Jeffrey Farmer

Jeffrey Farmer inquired about Brinker's restaurant level margin and G&A as a percentage of revenue expectations for fiscal 2026.

Answer

Mika Ware, CFO of Brinker International, projected that restaurant level margin would likely decrease slightly in the back half of FY26 compared to Q2, with cost of sales remaining similar or slightly higher due to commodity inflation and quality investments. She expects G&A to stay consistent with Q2's 4.1% of total revenues for the remainder of the fiscal year.

Jeffrey Farmer asked for an assessment of casual dining segment trends in December and January, seeking clarity on whether the demand backdrop is stable, softening, or improving. He also requested an update on restaurant level margin and G&A as a percentage of revenue expectations for fiscal 2026.

Answer

CEO Kevin Hochman described casual dining trends as mixed, with December being tougher, January showing improvement, and then weather impacting trends. He stressed focusing on controllable factors like food, service, and atmosphere to gain market share regardless of macro conditions. CFO Mika Ware indicated that restaurant level margin would likely decrease slightly in the back half compared to Q2 due to commodity pricing influx and quality investments. G&A as a percentage of total revenues is expected to remain similar to Q2's 4.1%.

Jeff Farmer sought clarification on the expectation for Chili's same-store sales to normalize in the mid-single-digit range for the balance of the fiscal year, and how updated commodity inflation expectations impact the FY2026 restaurant operating margin expansion guidance.

Answer

Mika Ware, EVP and CFO of Brinker International, clarified that mid-single digits is an average for Q3 and Q4, with Q2 potentially higher due to a holiday shift. She stated that due to Maggiano's softness, brand investments, and tariffs, restaurant operating margins for Brinker could be flat to slightly positive, rather than the previously guided 30-40 basis points expansion, despite planned pricing to offset tariffs.

Jeff Farmer sought clarification on the expected mid-single-digit same-store sales normalization for the balance of the fiscal year, and the impact of updated commodity inflation on the FY2026 restaurant operating margin expansion.

Answer

CFO Mika Ware clarified that the mid-single-digit normalization is an average for Q3 and Q4, with Q2 potentially higher due to holiday shifts. She stated that restaurant operating margins for FY2026 are now expected to be flat to slightly positive, rather than the previously projected 30-40 basis points of expansion, due to softer Maggiano's results, brand investments, and higher tariffs.

Jeff Farmer of Gordon Haskett Research Advisors requested more detail on the expected same-store sales components (traffic, pricing, mix) for Chili's in fiscal 2026 and the company's outlook for casual dining segment traffic.

Answer

CFO Mika Ware detailed the fiscal 2026 outlook, noting pricing will be closer to 3%, starting near 4% in H1 and tapering. Mix is expected to be relatively flat, with any positive mix being upside. The company plans for positive traffic throughout the year, continuing to significantly outperform the broader casual dining industry.

Jeffrey Farmer asked about the company's ability to either hold or grow restaurant-level margins moving into fiscal year 2026.

Answer

CFO Mika Ware expressed confidence that restaurant margins would be maintained or continue to grow. She cited key drivers including maintaining pricing power through business investments, achieving labor productivity as teams gain tenure with higher traffic, and leveraging fixed costs as average unit volumes (AUVs) increase.

Jeffrey Farmer of Gordon Haskett Research Advisors inquired about the company's capital allocation priorities for its increased free cash flow and asked for details on how it monitors the influx of new guests.

Answer

CFO Mika Ware reiterated the capital allocation strategy: first, reinvest in the business; second, pay down debt; and third, return excess cash to shareholders via methods like share repurchases. CEO Kevin Hochman explained that new guest monitoring is done via tokenized data from customer transactions, which allows them to distinguish new customers from those who have visited in the last 12-24 months. This data confirms that growth is driven by both new guests and increased frequency.

Jeffrey Farmer inquired about the updated outlook for full-year restaurant-level margins and the planned number of TV advertising weeks for fiscal 2025 compared to 2024.

Answer

CFO Mika Ware projected that full-year restaurant-level margins would be approximately 100 basis points or more favorable year-over-year. CEO Kevin Hochman and CFO Mika Ware clarified that fiscal 2025 includes 31 weeks of TV advertising, an incremental 4 weeks over the prior year, with advertising spend expected to ramp up by $3-4 million in Q2 and Q3, and by about $7 million in Q4.

Jeff Farmer requested more information on Wingstop's exposure to lower-income and Hispanic consumer cohorts, even if in broad strokes. He also questioned the significant increase in development guidance, asking about the drivers behind this overperformance and why it wouldn't theoretically continue in coming years.

Answer

President and CEO Michael Skipworth broadly linked exposure to lower-income and Hispanic consumers to the overall comp trend, noting Wingstop's over-indexation to consumers currently under pressure. He emphasized focusing on underlying brand health metrics. SVP and CFO Alex Kaleida attributed the development overperformance to executing market-level playbooks, brand partners scaling infrastructure, the increasing role of international growth (including five new markets this year), and successful execution of the Smart Kitchen rollout, all of which are expected to continue into 2026.

Jeff Farmer requested more information, even broad strokes, on Wingstop's exposure to lower-income and Hispanic consumer cohorts. He also asked for an explanation of the significant acceleration in development guidance over the past nine months and why this outperformance might not continue in future years.

Answer

President and CEO Michael Skipworth broadly linked exposure to the overall comp trend and the dynamic broadening across the industry, reiterating focus on underlying brand health metrics and viewing current choppiness as near-term. SVP and CFO Alex Kaleida attributed the accelerated unit growth to effective market-level playbooks, brand partners scaling infrastructure, faster international expansion, and successful execution of the Smart Kitchen rollout, emphasizing that maintaining best-in-class returns is key to sustaining this growth.

Jeffrey Farmer asked about the future strategy for the rapidly growing national advertising fund beyond the NBA deal. He also inquired about the unit-level economics and cash-on-cash returns for international franchisees and when international comps might be reported.

Answer

CEO Michael Skipworth stated there is still significant runway with current tactics, like increasing ad frequency, and the NBA deal is an example of the strategy's evolution. He confirmed international unit economics, especially in the U.K., are very similar to the U.S. with strong returns. Regarding international comps, he said the company wants to see more scale across markets before breaking them out.

Jeff Farmer asked for the implied Q4 Cheesecake Factory same-store sales range based on the provided $940-$955 million revenue guidance. He also inquired about any observed changes in consumer behavior across the portfolio for the younger demographic (35 and under) over the last couple of quarters.

Answer

Matt Clark, EVP and Chief Financial Officer, indicated that the implied Q4 Cheesecake Factory same-store sales range would be approximately -1% to 0%. Regarding consumer cohorts, he stated that the company does not parse data down to that level and noted that various analyst reports identify different challenged groups, making it difficult to pinpoint specific demographic shifts.

Jeff Farmer asked for the implied Q4 Cheesecake Factory same-store sales range based on the provided revenue guidance. He also inquired if the company observed changes in consumer behavior among the younger (35 and under) demographic.

Answer

Matt Clark, EVP and CFO, indicated an implied Q4 Cheesecake Factory comparable sales range of about negative 1% to 0%. He stated he couldn't parse consumer behavior down to specific cohorts like younger demographics, noting that recent analyst reports identified many challenged groups, making it hard to pinpoint one.

Jeff Farmer questioned the customer response to the February menu innovation and asked whether consumers are aware of and reacting to the new, lower-priced menu items.

Answer

David Gordon, President, explained that new menu items are featured on a separate card to ensure visibility and that the previous menu change showed good stickiness. He anticipates the new value-oriented items, like 'bites', will resonate well, potentially driving incremental add-on orders rather than just cannibalizing existing sales, similar to the past success of the 'small plates' category.

Jeff Farmer of Gordon Haskett asked for quantification of the year-over-year improvement in staff and manager retention and whether a sizable incremental opportunity for improvement remains.

Answer

President David Gordon quantified the retention metrics, stating that Q1 management attrition was in the mid-teens and staff attrition was between 60-70%, both best-in-class. He indicated the goal for the remainder of the year is to maintain these historically strong levels rather than expecting significant further improvement, leveraging the company's strong culture as a competitive advantage.

Jeffrey Farmer asked if the company is seeing signs of an 'increasingly anxious consumer' and inquired about price sensitivity at the core Cheesecake Factory brand.

Answer

EVP and CFO Matt Clark responded that they do not see evidence of an anxious consumer in their data, citing the brand's resilience and a strong Valentine's Day. He noted that price sensitivity is not a major issue, as attachment rates remain above 2019 levels and the company avoids discounting wars, unlike some competitors, particularly in the quick-service space.

Jeffrey Farmer asked about the factors contributing to the expected moderation in mix headwinds and sought clarity on the menu pricing outlook for Q4 and fiscal year 2025.

Answer

EVP and CFO Matt Clark explained that the mix headwind is moderating as the company laps the return of larger party sizes. He projected the headwind to be around -1% in Q4 and flatten out in 2025. He confirmed Q4 pricing will be 4.5%, same as Q3, and anticipates 2025 pricing will move closer to the historical 3% level, aiming only to offset inflation.

Jeff Farmer asked how Cracker Barrel's top-line strategy is impacted by increasing competitive low-price point offers in casual and family dining, especially after recent brand dynamics. He also questioned the rationale behind the 4-5% menu pricing for fiscal 2026, which is ahead of commodity and wage inflation, and the expectation for consumer acceptance.

Answer

President and CEO Julie Felss Masino acknowledged the competitive promotional environment but emphasized Cracker Barrel's inherent value, citing an average check of around $15 compared to higher industry averages. She highlighted abundant, scratch-made food, specific value offerings like the $7.99 Sunrise Special and $10.99 Campfire meals, and the effectiveness of their barbell pricing strategy and loyalty program. SVP and CFO Craig Pommells added that their revamped pricing approach has consistently shown good flow-through, positive mix, and improving value scores, with careful attention to maintaining entry price points.

Jeff Farmer asked how Cracker Barrel's top-line strategy is impacted by the increasingly aggressive low-price point offers and value promotions from competitors in the casual and family dining sectors. He also questioned the rationale behind the 4-5% menu pricing for fiscal 2026, which is notably higher than commodity and wage inflation, and the expected consumer acceptance.

Answer

Julie Felss Masino (President & CEO) highlighted Cracker Barrel's strong value proposition, including an average check of around $15, abundant scratch-made food, and successful promotions like the $7.99 Sunrise Special and $10.99 campfire meals. She noted that their barbell pricing strategy and loyalty program continue to resonate, with recent promotional activities driving guest engagement and improving value scores. Craig Pommells (SVP & CFO) explained that their revamped pricing approach has consistently delivered good flow-through, positive mix, and improving value scores, and that a 4-5% increase on a $15 check is a smaller dollar amount, making it acceptable to guests, especially with entry price points maintained and loyalty program benefits.

Jeff Farmer asked how Cracker Barrel's top-line strategy is impacted by the increasingly aggressive low-price point offers and value promotions from casual and family dining peers. He also questioned the rationale behind the 4-5% menu pricing for 2026, which is notably higher than commodity and wage inflation, and the expectation for consumer acceptance.

Answer

Julie Masino, President and CEO, emphasized Cracker Barrel's strong value proposition, citing an average check of around $15 compared to higher industry averages, abundant scratch-made food, and successful barbell pricing strategies like the $7.99 Sunrise Special and $10.99 Campfire meals. She also highlighted the loyalty program as a key value driver and the positive reception of recent promotional activities. Craig Pommells, SVP and CFO, added that value scores continue to improve. Regarding pricing, Craig explained that the revamped pricing approach has consistently delivered good flow-through, positive mix, and continued gains in value scores, noting that a 4-5% increase on a $15 check is a smaller dollar amount and that entry price points are carefully maintained.

Jeff Farmer from Gordon Haskett Research Advisors inquired about the magnitude of the 'strong start' to Q4 relative to Q3's +1% same-store sales and asked for specifics on the expense management actions taken during the third quarter.

Answer

SVP and CFO Craig Pommels explained that sales trends improved sequentially from a soft February through March and April, with the positive momentum continuing into Q4 driven by the Campfire promotion. Regarding expenses, he noted that discretionary G&A spending was tightened in Q3, and Q4 G&A levels are expected to normalize to be more in line with Q1 and Q2.

Jeffrey Farmer inquired about the same-store sales outlook for the second half of fiscal 2025 given consumer anxiety, and how this sentiment is manifesting across different income and age demographics.

Answer

CFO Craig Pommells acknowledged that Q3 may be pressured by consumer challenges but noted recent trends have improved and Q4 initiatives should help. He highlighted gains with the over-55 age cohort and relatively similar performance between under and over $60k income groups, a recent shift. CEO Julie Masino added that Cracker Barrel's strong value proposition, including a lower average check than peers and a successful loyalty program, positions the company well in the current macroeconomic environment.

Jeff Farmer asked about the specific comparable store sales trends for Q3 2025 to date, following the Q2 results, and sought elaboration on Dave & Buster's challenges regarding value perception and potential opportunities to improve it.

Answer

CFO Darin Harper clarified that Q3 comparable store sales trends were not specifically quantified but were consistent with the second half of Q2. CEO Tarun Lal explained that the value proposition is strong, but past marketing efforts created confusion, which the company is now simplifying through clearer messaging.

Jeff Farmer asked about the specific comparable store sales trends for Q3 2025 to date, inquiring if numbers were provided beyond the consistency with Q2 exit trends. He also asked for elaboration on Dave & Buster's value perception challenges and opportunities.

Answer

Darin Harper, CFO, clarified that specific Q3 comparable store sales numbers were not quantified but confirmed consistency with Q2's second-half trends. Tarun Lal, CEO & Board Director, explained that value perception issues stem from confusing marketing messages, not a lack of inherent value, and that simplification efforts are underway.

Jeff Farmer inquired about the specific Q3 comparable store sales trends, particularly if they improved from the July low watermark, and asked for elaboration on Dave & Buster's value perception challenges and opportunities.

Answer

Darin Harper (CFO) clarified that Q3 comparable store sales trends were consistent with the second half of Q2, which saw a 3% decline for the quarter after a 2.2% decline in the first five weeks. Tarun Lal (CEO) explained that value perception issues stem from confusing marketing and communication, not a lack of inherent value, and the company is focused on simplifying messaging.

Jeff Farmer of Gordon Haskett Research Advisors asked for more detail on the drivers of the improved same-store sales trend and requested specifics about the new store manager incentive program.

Answer

CFO Darin Harper attributed the sales improvement primarily to increased traffic, strong weekend performance, and higher F&B attachment from the Eat & Play Combo. Interim CEO Kevin Sheehan described the new manager incentive plan as a best-in-class program with a rolling three-year, sales-driven long-term incentive designed to make managers think like owners.

Jeffrey Farmer inquired about the number of stores currently operating in the highest game pricing tier and sought to understand the intra-quarter comp trend that led to a deceleration from low-single-digit declines to a 6.3% decline for Q2.

Answer

CEO Christopher Morris stated that there have been no material changes to the pricing tiers, as the company feels it has the right formula for now and does not anticipate changes for the rest of the year. Regarding the comp trend, Morris explained that June and July were tougher months and more challenging than the start of the quarter, a macro pressure felt across both the Dave & Buster's and Main Event brands, which moved in lockstep.

Jeff Farmer from Gordon Haskett Research Advisors requested an update on the Texas Roadhouse mobile app, asking about the number of active users, its growth rate, and how the company leverages its customer database.

Answer

CEO Gerald Morgan explained that while he didn't have specific user numbers, a large percentage of guests use the app for to-go orders and the waitlist. He highlighted recent upgrades, such as adding more food pictures, and emphasized that the app's ease of use, combined with improved operational execution at the restaurant level, has been a key driver of off-premise success.

Jeff Farmer asked for any surprising insights or key takeaways from the recent Managing Partner Conference regarding restaurant operations or the health of the consumer.

Answer

CEO Gerald Morgan reported that the feedback from operators was overwhelmingly positive and confident. He said the key takeaway was that operators are 'all in' on executing the fundamentals of legendary food and service, which they believe is the key to navigating any macro concerns and continuing to drive the business forward.

Jeffrey Farmer of Gordon Haskett followed up on the managing partner tour, asking for any interesting or unexpected feedback from operators, particularly concerning pricing power and consumer demand across different income levels.

Answer

CEO Gerald Morgan responded that the conversations were largely focused on internal matters and that feedback on the recent 0.9% price increase has been positive with no pushback. He characterized the overall sentiment from operators as very positive, driven by the company's current success and a shared focus on continuous improvement.

Jeff Farmer of Gordon Haskett Research Advisors asked about Dutch Bros' value positioning and how it competes for value-focused consumers, a common theme in the current environment.

Answer

CEO Christine Barone stated that they are in a "fantastic position" on value, a perception they continuously test with customers. She pointed to their strategy of taking minimal price this year, the generous beverage sizes, and the ability for customers to customize freely as key components of their value proposition. She concluded that this, combined with the positive service experience, is what customers are ultimately looking for.

Jeffrey Farmer asked if the company's guidance, which trends toward the high end of the range, already accounts for a potentially uncertain consumer environment. He also inquired about the expected impact of the large class of Texas shops entering the comparable store base in 2025.

Answer

CFO Josh Guenser confirmed that while they are not currently seeing a negative impact on their customers, they are mindful of the broader macro environment and have factored that into their guidance. On the Texas shops, he spoke broadly, confirming that newer market vintages show outsized performance due to marketing, mobile order adoption, and maturation, which contributes to overall strength.

Jeffrey Farmer asked about the biggest upside surprises that drove the strong 6.9% Q4 comp result, which significantly exceeded the company's low-single-digit guidance.

Answer

CEO Christine Barone identified several key factors for the outperformance. She highlighted stronger-than-expected transaction growth of 2.3%, driven by mobile order, paid ads, and successful holiday promotions. Additionally, the strong sales momentum allowed the company to pull back on discounting, which contributed over a point to the comp. Finally, she noted that new shops entering the comp base performed at the high end of expectations.

Jeffrey Farmer of Gordon Haskett asked for a comparison of sales trends between rewards and non-rewards customers and inquired about consumer strength in California compared to other regions.

Answer

CFO Josh Guenser stated that the company does not disclose sales performance segmented by rewards status but highlighted the program's record growth of 1 million sign-ups in Q3. CEO Christine Barone reported that they are 'quite pleased' with performance in California, noting strong growth from new shops and continued brand resonance, with California containing some of the system's highest-volume locations.

Jeff Farmer of Gordon Haskett Research Advisors asked for key findings from the initial 14 Outback test restaurants and questioned what drove strengthening traffic momentum throughout the quarter.

Answer

CEO Mike Spanos shared that the tests revealed the brand's high potential and the cumulative positive impact of improving service, steak quality, value, and ambiance. He attributed the strengthening traffic to favorable comparisons against prior-year promotions and, importantly, more consistent operational execution by restaurant teams, which is improving guest return frequency.

Jeffrey Farmer of Gordon Haskett Research Advisors asked about the greatest near-term opportunity to drive traffic at Outback and the assumptions for segment traffic and market share within the 2025 guidance.

Answer

CEO Mike Spanos stated that the greatest opportunity for Outback is improving 'consistency of execution' across quality, value, and guest experience, expressing high confidence in turning the brand around. He added that the 2025 guidance assumes casual dining traffic will be down about 3%, and the company aims to win share through consistent execution and building brand trust with everyday value offerings.

Jeffrey Farmer asked for an elaboration on Outback's current value positioning and whether the strategy of lowering promotional price points, such as the move to a $14.99 offer, is the intended path forward.

Answer

CEO Mike Spanos defined value as a combination of price, benefits, and the overall guest experience. He noted the team is evaluating how to balance LTOs, everyday value, and menu simplification. CFO Michael Healy confirmed the intentional shift to lower opening price points on LTOs in Q3 to address affordability, noting the team can engineer these offers to be economically sound. Spanos added that the focus is on ensuring these promotions drive sustainable traffic from loyal and new target guests.

Jeff Farmer asked when the standardized performance scorecard was rolled out and what actions are taken for underperforming units. He also questioned the opportunity to improve comp performance in the New York City and Northeast regions.

Answer

CEO Rob Lynch stated the scorecard was rolled out late last year and is used in a disciplined, weekly review process to identify opportunities and develop leaders. Regarding regional performance, he cautioned that while NYC/Northeast have lower comps, they are the company's highest AUV and margin restaurants, attributing the slower growth more to macro factors than operational issues.

Jeffrey Farmer from Gordon Haskett followed up on the combo meal LTO, asking for specifics on customer response and key learnings from the test.

Answer

CEO Robert Lynch shared that while not disclosing specific mix details, the combo test led to improved order times, accuracy, and guest satisfaction. A key learning was that menu design, such as placing the double burger combo first, successfully shifted mix to more premium, profit-accretive items. This shows combos can be used to drive profitable mix and attachment, not just offer discounts.

Jeff Farmer of Gordon Haskett questioned the 3-year guidance, noting that low to mid-teens EBITDA growth implies only modest margin expansion over low-teens revenue growth, and asked if this reflects conservatism or planned investments.

Answer

CEO Rob Lynch confirmed it is due to being in 'investment mode.' He stressed that opening new Shacks is the #1 value unlock, which requires increased G&A for development teams, real estate, and construction management. CFO Katie Fogertey added context, noting that 4/5 of 2024's revenue growth came from new units, not comp sales. They believe investing in the infrastructure to support this growth is essential to reaching their long-term potential and maximizing returns.

Jeff Farmer of Gordon Haskett Research Advisors asked for management's view on the pros and cons for the Domino's brand amidst the intensifying value-focused environment in the U.S. pizza segment.

Answer

CEO Russell Weiner framed the situation as a significant advantage for Domino's. He stated that the brand is 'built for this' environment due to its strong franchisee economics, efficient supply chain, and large advertising budget. He concluded that what serves as a headwind for competitors often becomes a tailwind for Domino's, allowing them to play offense on value and gain market share.

Jeffrey Farmer asked about Domino's exposure to lower-income and Hispanic customers and inquired about the relative same-store sales performance of those demographics during the quarter.

Answer

Chief Executive Officer Russell Weiner characterized the lower-income consumer as a core demographic for the entire QSR industry. He noted the current pressure leads this group to skip occasions rather than switch brands. He emphasized Domino's is well-positioned to offer sustained value and gain share in this environment due to its scale and franchisee profitability.

Jeffrey Farmer of Gordon Haskett asked if Domino's is observing the same trend as its peers, where demand headwinds are expanding beyond the lower-income cohort.

Answer

CEO Russell Weiner noted that for Domino's, the pressure across income cohorts is primarily seen in 1P delivery. He discussed a broader QSR dynamic of 'up-switching,' where a narrowing price gap between QSR and fast-casual might lead some consumers to trade up, but emphasized Domino's strength in offering valued items.

Jeffrey Farmer from Gordon Haskett Research Advisors asked if Domino's expects the competitive promotional and value-oriented environment in the U.S. to intensify further through the rest of 2024 and into 2025, or if the current level represents the peak.

Answer

CEO Russell Weiner characterized the current environment as the 'pizza wars' and stated that Domino's is 'clearly winning.' He believes that for competitors to keep up, they will have to continue leaning into value. While he doesn't know their specific plans, he is confident in Domino's own strategy and suggested that if competitors want to match Domino's, they will need to maintain their promotional intensity.

Jeffrey Farmer asked for an interpretation of the significant divergence between the average and median same-store sales in the industry. He also questioned what is driving the surprising demand resilience of the casual dining consumer.

Answer

CFO Raj Vennam explained that the divergence in industry data is caused by one or two outlier brands, as the benchmark provided excludes Darden. President and CEO Ricardo Cardenas suggested consumer resilience may be a post-COVID behavioral shift, with consumers prioritizing dining experiences. He also noted that rising incomes and moderating costs for essentials could be freeing up disposable income for dining out.

Jeffrey Farmer inquired about the income demographic that typically responds to the Never Ending Pasta Bowl promotion and whether it's providing a lift with lower-income consumers. He also asked if the lack of a small-party delivery option could have contributed to Olive Garden's recent narrowing of its market share outperformance.

Answer

CFO Raj Vennam explained that Never Ending Pasta Bowl appeals broadly across income levels, including consumers up to the $150,000 income bracket, and is effective at attracting new and infrequent guests. President and CEO Rick Cardenas pushed back on the 'diminished market share' premise, noting the recent quarter was the only time in five years Olive Garden's traffic trailed the industry. While conceding delivery could be a factor, he did not see it as the primary reason for the single quarter of underperformance.