James Sanderson • Northcoast Research

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CFO David Monroe stated that while they maintain an active dialogue with their small base of remaining franchisees, there are no imminent acquisition plans beyond what has been disclosed. He definitively stated that the company is not considering selling company-owned Texas Roadhouse restaurants to franchisees.

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CEO Gerald Morgan reiterated that they will always view pricing through a conservative lens and will revisit the topic with operators at the end of the summer before making decisions for the back half of the year. CFO David Monroe clarified the pricing cadence: 3.1% in Q1, 2.3% starting in Q2, with a 0.9% increase rolling off at the end of Q3, which presents the next opportunity for a pricing action.

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An executive, likely CFO Ravi Thanawala, explained that while delivery times vary significantly by market and time, the company is leveraging its partnership with Google to improve the tech stack and service levels. President and CEO Todd Penegor added that the extensive study of 5,000 restaurants confirmed that while carryout and digital experiences perform well, there are addressable opportunities to improve the delivery experience, and action plans are in place.

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CFO Ravi Thanawala clarified that quarter-to-date, carryout and aggregator channels are both positive on an order basis, with carryout growing the fastest. The overall traffic loss is concentrated in the first-party organic delivery channel. However, he explicitly stated that the organic delivery transaction run rate has improved sequentially in Q1-to-date relative to both Q4 and Q3.

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CFO and EVP, International Ravi Thanawala expressed confidence, stating that Papa John's continues to gain its 'fair share, if not more' on aggregators and that the category has room for all players to grow. President and CEO Todd Penegor reinforced this, highlighting the company's strong partnerships, innovation, premium positioning, and value offerings as key competitive advantages in the 3P channel.

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CFO Ravi Inukonda responded that growth has been stable and resilient across the business for several quarters. He noted that all cohorts, both new and old, and across different income levels, continue to perform well. The healthy performance is attributed to underlying product improvements rather than outperformance in any single demographic or sector.

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CEO Kevin Hochman explained they have a 'North of 6' team studying their highest-volume restaurants (>$6M AUV) to apply their operational learnings system-wide, stating there are no physical capacity constraints. CFO Mika Ware added that the off-premise mix remains stable at around 24-25%, with delivery and carry-out splitting that mix about evenly for Chili's.

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CEO Kevin Hochman provided detailed examples. Removing the bulky wing station frees up physical space in the busy fry zone, allowing for an extra team member during peak hours, which increases throughput and reduces cleaning time. Using steak weights cuts cooking time significantly without sacrificing quality. He explained these changes make running a restaurant easier even with higher volume. Regarding the fajita launch, he clarified it will be supported by in-restaurant merchandising and operational fixes, not a major TV advertising campaign.

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CEO Kevin Hochman stated that while they are anecdotally seeing different guests, the brand is growing with all income demographics, so there is no plan to change the current marketing mix. CFO Mika Ware clarified that new restaurants do not enter the comparable sales base for 18 months, but closing underperforming stores while opening strong new ones is beneficial to long-term margins and brand health, even if net revenue impact is neutral.

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CEO Robert Lynch stated the goal is to drive both traffic and mix improvement simultaneously. He explained this will be achieved not through discounting, but by launching premium LTOs, using combos to increase attachment of high-margin items like fries and beverages, and innovating on shakes and sides. The strategy is to drive mix growth without taking price on core menu items.

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CEO Rob Lynch confirmed that menu bundling 'will absolutely be part of that solution' and is launching soon to address the biggest time gap, which is at the order station. He also highlighted the new kitchen innovation lab in Atlanta, which will allow for rapid testing of equipment, flows, and processes, accelerating innovation '100x'. He noted that even their first single-lane drive-thru, without these new modifications, is already posting the best service times in the system, indicating significant upside.

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EVP and CFO Matt Clark explained that there is no anticipated tariff impact on 2025 construction costs, as most materials have been ordered and shipped, and costs have already normalized. President David Gordon added that sentiment from real estate developers remains promising, as the company's portfolio of experiential dining brands continues to be highly sought after for new projects.

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EVP and CFO Matt Clark confirmed that the guidance includes one anticipated Cheesecake Factory closure around mid-year. He stated that the long-term target for mature locations at both North Italia and Flower Child is a restaurant-level margin of 16% to 18%, similar to The Cheesecake Factory, as their business models and return profiles are expected to be equivalent.

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EVP and CFO Matt Clark clarified that one closure was due to a site condemnation and the other was a strategic lease exit. Executive Etienne Marcus projected net unit growth of about 20 restaurants in 2024. Clark guided for up to 24 openings in 2025 and targeted a 10 basis point reduction in G&A as a percent of sales. He views the holiday season outlook as consistent and predictable.

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CFO Jeff Uttz provided the Q2 comp breakdown: -5.3% total, comprising -8.5% traffic and +3.2% price/mix. Hajime Uba, via interpreter Benjamin Porten, noted March's absolute performance was strong but faced a tough year-over-year comparison. He confirmed a 20%+ unit growth outlook for the foreseeable future and stated it would be difficult to source entirely domestically due to product availability, but Kura's direct vendor relationships provide a significant advantage in navigating tariff impacts versus competitors.

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Hajime Uba and Benjamin Porten confirmed that mix-driving tools like the 'Perfect Pair' campaign, premium LTOs, and spending-threshold promotions have been effective and will continue to be used. Jeff Uttz advised focusing on the strong sequential traffic improvement from Q4 rather than the noisy two-year stack. Benjamin Porten provided the updated share count as approximately 12 million shares.

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CFO Raj Vennam clarified that the Manicotti LTO had a low single-digit sales mix, while the core Create Your Own Pasta offering at a similar price point maintained its typical 9-10% mix. President and CEO Ricardo Cardenas explained that last year's marketing was focused on brand equity, not a specific price-point promotion, making this year's 'Buy One, Take One' a more direct call-to-action for consumers.

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President and CEO Rick Cardenas confirmed that reducing the price of 'Create Your Own Pasta' back to $12.99 from a higher point led to better performance and increased preference. He framed this as finding the right everyday value point for a core menu item, not as a shift towards a broader promotional strategy. He reiterated that future plans involve highlighting value, not introducing deep discounts.

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COO & CFO Joan Hilson stated the new model targets a 30-35% flow-through on incremental comps over time by driving margin expansion and SG&A leverage. CEO James Symancyk emphasized that focusing on the largest brands is key to this. Regarding engagements, Hilson confirmed that while they see a recovery, their guidance is conservative, and the company's explicit goal is to gain market share in the category.

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Executive Joan Hilson explained that while overall engagement units are recovering, the decline in Bridal ATV was significantly impacted by the digital banners, which have a high penetration of engagement sales. She noted the company is managing this through the product mix, particularly with a strong Fashion assortment. She stated that the company did not provide a comparable Black Friday metric for the prior year.

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CEO Virginia Drosos positioned marketing as a key competitive advantage and an ongoing investment to differentiate banners and drive traffic. CFO Joan Hilson confirmed that marketing spend is expected to be up for the year, contributing to SG&A deleverage, but that the company is also focused on driving efficiencies. Hilson added that lab-grown diamonds now represent a mid-teens percentage of total sales.

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CEO Kirk Tanner reiterated that breakfast sales grew 6% for the full year 2024 and clarified that the company expects the breakfast daypart to continue growing faster than the rest of the business in 2025. He emphasized that it will remain a tailwind for growth, driven by continued focus on awareness, upcoming product innovation, and operational excellence, implying no step-back is expected.

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CEO Kirk Tanner stated that the success is encouraging and proves Wendy's can be an excellent partner where both parties benefit. He confirmed they will continue to seek opportunities to elevate the brand and menu through strategic partnerships that align with their goals.

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