James Sanderson

James Sanderson asked about Hispanic consumer demand, which was previously identified as a difficult segment for Jack in the Box, and whether it has improved recently and at a richer pace. He also asked if the new in-store technology, specifically the POS and back-of-house systems, is expected to drive traffic or transactions in the back half of the year.

Answer

CEO Lance Tucker noted only slight, not significant, improvement in both low-income and Hispanic consumer segments over the last quarter, trending in line with overall sequential improvements. He confirmed that the new POS system (rolled out by end of August) and back-of-house systems (labor management and inventory, completed November 2025) are early in their utilization, with the focus for the balance of the year being to leverage these investments for efficiencies on both the top and bottom lines.

James Sanderson asked for more details on future franchisee acquisitions and whether Texas Roadhouse would ever consider refranchising its company-owned stores.

Answer

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.

James Sanderson of Northcoast Research asked about the company's pricing philosophy, specifically if they would raise prices to protect margins amid rising inflation, and requested clarification on the 2025 pricing roll-off schedule.

Answer

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.

James Sanderson of Northcoast Research inquired about the expected restaurant build-out costs for 2025 and asked for any feedback on advanced bookings for holiday parties.

Answer

CFO David Monroe stated that build-out costs for new restaurants are expected to be 'relatively stable' in 2025. He also clarified that Texas Roadhouse does not focus on the large party or banquet business, so holiday bookings are not a relevant performance indicator for the company.

James Sanderson from Northcoast Research asked for more details on the secret shopper study, specifically regarding observed delivery times and the potential opportunity to improve customer engagement and capture peak period demand.

Answer

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.

James Sanderson from Northcoast Research asked for clarification on the year-to-date traffic trend, questioning its balance across channels and whether the organic delivery channel had deteriorated sequentially.

Answer

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.

James Sanderson asked for the company's outlook on the third-party marketplace for the upcoming year, particularly concerning a major competitor's expanded partnership with DoorDash and the potential for share shifts.

Answer

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.

James Sanderson of Northcoast Research asked for details on same-store sales, including the Easter calendar shift's impact, Mother's Day booking trends, and potential exposure to tourism fluctuations. He also requested a traffic vs. check breakdown for Q1 comps and the long-term target mix for Benihana's company-owned versus franchised units.

Answer

CEO Emanuel Hilario clarified the Easter shift had a minimal impact and that Mother's Day bookings were tracking as expected, with the primary focus on operational execution. He noted some anecdotal evidence of reduced tourism from Canada and Mexico. Executive Tyler Loy provided the comp breakdown, stating average check was up about 4% while mix was slightly down. Hilario concluded by stating the long-term goal for Benihana is a 50/50 split between company-owned and franchised restaurants.

James Sanderson asked if any specific sectors, geographies, or demographic groups within the U.S. restaurant business grew significantly ahead of or below expectations during the strong first quarter.

Answer

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.

James Sanderson asked how the capacity of an average Chili's has improved with recent changes, what constraints are being addressed, and requested an update on the off-premise sales mix.

Answer

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.

James Sanderson from Northcoast Research asked for specific examples of how operational improvements like the TurboChef ovens and the removal of the wing station solve problems for operators, such as improving throughput or reducing wait times. He also inquired about the marketing plan for the upcoming fajita launch.

Answer

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.

James Sanderson asked how household income demographics have changed since the TV ad launch, how that affects marketing allocation, and how strong new unit openings benefit the comp base.

Answer

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.

James Sanderson from Northcoast Research asked if the positive sales mix from Q1 could turn into a headwind as the company rolls out more promotions and marketing for the rest of the year.

Answer

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.

James Sanderson of Northcoast Research asked for more detail on the drive-thru optimization process, including whether menu bundling is part of the solution and how changes will improve performance.

Answer

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.

James Sanderson of Northcoast Research asked about the accelerated unit growth for 2025 and whether to view the absolute number or percentage growth as the go-forward run rate.

Answer

CEO Rob Lynch stated the company is 'really bullish' on the cash-on-cash returns from new company-operated Shacks, driven by strong sales, margin productivity, and lower build costs. He confirmed they will continue to increase development in 2025 and beyond, and are investing in the internal infrastructure for real estate and construction to support this accelerated growth.

James Sanderson of Northcoast Research asked if potential tariffs were impacting development build-out costs or material procurement, and whether there was any change in sentiment from real estate developers for long-term projects.

Answer

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.

James Sanderson asked for clarification on any restaurant closures embedded in the 2025 guidance and inquired about the long-term margin potential for North Italia and Flower Child.

Answer

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.

James Sanderson asked for details on recent Cheesecake Factory store closures, the net unit growth outlook for 2024 and 2025, expected G&A spending, and the company's view on the upcoming holiday season.

Answer

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.

James Sanderson requested a breakdown of Q2 same-store sales, asked if March traffic showed meaningful improvement, inquired about the unit development pipeline beyond fiscal '25, and questioned the feasibility of shifting to a U.S.-only supply chain.

Answer

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.

James Sanderson asked about plans for future mix-driving promotions, the impact of a recent high-check contest, the two-year stacked traffic trend, and the updated share count following the recent offering.

Answer

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.

James Sanderson inquired about the sales mix of the $12.99 Manicotti limited-time offer and asked how the new $14.99 'Buy One, Take One' promotion compares to what was offered in the market during the same period last year.

Answer

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.

James Sanderson asked about the performance of Olive Garden's 'Create Your Own Pasta' after its price was reduced over the summer. He also questioned whether Darden plans to feature more discounted promotions in the future.

Answer

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.

James Sanderson of Northcoast Research asked how the new operating model will impact profit flow-through on incremental sales and whether the engagement category guidance implies a need to capture market share to achieve growth.

Answer

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.

James Sanderson requested more perspective on the decline in the Bridal category's average transaction value (ATV), asking if the trend was worsening and what the key drivers were. He also asked for a comparison of the current year's Black Friday sales trend to the prior year.

Answer

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.

James Sanderson from Northcoast Research asked about Signet's marketing strategy, inquiring about the budget's growth, its use as an investment to drive traffic, and its near-term impact on operating income. He also followed up on the current sales mix of lab-grown diamonds.

Answer

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.

James Sanderson of Northcoast Research inquired about the expected trend for the breakfast daypart's sales mix in 2025 and whether a step-back should be anticipated due to investment shifts.

Answer

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.

James Sanderson of Northcoast Research followed up on the Krabby Patty promotion's success, asking if Wendy's plans to increase its use of partnerships or celebrity endorsements for future product launches.

Answer

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.