Jim Salera

Jim Salera asked about the successful launch of Wonder cakes, the lack of cannibalization of Tastykake, the role of Simple Mills in future innovation, and whether Simple Mills' presence in the club channel is increasing.

Answer

Chairman & CEO A. Ryals McMullian expressed that the Wonder cake launch has exceeded expectations and that he was pleasantly surprised by the minimal cannibalization, attributing it partly to different geographic strengths. Regarding innovation, he clarified his earlier comments were about the core category but confirmed Simple Mills will also innovate more frequently. He noted that Simple Mills' presence in club stores is part of their normal rotation and that the brand continues to grow distribution points despite a recent cyber attack affecting a distributor.

Jim Salera asked about the successful Wonder cake launch, questioning why it did not cannibalize Tastykake sales. He also inquired about Simple Mills' role in the company's innovation strategy and its distribution presence in the club channel.

Answer

CEO A. Ryals McMullian expressed pleasant surprise at the lack of cannibalization, attributing it to geographic differences, with Tastykake strong in the Mid-Atlantic and Wonder being a national brand. He noted the Wonder launch exceeded expectations. McMullian clarified that while his primary innovation comments were about the core portfolio, Simple Mills will also innovate aggressively. He confirmed Simple Mills has a standard rotation in the club channel and continues to grow distribution points, performing well despite a distributor's cyber attack.

Jim Salera inquired about quantifying the impact and potential size of the retail segment of the business, specifically mentioning the success of mini rolls.

Answer

Jerry Morgan, CEO, stated that all retail initiatives are primarily focused on building brand awareness and engagement, with the logo in grocery stores keeping Texas Roadhouse top of mind. He highlighted the significant success and high demand for the 'Inspired by' mini rolls, noting that while it's still early to quantify the full revenue impact, the product is selling exceptionally well.

Jim Salera asked about the retail segment of the business, inquiring if the company could quantify its impact, its potential size, and how it leverages strong brand equity to access new consumer groups at potentially decent margins.

Answer

Jerry Morgan, CEO, stated that all retail initiatives are primarily focused on brand awareness and keeping Texas Roadhouse top-of-mind for consumers in grocery stores. He highlighted the significant success of the 'Inspired by' mini rolls, noting strong demand and sales, but mentioned it's still early to fully quantify the revenue impact, though they are very proud of its performance.

Jim Salera from Stephens Inc. asked for details on the growth strategy for Bubba's 33, including its regional expansion plan and methods for engaging new guests as the brand's visibility increases.

Answer

CEO Gerald Morgan explained that the growth strategy for Bubba's 33, which is now in 16 states, involves building out territories around multi-unit operators. He emphasized that the focus has been on stabilizing leadership and perfecting menu execution, which now allows the company to develop the brand at a higher rate than in recent years.

Jim Salera asked about the strong performance of Hershey's salty snacks business, noting a 14% year-over-year consumption increase and volume-driven share gains. He inquired about the driving factors behind this success and sought commentary on the 4Q outlook for the business, including any innovation plans.

Answer

President and CEO Kirk Tanner expressed excitement for the salty business, highlighting SkinnyPop's refresh and growth in popcorn, Dot’s leadership in the pretzel category, and the opportunity with Pirate’s Booty in the Puffs segment. He emphasized the focus on permissible and premium snacking, allowing the portfolio to grow ahead of the category. He also confirmed momentum continuing into 2026 with a pipeline of innovation across Dot’s, SkinnyPop, and Pirate’s Booty.

Jim Salera asked about the strong performance of the salty snacks business, noting a 14% year-over-year increase in consumption and share gains driven by volume, contrasting with an anemic category. He inquired about the driving factors and the outlook for Q4, including any innovation plans.

Answer

CEO Kirk Tanner expressed excitement for the salty business, highlighting SkinnyPop's refresh and growth in popcorn, Dot's leadership in pretzels, and Pirate’s Booty's opportunity in the Puffs category. He emphasized that the collection of brands in permissible, premium snacking allows growth ahead of the category. He confirmed momentum into 2026 with an exciting innovation pipeline across Dot's, SkinnyPop, and Pirate’s Booty.

Jim Salera from Stephens Inc. asked about the drivers of outperformance in the salty snacks portfolio, particularly Dots and Skinny Pop, and inquired about opportunities to expand multipack distribution and innovation.

Answer

Chairman, President & CEO Michele Buck attributed the salty snacks' success to their permissible and premium positioning, continued household penetration gains, and effective marketing. She highlighted flavor innovation, price pack architecture, and new products like Reese's filled pretzels as key drivers. She confirmed that multipacks are a significant growth lever with a lot of upside ahead.

Jim Salera asked about the drivers of strength in the salty snacks portfolio, particularly Dots and Skinny Pop, and inquired about opportunities to expand multipack distribution and leverage innovation within that format.

Answer

Chairman, President & CEO Michele Buck attributed the salty snack success to the portfolio's permissible and premium halo, strong consumer momentum, and increased household penetration. She highlighted marketing, flavor innovation like Buffalo Dots, and price pack architecture as key levers. She confirmed that multipacks are a significant growth area where Hershey is expanding its SKU count and gaining distribution, with a lot of upside remaining.

Jim Salera asked about the drivers of strength in the salty snacks portfolio, specifically Dot's and SkinnyPop, and inquired about the opportunity to expand multipack distribution.

Answer

Chairman, President & CEO Michele Buck attributed the salty snacks' success to their permissible/premium positioning, continued gains in household penetration and distribution, and effective marketing. She confirmed that multipacks are a significant growth lever with substantial upside, and the company is actively expanding its SKU portfolio and distribution in that format.

Jim Salera asked for a breakdown of LongHorn Steakhouse's comparable sales between traffic and ticket, and whether the pricing gap below inflation is expected to continue. He also inquired if value-focused menu expansions, similar to Olive Garden's lighter portions, might be introduced at LongHorn Steakhouse.

Answer

Raj Vennam, SVP & CFO, reported LongHorn's traffic was up 3.2% and check was up 2.3%, with pricing at 2.5% and a 20 basis point negative mix from alcohol. He expects Darden's Q2 pricing to be 100 basis points below inflation, narrowing later in the year. Rick Cardenas, President, CEO & Director, stated that the lighter portion initiative is currently Olive Garden-focused, with other brands potentially implementing similar strategies after evaluating its success.

Jim Salera requested a breakdown of LongHorn Steakhouse's same restaurant sales between traffic and ticket, and asked about the expected trend of the pricing gap relative to inflation. He also inquired if the value-focused menu expansion, similar to Olive Garden's smaller portions, could be seen at LongHorn or other brands.

Answer

Raj Vennam, CFO, reported LongHorn's traffic was up 3.2% and check was up 2.3% (with 2.5% pricing and 20 basis points negative alcohol mix). He expects Darden's pricing to be approximately 100 basis points below total inflation in Q2, with the gap narrowing in Q3 and Q4. Rick Cardenas, President and CEO, stated that the smaller portion initiative is currently Olive Garden-focused, and other brands would consider it in the future based on learnings.

Jim Salera of Stephens Inc. requested a traffic and ticket breakdown for Olive Garden's quarterly performance and asked about the customer impact of the 'Buy One, Take One' promotion. He also inquired about the planned promotional cadence for fiscal 2026.

Answer

CFO Raj Vennam detailed Olive Garden's comp, noting underlying traffic was over 2% (closer to 3% including catering), with pricing at 2.7% and positive mix. He stated 'Buy One, Take One' attracts both new and frequent guests without hurting margins. President & CEO Rick Cardenas added that while specific promotional plans are competitive, Olive Garden has a proven ability to react to the market environment and will continue to invest in marketing.

Representing Jim Salera, Tyler Klaus asked how Darden's marketing mix has evolved since pre-COVID times and inquired about the company's exposure to potential tariffs on kitchen equipment and building materials.

Answer

President and CEO Ricardo Cardenas explained that marketing is now a lower percentage of sales and more focused on brand-building with existing menu items. The media mix has shifted slightly more to digital, but TV remains crucial for Olive Garden. CFO Raj Vennam estimated that any tariff impact on building materials would be in the low-to-mid single-digit percentage range, and not a double-digit impact on kitchen equipment.

Jim Salera from Stephens Inc. asked for insights into how Hain Celestial's current optimization efforts differ from the 'Hain Reimagined' program two years ago, specifically where the previous program fell short and what new angles or focus areas are expected to jumpstart the business. He also questioned the anticipated cadence of leverage throughout fiscal 2026, particularly if Q1 and Q2 would see a pick-up before declining, and if a high watermark quarter for leverage is expected.

Answer

Alison Lewis, Interim President, CEO & Director, stated that the previous program focused on structure and process rather than decisive actions. She highlighted current differences including aggressive pricing across nearly the entire portfolio, a significantly ramped-up innovation pipeline, local empowerment through a regional operating model (e.g., two innovation hubs), and continued focus on supply chain productivity and working capital reduction. Lee Boyce, CFO, confirmed an expected free cash flow outflow in Q1, with benefits from cost focus and initiatives materializing more in the second half, leading to improved cash generation and leverage reduction later in the year, particularly from inventory management.

The analyst asked about the outlook for the foodservice business in fiscal 2026, considering consumer behavior and QSR trends, and also inquired about the company's exposure and strategy regarding rising soybean oil prices.

Answer

The company expects a modestly improving foodservice environment with traffic approaching flat, driven by value offerings and the chicken category. Regarding soybean oil, which is about 10% of COGS, they have been actively hedging and do not see it as a significant headwind for the upcoming year, as the price movements are within their expectations and managed through strategic positions.

Jim Salera of Stephens Inc. requested a debrief on why the Takis collaboration fell short after a strong start and asked for an update on the performance of the new Wednesday LTO compared to past collaborations.

Answer

Interim CEO & CFO Ken Cook explained that the Takis promotion saw a drop-off after week one due to lower-than-expected secondary trial. He identified this as a learning opportunity to conduct more robust testing on future collaborations to optimize elements like duration. He stated that the Wednesday collaboration, which just launched, is performing in line with expectations.

Jim Salera of Stephens Inc. asked if the expected 2025 traffic improvement would come from Wendy's-specific efforts or general industry recovery, and what the company assumes for industry messaging between value and experience.

Answer

CEO Kirk Tanner stated the improvement will be a combination of both, as they expect the industry to improve but their primary goal is to outperform the category. He noted that value remains critical for consumers, and Wendy's will leverage its Biggie Bag platform, which he described as a high-quality value proposition. The company plans to innovate on this platform to elevate the value experience for customers.

Jim Salera asked about the expected growth pacing for Alani Nu in the second half of the year against tougher comps and requested an update on its household penetration.

Answer

CFO Jarrod Langhans acknowledged that comps will be tougher for Alani but expects solid growth to continue, driven by the core portfolio and upcoming LTOs. CEO John Fieldly reiterated the household penetration figures, stating the combined portfolio is at 43%, with Alani at 22% and Celsius at 34%. He emphasized that both brands have a significant runway for growth and are attracting new consumers.

Jim Salera from Stephens Inc. asked about the drivers behind the strong growth in shelf-stable plant-based milk, which appears disconnected from syndicated data. He sought to understand if the growth stems from existing customers gaining share or from new brands entering the category and choosing SunOpta.

Answer

CEO Brian Kocher explained that tracked channel data is uncorrelated with their performance as it represents less than 20% of the total category, with foodservice and club channels being the primary growth drivers. He confirmed the growth is heavily weighted towards SunOpta's existing customers gaining significant market share, though new entrants also contribute. Kocher emphasized the strength of the entire diversified portfolio, including broth and fruit snacks.

Jim Salera of Stephens Inc. asked about the drivers behind the strong growth in shelf-stable plant-based milk, which contrasts with syndicated data. He sought to understand if growth stems from existing customer share gains or the entry of new brands into the category.

Answer

CEO Brian Kocher explained that tracked channel data is not representative, as it comprises less than 20% of the category and misses the larger, high-growth foodservice and club channels. He confirmed growth is driven primarily by their existing customers gaining significant market share, but noted that SunOpta benefits regardless. Kocher also highlighted strong performance across the diversified portfolio, including broth and tea.

Jim Salera asked about the drivers behind the strong growth in shelf-stable plant-based milk, which appears disconnected from syndicated data. He questioned whether the growth stems from existing customers gaining market share or from new brands entering the category and choosing SunOpta as a partner.

Answer

CEO Brian Kocher explained that tracked channel data is not representative, as it covers less than 20% of the category and misses significant growth in foodservice and club channels. He noted that one club customer's sales alone exceed the entire tracked channel volume. Kocher confirmed the growth is more heavily weighted towards SunOpta's existing customers gaining share, while also emphasizing the strong performance of the company's diversified portfolio, including fruit snacks and broths.

Jim Salera of Stephens Inc. asked about the factors driving the sequential increase in consumer metrics like household penetration and purchase frequency. He also requested details on Zevia's product rotation and strategy within the club channel.

Answer

President & CEO Amy Taylor attributed the improved consumer metrics to a combination of increased distribution visibility (e.g., Walmart expansion, better grocery placement) and successful product innovation driving trial and repeat purchases. Regarding the club channel, she highlighted that variety packs are key for discovery and that while currently rotational, strong performance supports the goal of becoming an everyday item.

Jim Salera of Stephens Inc. asked for insights into the Portillo's Perks loyalty program's geographic reach and its potential in expansion markets, and also inquired if new market AUVs could accelerate in 2026.

Answer

CEO Michael Osanloo highlighted the success of the new Perks program, which has reached 1.9 million members across just 95 restaurants, calling it a powerful future tool for acquisition and frequency. CFO Michelle Hook noted that while the company is still learning the sales curves in new markets, the long-term AUV target of $5.9M-$6.3M by year three for new classes of restaurants remains the goal.

Jim Salera from Stephens Inc. asked about the future promotional cadence, considering that increased industry capacity might lead to more new brands launching with heavy promotional support.

Answer

CEO Darcy Horn Davenport stated that she expects the company's promotional cadence to remain consistent with historical patterns, which follow consumer behavior. She outlined the typical cycle: low promotions in Q1, a peak in Q2 (Jan-Mar), minor activity in Q3, and another significant period in Q4 for back-to-school. She noted fiscal 2025 marked a return to this full promotional schedule.

Jim Salera of Stephens Inc. inquired about the shift in First Watch's customer base to a younger demographic, asking whether it was driven by geographic expansion or the growth in third-party delivery. He also questioned if there were notable differences in visit frequency or average check size for these younger consumers.

Answer

President & CEO Chris Tomasso confirmed the demographic shift is due to a combination of factors, including entering new markets, an evolved restaurant prototype, advanced culinary offerings, and a strong social media presence. He noted that while there are no massive shifts in menu mix, the introduction of alcohol has also helped attract a younger audience. Tomasso emphasized the company's focus on continuous evolution to maintain long-term relevance.

The analyst inquired about the evolution of the coach base in the context of GLP-1 medications, the performance and adoption of the ASCEND product line, and the company's future strategy for corporate-led marketing.

Answer

Company executives explained that new coaches are trained for the GLP-1 environment, with a significant portion having experience with clients using these drugs. The ASCEND product is meeting expectations, often used by clients after the core 'five and one' program. The marketing strategy will continue to prioritize coach-led acquisition, which is more effective for new clients, while corporate marketing will be used strategically for re-engagement and search engine management.

Jim Salera from Stephens Inc. asked about the changing composition of OPTAVIA coaches in response to GLP-1s, the performance of the ASCEND product line, and the future role of company-supported marketing versus coach-led acquisition.

Answer

Chairman & CEO Dan Chard and Chief Field Operations Officer Nicholas Johnson explained that new coaches are trained for the GLP-1 environment, with many having personal or client-related experience. Chard noted that while the ASCEND line meets expectations, the core 'five and one' plan is also proving effective for GLP-1 users needing to preserve lean mass. He also stated that marketing will now focus on coach-led acquisition, which is more efficient, with a pared-back corporate advertising budget primarily for search engine optimization.

Jim Salera inquired about the potential for persistent challenges from durable trends like return-to-office mandates and high housing costs on dog ownership, and whether this might lead to a strategic pivot toward cat food.

Answer

CEO Billy Cyr acknowledged these trends as cyclical headwinds that currently suppress pet acquisition among younger generations. However, he stated the company's focus remains on controllable factors like advertising, innovation, and operational execution. While interested in the growing cat food market, he clarified that it requires a different strategy and product format, and is not a primary focus for the current year.

Jim Salera from Stephens Inc. asked about the potential long-term challenges from durable trends like return-to-office and high housing costs on dog ownership. He also inquired about the potential for more innovation in the cat food category.

Answer

CEO Billy Cyr acknowledged these trends as cyclical headwinds, particularly affecting pet adoption by younger generations, but stated the company's focus remains on controllable factors like advertising and innovation. Regarding cat food, he noted that while the market is attractive and growing, developing products for cats is complex and not a primary focus for this year, though they remain interested in the opportunity long-term.

Jim Salera from Stephens Inc. inquired about the growth drivers and runway for the Boulder Canyon brand in conventional channels. He also asked for details on the composition of new households contributing to the company's record household penetration.

Answer

CEO Howard Friedman stated that Boulder Canyon's growth is broad-based across geographies and channels, with significant runway remaining as its ACV is still only around 49%. He suggested it could become a multi-hundred-million-dollar brand. Regarding household penetration, he hypothesized that growth is driven by the company's 'Power Four' brands entering new geographies, supported by strong trial and repeat rates that validate the expansion strategy.

Jim Salera from Stephens Inc. inquired about TreeHouse's innovation strategy, asking whether private label primarily follows branded innovation and if increased branded innovation could detract from private label's focus. He also asked if TreeHouse's scale provides a structural advantage over peers in innovation.

Answer

CEO Steven Oakland described TreeHouse's innovation model as being a 'fast follower' of established branded trends, citing examples like seasoned pretzels and cold brew coffee. He affirmed that the company's balance sheet, size, and scale provide a significant competitive advantage, especially in a high-cost capital environment, allowing them to invest and acquire capabilities faster than smaller competitors.

Jim Salera of Stephens Inc. requested more detail on the record new unit openings, asking about the mix between established and expansion markets and whether the Smart Kitchen could enable higher restaurant density. He also asked for a preview of marketing plans for the upcoming football season, particularly with increased visibility on third-party delivery platforms.

Answer

President and CEO Michael Skipworth described the development as highly diversified, with Q2 openings across 46 states. He clarified that the Smart Kitchen strengthens existing strategies to capture more market share rather than directly enabling higher density. For the fall, Skipworth noted that Q4 will see the highest media investment of the year, with plans to continue leveraging successful partnerships like the NFL and NBA without a fundamental shift in strategy.

Asked about the impact of competitor value messaging on new customer acquisition, the 2025 marketing strategy, the company's average ticket size, and the expected contribution from pricing in the 2025 comp guidance.

Answer

Wingstop continues to see record new guest acquisition and high retention, indicating its value proposition of quality and value resonates despite competitor promotions. The average ticket is in the low-to-mid $20s. Pricing is expected to be at the low end of the typical 1-2% range for 2025.

Jim Salera of Stephens Inc. asked for clarification on the gross margin cadence for the second half of the year and whether the full-year guidance of 36% is achievable if a potential 19% tariff on products from the Philippines materializes. He also asked for a good dollar run-rate for the U.S. private label business.

Answer

CFO Corey Baker confirmed Q3 gross margins would be sequentially lower due to the timing of tariff impacts and pricing actions, before improving in Q4 to meet the full-year target of approximately 36%. Executive Chairman Michael Kirban stated that while the tariff situation is fluid, the company believes it can manage higher rates through a combination of margin mix, declining ocean freight, and potential pricing. Baker suggested the private label baseline should grow from Q2 levels.

Jim Salera requested the Q2 comparable sales breakdown for North Italia and asked about the drivers of its softness. He also inquired about customer trends at North Italia by income bracket.

Answer

Etienne Marcus, VP of Finance & IR, provided the comp breakdown: 4% price, -1% mix, and -4% traffic. Matthew Clark, Executive VP & CFO, clarified that the negative comp is misleading due to significant sales transfer from highly successful new units. He noted that netting out this impact, the comp would be around 1%. He added that North Italia attracts a slightly higher-income but still broad, aspirational demographic, evidenced by strong performance in new markets.

Jim Salera asked for an update on the average number of Quest SKUs at retail and future targets, as well as whether a 36-37% gross margin range is a fair assumption for fiscal 2026 given commodity and tariff headwinds.

Answer

CEO Geoff Tanner stated there is no specific target SKU count for Quest, emphasizing a significant runway for distribution growth both in and out of its core aisle. CFO Chris Bealer declined to provide a specific FY26 gross margin range due to uncertainties like tariffs but noted H1 will be challenged. Tanner reiterated the company's long-term goal is a high-30s gross margin, which they aim to recover via productivity and pricing.

Jim Salera asked about the portion of the portfolio considered 'splurge-worthy' and whether a portfolio pivot was needed for recovery. He also inquired if Rao's production could be shifted to the U.S. to mitigate tariff impacts.

Answer

President, CEO & Director Mick Beekhuizen characterized the company's strategy as 'surgical' innovation and brand support rather than a complete portfolio reset, noting many brands are already well-positioned. He stated that improved consumer confidence would lift the entire category. Executive VP & CFO Carrie Anderson addressed the production question by stating that the company is exploring all levers to mitigate tariffs, including strategic inventory management, supplier partnerships, and product cost optimization, without confirming a specific production shift for Rao's.

Inquired about the intra-quarter sales cadence for Q3, the components of the same-store sales decline (traffic, price, mix), and the long-term growth potential for asset-light models like franchising and licensing.

Answer

The executives confirmed a sales pattern of a weak July followed by a stronger August and a slightly weaker September. They broke down the comp for STK, noting a traffic decline and a negative mix shift that offset pricing. For the long term, they see significant growth potential in asset-light models, targeting over 100 managed/licensed STKs and 50-100+ franchised Benihana locations.

Jim Salera inquired about the avocado supply-demand dynamics for the fall, evidence of consumer demand shifts from inflation, the status of the new management team, and the volume contribution from the new Jalisco facility.

Answer

President and CEO Brian Kocher explained that supply and demand are rebalancing, making it difficult to gauge true consumer elasticity in a supply-constrained market, although some retailers did reduce promotions at peak prices. He confirmed the new leadership team is fully in place. Kocher also clarified that the Jalisco facility provides strategic sourcing optionality and cost arbitrage opportunities rather than having a specific volume target, which was about 10-12% of Mexican volume in August and could reach 25% in the near term.