James Salera

James Salera asked for a breakdown of volume growth between increased frequency from existing customers and new customer acquisition. He followed up by asking if the frequency increase was driven by product mix or by traditional bone-in wing customers.

Answer

CEO Michael Skipworth confirmed that growth is coming from both record new guest acquisition and a notable uptick in frequency. Executive Alex Kaleida added that frequency growth is occurring across all income cohorts and that both classic bone-in wings and the boneless business are growing, supported by improvements in brand health metrics like awareness and value perception.

James Ronald Salera inquired about the composition of The Vita Coco Company's growth, specifically if multipacks indicate increased purchases by existing households, and whether upcoming inclusion in modern hydration sections would attract new households or re-engage lapsed customers.

Answer

CEO Martin Roper explained that the multipack strategy aims to increase value, velocity, and pantry stock, partly driven by strong club channel performance. He estimated that the company's overall growth is balanced, with approximately half coming from new households and half from increased consumption by existing households. He declined to provide 2026 gross margin guidance, citing numerous moving pieces related to tariffs and other factors.

James Salera from Stephens Inc. asked about the drivers behind the strong growth in multi-packs and questioned what the key levers for demand generation would be during the summer.

Answer

CEO Martin Roper attributed the sustained multi-pack growth to consumer demand for convenience and value, a trend that has been building for two years, rather than short-term stockpiling. For the summer, Roper highlighted that the company's significantly improved inventory position is the most critical factor, as it will allow them to execute a normal promotional cadence, which will be especially beneficial in Q3 when they lap last year's major service issues.

James Salera asked for clarification on the 1-liter convenience store launch relative to 500ml distribution, an update on the Powerlift brand's scaling strategy, and insights into the customer profile for the new Vita Coco Treats product.

Answer

Executive Michael Kirban and CEO Martin Roper clarified that the 1-liter launch was an incremental distribution point and not related to minor changes in 500ml ACV. Roper stated the strategy for Powerlift is to focus on its online business while researching how to improve its on-shelf appeal. Kirban noted that Vita Coco Treats is attracting a mix of new and existing customers and is skewing younger than the core brand's average consumer, presenting a key opportunity to grow the franchise.

James Salera inquired about inventory levels on a unit basis, whether inventory would be fully replenished by year-end, and if a major club promotion that was missed in Q3 could be rescheduled for the first half of 2025.

Answer

CFO Corey Baker clarified that the significant increase in inventory on the balance sheet was primarily goods in transit on the ocean, a positive sign of future availability. He noted that year-end in-market inventory levels will depend on consumer demand. He also explained that major club promotions require 6-9 months of planning and cannot be easily rescheduled, but they hope to participate in similar promotional slots next year.

James Ronald Salera inquired about the percentage of COGS represented by cocoa, details on cocoa hedge layering, and the potential for earlier or greater gross margin relief if cocoa prices continue to fall.

Answer

CFO Chris Bealer stated that cocoa represents a mid-single-digit percentage of overall costs, including direct purchases and components. He explained that the company is covered at high prices for the first half of the year to ensure supply, with a transition to much lower, deflationary costs in Q3 and Q4, carrying into fiscal 2027. President and CEO Geoff Tanner added that recent spot price declines present further opportunity for Q4 and into 2027.

James Ronald Salera inquired about the percentage of Simply Good Foods' COGS that cocoa represents and sought commentary on the layering of cocoa hedges. He also asked if continued declines in spot cocoa prices could lead to earlier or greater gross margin relief than currently projected for Q3.

Answer

CFO Chris Bealer stated that cocoa, including its components in coatings and inclusions, represents a mid-single-digit percentage of overall costs. He explained that the company is covered far into the year, with the first half at fairly high prices due to ensuring supply. Transition to much lower, deflationary costs is expected in Q3, with even lower prices impacting Q4 and carrying into fiscal year 2027. President and CEO Geoff Tanner added that spot cocoa prices have come down considerably in recent months, offering further opportunity for Q4 and into 2027.

James Salera asked about the net change in total company SKU count in the club channel after accounting for gains in Quest and OWYN and losses in Atkins. He also inquired about the in-store positioning of Quest's salty snacks and whether retailers are placing them in the traditional salty aisle.

Answer

CFO Shaun Mara estimated that the net result in the club channel would be 'slightly positive' in terms of total space over time, as gains from Quest and OWYN offset Atkins' losses, though timing may vary. CEO Geoff Tanner described expanding physical availability as a major growth opportunity for Quest. He confirmed they are actively working to get products like chips into mainline snacking aisles, citing an expanded test at a large mass retailer and a new retail execution team focused on driving displays outside the nutritional aisle.

James Salera from Stephens Inc. asked about the drivers of Atkins' RTD shake growth, specifically regarding new versus existing consumers, and the potential to cross-sell them to other Atkins products.

Answer

CEO Geoff Tanner attributed the growth to both new users and increased buy rates, driven by new advertising and the launch of the incremental 'Atkins Strong' shake. He noted that while it's early, the brand historically sees consumers who enter via one product, like shakes, begin to shop across the entire portfolio over time.

James Salera inquired about OWYN's production capacity for fiscal 2025, given past constraints with Quest chips. He also asked about capital allocation plans for FY25, noting the company's low leverage.

Answer

CEO Geoff Tanner stated there are no near- or medium-term capacity constraints for OWYN, noting that the Simply Good Foods network has helped expand it. CFO Shaun Mara added they are working to optimize the entire RTD network for future cost savings. Regarding capital allocation, Mara confirmed that strong cash flow is a hallmark of the company and they will continue to evaluate all options, including debt paydown, share repurchases, and M&A, to return cash to shareholders.

James Salera of Stephens Inc. inquired about the path to stabilizing unit share in the core packaged bread category and the timeline for recovery. He also asked if the new Wonder cake innovation is driving incremental sales or cannibalizing existing cake products.

Answer

CEO Ryals McMullian stated that a recovery in the bread category is now more likely in 2026 than in the second half of the current year, citing persistent economic uncertainty and a weakening consumer. He emphasized that the company's strategy is to focus on differentiation and innovation rather than heavy promotions. Regarding the Wonder cake, McMullian noted it was too early to determine its incrementality but that it was more than offsetting declines in the legacy cake business so far.

James Salera inquired about the drivers behind the sequential increase in to-go sales and asked for a reminder of the margin differential between to-go and dine-in transactions.

Answer

CEO Gerald Morgan attributed the strong to-go sales to improved operational execution, better packaging, and a temporary boost from weather in February. Executive Michael Bailen explained that when dining rooms are full, to-go sales are highly incremental to margin dollars and are margin-neutral to slightly positive on a percentage basis.

James Salera of Stephens Inc. asked about the drivers of 2024 traffic between new and existing guests, and also inquired about the value proposition and average check at Bubba's 33 compared to competitors.

Answer

Executive Michael Bailen stated it's challenging to separate new versus existing guests but believes both contributed to growth, with local store marketing aimed at attracting new customers. CEO Gerald Morgan expressed confidence in Bubba's 33 pricing on burgers, pizza, and wings, highlighting quality and variety as key differentiators. Michael Bailen estimated the Bubba's per-person average check is around $20, though pizza makes it harder to calculate precisely.

James Salera from Stephens Inc. asked a two-part question about menu mix. He inquired about the mix contribution in the quarter, specifically alcohol versus add-ons, and how the recent 0.9% price increase was distributed across the menu.

Answer

Executive Michael Bailen reported that Q3 mix was slightly negative by about 20 basis points, driven by negative alcohol mix, while entree, soft beverage, and add-on mix were all positive. CEO Gerald Morgan added that the 0.9% price increase was generally spread across the entire menu to achieve the overall percentage.

James Salera asked if the mid-2026 timeline for the Midlothian wastewater treatment solution could be accelerated and whether other plants could handle the interim volume. He also questioned if potential tariffs were creating new domestic sourcing opportunities with retailers.

Answer

Executive Brian Kocher responded that while they are trying to accelerate the Midlothian project, the timeline is constrained by equipment fabrication, and the capital is already included in maintenance CapEx guidance. He confirmed other plants are already helping meet demand, as overall capacity creation is ahead of schedule. Kocher does not see tariffs creating significant new business, as growth is driven by traditional demand generation and an accelerating pipeline.

James Salera asked about the composition of the 2025 revenue growth guidance, specifically the split between existing customer volume and new business wins, and the expected sequencing of gross margin throughout the year.

Answer

CEO Brian Kocher explained that approximately two-thirds of the guided growth comes from category expansion and existing customer performance, with the remaining one-third from known distribution wins and innovation. CFO Greg Gaba detailed that gross profit dollars would be split 44% in the first half and 56% in the second half, driven by investments in new supply chain roles impacting H1, with margins expected to ramp to an 18-19% run rate by Q4.

James Salera from Stephens Inc. asked about the sustainability of the company's significant market share gains, particularly the outperformance in untracked channels, and sought more detail on the specific factors driving the foodservice segment's strength despite a broader industry slowdown.

Answer

Executive Brian Kocher emphasized that untracked channels like foodservice and club represent the vast majority of their market. He noted that while they are seeing a deceleration of softness in tracked channels, their growth is primarily driven by solving customer challenges and innovation in untracked areas. For foodservice specifically, Kocher highlighted that the brands they support are outperforming the category and are often featured in high-growth promotional items and limited-time offers. He also pointed to new product launches co-developed with customers as a key growth driver in that channel.

James Salera asked if the 50%+ gross margin is sustainable and how the company will balance tariff headwinds with productivity savings. He also inquired about the convenience channel strategy and its link to DSD relationships.

Answer

CFO Girish Satya stated that gross margins in the upper 40s are sustainable, noting that tariffs represent a ~200 basis point headwind that the company will work to offset. CEO Amy Taylor confirmed the convenience strategy involves 12-ounce sleek cans within the DSD footprint (Northwest and Southwest), allowing for testing with regional and national banners, with branded coolers being a potential Phase II opportunity.

Asked about the customer impact of the Salted Caramel LTO (trial vs. frequency), learnings from digital advertising conversion, and an update on the DSD network's performance in the Pacific Northwest and future expansion plans.

Answer

The Salted Caramel LTO is believed to be driving both trial with new consumers and frequency with existing ones, supported by a revamped digital and influencer marketing strategy that has shown positive early results in test markets. The DSD network in the Pacific Northwest has successfully increased grocery velocity, outperforming other markets. The company is now expanding this DSD footprint into the Southwest, starting with Arizona, expecting similar positive outcomes for velocity and convenience channel penetration.

James Salera asked about the lack of visibility that led to the surprising quarterly underperformance and what investments in talent or systems could improve future forecasting. He also questioned why Snack promotions underperformed despite distribution gains.

Answer

CFO Lee Boyce conceded a need for better forecasting, highlighting investments in the commercial team to create top-to-top customer linkages and in digital capabilities for more real-time data. Regarding promotions, Boyce explained the lift was only 80% of expectations due to heightened competition in the club channel and poor in-store execution by retail partners in the mass channel, compounded by a general softening in the snacks category.

James Salera inquired about the specific in-store performance issues in the snacks category, the effectiveness of marketing and promotions, and what provides confidence that promotions shifted to the second half will be more successful. He also asked about the impact of broader salty snack category softness in December.

Answer

CEO Wendy Davidson explained that the company learned its brands respond better to feature and display than deep discounts, and that a shift from broad awareness campaigns to conversion-driven, occasion-based marketing was necessary. She stated the issue was less about category softness and more about Hain-specific promotional effectiveness and availability. She highlighted confirmed distribution gains in convenience stores and with a major retail partner as drivers for future growth.

James Salera asked for an outlook on the overall snacking category's performance and whether potential softness at the category level could create variability in Hain's expected distribution gains in the back half of the year.

Answer

Wendy Davidson, President and CEO, explained that Hain's confidence in its back-half snacking performance is based on controllable factors, not broad category trends. She cited a significant promotional timing shift from Q1 to Q3, incremental promotional activity in Q4, and the continued ramp-up of the Flavor Burst launch. Davidson noted that while some large competitors engaged in deep discounting, Hain's primary growth opportunity is expanding distribution for its high-awareness, low-penetration brands like Garden Veggie and Terra. She emphasized that their brands respond best to feature and display promotions rather than deep discounts and highlighted double-digit distribution growth in the C-store channel as a key initiative.

James Salera from Stephens Inc. asked about the specific category drivers that could push fiscal 2025 results from 'flat' to 'better than flat' guidance. He also inquired if the convenience store channel expansion was acquiring new households or driving incremental purchases from existing ones.

Answer

CFO Lee Boyce highlighted the second-half recovery of infant formula, a promotional timing shift in Garden Veggie Snacks, and expanded distribution for Greek Gods as key drivers. CEO Wendy Davidson added that regaining full distribution for infant formula and realizing sales from 13,000 new C-store placements for snacks are potential 'overdrivers.' Davidson also explained that C-store presence acts as brand building, driving awareness and trial in other retail channels.

James Salera questioned the drivers behind the raised same-store sales guidance, given tougher upcoming comparisons, and asked for the key metrics that would define a successful breakfast test.

Answer

CFO Michelle Hook outlined the factors supporting the guidance, including a ~3.5% price increase in Q2, a positive mix from growing kiosk adoption (nearing 30%), and traffic-driving initiatives like advertising and the Perks program. CEO Michael Osanloo explained that the breakfast test's success will be measured by internal metrics like comp lift, guest satisfaction, and, critically, the operational impact on the core lunch business.

James Salera asked for context on the implied negative traffic in the 2025 guidance compared to the broader QSR industry and inquired about the opening timeline for the new Atlanta location.

Answer

CEO Michael Osanloo explained that the guidance reflects a gradual improvement from the negative 3.7% traffic seen in Q4 2024, rather than an immediate turnaround. CFO Michelle Hook added that the guidance is conservative, acknowledging Q1 headwinds. Osanloo confirmed the Atlanta location will open in the back half of 2025 but noted that predicting volumes for a first-in-market restaurant is difficult.

James Salera of Stephens inquired about the specific changes in the smaller 'restaurant of the future' builds and asked if the company would consider more price-point-focused marketing or a value menu.

Answer

CEO Michael Osanloo detailed that the new prototype is 6,250 sq. ft., down from 7,800, with a smaller dining room to focus on growing off-premise channels, while retaining the 'food theater' kitchen. He firmly rejected the idea of a value menu or discounting, stating it would be 'false to who we are' and that the brand competes on everyday value, high quality, and abundant portions.

James Salera asked about the competitive landscape, specifically if Premier Protein needs to offer higher-protein shakes to compete with new 40g+ entrants, or if its current balance of taste and nutrition is sufficient.

Answer

President and CEO Darcy Davenport stated she does not believe 40g+ protein will become the standard. She emphasized that Premier's success is driven by its combination of approachable branding, great taste, and balanced nutritionals (high protein, low sugar/calories). She views category expansion into different protein levels as an exciting development for serving new occasions, but the 30g shake remains the core.

James Salera of Stephens Inc. asked why Premier Protein is succeeding in attracting new consumers more effectively than legacy brands and requested a breakdown of volume gains between new households and increased purchase frequency.

Answer

President and CEO Darcy Davenport attributed Premier's success to its position in the high-growth 'Everyday Nutrition' and 'Sports Nutrition' segments, which have a more positive, proactive health message compared to the stagnant 'Adult Nutrition' and 'Weight Management' segments. While not providing a specific breakdown, she confirmed that growth is driven by both attracting new households and increasing buy rate and repeat rates among existing consumers, a rare combination that demonstrates strong brand loyalty.

James Salera asked for the expected growth rate of the ready-to-drink (RTD) shake category and whether Premier Protein's distribution gains are from overall category expansion or from taking share from competitors.

Answer

President and CEO Darcy Davenport projected low double-digit growth for the RTD category. She stated that approximately 75% of Premier's growth is expected from new distribution and products. Because Premier Protein is a primary driver of category growth, it anticipates capturing the majority of new shelf space, supported by constructive conversations with retailers about the category being underspaced.

James Salera asked if retailers are becoming more aggressive in their bidding expectations to mitigate potential tariff impacts and whether the business TreeHouse opts not to pursue is typically removed from the retailer's assortment or awarded to a competitor.

Answer

CEO Steven Oakland clarified that the decision to pass on certain business is driven by an internal strategy to streamline complexity and improve supply chain efficiency, rather than retailer price pressure. He used sandwich crème cookies as an example where exiting complex seasonal items freed up capacity for core products. He added that while a smaller competitor might pick up a specialty item, the focus is on aligning TreeHouse's strengths with customer needs on high-volume items, which strengthens the retail partnership.

James Salera requested more color on the softness in private label consumption during Q4, noting the strength in discretionary-like categories such as pretzels and cookies seemed counterintuitive. He also asked about the expected drivers of base business volume in 2025.

Answer

Chairman, CEO and President Steven Oakland attributed the strength in specific categories to strong execution and share gains, while viewing the overall Q4 slowdown as a macro consumer spending issue rather than a private label problem. For 2025, he stated the company is conservatively planning for flat volume, which allows flexibility for margin-enhancing actions, supported by the profitable volume from the Harris Tea acquisition.

James Salera of Stephens Inc. asked about the potential impact of increased branded promotions on TreeHouse and whether the expansion of retailer-owned brands presents an outsized share gain opportunity.

Answer

CEO Steve Oakland stated that increased branded promotions would likely be a net positive by driving traffic to the category, given that current price gaps are historically wide in penny terms. He also confirmed that TreeHouse is actively partnering with retailers like Walmart on their new private label brand launches, viewing it as a significant growth opportunity.

James Salera of Stephens Inc. inquired about the key learnings from the increased marketing spend and sought details on why management expects Q2 to be the peak for commodity cost inflation.

Answer

CEO Chris Tomasso explained that the marketing efforts, though early, are showing positive results in traffic trends and are part of an iterative process. CFO Mel Hope detailed that commodity cost expectations are based on seasonal crop cycles and the anticipated rebuilding of cage-free egg-laying hen flocks, which should eventually increase supply and provide relief.

Jim Salera requested a breakdown of the commodity inflation forecast to isolate the impact of tariffs and asked whether the positive traffic guidance is expected to be driven by new customer acquisition or increased frequency.

Answer

CFO Mel Hope declined to separate the tariff impact, stating that management views inflation as a single, combined cost pool. He confirmed that the company's marketing plan is expected to drive both new guest visits and increased frequency from existing customers, contributing to the positive traffic outlook.

James Salera of Stephens Inc. inquired about the effectiveness of targeted marketing as a tool to drive positive dining room traffic in 2025 and its potential impact on the off-premise channel. He also asked what broader consumer trends would signal a recovery.

Answer

CEO Chris Tomasso confirmed that Q3 marketing tests yielded encouraging results and are being considered for 2025 plans, though on-premise and off-premise channels are treated distinctly. Tomasso identified the return to positive in-restaurant dining traffic at the end of Q3 as the key "bellwether" for a broader consumer recovery.

James Salera inquired if Alani Nu outperforms Celsius in certain retailers or formats and asked about the strategy for cross-pollinating the brands, including an update on branded and potentially co-branded cooler placements.

Answer

CEO John Fieldly identified significant opportunities for Alani Nu in channels like convenience, Amazon, and foodservice, where Celsius has a strong presence. He noted that cannibalization is minimal at around 15%. Regarding coolers, he confirmed it's a huge focus for the sales team. The company is evaluating co-branded coolers for smaller formats while prioritizing dedicated coolers where space allows, leveraging the strength of the combined portfolio.

James Salera asked about the incrementality of the Alani Nu acquisition, questioning whether the legacy Celsius brand is expected to grow in line with the category while Alani Nu provides the lift, or if both brands are expected to accelerate growth. He also asked about plans for Alani Nu's non-energy products.

Answer

CEO John Fieldly expressed confidence that the core Celsius brand will continue its above-category growth trajectory, driven by a robust 2025 innovation pipeline. He positioned Alani Nu as being earlier in its growth cycle, similar to where Celsius was two years ago, with significant untapped distribution opportunities in channels like food service and convenience, making both brands incremental growth drivers. He added that Alani's other products fit into the company's broader 'better-for-you' platform strategy.

James Salera of Stephens Inc. asked about the expected cadence of sales trends for the remainder of 2024 and into 2025, given promotional activities and new flavor launches. He also inquired about the consumer behaviors needed to re-accelerate overall energy drink category growth.

Answer

CEO John Fieldly confirmed that various Q4 promotional activities are planned and that the company is focused on its key growth drivers. He noted that a rebound in consumer traffic, particularly in convenience stores, and improving macroeconomic trends are needed for category acceleration. Fieldly highlighted that the sugar-free segment, now over 50% of the category, presents a significant tailwind for Celsius's portfolio.

James Salera questioned whether there is a concern that branded partnerships, such as the Frosty platform, could be overshadowed by the increasing number of value offerings from competitors in a softer consumer market.

Answer

Kirk Tanner, President and CEO, countered that igniting consumer passion points is a powerful value proposition in itself that drives traffic, referencing the successful SpongeBob event. He expressed confidence that these intentional collaborations create a strong connection with customers and generate brand enthusiasm that will not be drowned out by deep discounting from competitors.

James Salera of Stephens Inc. requested more detail on which menu components are driving the Q4 sales acceleration and how the company plans to maintain momentum after the Krabby Patty promotion concludes.

Answer

CEO Kirk Tanner attributed the Q4 momentum to a balanced performance across the menu, including large sandwiches, Saucy Nuggs innovation, and the Biggie Bag value platform. He expressed confidence that momentum would continue with upcoming launches like the salted caramel Frosty and the Mushroom Bacon Cheeseburger.

James Salera asked for the percentage of sales from SNAP dollars, the potential impact of proposed SNAP restrictions, and whether retailers are favoring products with fewer artificial ingredients in planograms.

Answer

CEO Michele Buck stated she does not anticipate a material impact from SNAP changes, as candy is only 2% of SNAP purchases and Hershey's buying patterns are similar for SNAP and non-SNAP households. She added that while retailers prioritize velocity, Hershey's ability to reformulate quickly could be an advantage.

James Salera of Stephens Inc. asked for the same-store sales composition for North Italia and inquired about how sales trends progressed through Q1 and into April, trying to parse whether the cautious outlook was based on observed trends or general prudence.

Answer

Executive Etienne Marcus provided the North Italia comp breakdown: negative 2% mix, 4.5-5% price, and negative 4% traffic, noting the impact of LA fires and weather. EVP and CFO Matt Clark reiterated that while sales are predictable, the overall environment feels less robust, and the cautious outlook combines this feeling with economists' forecasts for a slowdown, making it a prudent approach.

James Salera requested details on the size and timing of the planned FRC restaurant openings and asked about guest frequency patterns across the different concepts.

Answer

EVP and CFO Matt Clark stated the FRC openings would be spread throughout the year, with an average size of 5,000-6,000 sq. ft. and an expected AUV of around $6 million. President David Gordon clarified that an average Cheesecake guest visits 4-5 times a year, while Flower Child's fast-casual model supports higher frequency. North Italia and other FRC concepts have frequency patterns similar to The Cheesecake Factory.

James Salera asked for a breakdown of same-store sales components (pricing, mix, traffic) and inquired about the key drivers behind The Cheesecake Factory's strong traffic trends relative to its peers.

Answer

EVP and CFO Matt Clark provided the Q3 same-store sales breakdown: 4.5% pricing, a negative 2.1% mix, and negative 0.8% traffic, noting that traffic improved throughout the quarter to become positive in September. President David Gordon attributed the traffic outperformance to excellent operational execution driven by high staff retention, record-high guest satisfaction scores, and an incremental lift from the Cheesecake Rewards program.

James Salera of Water Tower Research questioned the Q2 revenue guidance, which implies an acceleration in the year-over-year sales decline, contrasting with the moderating trend of the past four quarters. He also inquired about the proportion of new coaches who have personally used GLP-1s, the sales performance of the ASCEND product line, and the expected SG&A impact from shifting marketing spend from company-led initiatives back to the coach network.

Answer

CFO Jim Maloney explained that the Q2 guidance reflects the timing of promotions; a successful Q1 2025 promotion is not being repeated in Q2, unlike the prior year, causing a temporary distortion in the year-over-year comparison. He stated the ASCEND product line accounted for a mid-teens percentage of orders, in line with expectations. Regarding the marketing shift, Maloney noted the pullback from company-led efforts would not be dramatic for modeling purposes, as these efforts will continue for customer reactivation. Chief Field Operations Officer Nicholas Johnson added that the company has not yet segmented new coaches by personal GLP-1 usage.

James Salera inquired about the Q1 2025 guidance, the expected cadence of company-led marketing for the new ASCEND product line, and the retention rates for customers transitioning off GLP-1 medications compared to traditional program users.

Answer

CFO Jim Maloney explained that the Q1 guidance reflects ongoing pressure on the number of active coaches, a metric that historically lags improvements in coach productivity. He highlighted that the year-over-year decline in coach productivity has moderated significantly, from -22.2% in Q1 2024 to -5.5% in Q4 2024, and expects this metric to turn positive in 2025, which would be a leading indicator for growth. CEO Dan Chard added that the company is in a transition period where newer coaches, who are more effective at engaging with GLP-1 users, are improving overall productivity. Regarding customer retention, Chard noted that it's still early, but many GLP-1 users leverage OPTAVIA to complete their weight loss journey after plateauing on medication, and the new ASCEND line is designed to support long-term maintenance, potentially increasing customer lifetime value.

James Salera inquired about the expected progression of same-store sales throughout 2025, including the anticipated split between traffic and mix. He also asked about the sequencing of new restaurant openings and potential impacts from equipment availability or tariffs.

Answer

CEO Emanuel Hilario projected a sequential improvement in same-store sales, moving from a guided -4% to -3% in Q1 to a full-year range of -3% to +1%. He highlighted positive Q4 traffic at STK and expressed confidence in traffic trends for both STK and Benihana in 2025 due to strategic initiatives. Regarding development, Hilario detailed that a Benihana in San Mateo and two STK locations are in the final pre-opening stages, with the balance of openings expected in late Q3 or early Q4. He stated that no immediate impacts from equipment availability are anticipated for 2025.

James Salera inquired about the assumptions for consumer recovery in the second half and whether Snacks' improvement hinges on category-wide recovery or company-specific initiatives. He specifically asked about Goldfish's performance and the impact of its innovation pipeline.

Answer

CEO Mick Beekhuizen stated that the company expects the Snacks top line to stabilize by Q4, driven by company-controlled actions rather than relying solely on category improvement. For the Goldfish brand, which is underperforming, he outlined a multi-pronged strategy focusing on enhanced promotional support, effective marketing, strong innovation execution, and new price-pack architecture to improve value perception and create accessible entry points for consumers.

James Salera from Stephens asked about the snacking promotional landscape and whether the industry is taking a more tactical approach. He also inquired about the strong momentum of Rao's with millennial households and if those learnings could be applied to other premium brands.

Answer

CEO Mark Clouse stated that snacking promotions are not out of line with historical norms and that Campbell's is advantaged by its presence in growing sub-categories. Regarding Rao's, he attributed its broad appeal, including with millennials, to its 'incredibly differentiated' and superior quality product. The key lesson for other brands, he explained, is to frame the value proposition around occasions where quality is paramount, making a premium price justifiable to a wider range of consumers, provided the product has true points of difference.

James Salera explored the dynamic of the premium Rao's brand growing across all income segments, asking if this reflects a trade-down from restaurants or a consumer willingness to pay for quality. He then asked how this trend informs the planned increase in marketing spend for fiscal 2025.

Answer

CEO Mark Clouse explained that Rao's success across demographics is driven by its strong value proposition compared to more expensive restaurant or food delivery options. He noted that for fiscal 2025, marketing spend will be balanced between communicating value and reinforcing brand equity through innovation and differentiation, particularly for brands facing new competition. This marks a shift from the more singular focus on value in the previous year.

James Salera inquired about Papa John's 2025 performance expectations relative to a flattish-to-down pizza category, asking if guided improvements stem from market share gains or a stronger consumer environment.

Answer

President and CEO Todd Penegor stated that while the category is value-focused, Papa John's initiatives in loyalty, CRM, and marketing mix are expected to drive sequential improvement and transaction growth, leading to market share gains. CFO Ravi Thanawala added that while transaction trends were down 5% in the first 8 weeks of the quarter, the company is seeing strong performance in carryout and aggregator channels and is focused on shortening the time between customer visits.

James Salera asked whether the growth opportunity on third-party apps is primarily about incremental brand awareness or about driving higher frequency for the pizza category overall.

Answer

President and CEO Todd Penegor suggested it is a combination of both. He sees an ongoing awareness opportunity as consumers learn pizza is available on 3P, which he believes will lead to higher frequency as they recognize pizza's value proposition. CFO and EVP, International Ravi Thanawala added that brand consideration improved during the quarter and the company holds a strong #2 position in key markets, providing a solid foundation for growth.

James Salera asked for details on the drivers behind the simultaneous increase in both household penetration and repeat purchase rates in 2024. He also inquired about the specific factors contributing to the outsized growth of the Boulder Canyon brand, particularly outside the natural channel.

Answer

CEO Howard Friedman attributed the concurrent growth in household penetration and repeat rates to high product quality and a diverse portfolio, which is effectively showcased in expansion markets. He expects penetration gains to continue in 2025. Regarding Boulder Canyon, Friedman explained its success is a 'velocity-led growth story,' meaning that in addition to gaining distribution, its rate of sale is accelerating rapidly due to strong consumer demand for its taste and better-for-you attributes like avocado oil.

James Salera asked for details on which brands are driving the 180 basis point increase in household penetration. He also drilled down on the On The Border brand, asking about the apparent softness in its complementary dips and sauces and whether that will turn around as the chip business scales.

Answer

CEO Howard Friedman identified On The Border and Boulder Canyon as the two 'shining stars' driving household penetration gains, fueled by distribution growth. Regarding On The Border dips and salsas, he explained that the softness is due to cycling a significant distribution contraction at a key retailer and a failed innovation from the prior year. He affirmed that the underlying health of the dips and salsa business remains strong.

James Salera asked about the dynamic of seeing strong growth in both premium (Boulder Canyon) and value (Utz bonus bags) potato chips. He also inquired about the overlap between the two brands' consumer households and the expected sequencing of future distribution gains for Boulder Canyon.

Answer

CEO Howard Friedman explained that the growth drivers were different: Boulder Canyon's success comes from distribution gains and its premium attributes, while Utz's growth was driven by merchandising support for the bonus pack in expansion markets. He suggested the households likely have some overlap but that Boulder's consumer skews more affluent and health-conscious. He confirmed that significant white space remains for Boulder Canyon distribution, and gains should continue.

James Salera asked about the drivers behind LongHorn's strong performance despite low marketing spend and requested a breakdown of its 7.5% same-restaurant sales growth.

Answer

Executive Ricardo Cardenas attributed LongHorn's success to long-term investments in food quality and execution, which resonates with guests more than price-point promotions. Executive Rajesh Vennam provided the sales breakdown: traffic was approximately 4.3-4.4%, and check was around 3%, driven by 2.8-2.9% pricing and a positive mix.

James Salera inquired about the current penetration of the Olive Garden mobile app among its guest base and any plans for in-restaurant marketing to encourage downloads. He also requested the specific traffic, pricing, and mix components for Olive Garden and LongHorn's quarterly performance.

Answer

President and CEO Rick Cardenas noted that over 60% of Olive Garden's to-go orders are placed digitally via the website or app, indicating strong digital engagement, but did not provide a specific app penetration percentage. CFO Raj Vennam provided the quarterly metrics: Olive Garden had pricing just under 2% and slightly positive mix, resulting in negative mid-5% traffic. LongHorn posted positive traffic of 0.7% with check growth of 3%, driven mostly by pricing.

James Salera asked about the key drivers that convert a consumer from using Freshpet as a food 'topper' to a 'main meal' and requested the potential size of this conversion opportunity.

Answer

Co-Founder and President Scott Morris explained that the conversion is encouraged through advertising that shows full bowls, a focus on their high-value 'HIPPOH' customers, and the introduction of larger pack sizes and multipacks. While he noted that a 'very big chunk' of users start as toppers, he emphasized the strategy is to cultivate main-meal behavior over time in their core consumer base, which already represents 90% of sales.

James Salera asked about the drivers behind converting consumers from using Freshpet as a 'topper' to a main meal, and if the company could quantify the current percentage of topper-only users.

Answer

Executive Scott Morris explained that converting users is a key goal, driven by messaging in advertising and developing products like multipacks and large-dog formats. While not providing a specific percentage, he emphasized the focus is on cultivating 'HIPPOH' households, which represent 90% of sales and are more likely to be main meal users.

James Salera from Stephens Inc. asked about the competitive threat from the grocery channel, specifically whether increased promotions on frozen pizza are pulling away lower-income consumers and what Domino's can do to retain them.

Answer

CEO Russell Weiner stated that based on the company's analysis, even during previous periods of macro headwinds, there has not been significant interaction or switching between Domino's customers and frozen pizza. He believes that when a delivery customer opts out, they are more likely to simply eat a meal made at home rather than specifically choosing a frozen pizza as a direct substitute.