Research Analyst at UBS Asset Management Americas Inc.
Dennis Geiger is an Executive Director and Senior Equity Analyst at UBS specializing in the restaurant and services sectors, with a significant focus on major companies such as McDonald's, Starbucks, and Dutch Bros. He currently covers 29 stocks and has achieved a 56.63% success rate with an average return profile, including a standout call on Dutch Bros that delivered a 93.3% return. Having joined UBS prior to 2016, Geiger has built a reputation for insightful research and has appeared on platforms such as CNBC to discuss industry trends and stock outlooks. He is a FINRA-registered securities professional, holding the appropriate credentials for securities research and financial analysis.
Dennis Geiger inquired about the outlook for the other operating expense and G&A line items for 2026, considering the current inflationary environment.
Michael Bailen, VP of Investor Relations, projected that other operating expenses for 2026 could see low single-digit dollar per store week growth, similar to 2025. He noted potential increases in utility costs and tariffs but does not anticipate anything dramatic for these lines.
Dennis Geiger asked for an outlook on the other operating expenses and G&A lines for 2026, inquiring about any notable callouts for these items.
Michael Bailen, VP of Investor Relations, indicated that other operating costs for 2026 could see low single-digit growth per store week, similar to this year. He mentioned potential increases in utility costs and tariffs but does not anticipate anything dramatic, assuming healthy traffic growth continues.
Dennis Geiger from UBS Group asked for more detail on the restaurant margin outlook for the second half of the year, specifically focusing on the Other Operating Expense line and any potential differences between Q3 and Q4.
Michael Bailen, Senior Director & Head of IR and Financial Analysis, suggested that assuming continued modest traffic growth, the Other OpEx line could see a similar level of leverage as in the first half. He added that the labor line would likely be flat to slightly leveraged under the same traffic assumption.
Dennis Geiger requested additional details on the full-year margin outlook, asking about potential puts and takes beyond the guided labor and commodity costs, such as Other Operating Expenses.
Executive Michael Bailen suggested that assuming modest traffic growth, the commodity line will face pressure throughout the year. He identified 'Other Operating' costs as the line item with the greatest opportunity for leverage for the remainder of 2025, while labor pressure would likely be less than what was seen in Q1.
Dennis Geiger of UBS inquired about the company's significant traffic outperformance gap relative to the industry and whether this gap influences strategic decisions, such as pricing.
CEO Gerald Morgan responded that while the company pays attention to competitors, its primary focus is on maintaining the value proposition built into its menu. He emphasized that decisions are made in partnership with local operators to ensure they offer a competitive, value-based experience. The strategy remains a conservative approach to pricing to do right by the consumer while managing the business.
Dennis Geiger from UBS asked for an outlook on labor hour growth into 2025, following another quarter of strong hour management and productivity gains.
Executive Michael Bailen suggested that the favorable ratio of labor hours to traffic growth (below 50%) could persist through 2024. For 2025, he cautioned that they will be lapping a period of being well-staffed, which could cause the ratio to normalize. He stressed that operators will continue to staff appropriately to drive growth and that they will be 'learning together' what the 2025 ratio will ultimately be.
Dennis Geiger asked about the U.S. sales trajectory for the coming quarters, given current sales drivers, and whether the underlying guest count baseline trends are improving or set to improve in 2026.
CFO Ian Borden indicated that McDonald's expects U.S. comparable sales growth to accelerate in Q4 2025 compared to Q3's 2.4%, driven by lapping a prior-year food safety incident, the Monopoly campaign in October, and the EVM relaunch in November. He also noted that two-year stack comparable sales growth is expected to accelerate modestly. Chairman and CEO Chris Kempczinski added that the environment remains difficult with sticky inflation, particularly in beef prices, requiring the company to 'grind it out' despite strong execution and franchisee alignment.
Dennis Geiger asked about McDonald's outlook for US sales trajectory in the coming quarters, considering key sales drivers. He also inquired if the underlying guest count baseline trends are improving or are expected to improve in 2026.
CFO Ian Borden stated that McDonald's has seen two consecutive quarters of solid growth and is building momentum across all segments, despite a challenging consumer environment that worsened in Q3 and early Q4. He expects another solid quarter of growth in Q4, driven by strong execution across value, marketing, and menu news. US comparable sales growth is projected to accelerate in Q4 versus the 2.4% in Q3, benefiting from lapping a prior-year food safety incident, a strong start with Monopoly in October, and the November EVM rehit. International segments may see sequential deceleration due to tougher prior-year comparisons but are expected to accelerate meaningfully on a two-year stack basis. CEO Chris Kempczinski added that the environment remains difficult with sticky inflation, including high beef prices, and expects pressures to continue into next year, requiring a 'grind it out' approach.
Dennis Geiger inquired about the U.S. sales trajectory and underlying momentum for the upcoming quarters, balancing the encouraging response to Snack Wraps and other initiatives against the challenging industry-wide traffic trends.
Executive VP & CFO Ian Borden acknowledged that the QSR industry environment remains challenging, with negative traffic and a bifurcated consumer base where low-income visits are down double-digits. While these headwinds are expected to persist, he expressed confidence in the company's planned menu and marketing calendar for the rest of the year. He reiterated the expectation that the second half of the year will be stronger than the first, with Q4 likely outperforming Q3 due to lapping a prior-year food safety event.
Dennis Geiger asked about the U.S. sales trajectory and underlying momentum for the upcoming quarters, considering the encouraging response to the Minecraft campaign and value platforms.
CEO Christopher Kempczinski stated that Q1 was expected to be the toughest quarter, with momentum building through the year. He highlighted the success of the Minecraft promotion, which sold out in 10-14 days, and the promising soft launch of McCrispy chicken strips. Kempczinski emphasized that in a pressured consumer environment, superior execution in value, marketing, and innovation is critical for growth.
Dennis Geiger asked about the initial customer response to the McValue platform in the U.S., its effect on customer value perceptions, and the resulting impact on guest count, check, and margins.
CEO Christopher Kempczinski stated that early take rates for the McValue platform are in line with expectations and that customer perceptions of value are improving. CFO Ian Borden added that the 'buy 1 add 1 for $1' offer is accretive to the overall check, has good margins, and has performed particularly well during breakfast. Kempczinski also noted that the $5 Meal Deal is driving larger orders, with an average check over $10.
Dennis Geiger requested additional insights on the public health situation, including its recent trajectory and any potential financial implications beyond the initial commentary.
CFO Ian Borden provided context, noting the U.S. business had strong momentum entering October with mid-single-digit positive comps before the incident caused a shift to daily negative sales. He affirmed the belief that the most significant events are now past and that the primary focus is on restoring consumer confidence and regaining the prior business momentum, suggesting no material impact is expected on full-year guidance.
Dennis Geiger sought clarification on the performance of newer stores in year two, specifically if the 2024 class is flipping to positive after 18 months, and asked for insights into the 2026 outlook for new store dynamics and levers to maintain growth after strong year-one comps.
Tricia Tolivar, CFO, confirmed that 2024 restaurants open for over 18 months are indeed returning to positive same-restaurant sales, and the 2025 cohort is expected to follow a similar pattern in 2026. To maintain growth, CAVA is exposing general managers to high-volume markets like New York to better prepare them for managing demand and retaining consumers.
Dennis Geiger asked for clarification on the performance of newer stores in year two, specifically if the 2024 class is flipping to positive after 18 months, and for insights into what 2026 might look like with this new store dynamic and 'honeymoon' phenomenon.
CFO Tricia Tolivar confirmed that the trends are as articulated: initial stores impacted by the 'honeymoon' are performing better year-over-year, and 2024 class stores open 18+ months are indeed returning to positive same-restaurant sales. She expects the 2025 cohort to perform similarly in 2026, and CAVA is implementing strategies like exposing general managers to high-volume markets to better manage demand and retain consumers.
Dennis Geiger from UBS Group followed up on the strong new store openings, asking what year-two performance might look like for these cohorts and if CAVA would consider actions like marketing to support them.
CFO Tricia Tolivar highlighted that recent cohorts are significantly outpacing expectations, with the 2024 class already achieving its year-two cash-on-cash return target in year one. She framed this as an acceleration of value and said that while they will monitor the trend, they view the outperformance as a potential pull-forward of future growth.
Dennis Geiger asked about franchisee feedback on the Wingstop Smart Kitchen rollout, inquiring if the rollout across similar stores at various stages has been largely consistent or if there's variability. He sought more granular detail on performance along different stages of implementation, such as two or three months in.
President and CEO Michael Skipworth expressed encouragement with over 2,000 restaurants now operating with the Wingstop Smart Kitchen. He noted that speed of service times experience significant reduction in the six-to-eight-week period post-implementation, with consumer frequency showing traction in the three-to-six-month window, all organically without marketing support. He highlighted the opportunity for 2026 with the new ad campaign and operating standards.
Dennis Geiger inquired about franchisee feedback on the Smart Kitchen rollout, asking if the rollout and performance across stores at various stages have been consistent, and sought more granular detail on performance at different timeframes (e.g., two, three months in).
President and CEO Michael Skipworth expressed encouragement with over 2,000 restaurants now operating with the Smart Kitchen platform. He highlighted the unveiling of new operating standards to brand partners and the focus on driving these standards in 2026. He detailed that speed of service reductions are typically seen within 6-8 weeks, and frequency traction with consumers emerges in the 3-6 month window, all organically, which provides excitement for 2026 with marketing support.
Dennis Geiger inquired about Taco Bell's significant outperformance relative to the industry and sought insights into how this momentum is expected to continue into next year, considering planned initiatives like more weeks of crispy chicken, fries, beverages, and updates to the cravings menu and guest experience.
CEO Chris Turner attributed Taco Bell's continued market share gains to craveable food, convenient experience (fastest drive-through, Voice AI stores up 14% QoQ, 28% YoY digital sales growth), and unbeatable value. He noted growth across all income bands and increased engagement from younger consumers and families in Q3, expressing confidence in sustained momentum into 2026, aligning with the goal of $3 million AUVs by 2030.
Dennis Geiger from UBS asked for more insights into Taco Bell's significant outperformance relative to the industry and how this momentum is expected to carry into the next year, specifically mentioning planned expansions of crispy chicken, fries, beverages, and updates to the cravings menu and guest experience.
CEO Chris Turner attributed Taco Bell's success to craveable food, convenient experiences (fastest drive-through, Voice AI), and unbeatable value, which resonated across all income bands and attracted younger consumers and families. He detailed Q3 innovations like crispy chicken and Baja Blast Midnight, and expressed confidence in continued growth towards the $3 million AUV target by 2030.
Dennis Geiger asked for more color on the challenging U.S. consumer environment, particularly regarding the low-income demographic, and how Yum's brands are positioned to succeed.
CEO David Gibbs stated that the current environment is advantageous for Taco Bell, which drives over 80% of U.S. profit. He noted that Taco Bell is seeing clear trade-in from fast-casual and is experiencing transaction growth across all income bands, with no pullback from lower-income consumers. Gibbs highlighted that Taco Bell has not had a single negative sales week this year and attributed its success to innovation and a strong value proposition, with more launches planned for H2.
Dennis Geiger asked for more detail on the global store development outlook, franchisee sentiment, and the company's confidence in hitting unit growth targets amid macro uncertainty.
CFO Christopher Turner affirmed confidence in the development plan, citing the upbeat mood at the recent global franchise convention and the strength of their well-capitalized franchisees. He noted that Q1 gross openings were higher than in 2023, with the net number impacted by planned closures in Turkey and strategic closures at Pizza Hut. He highlighted KFC's strong development and stated that Pizza Hut's net development is expected to be higher year-over-year for the rest of the year. CEO David Gibbs added that Yum China also reiterated its development confidence.
Dennis Geiger inquired about the health of Yum's international franchisees, the impact on the 2025 growth outlook, and the general condition of international markets, asking if they are improving, stabilizing, or gaining market share.
CEO David Gibbs explained that international markets are improving, breaking down KFC's performance into three segments: markets heavily impacted by the Middle East conflict are recovering strongly (up 11% in Q4 vs. down 12% for the full year), unimpacted markets are accelerating (10% system sales growth in Q4), and other markets are also seeing recovery. CFO Chris Turner added that strong franchisee health is evidenced by the 4,500 gross new units opened during the year, calling it the ultimate test of their system's appeal.
Dennis Geiger asked about Yum! Brands' high-level strategy for managing profitability in 2025 if macroeconomic pressures persist, with a specific focus on the outlook for G&A growth and divisional cost management.
CFO Chris Turner stated that while specific 2025 guidance would be provided on the next call, the company's fundamental growth drivers remain strong. He noted that G&A would see benefits from recent productivity initiatives, though this would be partially offset by a reset in incentive compensation. Turner reiterated confidence in the long-term business model, driven by the performance of Taco Bell, strong international unit growth at KFC, and an expanding digital ecosystem.
Dennis Geiger asked about learnings from Chipotle's 2025 Limited Time Offer (LTO) launches that could inform the strategy for 2026, particularly for maximizing impact in the current environment through marketing or timing, given the plan for more incremental LTOs. He also asked about other ways the company might invest margin to drive top-line growth beyond pricing.
CEO Scott Boatwright noted that repeat LTOs performed well, driving transactions and spend, and that consumers purchasing LTOs show exponentially higher lifetime value. He highlighted the surprising success of dips like Adobo Ranch and Red Chimichurri, which also drove incremental trial for carne asada. For 2026, the strategy will involve a blend of new and historic innovation, focusing on new news, including protein LTOs, sauces, dips, and sides. Beyond pricing, Boatwright mentioned the positive impact of investing in abundant portions, which has driven positive social media engagement. He also stated that annual ad spend will remain around 3% but strategic incremental spending could occur for opportunities with a four-plus ROAS (return on ad spend) to drive top-line and margin.
Dennis Geiger asked about learnings from Chipotle's 2025 limited-time offer (LTO) launches that will inform the ramp-up to 3-4 LTOs in 2026, focusing on maximizing impact through marketing or timing. He also inquired about other potential aspects of investing margin to drive top-line growth beyond pricing, such as portion size or ad spend.
Scott Boatwright (CEO) noted that repeat LTOs performed well, driving transactions and spend, and that LTO purchasers show higher lifetime value. He highlighted the unexpected success of new dips like Adobo Ranch and Red Chimichurri, which also drove incremental trial for Carne Asada. For 2026, the strategy will blend new and historic innovation, including sauces, dips, and sides, to deliver 'new news.' Regarding margin investment, Scott mentioned the positive impact of abundant portions and confirmed that the 3% annual marketing spend will remain intact, with potential for incremental spending on strategic opportunities that yield a 4+ return on ad spend (ROAS).
Dennis Geiger from UBS Group asked for specifics on sales trends through June and July to level-set the underlying performance, and questioned the timeline for returning to mid-single-digit comp growth.
CFO Adam Rymer detailed the two-year comp stack, which was around +8% in April, dipped in May, but returned to the 8% level in June and has been 7-8% in July. CEO Scott Boatwright expressed confidence in returning to mid-single-digit comps in the near term, citing easing comparisons, upcoming LTOs, a new rewards program for college students, and operational benefits from the produce slicer rollout.
Dennis Geiger asked about sales trends between lunch and dinner dayparts and which initiatives are expected to be most impactful in driving transaction growth in the second half of the year.
CFO Adam Rymer noted that dinner has been holding up better than lunch. CEO Scott Boatwright emphasized that great throughput is the most critical driver, which will be aided by the new produce slicer. He described marketing and digital initiatives as providing additional 'topspin' to accelerate growth.
Dennis Geiger of UBS Group AG asked for a bigger-picture view on the long-term same-store sales algorithm, questioning if a mid-single-digit growth rate is still the appropriate underlying trajectory for the business.
CEO Scott Boatwright affirmed that mid-single-digit comp growth is the correct long-term expectation for the organization. He acknowledged the rough start to the current year due to factors out of their control but expressed confidence in the annual plan, stating the low-to-mid-single-digit guidance for 2025 is appropriate given the current situation. CFO Adam Rymer concurred.
Dennis Geiger followed up on the mid-single-digit comp expectation, asking if it assumes positive traffic, and inquired about the price and mix expectations for the remainder of the fiscal year.
CFO Mika Ware indicated that Chili's price would likely be around 4% for the entire year. She noted that mix and traffic, as they lap significant prior-year numbers, could be negative, flat, or positive, settling into a 'neutralish' zone.
Dennis Geiger asked about the assumptions for traffic and price within the mid-single-digit comp expectation for the balance of the year, and whether mix expectations remain similar to previous projections.
Mika Ware, EVP and CFO of Brinker International, indicated that if planned January pricing is implemented, Chili's price would likely be around 4% for the full year. She noted that traffic and mix could be in a 'neutralish zone' (negative to flat to positive) as they lap significant prior-year numbers.
Dennis Geiger from UBS asked about any shifts in the contributors to sales momentum during the quarter and sought the latest updates on new customer acquisition and their subsequent frequency and behavior.
CFO Mika Ware explained that the fiscal 2026 sales composition will shift towards lower pricing (3-4%) and flattish mix, with a continued focus on positive traffic. She noted that the company is successfully growing across all income levels and that despite a large influx of new and lapsed users, visit frequency has remained stable, indicating strong operational execution is retaining these new guests.
Dennis Geiger asked if there has been any notable shift in the biggest contributors to Chili's sales momentum, such as the 3 For Me platform, Triple Dipper utilization, or marketing benefits.
CFO Mika Ware responded that the momentum has been very sustainable and consistent. She noted that in Q4, they will lap some of the Triple Dipper's initial ramp-up, which will likely cause about a one-point moderation in mix, but she affirmed that traffic continues to be very strong year-over-year with no slowdown.
Dennis Geiger of UBS inquired about the value proposition, specifically the mix of the "3 for Me" platform, how value scores are trending relative to strong sales, and for more color on the mix between new customers and increased frequency from existing ones.
CFO Mika Ware stated the "3 for Me" mix was stable at just over 19%, similar to the prior quarter. CEO Kevin Hochman added that value scores are very strong, attributing this not just to price but to the entire experience, including better food, service, and atmosphere. He noted that while competitors can undercut on price, they struggle to replicate the overall value equation. He also confirmed directionally that both new guest acquisition and frequency are up but declined to provide specific numbers.
Dennis Geiger requested further details on the cadence of investments and margin items for fiscal 2025, and asked about the sustainability of the traffic growth driven by social media initiatives.
CFO Mika Ware detailed that marketing costs will ramp up in Q2-Q4, while R&M expenses will moderate in the second half of the year, leading to the largest margin improvements in Q1 and Q2. CEO Kevin Hochman attributed the sustained social media success to a professional team that actively monitors trends and creates engaging content, noting the longevity of the campaign's impact is a testament to its quality.
Dennis Geiger followed up on the loyalty program, asking if its benefits for 2026 would be similar to 2025 or build upon it, and if the 100 basis points contribution target was still relevant. He also asked about the stability and sequential changes in delivery and off-premise performance.
Matt Clark, EVP and CFO, stated they are evolving the loyalty program and expect to build on benefits next year, focusing on reducing friction and improving the guest experience, but are cautious about overstating near-term contributions. David Gordon, President, reported total off-premise sales remained very stable at 21% of sales, with delivery at about 10% and other channels making up the rest.
Dennis Geiger followed up on the loyalty program, asking if the benefits to 2026 would be similar to 2025 or build on that, and if the previously discussed 100 basis points contribution from loyalty was still the right level to consider. He also asked for an update on delivery performance in the quarter.
Matt Clark, EVP and Chief Financial Officer, stated that the loyalty program is evolving and providing incremental contribution, with expectations to build on it next year, though not yet specifying a contribution level. He highlighted the app's role in reducing friction and improving the holistic guest experience. David Gordon, President, reported that total off-premise sales remained very stable at 21% of sales, with delivery accounting for about 10%, and online ordering and phone/walk-up making up the rest.
Dennis Geiger asked about any notable consumer behaviors at Olive Garden, LongHorn Steakhouse, or across the broader portfolio, specifically regarding performance across dayparts, desserts, or alcohol consumption.
Raj Vennam, SVP & CFO, highlighted a lower preference for alcohol across most brands. He noted that LongHorn Steakhouse saw greater growth in lunch compared to dinner, though all dayparts were growing. In fine dining, weekday weakness was observed, attributed to a drop-off in business travel.
Dennis Geiger asked if there were any notable consumer behaviors at Olive Garden, LongHorn Steakhouse, or broadly across the portfolio related to performance across dayparts, or within menu categories like desserts and alcohol.
CFO Raj Vennam noted a general trend of lower preference for alcohol across most brands. He also mentioned that LongHorn Steakhouse has seen lunch grow more than dinner, though all dayparts are growing. In fine dining, there's a slight drop-off in business travel, leading to some weekday weakness.
Dennis Geiger asked if there were any notable behaviors at Olive Garden, LongHorn, or broadly across the portfolio related to performance across day parts or within menu items like desserts and alcohol.
Raj Vennam, CFO, noted a general trend of lower alcohol preference across most brands. He mentioned that LongHorn has seen lunch grow more than dinner, though all day parts are growing. In fine dining, he highlighted some weekday weakness due to a drop-off in business travel.
Dennis Geiger from UBS Group asked about the sustainability of Olive Garden's strong momentum into fiscal 2026, considering factors like Uber, menu innovation, and promotions. He also questioned if the updated long-term comp guide was primarily driven by delivery.
President & CEO Rick Cardenas stated that Olive Garden's current momentum is factored into the annual guidance and that if delivery over-performs, the brand may increase investments in other areas like affordability, which could moderate the SSS figure for the right long-term reasons. He clarified the higher long-term comp guide is more reflective of slightly higher inflation assumptions than in the past, not solely driven by delivery.
Dennis Geiger asked about recent trends in Olive Garden's customer value scores and requested any early data on the incrementality of sales from the new Uber Direct delivery partnership.
President and CEO Ricardo Cardenas stated that Olive Garden's value scores have been gradually improving over time, driven by the total experience rather than just price. On delivery, he noted that while it's still early, they are observing 40-50% incrementality from the Uber Direct channel, even before significant marketing support. This effect is already incorporated into their financial guidance.
Dennis Geiger asked if any sales contribution from the Uber Direct rollout was included in the full-year guidance and inquired about the future of menu innovation at Olive Garden.
Executive Ricardo Cardenas confirmed that no incremental sales from the Uber Direct rollout are built into the current fiscal year guidance. He also stated that there will be more menu innovation at Olive Garden, including both the return of fan favorites and new limited-time offers at compelling price points to attract value-seeking guests.
Dennis Geiger asked for more details on recent traffic trends, specifically if any improvement has been observed within the current quarter's trajectory. He also questioned the nature of the recent weakness (e.g., regional, demographic) and the near-to-medium term plans to recover traffic, including the 'front porch feedback' initiative.
Craig Pommells (SVP & CFO) indicated that traffic was down approximately 1% before August 19th, and the Q1 guidance reflects expectations for sequential improvement, particularly in the second half of the year. He noted that declines are broad-based but larger in the Southeast (excluding Florida), with the over 65 cohort showing less decline. Julie Felss Masino (President & CEO) outlined plans including new menu innovation, bringing back guest-requested items, college football advertising, and the launch of 'front porch feedback' to gather direct input from loyalty members.
Dennis Geiger requested more details on Cracker Barrel's traffic trends, specifically if there has been any improvement in the weekly cadence since the August 19th logo change. He also asked about the nature of the recent weakness (e.g., regional, age cohort, frequency) and the near-to-medium term plans to recover traffic, including the 'Front Porch Feedback' initiative.
Craig Pommells, SVP and CFO, noted that traffic was down about 1% before August 19th, and the Q1 guide reflects current expectations, with anticipated sequential improvement throughout fiscal 2026, accelerating in the second half. He added that declines are relatively broad-based but larger in the Southeast (excluding Florida), with the over-65 cohort showing less decline. Julie Masino, President and CEO, highlighted new menu innovations, the return of guest-requested breakfast items, upcoming college football marketing, and the launch of the 'Front Porch Feedback' initiative to gather direct input from loyalty members.
Dennis Geiger inquired about the recent traffic trends, asking for more detail on any improvements in trajectory or weekly cadence, and sought information on the nature of the weakness (regional, cohort, frequency). He also asked about specific near-term plans to recover traffic, including the 'front porch feedback' initiative.
SVP and CFO Craig Pommells noted that prior to August 19th, traffic was down about 1%, and the Q1 guide reflects expectations for sequential improvement, with greater recovery in the second half. He added that declines were broad-based but larger in the Southeast (excluding Florida), with the over-65 cohort showing less decline. President and CEO Julie Felss Masino highlighted new menu innovations, the return of guest-requested breakfast items, and upcoming college football marketing, emphasizing the launch of 'front porch feedback' for loyalty members to gather direct input.
Dennis Geiger inquired about the business momentum quarter-to-date in Q2, particularly around the Thanksgiving period, and asked for more details on the loyalty program's impact on customer frequency and other benefits.
CFO Craig Pommells stated that Q2 performance was pleasing and in line with expectations. He noted that this year's Thanksgiving strategy was adjusted from the prior year to better balance top-line results with guest experience, employee experience, and profitability, with a successful increased emphasis on dine-in. CEO Julie Masino added that the loyalty program, with over 6 million members, is driving higher frequency, spend, and check averages. She highlighted successful tests using the program to drive incremental retail purchases.
Dennis Geiger asked about customer trends observed during the quarter, particularly regarding key demographics like age and income, and requested more detail on the profile of new loyalty program members. He also asked for clarity on fiscal 2025 G&A expense guidance and the status of the previously announced $50-$60 million cost savings plan.
CEO Julie Masino noted a slight recovery in the 65+ guest cohort and a spending decline among the under-$60k income group, but no other major demographic shifts. She stated the company is focused on loyalty members' behavior rather than their demographics. CFO Craig Pommels added that dinner trends are improving. He confirmed the $50-$60 million three-year cost savings target remains, but it will not fully flow through in the fiscal 2025 investment year, and G&A is expected to normalize in late fiscal 2026 and 2027.
Dennis Geiger asked Tarun Lal, CEO, to discuss how the company views brand-specific missteps in relation to the current macro and competitive environment, and how these dynamics influence future plans.
Tarun Lal, CEO & Board Director, acknowledged macro headwinds but emphasized that businesses prepared to deliver value prosper. He highlighted priorities of simplifying marketing messages for transparency and trust, and enhancing brand distinctiveness through unique IP (games) and effective communication to stand out in a crowded media landscape.
Dennis Geiger asked CEO Tarun Lal to elaborate on how the company considers the current macro environment and competitive landscape, beyond brand-specific missteps, when formulating its plans.
CEO Tarun Lal acknowledged macro headwinds but emphasized that businesses must be prepared for cycles and deliver value. He highlighted the focus on simplifying marketing messages, building trust through transparent value, and making the brand distinctive by offering unique IP games and effective communication to stand out in the competitive landscape.
Dennis Geiger asked how management considers the macro environment and competitive landscape relative to their plans, beyond brand-specific missteps.
Tarun Lal (CEO) acknowledged macro headwinds but emphasized that consumers seek value, and D&B's focus is on simplifying marketing messages and promotions to build trust and communicate clear value. He also highlighted efforts to enhance brand distinctiveness through unique IP games and effective communication.
Dennis Geiger from UBS Group asked management to weigh the impact of macro headwinds versus brand-specific issues on performance and sought clarification on the long-term new store growth outlook.
Interim CEO Kevin Sheehan expressed confidence that the company's internal improvement initiatives are powerful enough to 'ride through' the current economic landscape and outperform the industry. He also described a long-term growth algorithm, which was later clarified by CFO Darin Harper to reaffirm the strategy of opening 10-14 new stores annually.
Dennis Geiger asked for a high-level breakdown of the recent traffic and sales pressures, questioning how much was attributable to macro-economic factors versus brand positioning or self-inflicted execution issues.
Interim CEO Kevin Sheehan attributed the pressures to a mix of factors but emphasized that a significant portion was due to "our own mistake." He cited the rollout of untested and complicated attractions that took up valuable floor space as a key self-inflicted error. He expressed confidence that correcting these internal issues will strengthen the business and mute the impact of the broader economic landscape.
Dennis Geiger of UBS requested an update on the performance of the Friendswood, TX test remodel, particularly in its second year. He also asked for observations on how macroeconomic pressures impacted consumer visit and spending patterns during the third quarter.
CFO Darin Harper reported that the Friendswood location, now lapping its remodel, continues to perform well, and the company remains pleased with where its performance has settled. Regarding the macro environment, he noted it continues to be a headwind, with the low-end consumer being particularly pressured, as their spending is down significantly more than other income groups. He described the overall trend as 'a little bit more of the same' compared to Q2.
Dennis Geiger asked for an update on the performance of the Friendswood test remodel as it enters its second year and whether the trajectory of other remodels is meeting expectations. He also inquired about any notable changes in macro-driven consumer behavior during Q3.
CFO Darin Harper reported that the Friendswood location, now lapping its remodel, continues to perform well, and its results have moderated as expected but remain pleasing. He confirmed that overall remodel performance shows strong growth and is not a short-term burst. Regarding macro trends, he stated the environment remains a headwind, particularly with the low-end consumer, and that trends were largely a continuation of what was seen in Q2.
Dennis Geiger of UBS Group asked for more detail on the drivers behind the company-owned restaurants' same-store sales outperformance, particularly the lift from digital menu boards and FreshAI.
Chief Accounting Officer Suzie Thuerk attributed the outperformance to technology investments. She highlighted that the FreshAI automated ordering technology is driving a higher mix by recommending products based on factors like seasonality and local popularity. She also noted that investments in training and reducing employee turnover have paid off, contributing to the stronger performance in company-owned locations.
Dennis Geiger asked for an update on the unit development outlook, including the strength of the franchisee pipeline and overall demand in the current environment, as well as any impact on plans for 2026 and beyond.
Kirk Tanner, President and CEO, expressed satisfaction with the strong start to the year, noting that over 60% of new units were international, which validates the company's global strategy. He reaffirmed confidence in the 2025 development pipeline and beyond, citing a focus on improving restaurant-level economics, lowering build costs, and leveraging an increased investment in the build-to-suit program to support growth.
Dennis Geiger of UBS asked for more details on the 2025 unit development outlook, including how much of the target is covered by existing agreements and the overall sentiment of franchisees toward growth.
CEO Kirk Tanner expressed a high level of confidence in the 2% to 3% net unit growth guidance for 2025, stating that development agreements are in place and the near-term build pipeline is visible. He highlighted that this growth rate represents the most new restaurants built in over 15 years and mentioned that a more detailed long-term outlook will be provided at the March 6 Investor Day.
Dennis Geiger of UBS Group AG asked for an update on the breakfast daypart's performance, how its progress compares to internal plans, and the general outlook for this segment heading into 2025.
CEO Kirk Tanner confirmed that breakfast remains a crucial long-term strategic initiative and a significant growth opportunity. He highlighted that its sales growth is outpacing both the overall business and the QSR breakfast category, providing a profit-accretive tailwind for the company.
Dennis Geiger from UBS Group requested more detail on the momentum within the international business, specifically asking to unpack the performance of Burger King International across key markets and its implications for long-term development.
CEO Josh Kobza highlighted strong results in Spain, Germany, and the UK, driven by innovation and balanced value offerings. He also pointed to a significant and faster-than-expected turnaround in China, where comparable sales turned positive. Executive Chairman Patrick Doyle added that Popeyes International is also experiencing rapid growth, with system sales comping in the high 20s to low 30s percent.
Dennis Geiger asked about the performance of Tim Hortons in Canada, questioning the impact of the macroeconomic environment and the brand's expected resiliency. He also inquired about the effectiveness of the 'back-to-basics' strategy in maintaining market share.
CEO Josh Kobza responded that the brand's long-term 'back-to-basics' plan is working, citing its strong performance over the last five years. He acknowledged a dip in Canadian consumer confidence in Q1 but noted it has since improved in Q2, correlating with a rebound in Tim Hortons' sales. Kobza expressed strong confidence in the business, highlighting recent successful promotions like the loaded sales box with Ryan Reynolds and a strong pipeline for the rest of the year.
Dennis Geiger sought clarification on the Burger King China development situation's impact on 2025 guidance and asked how the Burger King and Tim Hortons brands plan to drive sales in their home markets amid a challenging macroeconomic backdrop.
CFO Sami Siddiqui noted a resolution for Burger King China is expected soon, after which guidance implications will be updated. CEO Joshua Kobza detailed 2025 plans, highlighting that Burger King will focus on family partnerships and Whopper innovation, while Tim Hortons will build on its PM food and cold beverage platforms alongside new breakfast innovations.
Dennis Geiger asked for an update on the unit growth outlook, seeking details on key drivers for the remainder of 2024 beyond the Burger King China situation and inquiring about the long-term global development opportunities that could offset pressures from the China market.
CEO Josh Kobza outlined a multi-pronged growth strategy for 2025 and beyond. In the U.S., he highlighted improving profitability at Burger King, accelerating development at Firehouse Subs, and new agreements at Tim Hortons. Internationally, he pointed to significant opportunities in markets like India, Mexico, Japan, and the U.K. (for Popeyes), where strong unit economics are fueling franchisee demand for new restaurants.
Dennis Geiger of UBS asked about the sustainability of Tim Hortons' strong momentum in Canada, questioning the underlying drivers and the potential impact from the Canadian consumer macro environment.
CEO Josh Kobza attributed the brand's sustained success to improvements in operational basics, strong franchisee collaboration, and consistent positive traffic. He highlighted future growth from the PM food daypart, with new Flatbread Pizzas, and an expanding cold beverage lineup, expressing confidence for the remainder of the year.
Dennis Geiger of UBS Group followed up on mobile ordering, asking why the company isn't marketing it more aggressively to accelerate adoption and how exactly it is contributing to transaction growth.
CEO Christine Barone stated they are very happy with the current adoption rate, which is being driven by customer demand rather than heavy marketing. She explained that mobile ordering drives transactions by increasing frequency among users and capturing previously untapped demand in the morning daypart. The focus remains on ensuring an exceptional customer experience through the app rather than pushing for faster adoption.
Dennis Geiger asked for more details on the mobile order program, specifically regarding its incrementality and throughput benefits. He also questioned if there has been any notable change in the intensity or customer utilization of promotions and offers.
CEO Christine Barone confirmed that mobile order is driving incrementality through increased visit frequency and faster rewards program adoption in new markets. She highlighted its success in boosting the morning daypart. Regarding promotions, she stated that while discount contribution has not increased, the company's sophistication in targeting offers has improved, leading to greater efficacy without higher spending.
Dennis Geiger asked about the shop-level throughput opportunity for 2025, the incrementality of mobile ordering, and the current marketing strategy supporting the mobile order adoption.
CEO Christine Barone explained that throughput efforts are focused on staff deployment and that mobile ordering naturally aids this by balancing production between walk-up and drive-thru windows. She emphasized a steady, operationally-focused rollout for mobile order rather than a heavy marketing push, noting that incrementality is observed through increased frequency from existing members, new member acquisition, and improved line speed.
Dennis Geiger of UBS inquired about the characteristics of shops with double the average mobile order mix and asked for early insights into the long-term food strategy.
CEO and President Christine Barone explained that higher mobile order penetration is seen in newer shops where new customer routines are being established, which also boosts Dutch Rewards sign-ups. Regarding food, she positioned it as a strategic lever to build morning routines and drive beverage sales, viewing it as a 2026 and beyond opportunity that will be tested methodically throughout 2025 to ensure operational excellence.
Dennis Geiger of UBS Group sought clarification on new store performance outside of Texas and asked which of the company's four key initiatives would be most impactful for driving sales in the near term.
CFO Michelle Hook clarified that new store underperformance is primarily concentrated in Texas, with other new units performing largely as expected. CEO Michael Osanloo detailed a bifurcated strategy: operational improvements like drive-thru speed are key for the core Chicago market, while multichannel marketing is the priority for building awareness in new markets. He identified the Perks loyalty program as the most significant long-term driver for both.
Dennis Geiger followed up on the newer stores, asking about any operational or staffing learnings, and also inquired about any observed shifts in customer behavior that contributed to recent sales strength.
CEO Michael Osanloo reiterated that newer stores are well-run with generous staffing, reinforcing that the primary issue is brand awareness in a tough macro environment, not operations. He highlighted that a key behavioral trend is strengthening momentum in the drive-thru channel, which he attributed to successful initiatives to improve speed and guest satisfaction.
Dennis Geiger of UBS Group asked for more detail on the U.S. sales outlook for the second half of 2025 and the key initiatives providing confidence in the reiterated 3% same-store sales growth guidance.
CEO Russell Weiner highlighted the ongoing 'best deal ever' promotion and the national rollout of DoorDash, which he noted is twice the size of Uber in pizza sales. CFO Sandeep Reddy added that the carryout business was a significant contributor, with comps up 5.8% driven by the Domino's Rewards program, and that both delivery and carryout are expected to be positive for the full year.
Dennis Geiger asked about key initiatives beyond Stuffed Crust and DoorDash that are expected to help accelerate U.S. sales to meet the full-year guidance, such as loyalty, promotions, or other new items.
Chief Executive Officer Russell Weiner pointed to the 'Hungry for MORE' strategy, which includes two new products annually and value promotions that create 'talk value.' Chief Financial Officer Sandeep Reddy highlighted the revamped loyalty program as a multi-year frequency driver, noting it added 2.5 million active members last year.
Dennis Geiger of UBS inquired about the 2025 U.S. same-store sales guidance, specifically the expected lower performance in the first half versus the back half, and the anticipated impact of aggregators, loyalty, and new product innovation.
CFO Sandeep Reddy explained the back-half weighting is due to the meaningful impact from new aggregator partnerships expected later in the year. CEO Russell Weiner added that while specific promotions won't be disclosed, the company's "Hungry for MORE" strategy will be the driving force behind all initiatives.
Dennis Geiger from UBS asked for more detail on the U.S. growth drivers for 2025, noting that the outlook for the domestic business seems unchanged. He specifically inquired about the expected contributions from the loyalty program, marketing initiatives, and new product innovation.
CEO Russell Weiner pointed to the 'Hungry for MORE' strategy as the roadmap for 2025. While avoiding specific future promotions for competitive reasons, he confirmed the company will lean into renowned value with programs similar to 'Emergency Pizza' and 'MOREflation,' and will continue its cadence of launching two new products per year. He emphasized the strong track record of the team since the strategy's launch as a reason for confidence.
Dennis Geiger of UBS requested more detail on the company's value positioning, including current value scores, and how the strategy might evolve given the competitive and consumer environment.
Chief Customer and Digital Officer Ryan Ostrom explained that the definition of value is shifting from just low price to overall satisfaction and 'value for the dollar.' He cited the Munchie Meal, priced around $9-$10, as an example of 'food by the pound' value. He also confirmed the company continues to lean into core value items like its 2 Tacos and the 'Munchie's Under $4' platform, focusing on ensuring the message resonates with consumers.
Dennis Geiger requested an update on the Del Taco refranchising strategy, including franchisee demand and feedback, and any future milestones for increasing the franchise ownership percentage.
CEO Darin Harris reported that Del Taco is now approximately 80% franchised, which he considers an 'asset-light' level. While deals for another 13 restaurants are in progress, the company is currently in a 'holding pattern' on further sales. This pause allows them to assess the impact of AB1228 and the market environment on restaurant valuations to ensure they receive appropriate value for the assets.
Dennis Geiger asked about customer value perceptions at both brands, the potential evolution of their value strategies, and how franchisee sentiment for new unit development has been impacted by the dual-brand concept.
IHOP President Lawrence Kim noted they are testing an 'everyday' House Faves menu and exploring value through digital channels. CEO John Peyton described Applebee's value strategy as an 'evolution' centered on its '2 for $25' platform. Regarding development, Peyton expects a healthy mix of single and dual-brand openings, highlighting IHOP's consistent unit growth and a new, lower-cost Applebee's prototype.
Dennis Geiger from UBS followed up on the value strategy, asking for the total value incidence mix in Q4 and for more details on the upcoming Applebee's everyday value platform, including its testing status and launch timeline.
CEO John Peyton reported that the value mix was approximately 27-28% for Applebee's and 17-18% for IHOP, consistent with recent quarters. He elaborated that the new Applebee's platform, launching late spring/early summer, will expand on the core "2 for $25" deal to also target single diners and groups, incorporating new menu items to enhance its appeal.
Dennis Geiger asked for the value incidence as a percentage of transactions for both brands in Q3. He also requested an update on the off-premise business initiative, including its current status and timeline.
CEO John Peyton reported Q3 value incidence was 31% at Applebee's and 16% at IHOP. For off-premise, IHOP President Jay Johns highlighted the rollout of a call center to address challenges with phone orders. Applebee's President Tony Moralejo attributed off-premise gains to extending dine-in LTOs to takeout, targeted marketing, and improved operational efficiency.
Dennis Geiger from UBS questioned the potential throughput opportunity in traditional stores and sought context on the Average Unit Volume (AUV) potential for Infinite Kitchen (IK) locations.
CEO Jonathan Neman outlined a two-pronged approach to improving throughput. For traditional stores, initiatives include optimizing labor deployment, testing planted positions, and 'Project Turbo' to leverage both front and digital make-lines. For Infinite Kitchens, he emphasized their capacity of 500 orders per hour and recent ergonomic improvements to the finishing station, enabling sub-5-minute order times even during peak hours and unlocking significant AUV potential.
Dennis Geiger asked for additional insights on the Average Unit Volumes (AUVs) at Infinite Kitchen (IK) stores, given another quarter of performance data and an expanded number of IK locations.
CFO Mitch Reback stated that the company expects IK store volumes to grow over time due to faster throughput and higher customer satisfaction. He noted that while it's still early, the Naperville IK (open over a year) is showing this, and the recently retrofitted Penn Plaza store grew at the faster end of the range for New York City in October.
Dennis Geiger of UBS asked for more detail on the Outback value strategy, specifically the performance of the Aussie 3-Course promotion, including incidence levels and customer behavior, and how it addresses the brand's value perception.
CEO Mike Spanos explained that the Aussie 3-Course builds brand trust and frequency. He highlighted that while the offer leads with a $14.99 price point, a significant number of guests are trading up to more premium sirloin options and adding desserts for an extra charge. He emphasized that its inclusion on the everyday menu simplifies execution for restaurant teams compared to rotating LTOs.
Dennis Geiger asked for high-level thoughts on marketing strategy, especially given competitors' success with enhanced marketing, and requested more details for modeling the Brazil refranchising transaction, such as the royalty rate and closing timeline.
CEO Mike Spanos emphasized that the foundation of any marketing is a great guest experience, which is the primary focus. He noted that marketing spend and activity in Q3/Q4 were flat year-over-year. CFO Michael Healy added that while they have strong analytical capabilities for marketing ROI, communicating a new brand message for Outback will be a key consideration after the strategic work is complete. Regarding Brazil, Healy reiterated the deal terms, stated the goal is to close by year-end, and confirmed they will receive an ongoing royalty but did not disclose the rate.
Dennis Geiger asked about the international footprint, specifically if more closures are expected, and how the company plans to handle increased competitor activity on third-party delivery platforms.
CFO and EVP, International Ravi Thanawala stated that while some 'pruning' may continue, the major steps in optimizing the international footprint have been taken, with the 'narrow and deep' strategy yielding strong results in priority markets. President and CEO Todd Penegor added that the company will compete by executing its own playbook, balancing 1P and 3P channels and leveraging its premium positioning and innovation.
Dennis Geiger of UBS inquired about the sustainability of Tim Hortons' strong momentum in Canada, asking about the underlying drivers and the potential impact of the Canadian macro environment on the brand's outlook.
CEO Josh Kobza attributed the sustained success to foundational improvements in operations and a strong franchisee partnership. He highlighted that ongoing initiatives in PM food, such as Flatbread Pizzas, and growth in cold beverages provide further avenues for growth. Kobza emphasized that Tim Hortons' strong value proposition positions it well to continue performing in any consumer climate.
Dennis Geiger of UBS asked about the sustainability of Tim Hortons' strong momentum in Canada, the underlying drivers of its performance, and the potential impact of the Canadian consumer macro environment on its outlook.
CEO Josh Kobza expressed confidence in Tim Hortons' sustained performance, attributing it to improvements in operational basics, which have driven positive traffic and sales. Kobza highlighted future growth opportunities in the PM food daypart with new Flatbread Pizzas and an expanding cold beverage lineup, stating the team is confident about its strategy for the remainder of the year.
Performance on expert-authored financial analysis tasks