David Palmer

David Palmer inquired about expectations for all-channel scanner data consumption trends through the rest of Q4 and into Q2, considering increased competition and the contribution of innovation.

Answer

Darcy Davenport, President and CEO, BellRing Brands, projected slightly negative to low single-digit consumption through November due to tough club comps and non-recurring promotions. She expects acceleration in late December (low double digits) and continued momentum into Q1 2026, driven by easing club dynamics, a new mass partnership, advertising, and innovation. Davenport described the guidance as prudent and conservative regarding competition.

David Palmer asked about the expected consumption trends in all-channel scanner data through the rest of the fourth quarter and into Q2, how increased competition is factored into plans, and the contribution of innovation to growth.

Answer

President and CEO Darcy Davenport expects slightly negative consumption in November due to tough club comparisons, with acceleration starting in late December, driven by new mass partnerships, advertising, and innovation. She emphasized that the guidance is prudent and conservative regarding competition.

David Palmer from Evercore ISI followed up on the fiscal 2026 outlook, asking if the company's long-term target of 10-12% growth is a reasonable starting point and if they anticipate gaining market share.

Answer

CEO Darcy Horn Davenport reiterated that the company feels positive about its long-term algorithm and the category's momentum. She highlighted BellRing's influential role as a category captain and the impact of innovation but stated that they require a few more months to finalize a specific plan for fiscal 2026.

David Palmer from Evercore ISI inquired about the key differences in BellRing's growth drivers for fiscal 2025 compared to the prior year, and sought an outlook on the Dymatize brand's performance, particularly the sustainability of its international growth.

Answer

President and CEO Darcy Davenport explained that fiscal 2025 growth is fundamentally different due to ample capacity, allowing for a focus on demand-driving activities. Key drivers include the first national advertising campaign since 2021, expanded distribution and innovation, and broader promotional activity in the food channel. For Dymatize, Davenport stated that strong international performance is expected to continue throughout the year, driving the global brand's single-digit growth, while the U.S. business remains pressured by commodity price acceleration.

David Palmer inquired about the company's strategy for the convenience channel and how an increased advertising spend in the 4% range would position its share of voice within the category.

Answer

President and CEO Darcy Davenport explained that the convenience channel is not an immediate focus, as larger opportunities exist in expanding distribution in food and mass channels. She clarified that the single-serve bottle format is a key opportunity within those existing channels. Regarding advertising, she stated that the increased spend will ensure Premier Protein has a competitive share of voice during key buying seasons.

David Palmer asked about the philosophical approach to pricing, specifically how the potential impact of pricing (or underpricing inflation) on managing partner pay is weighed, especially given anticipated beef inflation in 2026. He also asked about the deceleration of Bubba's 33 same-store sales compared to Texas Roadhouse's acceleration.

Answer

Jerry Morgan, CEO, explained that managing partner compensation is tied to sales and profit growth, emphasizing the long-term partnership philosophy despite business ups and downs. He expressed continued excitement and confidence in Bubba's 33, noting ongoing leadership and menu engineering efforts despite competitive pressures. Michael Bailen, VP of Investor Relations, was congratulated on his promotion.

David Palmer asked about the philosophical considerations behind pricing decisions and their impact on managing partner compensation, and the reasons for the deceleration in Bubba's 33 same-store sales compared to Texas Roadhouse.

Answer

Jerry Morgan, CEO, explained that managing partner compensation is built on a partnership model, where pay grows with sales and profits, fostering a long-term view. He expressed continued confidence in Bubba's 33, noting ongoing work on leadership and menu engineering despite competitive dynamics in its segment.

David Palmer of Evercore ISI asked for insights into the persistent negative sales mix, which has lasted over two years, and its drivers, such as alcohol dynamics. He also questioned if strong traffic growth is the primary reason for the significant labor leverage observed in the quarter.

Answer

Michael Bailen, Senior Director & Head of IR and Financial Analysis, clarified that all negative mix pressure stems from the alcohol category, while entree mix remains positive with guests trading up to larger steaks. Regarding labor, he confirmed that while higher traffic helps, operators are also benefiting from lower turnover and more productive, longer-tenured employees, supported by digital kitchen investments.

David Palmer inquired about labor leverage, noting that it appeared less favorable during the volatile first quarter and asked if this was a temporary issue or a new trend.

Answer

CFO David Monroe clarified that labor productivity remained strong, with labor hours growing at only 35% of traffic growth in Q1. He noted this was the sixth consecutive quarter of productivity being better than their 50% target, attributing the success to operator focus and continued low employee turnover.

David Palmer of Evercore ISI asked about the updated 2025 commodity inflation guidance of 3% to 4%, seeking clarity on the drivers, the company's visibility on costs, and the expected cadence of inflation throughout the year.

Answer

Executive Michael Bailen confirmed the increase was largely driven by tighter beef supply expectations for the second half of the year. He stated that about 40% of the overall commodity basket is locked for 2025, with more visibility in the first half. Bailen projected the lowest inflation in Q1, followed by a consistent, higher rate for the rest of the year to reach the 3% to 4% range.

David Palmer of Evercore ISI questioned the company's philosophy on pricing versus wages, noting that projected 2025 price increases in the 2% range would lag wage inflation of 4-5%. He asked if this was a conscious investment in labor or in consumer value.

Answer

Executive Michael Bailen confirmed it is an 'investment in the guest.' He clarified that pricing decisions are driven by a long-term commitment to the brand's value proposition, not as a direct reaction to short-term cost pressures. CEO Gerald Morgan reinforced this, stating they will always err on the side of 'screaming value' for the guest.

David Palmer asked about McDonald's U.S. business, specifically how the company plans to achieve both improved company restaurant profitability and a better value perception among consumers, considering current AUVs and restaurant margins.

Answer

Chairman and CEO Chris Kempczinski explained that the strategy focuses on increasing guest counts and average check size, which naturally drives AUVs and unit economics. CFO Ian Borden added that while inflation and pricing pressures currently impact margins, driving more volume and customers through the doors will lead to margin accretion over time, aligning value with long-term profitability.

David Palmer asked about McDonald's US business, specifically the dual objectives of enhancing company and system restaurant profitability while simultaneously improving value perception against competitors. He noted high Average Unit Volumes (AUVs) but a trailing restaurant margin of 11.5%, suggesting potential for higher margins or a narrower value perception gap.

Answer

CEO Chris Kempczinski explained that the strategy is to delight customers, which drives traffic and ultimately unit economics. He believes improving value scores is compatible with enhancing unit economics, noting solid cash flow for US franchisees despite Extra Value Meal (EVM) investments. CFO Ian Borden added that the focus remains on guest count-led growth, which historically drives margin accretion, though current elevated inflation and a challenging pricing environment are putting short-term pressure on margins. He emphasized that value and affordability are crucial for both short-term and long-term success.

David Palmer asked for an assessment of McDonald's current value and affordability scores in the U.S., particularly after recent initiatives like the Snack Wrap launch, and how these scores compare to historical levels, competitors, and key international markets.

Answer

Chairman & CEO Chris Kempczinski explained that value perception is bifurcated. For loyalty members (about 25% of U.S. business), value scores are 'exceptional,' evidenced by a frequency jump from 10 to 26 annual visits. The McValue platform is also performing well. However, the key opportunity lies with the other 50% of consumers who are negatively influenced by core menu combo meal prices often exceeding $10. He noted that International Operated Markets (IOM) are in a better position due to strong everyday affordable price (EDAP) platforms and more prudent franchisee pricing.

David Palmer inquired about the consumer economic dynamics and value perception in key International Operated Markets (IOM) compared to the challenges seen in the U.S.

Answer

CEO Christopher Kempczinski characterized Europe as challenged by high inflation, particularly in beef, but noted value programs are effective. He mentioned China has stabilized and Japan is performing solidly. The most significant difference in the U.S. is the severe pressure on low-income consumers, with traffic down nearly 10%. An executive, likely Ian Borden, added that despite contracting industry traffic in three of the five major IOM markets, McDonald's is gaining share due to its value platforms.

David Palmer inquired about the drivers behind the U.S. fourth-quarter comp, which saw negative check but positive traffic, and asked for an update on the performance and value initiatives in the International Operated Markets (IOM) segment.

Answer

CEO Christopher Kempczinski explained the U.S. results were impacted by the E. coli incident, which disrupted strong early-quarter momentum. He noted that new value platforms are currently driving guest counts ahead of check, which is expected. For the IOM segment, he described improving but market-specific trends, with France showing progress while the U.K. and Australia remain opportunities. CFO Ian Borden added that the U.S. check was hurt by lower sales of high-margin Quarter Pounders and increased value investments post-incident.

David Palmer asked how McDonald's plans to adjust its marketing and overall strategy to help consumers move past the recent food safety incident and restore sales momentum.

Answer

CEO Christopher Kempczinski stated that the company's response has been rooted in transparency and swift, decisive action. He explained the strategy is to resume the successful initiatives that were driving momentum prior to the incident, such as the $5 Meal Deal and food innovation, and to supplement them with additional resources to re-engage customers if necessary, drawing on lessons from post-COVID recovery efforts.

David Palmer from Evercore ISI inquired about the strategic opportunities and critical success factors for the KFC brand, particularly in light of leadership changes and the potential shift in company focus from Pizza Hut. He also asked about solidifying the KFC U.S. turnaround and international market performance.

Answer

CEO Chris Turner highlighted KFC's global powerhouse status, strong unit development, and the strategic leadership of Scott and Katherine Tan Gillespie. He emphasized bringing Taco Bell's brand relevance and digital growth strategies to KFC, noting the positive early signs of a turnaround in KFC U.S. and exceptional results in KFC U.K.

David Palmer asked about the strategic opportunities and 'must-get rights' for KFC, particularly in light of the Pizza Hut strategic review, and how new leadership (Sean Tresvant and Scott) will focus on the brand's global and U.S. performance, including solidifying the U.S. turnaround and addressing performance in markets like Canada.

Answer

CEO Chris Turner highlighted KFC's global powerhouse status and unit development momentum, noting that Scott (KFC Global CEO) is applying brand relevance and digital growth strategies from Taco Bell to KFC. He mentioned strong results in KFC U.K. (+9% SSS) and discussed the U.S. turnaround efforts led by Catherine Tan-Gillespie, focusing on brand relevance and new marketing tactics, which led to 2% SSS growth in Q3.

David Palmer inquired about how Yum's technology initiatives, such as hyper-personalized marketing and AI-enabled drive-thrus, are expected to translate into tangible impacts on comps and other key financial metrics.

Answer

CFO Chris Turner explained that the BITE strategy shows a strong correlation between digital sales mix and store-level sales and EBITDA growth, particularly at Taco Bell. He highlighted that AI-driven marketing is yielding significantly higher returns on targeted communications. Operationally, Voice AI is improving the customer experience and reducing employee turnover in pilot restaurants. Turner emphasized that while progress is strong, the company is still in the early phases of realizing the full value.

David Palmer asked about the long-term potential of the Byte technology platform and the expansion strategy for the new 'Saucy by KFC' concept.

Answer

CFO Christopher Turner described the $1 billion digital technology investment as one of the best Yum! has ever made, noting its proven impact on top and bottom-line growth. While not ruling out serving restaurants outside the Yum! system in the future, he stated the current priority is their own franchisees. Regarding Saucy, Turner confirmed its strong start and said the company is looking at multiple avenues for methodical expansion with franchise partners, focusing on scaling the supply chain and preserving the brand's unique identity.

David Palmer questioned the strategy behind Yum's proprietary 'Bite' technology platform, asking about the rationale for an internal build-out versus an outsourced model and how it will contribute to profit growth.

Answer

CEO David Gibbs explained that the internal strategy provides control and avoids the friction of relying on third-party vendors, allowing Yum! to offer the best technology at the lowest cost. CFO Chris Turner added that the goal is to provide franchisees with advantaged capabilities and economics to drive growth. He noted the integrated platform enables speed, citing the rapid deployment of AI-driven marketing and voice AI at Taco Bell as proof of its success in driving top- and bottom-line results.

David Palmer sought more details on key digital initiatives, including the rollout and impact of AI-enabled personalized marketing and the potential for AI voice drive-thrus to become a significant profit driver for Yum! Brands.

Answer

CFO Chris Turner described the AI-driven marketing as a coordinated effort across major U.S. brands that leverages the company's vast data assets for personalized offers, noting he was excited about its potential. Regarding voice AI, he highlighted its positive reception from both customers and team members. CEO David Gibbs added that the primary goal of technology is to drive franchisee profitability and unit growth, not to create a new fee-based profit center. He stated Yum! provides this technology at a lower cost than third-party alternatives to give franchisees a competitive advantage.

David Palmer asked for more color on the disappointing Halloween performance, including the level of disappointment and potential headwinds like a Friday Halloween and warm weather. He also inquired if this reflects broader consumer or customer trends and about the company's plans to adjust product lineup and marketing for future seasons. Additionally, he asked about retailer sympathy for pricing given input inflation and potential noise from competitors' pricing actions.

Answer

CEO Kirk Tanner acknowledged a slow start to Halloween, noting that a third of the business is typically sold in the last week when Halloween falls on a Friday. He stated that the company sees opportunities to improve by analyzing consumer and customer insights, focusing on pack types, opening price points, and product mix. He also emphasized strong, trusting relationships with customers regarding pricing, noting that cocoa is still 70% higher than in 2023.

David Palmer asked for color on the disappointing Halloween performance, inquiring about the extent of the disappointment, the impact of Friday Halloween and warm weather, and whether consumer/customer focus or the competitive environment played a role. He also asked about Hershey's plans to analyze trends and adjust strategies for future seasons. Additionally, he questioned retailer sympathy to Hershey's pricing and input inflation, particularly cocoa, and potential noise from competitors' pricing actions.

Answer

President and CEO Kirk Tanner acknowledged a slow start to Halloween, noting historical dynamics for Friday Halloweens, and highlighted opportunities to improve through consumer and customer insights, adjusting pack types, price points, and product mix. He emphasized building trust with customers and partnering on pricing solutions. He also noted that cocoa costs are still 70% higher than in 2023, reinforcing the need for a planful approach to pricing and the category's resilient nature.

David Palmer asked if the planned mid-teens pricing for 2026 includes potential tariff-related pricing and what would happen if a cocoa tariff exemption is granted. He also sought clarification on the expected price/mix flow-through in 2026.

Answer

SVP & CFO Steve Voskuil stated unequivocally that the announced pricing is 'strictly a catch up on cocoa' and has 'nothing to do with tariffs.' He noted it was too early to discuss next steps on tariff-related pricing. He confirmed the company expects a double-digit price/mix contribution to flow through in 2026, starting in Q1.

David Palmer from Evercore ISI asked for clarification on whether the announced mid-teens pricing for 2026 includes potential tariffs and what the expected price/mix flow-through would be for North American confectionery.

Answer

SVP & CFO Steve Voskuil stated explicitly that the announced pricing is strictly to catch up on cocoa inflation and has 'nothing to do with tariffs.' He confirmed that the company expects to see a double-digit price/mix contribution flowing through to North American confectionery results starting in Q1 2026.

David Palmer asked if the announced mid-teens pricing for 2026 is inclusive of potential tariffs and what would happen if a cocoa tariff exemption is granted. He also sought to clarify the expected price/mix flow-through in 2026.

Answer

SVP & CFO Steve Voskuil stated clearly that the announced pricing is strictly to catch up on cocoa inflation and has nothing to do with tariffs. He indicated it's too early to discuss the next steps if tariffs are exempted. He confirmed that the company expects to see a double-digit price/mix contribution flowing through to the P&L starting in Q1 2026.

David Palmer inquired if Hershey could achieve growth in its everyday (non-seasonal) chocolate business in the second half and asked if the current strength in the sweets category is a temporary moment or a long-term trend.

Answer

CEO Michele Buck expressed confidence in achieving low single-digit growth in everyday CMG in the back half, driven by strong innovation. She asserted that the sweets category's growth is a long-term trend, supported by consumer palate shifts, demographics, and innovation.

David Palmer questioned Chipotle's near-term strategy of sacrificing incremental margins by not fully pricing against inflation, aiming to offer better value to consumers. He asked about the implications for 2026, the path to returning to 40% incremental margins, and whether the core solution for driving strong comps is primarily through enhanced food value.

Answer

CEO Scott Boatwright confirmed the intent to double down on the consumer flywheel and deliver value, even if it means investing some margin in the near term to drive top-line transactions. He emphasized that the core value proposition remains intact and the company will emerge stronger. CFO Adam Rymer reiterated that pricing offsets inflation, and margin expansion is driven by transaction growth. He views lagging 2026 inflation as a temporary dislocation, expecting a return to 40% flow-through with mid-single-digit comps. Boatwright added that fast casual is currently out of favor, but Chipotle remains a 20-30% discount to peers, requiring better communication of its unique value.

David Palmer questioned Chipotle's near-term strategy of sacrificing incremental margins due to declining comparable sales, outsized inflation, and a reluctance to fully price against inflation to offer better consumer value. He asked about the implications for 2026, the path back to 40% incremental margins, and if the primary solution is delivering superior food value.

Answer

Scott Boatwright (CEO) affirmed that Chipotle's core value proposition and business fundamentals remain strong, but the consumer slowdown is significantly impacting the business. He stated that Chipotle will 'double down' on the consumer flywheel, investing in margin if necessary to drive top-line transactions in the near term, aiming to emerge stronger. Adam Rymer (CFO) clarified that lagging 2026 inflation is a temporary dislocation, and the company expects to return to its 40% flow-through target as comparable sales recover to mid-single digits. Scott Boatwright (CEO) emphasized that Chipotle offers a 20-30% discount to fast-casual peers and needs to better communicate this value.

David Palmer of Evercore ISI inquired about the effectiveness of recent digital marketing initiatives, such as 'Summer of Extras,' and the strategies for re-engaging lapsed customers.

Answer

CEO Scott Boatwright explained that 'Summer of Extras' was highly successful, engaging 5 million people and increasing new enrollments by 14% year-over-year. He noted it drove incremental frequency, particularly among low-frequency users. He also introduced a forthcoming 'win back journey' program, which will use AI to aggressively target and re-engage lapsed or near-lapsing consumers.

David Palmer asked if consumer data showed a trade-down to QSR and how the Chipotle Honey Chicken LTO's performance compared to past successful LTOs like Chicken al Pastor.

Answer

CEO Scott Boatwright stated that data shows Chipotle gaining share from all restaurant segments and that the mix percentage for Chipotle Honey Chicken is outpacing that of Chicken al Pastor. CFO Adam Rymer added the LTO is driving an estimated 100-200 basis points in incremental transactions, a strong result in a challenging environment.

David Palmer of Evercore ISI questioned the key comparable sales drivers for 2025 beyond LTOs, asking about the potential lift from throughput improvements, seasonal strategies, and personalized marketing initiatives.

Answer

CEO Scott Boatwright emphasized a 'flywheel' effect from operations, marketing, and digital strategy. He highlighted that operations are on strong footing with record-low turnover, with a key unlock being the modernization of the back-of-house to improve throughput. He also mentioned an extraordinary marketing plan with more linear TV and a new digital AI assistant to personalize customer journeys and reduce churn.

David Palmer asked for more details on the potential for AI-enabled customized marketing and its impact on comps. He also inquired about the relationship between improved throughput in entrees per minute and labor hours, which appeared flat despite traffic growth.

Answer

Interim CEO Scott Boatwright explained that while it's early, the company is experimenting with AI to create truly bespoke loyalty experiences based on user history, which could drive incremental value. Regarding labor, CFO Adam Rymer stated there is no direct relationship beyond normal sales leverage. Scott Boatwright added that the key is better deployment of existing labor from back-of-house tasks to guest-facing roles during peak times, not necessarily fewer hours.

David Palmer asked about Starbucks' 'Back to Starbucks' strategy, questioning if its focus on in-cafe, hot beverages aligns with evolving consumer preferences for cold beverages and diverse channels, and sought insights on comp differences by order type.

Answer

Brian Niccol, Chairman and CEO, clarified that 'Back to Starbucks' is a comprehensive brand definition centered on craft and connection across all access points (mobile, drive-thru, cafe). He highlighted the new Green Apron Service standard's positive impact on transactions, noting September's transaction-driven positive comps, and emphasized holistic innovation across the menu.

David Palmer asked about the comprehensive nature of the 'Back to Starbucks' strategy, questioning if its focus on in-cafe experiences adequately addresses the brand's diverse channels and cold beverage trends, and sought insights into comp differences by order type.

Answer

Brian Niccol, Chairman and CEO, Starbucks, clarified that 'Back to Starbucks' defines the brand's soul around customer connection and craft across all access points, including mobile, drive-thru, and cafe. He noted that the new Green Apron Service standard supports this holistic approach, leading to positive transaction-driven comps in September.

David Palmer of Evercore ISI inquired about the long-term margin evolution, asking if a return to pre-COVID levels (around 17% corporate-wide) is a reasonable expectation and over what timeframe.

Answer

EVP & CFO Cathy Smith confirmed an Investor Day is planned for early 2026 to detail long-term goals. She described 2019 margins as a 'good guidepost,' contingent on driving top-line growth. Chairman & CEO Brian Niccol added that he does not believe Starbucks 'over-earned' in the past and has aspirations to meet and hopefully exceed those prior margin levels by building a 'better Starbucks.'

David Palmer from Evercore ISI inquired about the company's long-term margin potential, asking if a return to pre-COVID levels (around 17% corporate-wide) is a reasonable expectation and what the key drivers and timeline would be.

Answer

CFO Cathy Smith described 2019 margins as a 'good guidepost' and confirmed the team is working on a clear path to get there, contingent on driving top-line growth first. CEO Brian Niccol added that he does not believe Starbucks 'over-earned' in the past and has aspirations to meet and hopefully exceed those levels. He confirmed more details will be shared at an Investor Day in early 2026.

David Palmer inquired about Starbucks' strategic shift towards labor investments and order sequencing over equipment to enhance store speed and throughput, asking about the potential OpEx versus CapEx implications and the timeline for these improvements.

Answer

Brian Niccol, Chairman and Chief Executive Officer, confirmed the strategy, stating that staffing and technology pilots are proving more effective than capital-intensive equipment. He noted the pilot is scaling to over 3,000 stores by fiscal year-end but said it was too early for specific cost figures, emphasizing a focus on finding material cost offsets and driving growth to improve margins.

David Palmer from Evercore ISI questioned if the previously stated $4 billion productivity opportunity through 2028, largely from COGS, is still a valid target for the company.

Answer

CFO Rachel Ruggeri confirmed that driving efficiencies remains a key focus, citing 150 basis points of margin expansion from in-store and out-of-store efficiencies in Q1. However, she advised against sticking to the $4 billion figure, stating the company is still determining the right level of efficiencies going forward as part of the 'Back to Starbucks' strategy.

David Palmer followed up on the back-of-bar changes, asking if the plan is simply a faster rollout of the existing Siren System vision or a more fundamental departure. He also asked for current service times versus the 4-minute goal and the primary bottlenecks.

Answer

CEO Brian Niccol clarified that the main change is the implementation of a clear operating standard: a sub-4-minute service time, which previously lacked clarity. He noted that current service times are already under 4 minutes for about 50% of transactions. The key bottlenecks vary by store and include food preparation, cold beverage mix, and mobile order volume, which the Siren system is designed to address systemically.

David Palmer inquired about Chili's observations regarding young consumers (Gen Z), specifically their frequency and trial following viral campaigns, and requested an update on the menu renovation journey, including completed and upcoming initiatives.

Answer

Kevin Hochman, President and CEO of Brinker International, confirmed that young consumers are repeating visits as frequently as other new guests, and TikTok trends remain strong. He outlined future menu renovations, including a chicken sandwich platform and later steaks and salads. He also discussed the learning from the new queso launch, which led to bringing back the original skillet queso due to existing guest preference.

David Palmer inquired about Chili's engagement with younger consumers (Gen Z), specifically their frequency and the sustainability of viral trends, and provided an update on the menu renovation journey, including lessons learned from the queso upgrade.

Answer

CEO Kevin Hochman confirmed that younger consumers are repeating as frequently as other new guests and TikTok trends remain strong. He emphasized ongoing marketing efforts to maintain relevance with Gen Z. Regarding menu renovation, he mentioned the chicken sandwich platform for the back half of the fiscal year and steaks/salads for the next. He highlighted the learning from the new queso, which performed well with new guests but led to the return of the old skillet queso for existing fans, indicating a need to be cautious with renovating established favorites.

David Palmer of Evercore ISI inquired about the drivers for the expected fiscal 2026 restaurant margin expansion and sought a conceptual overview of the Maggiano's turnaround strategy compared to the Chili's plan.

Answer

CFO Mika Ware clarified that fiscal 2026 margin expansion is guided to be 30-40 basis points, driven by sales leverage despite planned investments in food quality. CEO Kevin Hochman explained the Maggiano's turnaround will refocus on its core value proposition of abundant Italian-American favorites, applying key operational learnings from the successful Chili's turnaround.

David Palmer questioned the sustainability of same-store sales growth, particularly given the tough comparisons in the upcoming fiscal second quarter, and asked what initiatives give management confidence in maintaining positive comps.

Answer

President and CEO Kevin Hochman acknowledged the challenge but pointed to the company's track record of comping over high prior-year results, such as the +15% they are currently lapping. He emphasized that their confidence stems from fundamental improvements in food, service, and atmosphere, which they believe will continue to drive growth, rather than relying on specific, modelable initiatives.

David Palmer from Evercore ISI questioned the sustainability of the significant sales lift from social media, particularly the "lightning in a bottle" effect of the Triple Dipper campaign, and asked how Brinker plans to maintain this momentum.

Answer

Kevin Hochman, President and CEO, acknowledged the difficulty in precisely separating the impact of social media from other initiatives but estimated the Triple Dipper's contribution was about 7 percentage points of the 30%+ comp growth. He emphasized that the sustained success, unlike typical short-lived viral trends, is anchored by fundamental operational improvements that create a positive guest experience, leading to repeat visits from new, younger customers.

David Palmer asked about near-term sales trends versus the industry, the long-term strategy for unit growth, and how the company's capital allocation strategy might evolve with its recent success.

Answer

CFO Mika Ware stated that sales accelerated through Q1, widening the gap to the industry, a trend that continued into October. CEO Kevin Hochman explained that while there is no change to current unit growth guidance, the company is actively discussing capital allocation for accelerating new builds, reimaging existing restaurants, and returning capital to shareholders. Mika Ware reiterated that the priorities are investing in the business, paying down debt, and then shareholder returns.

David Palmer asked about the outlook for price elasticity in Europe, specifically whether it could come down or remain stubborn, considering the current 0.7-0.8 range and price gap issues. He also inquired about price elasticity in emerging markets, asking if there were signs of fatigue or price gap issues, or if performance was as expected.

Answer

Dirk Van de Put (Chairman and CEO) explained that the 30% price increases in Europe, particularly for tablet chocolate, led to higher elasticity (0.7-0.8) than the historical 0.4-0.5, but it's still below one. He noted issues with certain high price points (e.g., 300-gram bars) requiring adjustments like price reduction or downsizing, and adapting formats to competition. These adjustments, aided by a more benign cocoa environment, are expected to resolve issues. For emerging markets, he stated performance is largely as expected, with volume decline (4.7%) significantly impacted by Argentina's hyperinflation and India's downsizing. Excluding these, the decline was 3%. China saw low single-digit negative growth in Q3 due to low consumer confidence, but India, Brazil, and Mexico are performing well. He emphasized that volume decline isn't primarily due to a big elasticity effect.

David Palmer questioned the outlook for price elasticity in Europe, specifically whether current adjustments would lead to improvement or if fatigue from high prices could cause elasticity to remain stubborn. He also asked about price elasticity and potential fatigue or price gap issues in emerging markets, particularly regarding volume declines.

Answer

Chairman and CEO Dirk Van de Put clarified that Europe's 0.7-0.8 elasticity, while higher than historical norms, is not dramatic given unprecedented 30% price increases. He noted adjustments are targeted at specific price points (e.g., 300-g chocolate bars) and formats to align with competition, expecting these to resolve issues rather than necessarily improve overall elasticity. For emerging markets, he attributed volume declines to downsizing (India) and economic factors (Argentina), stating that elasticity is largely playing out as expected, with specific pressures noted in China.

David Palmer asked if factors beyond low-income consumer confidence were impacting the U.S. snacking market and inquired about the growth outlook for emerging markets following a Q1 slowdown.

Answer

CEO Dirk Van de Put stated the U.S. snacking softness is primarily driven by broad consumer uncertainty and a shift to essentials, with a secondary factor being a growing health and wellness trend. For emerging markets, he expects an acceleration from Q1's 4% growth, anticipating a recovery in India, continued strength in China, and steady performance in Brazil and Mexico, supported by distribution gains.

David Palmer asked a theoretical question about whether Mondelez believes it can, over a multi-year period, price to offset cocoa input inflation and normalize its long-term growth algorithm. He also asked about the timeline and key factors for deciding on the necessity of additional pricing actions.

Answer

CFO Luca Zaramella affirmed the company's ability to manage profitability. He explained that if cocoa prices remain high, the company will implement further pricing in 2026, using multiple waves to acclimate consumers. If prices fall, the existing pricing structure would lead to strong earnings. He noted that 2025 pricing plans are largely set, but decisions for H2 and 2026 will be made later in the year based on new crop data and demand signals.

David Palmer questioned the timing for when Mondelez might have enough visibility on cocoa costs and price elasticities to provide a narrow EPS range for 2025. He also asked for perspective on why the U.S. confectionery market is weak compared to Mondelez's experience with chocolate in Europe.

Answer

CFO Luca Zaramella projected that clarity on cocoa prices should emerge in the next one to two months, with the supply situation becoming clearer by January/February. He noted that the full effect of pricing and elasticities in Europe would be more visible towards the end of Q1 or beginning of Q2. Regarding U.S. confectionery, Luca Zaramella declined to comment specifically but attributed Mondelez's success in its own markets to consistent, long-term brand building, investment in marketing, and strong execution.

David Palmer asked for Darden's perspective on the strong performance of the casual dining segment and its sustainability. He also questioned Olive Garden's strategy to maintain momentum against tougher comparisons later in the fiscal year, including the rollout of smaller portions and other planned initiatives.

Answer

Rick Cardenas, President and CEO, attributed casual dining's strength to generally less pricing than other dining segments, increased perceived value, and guests seeking connection and engagement. For Olive Garden, he stated there are plans to continue momentum despite challenging comparisons, with affordability items (lighter portions) expected to drive long-term traffic, potentially with future marketing support, and the team is prepared to react to sales trends.

David Palmer from Evercore ISI inquired about the specifics of Uber Direct's impact at Olive Garden, including its mix, same-store sales contribution in Q4, and its incremental margin. He also asked about the potential rollout to other brands like LongHorn and any associated hurdles.

Answer

CFO Raj Vennam stated that Uber Direct accounted for 3.5% of Olive Garden's Q4 sales, contributing roughly 2% to incremental sales with a minimal impact on margins. President & CEO Rick Cardenas added that the successful Cheddar's rollout shows the model is replicable, but expansion to other brands depends on their ability to provide a high-quality curbside experience, as drivers do not enter the restaurants. He noted another brand may begin testing around the start of the next calendar year.

David Palmer asked about the potential impact of the flu season on quarterly results, sought insights into why the casual dining segment is demonstrating notable resilience, and questioned if Darden's M&A strategy is shifting.

Answer

President and CEO Ricardo Cardenas responded that weather had a more significant impact than any potential flu effects. He suggested casual dining's strength may be due to consumers prioritizing dining out as a primary way to 'treat themselves.' Regarding M&A, Cardenas affirmed the current focus is on integrating the recent Chuy's acquisition, with capital allocation strategies remaining an ongoing discussion with the Board.

David Palmer asked why Olive Garden's sales gap to the industry isn't wider, given its high customer satisfaction, and questioned if lower advertising spend compared to pre-COVID levels was a factor.

Answer

Executive Ricardo Cardenas explained that the sales gap is narrowing as expected after years of significant outperformance and that Darden has strategically avoided deep discounting. Executive Rajesh Vennam clarified that the overall marketing spend reduction is primarily driven by LongHorn, with Olive Garden's spend down only about 25-30%, not half as suggested.

David Palmer asked for details on the consumer-facing delivery fee for the Uber partnership and its effect on Darden's margins compared to a standard takeout order. He also requested a diagnosis of Olive Garden's performance relative to the industry, contrasting it with LongHorn's continued outperformance.

Answer

President and CEO Rick Cardenas and CFO Raj Vennam explained the delivery fee is transparently paid by the guest and consists of a fixed fee around $5 plus 5% of the order total, resulting in no margin dilution for Darden versus a pickup order. Cardenas attributed LongHorn's success to strong operational execution in the steak category, where consumers seek value and quality over cooking at home. He noted that Olive Garden is seeing fewer infrequent guests but is not losing its core customers to competitors' deep discounts.

David Palmer asked about the expected strong growth from innovation, the elongated timetable for price promotion investments, and which categories are achieving a balance between price and volume. He also followed up on the ramp-up plan for fresh pet coolers beyond the initial 5,000.

Answer

Dana McNabb, Group President of North America Retail and North America Pet, explained that initial price investments focused on promotion depth and frequency, shifting to base shelf price adjustments in Q1, with positive results in bars, fruit snacks, and salty snacks. She highlighted the increase in new products from 3.5% to 5% of net sales. Regarding fresh pet, she confirmed 1,000 coolers by month-end, 5,000 by fiscal Q2, with plans to ramp up distribution into calendar year 2026, leveraging General Mills' refrigerated channel experience.

David Palmer asked about the expected strong growth from innovation and the elongated timetable for price promotion investments, seeking to understand where the biggest changes in reality are occurring regarding categories where price promotions are lasting longer versus those achieving a better balance of price and volume. He also followed up on the ramp-up plan for fresh pet cooler distribution.

Answer

Dana McNabb, Group President of North America Retail and North America Pet, explained that initial price investments focused on promotion depth/frequency, while the current year emphasizes base shelf price adjustments across two-thirds of the portfolio, largely completed in Q1 with positive results in bars, fruit snacks, and salty snacks. She noted the remaining adjustments for Q2 will support baking and soup seasons. Regarding fresh pet, she confirmed 1,000 coolers by month-end, 5,000 by fiscal Q2, with distribution ramping into calendar year 2026, leveraging General Mills' refrigerated channel experience.

David Palmer noted strong innovation growth expectations but an elongated timetable for price promotion investments, asking which categories require longer price adjustments and where a better balance between price and volume is being achieved. He also inquired about the ramp-up plan for Freshpet cooler distribution.

Answer

Group President Dana McNabb explained that initial price adjustments focused on promotion depth and frequency, shifting to base shelf price adjustments in Q1, with remaining adjustments in Q2 for baking and soup. She highlighted positive results in bars, fruit snacks, and salty snacks. For Freshpet, she confirmed 1,000 coolers by month-end, 5,000 by fiscal Q2, with distribution ramping into calendar 2026, leveraging General Mills' refrigerated channel experience.

David Palmer requested clarification on the fiscal 2025 category growth rate and asked which specific categories and brands are the 'must get rights' for sales improvement in fiscal 2026.

Answer

VP of Investor Relations Jeff Siemon clarified that the comment on below-average growth referred to global categories, with Pet, China, and Europe being key drivers. CEO Jeffrey Harmening responded that he expects broad-based improvement, emphasizing that growth must come from the company's largest and most important categories to be impactful. The focus is on improving competitiveness rather than relying on category acceleration.

David Palmer of Evercore ISI sought clarification on the fiscal 2025 category growth figures and asked which specific categories and brands are the "must get rights" for improvement in fiscal 2026.

Answer

VP of IR Jeff Siemon clarified that the commentary on below-average growth referred to the global portfolio, with Pet and some international markets like China growing slower than long-term targets. Chairman & CEO Jeffrey Harmening responded that he expects broad-based improvement across all major categories, driven by enhanced marketing, innovation, and value, rather than focusing on just a few areas.

David Palmer noted that food industry innovation has lagged pre-COVID levels and asked how General Mills' innovation activity for fiscal '26 will compare to '25, and what specific changes in strategy give them confidence in its future success.

Answer

CEO Jeffrey Harmening acknowledged that innovation as a percentage of sales is below pre-pandemic levels, though it is up year-over-year. He stated the strategy for fiscal '26 will be 'fewer but bigger' innovations, particularly in the first half of the year. He also stressed the need to more robustly support existing successful innovations like Nature Valley Granola protein.

David Palmer asked about the company's innovation strategy for fiscal '26, questioning how the level of activity will compare to fiscal '25 and what changes in messaging or type of innovation give management confidence in its success.

Answer

CEO Jeffrey Harmening acknowledged that industry innovation is below pre-pandemic levels but noted General Mills is improving. He outlined the fiscal '26 strategy as focusing on 'fewer but bigger' innovations, particularly in the first half of the year, and providing more robust support for both new launches and recent successful introductions like Nature Valley Protein Granola.

David Palmer, on for Mark Mahaney, requested the advertising outlook for Q3 and the second half, focusing on video ads and macro sensitivity. He also asked for clarification on the commercial terms of the Disney partnership.

Answer

David Lee, CFO & COO, reported strong Q2 advertising growth of 10.2% (constant currency), driven by Korea and Japan. He positioned video ads as a key tool for habit formation and monetization, noting it is still early days for this format in North America. Lee reiterated that it was too early to disclose the financial terms of the Disney deal but confirmed no material change to unit economics was included in the company's guidance.

David Palmer requested market insights on the Pet and Cereal categories, asking about the drivers behind current trends and Post's strategic plans, including spending levels, to improve market share performance.

Answer

CFO Matt Mainer addressed the plans for both segments. For Pet, he noted that lapping prior profit-enhancing decisions and addressing challenges with the Nutrish and Gravy Train brands are key priorities, though the Nutrish recovery will take longer than expected. For Cereal, he described the spending plan as rational and tactical, with a focus on targeted brand support and further network optimization rather than a significant increase in overall spending.

David Palmer inquired about the fiscal 2026 outlook for Post Consumer Brands, specifically asking how management views the potential for the pet food business, including the Nutrish relaunch, to offset ongoing headwinds in the cereal category.

Answer

An executive, likely COO Jeff Zadoks, affirmed this view, describing fiscal 2025 as a transition year for the pet business. He stated that exiting the Smucker TSA and relaunching Nutrish are expected to yield positive results in the next fiscal year, helping to mitigate the challenges and volume pressures currently seen in the cereal business.

David Palmer questioned if the Q2 Foodservice EBITDA drag from avian influenza would be fully recovered in fiscal 2025 or create easy comparisons for fiscal 2026. He also asked about pet food demand creation plans and the expected volume trajectory for the remainder of the year.

Answer

COO Jeff Zadoks stated the company expects the financial impact to be recovered within fiscal 2025. CFO Matt Mainer detailed the pet food volume decline, attributing it to profit-enhancing actions, inventory shifts, and consumption weakness. He projected full-year volumes to be down 7-9%, improving as the year progresses, with innovation benefits expected in fiscal 2026.

David Palmer noted low single-digit consumption declines across cereal, pet, and refrigerated categories and asked about the likelihood of a return to organic growth in fiscal 2025. He also questioned how significant a variable QSR traffic is for the Foodservice business, especially given recent weakness at major chains.

Answer

President and CEO Rob Vitale stated that for FY25, Post assumes a continued low single-digit decline for cereal and flat to 2% growth for its other categories. Regarding Foodservice, he confirmed that increased traffic at major QSRs is highly beneficial due to the favorable mix of value-added products they purchase. However, he emphasized that the company's plans do not assume a significant short-term change in these traffic trends.

David Palmer of Evercore ISI asked for an assessment of Wendy's marketing and value menu performance in the first half of the year and the strategic shifts planned for the second half.

Answer

Interim CEO & CFO Ken Cook acknowledged that the '100 Days of Summer' campaign was overly complex, confusing customers and complicating restaurant execution. He noted that while Frosty innovation was a success (sales up 30% YoY), broad promotions underperformed. Cook explained the strategy for the second half is to simplify the calendar to focus on two key areas: chicken innovation (including a Netflix collaboration) and a new beverage lineup, supported by enhanced data analytics to better target customers.

David Palmer inquired about what consumer data is revealing and which of the company's initiatives—such as improving drive-thru speed, value perception, or order accuracy—is expected to yield the biggest improvements.

Answer

Kirk Tanner, President and CEO, explained that the primary focus is on operational excellence and hospitality to create a great customer experience. He highlighted order accuracy as a key driver of customer satisfaction and detailed specific initiatives like deploying delivery scales and menu item label printers, which have already shown 'dramatically improved accuracy' in restaurants where they are implemented. He also emphasized strong franchisee alignment on these operational goals.

David Palmer of Evercore ISI posed two questions: first, about the most significant opportunities to drive comparable sales based on recent consumer insights, and second, about organizational restructuring and changes to incentive compensation.

Answer

CEO Kirk Tanner outlined a three-pronged approach to driving comps: investing in the core menu, pursuing pure innovation like 'Saucy Nuggs', and strengthening the value proposition with the Biggie Bag platform. On the organizational front, Tanner explained that the company has been restructured to enhance 'operational intensity' and deliver a perfect customer experience, with compensation and metrics now aligned to these goals. He noted more details would be shared at the upcoming Investor Day.

David Palmer of Evercore ISI inquired about Wendy's future unit growth outlook, particularly the international versus domestic mix, and the long-term marketing strategy for platform-level innovations beyond temporary promotions like the Krabby Patty.

Answer

CEO Kirk Tanner detailed a strategy to strengthen the system by closing underperforming stores while guiding to 3-4% net unit growth with a 70/30 international/domestic split. On marketing, he explained the menu strategy rests on three pillars: building the core menu, maintaining a robust innovation pipeline, and offering compelling value through platforms like the Biggie Bag.

David Palmer of Evercore ISI asked about the QSR market conditions in Canada, questioning why Tim Hortons is outperforming competitors, and inquired about July sales trends for Burger King U.S. following a competitor's snack wrap launch.

Answer

CEO Josh Kobza credited Tim Hortons' 17 consecutive quarters of positive comps to strong fundamentals and execution, noting he sees no reason for a change in trend. For Burger King U.S., he stated there was no discernible impact from competitor activity in July. Executive Chairman Patrick Doyle added that BK's performance is driven by controllable factors like execution and remodels, not just the macro or competitive environment.

David Palmer inquired about consumer trends in international markets outside the U.S. He asked for an assessment of the informal eating-out market and RBI's market share performance in key global regions coming out of the first quarter.

Answer

CEO Josh Kobza expressed satisfaction with international results, noting Q1 same-store sales of +2.6% (+3.7% excluding leap day), which he considered strong on both an absolute and relative basis. He highlighted the diversified nature of the business across 200 brand-country combinations. Kobza detailed regional performance, citing outperformance in Germany and the U.K. (EMEA), Australia and Japan (APAC), and Brazil (Latin America), while acknowledging softness in France and Mexico. He also emphasized the growing importance of Popeyes as a future international growth driver.

David Palmer asked about the outlook for the International segment's comparable sales growth in 2025, following its strong Q4 performance, and inquired about the potential shape of that growth throughout the year.

Answer

An executive expressed satisfaction with the Q4 international sales momentum but declined to provide specific 2025 guidance for the segment, noting the focus remains on value and innovation. CFO Sami Siddiqui reminded analysts to factor in the negative impact of lapping a leap day in Q1 2025.

David Palmer posed a two-part question regarding the potential timeline for Burger King China's growth recovery and the comparable sales outlook for Tim Hortons Canada, noting its healthy traffic trends amidst a competitive environment.

Answer

CFO Sami Siddiqui and CEO Josh Kobza addressed China by stating they are working on a solution but asked for patience, emphasizing their long-term commitment. Regarding Tim Hortons, Executive Chairman Patrick Doyle highlighted that its growth is healthy and sustainable because it's driven by traffic (order count), not just price inflation. CEO Josh Kobza added that a strong innovation pipeline for 2025 provides further confidence.

David Palmer of Evercore ISI asked for an update on Tim Hortons' performance progression through Q1 in Canada and whether the brand needs to adjust its value strategy in response to a potentially weakening consumer, similar to trends seen in the U.S.

Answer

CEO Josh Kobza stated that while not providing intra-quarter details, Tim Hortons is successfully taking market share in Canada. He emphasized that the brand's established leadership in value-for-money positions it well for any consumer environment, negating the need for a significant strategic shift on value.

David Palmer from Evercore ISI questioned the second-half base business sales guidance of down 1-2%, asking for reconciliation with MULO data showing a steeper decline.

Answer

CFO Bruce Wacha explained that the guidance reflects sequential improvement, with Q1 down 10.5% and Q2 down 4.2%. CEO Casey Keller added that July and early August sales trends were already in the -2% range, supporting the forecast, and noted that B&G Foods' custom database shows a better trend than standard MULO data.

David Palmer of Evercore ISI asked how B&G Foods plans to manage its three core segments (Spices, Specialty, Meals) differently regarding growth spending and focus. He also asked which of these segments is expected to show the most improvement in 2025.

Answer

CEO Casey Keller outlined the distinct strategies: Spices & Flavor Solutions is positioned for growth, benefiting from trends in fresh food consumption. The Meals business is expected to return to modest growth driven by its Mexican and hot breakfast platforms. The Specialty segment, containing baking staples, will be managed for stable margins and cash flow rather than top-line growth. Keller identified the Meals business as having the most potential for improvement in 2025, citing upcoming innovation and marketing initiatives.

David Palmer of Evercore ISI asked if easier comparisons could lead to positive organic sales in Q1 2025 and requested management to rank the top strategic focus areas for driving improvement.

Answer

CEO Casey Keller acknowledged that trends should improve sequentially in early 2025 due to easier comps but doesn't expect a return to positive growth until the second half. He ranked the key focus areas as: 1) Spices & Flavor Solutions, 2) Ortega innovation, 3) Crisco pricing and marketing, and 4) Green Giant frozen product launches.

David Palmer asked about Kraft Heinz's current pricing and promotion strategy and inquired about the prospects for reviving growth in its legacy businesses, especially in the context of potential strategic actions.

Answer

CEO & Director Carlos Abrams-Rivera and EVP & Global CFO Andre Maciel detailed a strategy of targeted investments in pricing and marketing, noting that pricing is below inflation. Abrams-Rivera expressed confidence in the company's growth pillars, citing 8% growth in emerging markets and improving trends in North America Retail, driven by strategic investments.

David Palmer asked about the company's strategy for pricing offsets to higher inflation, given elasticity concerns. He also noted Kraft Heinz's promotional volume appears to be well below 2019 levels compared to peers and asked about the strategy behind this.

Answer

CEO Carlos Abrams-Rivera explained their promotional strategy is disciplined and tied to the brand growth system, aiming for sustainable growth rather than 'renting volume' for short-term gains. Executive Andre Maciel added that while they are using all levers to minimize tariff-related price increases, pricing might still be necessary, but it remains a work in progress.

David Palmer asked about the strategy for pricing offsets to higher inflation, considering elasticity, and questioned Kraft Heinz's promotional strategy, noting its volume on promotion appears to be below 2019 levels compared to peers.

Answer

CEO Carlos Abrams-Rivera stated the promotional strategy is disciplined and linked to the brand growth system, aiming to build sustainable base volume rather than 'renting' it. CFO Andre Maciel added that while the company is exploring all levers to minimize tariff-related price increases, including productivity and alternative sourcing, pricing actions might still be necessary as a final resort.

David Palmer of Evercore ISI asked about the strategy for pricing to offset new cost inflation and questioned the company's below-peer promotional activity levels.

Answer

CEO Carlos Abrams-Rivera explained the promotional strategy is a disciplined choice to build long-term base volume, not just "rent volume" short-term. EVP & Global CFO Andre Maciel added that the company is using all levers to minimize tariff-related price hikes but noted pricing remains an option.

David Palmer from Evercore ISI questioned the long-term sustainability of Domino's 3%+ same-store sales growth, suggesting the current benefits from third-party aggregators and the new stuffed crust pizza might represent a temporary 'golden year'.

Answer

CEO Russell Weiner responded by contextualizing the current initiatives as additions to a decade-long strategy of gaining market share. He emphasized that new tools like aggregators, stuffed crust, a new loyalty program, and a forthcoming e-commerce platform are not one-year events but enduring additions to their core strengths, such as strong franchisee economics and a large advertising budget, making the company stronger than ever.

David Palmer followed up on Stuffed Crust, asking about initial mix expectations, the incrementality of that mix, and how the product's performance on those metrics might evolve over time.

Answer

Chief Executive Officer Russell Weiner declined to provide forward-looking mix details but confirmed the company is closely tracking order and dollar incrementality, as well as repeat purchases. He added that Stuffed Crust is expected to create a positive 'halo effect' for the brand's overall perception of deliciousness. CFO Sandeep Reddy reiterated that all initiatives are factored into the 3% U.S. comp guidance.

David Palmer from Evercore ISI asked about the sustainability of the 3% domestic comp growth target beyond 2026, seeking drivers other than the current aggregator and loyalty initiatives, given concerns about underlying 1P pizza delivery trends.

Answer

CEO Russell Weiner pointed to the brand's long-term track record of gaining market share and stated that the "Hungry for MORE" strategy will continue to generate new, differentiated ideas. CFO Sandeep Reddy added that the aggregator channel and the expanded loyalty program are multi-year flywheels with compounding impacts.

David Palmer from Evercore ISI asked about Domino's confidence in achieving its implied 3% U.S. same-store sales growth for Q4, considering tougher comparisons from the prior year's loyalty launch and Emergency Pizza promotion, as well as third-party data suggesting a slow start to the quarter.

Answer

CEO Russell Weiner expressed strong confidence in the Q4 marketing lineup, calling it one of the strongest since he's been at the company. He highlighted the return of 'Emergency Pizza 2.0,' the new pasta launch, and the continued momentum from the loyalty program as key drivers. CFO Sandeep Reddy reiterated the full-year outlook of 3% or more for U.S. same-store sales, underscoring the company's confidence in its multi-year 'Hungry for MORE' strategy.

David Palmer from Evercore ISI asked about the strategic balance between using price and promotion versus other growth drivers like innovation across different categories, and inquired about the expected sales cadence for fiscal 2026.

Answer

President & CEO Sean Connolly stated that Conagra has a proven model for driving volume growth through innovation, in-store execution, and targeted A&P, which was successful before recent supply constraints. He noted service levels are now restored. EVP & CFO David Marberger added that for fiscal 2026, sales are expected to be down slightly in the first half and up slightly in the second half, driven by a mix of pricing actions and merchandising investments, without providing specific price/mix guidance.

David Palmer inquired about the specific execution issues hindering growth in Hain's key Snack (Garden Veggie) and Infant Nutrition (Earth's Best) categories, asking what internal processes need fixing and how the competitive landscape has evolved.

Answer

CFO Lee Boyce acknowledged that 80% of the top-line shortfall originated in North America, primarily from Snacks. He attributed this to underperforming promotions, overall category softness, and execution challenges with retail resets. For Baby & Kids, he noted that while underlying trends in formula and snacks are strong, performance was muted by the lap of a significant customer loss. Boyce emphasized that accelerating brand renovation and improving commercial execution are key priorities.

David Palmer of Evercore ISI asked if syndicated scanner data is a reliable proxy for North American organic sales or if non-measured channels would create a gap. He also inquired about the potential size of the baby formula business once it is fully unconstrained from supply issues.

Answer

CEO Wendy Davidson explained that only about 45% of total Hain sales are visible in scanner data, which will be affected by noise from Personal Care exits and a promotional shift in snacks. On formula, she stated the goal is to recapture the #1 position in the 'better for you' sub-segment. Since the category has grown, the business has the potential to be larger than it was two years ago.

David Palmer asked how the $10 million Q4 cybersecurity impact was calculated, the estimated drag for Q1, and for details on the logistics outsourcing timeline and its financial impact.

Answer

CFO Jeremiah Ashukian explained the $10 million Q4 impact was calculated from quantifiable lost online sales and estimated labor and material inefficiencies. He did not quantify the Q1 drag but noted it shifted from lost sales to efficiency impacts. Regarding logistics, he stated the plan is to transition half the fleet by year-end, targeting an EBIT-neutral outcome for 2025, with potential cash flow benefits from payment terms.

David Palmer of Evercore ISI asked for early learnings from the McDonald's rollout, details on associated start-up costs, and what actions are being taken to ensure U.S. EBITDA margin growth in 2025 following the Q3 margin shortfall.

Answer

CEO Joshua Charlesworth shared that key learnings confirm the model is working as expected, with the biggest challenge being the operational logistics of adding hundreds of delivery points at once. CFO Jeremiah Ashukian reiterated that they are investing ahead of the curve in equipment, facilities, and training. He stated that daily meetings and real-time course corrections are in place to manage the rollout effectively, and they expect U.S. EBITDA margins to improve in the second half of 2025 as they scale.

David Palmer questioned the path to positive price/mix given negative scanner data trends and asked if the company's plan assumes current market share loss trends will continue.

Answer

CFO David McKinstray explained that positive price realization is driven by lapping 2024 PPA activity, with an expectation for price and volume to align more closely in the second half of 2025. CEO Gary Pilnick reiterated that a stable top line is the key to their model and noted that the share decline was primarily driven by the Special K brand, while most other core brands performed well.

Sought clarification on the 2025 top-line outlook and asked about the strategy for wellness-oriented brands like Kashi, Bear Naked, and Special K.

Answer

The company reiterated it was too early for specific 2025 guidance but expressed confidence in their growth algorithm. They agreed that the wellness space is a growing opportunity, highlighting that brands like Bear Naked are showing improvement as supply stabilizes and that they see real opportunity in the Natural & Organic segment.

David Palmer requested clarification on the 2025 top-line growth outlook, asking if 'similar to '24' implied negative growth. He also asked about the wellness trend within cereal and the company's strategy for its premium brands like Kashi and Bear Naked.

Answer

Gary Pilnick, Chairman and CEO, declined to provide a specific growth number for 2025 but expressed confidence in the company's growth algorithm. On wellness, he agreed it is a significant opportunity, noting the growth in the Granola and Premium segments. He highlighted the improving performance of Bear Naked, stating 'when it's on shelf, it performs,' and affirmed the company's focus on the Natural & Organic space.

David Palmer sought clarification on the 2025 top-line outlook, asking if 'similar to '24' meant roughly -1% growth. He also asked about the potential for positive organic sales in Q1 2025 and the strategy for wellness-oriented brands like Kashi, Bear Naked, and Special K.

Answer

Gary Pilnick, Chairman and CEO, maintained a high-level view, stating the 2025 growth rate would be similar to the company's long-term algorithm and deferred specifics to February. On wellness, he agreed it's a growing space where WK Kellogg Co. can compete more effectively, highlighting the turnaround in Bear Naked as supply improves and affirming it as a significant opportunity.

David Palmer of Evercore ISI sought clarification on the reported consumption growth in North America Snacks, noting that measured channel data appeared down. He also asked if a return to low single-digit growth should be expected in measured channels for the second half.

Answer

Chairman, President and CEO Steven Cahillane explained that the overall consumption growth was driven by strong performance in unmeasured channels, including Canada and the away-from-home business. He confirmed that Kellanova expects to see improvement in the measured channels during the second half as the full commercial activation for brands like Cheez-It, Rice Krispies Treats, and Pop-Tarts catches up to the momentum already seen with Pringles.

David Palmer of Evercore ISI asked if the low-single-digit organic sales growth guidance for North America Snacks still holds and how the price versus volume mix is expected to evolve. He also requested specific metrics on year-over-year supply chain improvements.

Answer

Chairman, President and CEO Steven Cahillane confirmed a rebalancing toward better volume performance in North America, driven by a return to full merchandising, and expressed confidence in this trend continuing. Regarding the supply chain, he stated that performance and service levels are at pre-pandemic high watermarks and that productivity initiatives are back on track, though he did not provide specific metrics.

Questioned the Q4 organic revenue growth forecast, asking for a regional breakdown and how the company reconciles its 'within algo' target with negative U.S. scanner data, which would imply heavy lifting from international markets or a significant improvement in North America.

Answer

The company expects Q4 trends to be similar to Q3, with international markets growing faster than the U.S. They anticipate the volume decline in North America to moderate in Q4 as they return to full merchandising, with a gradual improvement continuing into Q1 2024 as quality display activity ramps up.

David Palmer of Evercore ISI asked for color on Tim Hortons Canada's performance trend through Q1 and into Q2, given negative macro headlines, and questioned if the brand needed to adjust its value strategy like some U.S. peers.

Answer

CEO Josh Kobza declined to provide intra-quarter specifics but confirmed Tim Hortons is taking market share in Canada. He explained that the brand's established leadership in value-for-money rankings positions it exceptionally well for a tougher consumer environment, suggesting a major strategic shift on value is not necessary.

David Palmer of Evercore ISI asked for an update on Tim Hortons' performance progression through Q1 in Canada amidst negative consumer headlines, and questioned if the brand needed to adjust its value strategy like some U.S. competitors.

Answer

CEO Josh Kobza declined to provide intra-quarter specifics but confirmed Tim Hortons is taking market share in Canada. He emphasized that the brand's established position as the market leader in value-for-money perception positions it well to compete effectively, especially in a tougher consumer environment, without needing a strategic shift.