressures, the overall system is healthy, and the brands are mature and resilient, having weathered many economic cycles.

Chris O’Cull of Stifel asked for an update on the performance of new car wash locations relative to underwriting targets and their ramp-up speed. He also questioned if M&A is becoming a more compelling opportunity given rationalizing valuations and the potential scale of acquisitions Mister Car Wash could manage.

Answer

CFO Jedidiah Gold acknowledged that some new stores are taking slightly longer to ramp due to denser competition and strategic site placement, but the company is refining its site selection process. CEO John Lai added that M&A is a key opportunity, with multiples becoming more palatable. He emphasized a focus on quality assets in existing or adjacent markets to densify their footprint, noting the company has the capacity for strategic acquisitions.

Chris O’Cull of Stifel asked what new marketing opportunities are opening up as the national ad fund grows and if there are inflection points for disproportionate brand visibility. He also questioned whether the improved delivery quote times from the Smart Kitchen make it more attractive to increase marketing spend on third-party delivery platforms.

Answer

President and CEO Michael Skipworth explained that the growing ad fund allows them to expand into new channels with high fan overlap but low brand awareness, such as WWE and UFC, while also deepening their presence in existing partnerships like the NFL. Regarding delivery, he noted the primary benefit is now being included in the 'under 30 minutes' consideration set for the first time, which drives organic growth. While they will continue to invest, they also benefit from co-investment from delivery partners who value Wingstop's high check size.

Asked if any single quarter's comp could fall outside the full-year guidance range and questioned the audience overlap and incrementality of new marketing partnerships like UFC and WWE.

Answer

The company declined to provide quarterly guidance but reiterated confidence in the full-year range. The new marketing partnerships (UFC/WWE) have audiences that align well with Wingstop's core guest, offering significant opportunity for brand awareness growth with limited overlap to existing channels like the NBA and NFL.

Chris O'cull of Stifel Financial Corp inquired about the drivers of procurement productivity in the supply chain and asked if the company is approaching a point where it will begin lapping these gains, potentially slowing profit growth in the division.

Answer

CFO Sandeep Reddy credited the supply chain team for delivering significant procurement productivity over the last few years. He noted that while these gains are now part of the cost base and won't reverse, the pace of incremental productivity is expected to taper off in the future after several years of strong performance.