Jim Sanderson

Jim Sanderson sought feedback on the performance of Papa John's delivery channel, specifically comparing third-party to first-party delivery, and identifying the key opportunities to boost check size and traffic in this segment.

Answer

Ravi Thanawala, CFO and President, North America, reported that third-party delivery grew low single digits on a dollar basis in the quarter, while the decline originated from the first-party side. He outlined ongoing efforts to improve consumer satisfaction scores for delivery, including leveraging the Google Cloud partnership for digital experience enhancements, improving food taste, and utilizing CRM to engage loyal consumers in the delivery channel.

Jim Sanderson asked for feedback on the delivery channel, specifically the performance of third-party versus first-party delivery, and the biggest opportunities to drive increased check and traffic in this channel.

Answer

Ravi Thanawala (CFO and President, North America, Papa John's International) reported that third-party delivery grew low single digits on a dollar basis, while first-party delivery saw declines. He identified opportunities to improve consumer satisfaction through the Google Cloud partnership for digital experience, enhancing food taste, and leveraging CRM to engage loyal customers in the delivery channel.

Jim Sanderson of Northcoast Research asked for an update on performance trends in the UK, specifically its comp performance relative to the international average, and the outlook for new unit development there.

Answer

EVP & CFO Ravi Thanawala reported that the UK has seen a multi-year transformation, with comps accelerating meaningfully in July to outperform the international business. He noted significant improvements in customer satisfaction and delivery times. While there is meaningful comp upside to capture first, the company will turn the development engine back on in the UK "in due course."

Jim Sanderson asked about the company's pricing position relative to top competitors, given the 3.6% pricing in Q2, and if the value gap remains strong. He also inquired about any consumer feedback regarding the brand's value perception.

Answer

Jerry Morgan, CEO, stated that the company maintains a conservative approach to pricing and believes they are still well under competitors and the full-service dining average. He emphasized their great value and high-level operations, noting they would consider feedback but feel confident in their current approach.

Jim Sanderson asked about the company's competitive positioning regarding pricing, specifically with the 3.6% pricing in Q2, and if the value gap remains strong. He also inquired about consumer feedback on the brand's perceived value.

Answer

Jerry Morgan (CEO) reiterated a conservative approach to pricing, believing they remain well under competitors and the full-service dining average. He stated they will monitor feedback but feel confident in their great value and high-level operations, which is the approach they will continue to take.

Jim Sanderson of Northcoast Research asked how the corporate store margin is expected to evolve with the increased development of Bubba's 33. He also inquired about the anticipated mix of company-owned versus franchised units as Bubba's grows towards its 200-unit goal.

Answer

Michael Bailen, Senior Director & Head of IR, stated that Bubba's 33 development is planned to be entirely company-owned. He added that over time, Bubba's is expected to deliver margins similar to Texas Roadhouse, as the brand is proving it can achieve very strong performance.

Jim Sanderson asked about Hispanic consumer demand, which was previously identified as a challenging segment for Jack in the Box, and whether it has improved recently. He also inquired about the in-store technology being leveraged, specifically the new point-of-sale (POS) system and back-of-house systems, and their expected benefits for traffic or transactions in the back half of the year.

Answer

CEO Lance Tucker stated that over the last quarter, there has been only a slight, not significant, improvement in both low-income and Hispanic consumer segments. He confirmed the completion of the POS system rollout by late August and new back-of-house systems (labor management, inventory) by November 2025. The focus for the remainder of the year is to leverage these investments to gain efficiencies on both the top and bottom lines.

Jim Sanderson sought insights into the specific factors that drove the 300 basis point sequential improvement in Q4 comps, including consumer reactions across demographics, and asked about the evolving outlook for Jack in the Box's store margins.

Answer

CEO Lance Tucker identified the pivot to more price-pointed value, particularly the Bonus Jack promotion, as the biggest singular driver of the 300 basis point improvement, noting no significant differences across geographies or demographic cohorts. Regarding store margins, he expects improvement from Q4 levels, which were impacted by overstaffing new Chicago market openings, citing ongoing supply chain and labor initiatives, though he did not confirm if margins would return to pre-pandemic levels.

Jim Sanderson asked for insights into what specific actions or promotions most effectively generated the sequential 300 basis point improvement in comp sales, including consumer reactions across income levels, regions, or specific offerings. He also followed up on the long-term outlook for store margins, asking how they are evolving, if they are lower than pre-pandemic levels, and if a 'new normal' for store labor and new stores should be expected.

Answer

CEO Lance Tucker stated that the biggest singular driver of the 300 basis point improvement was pivoting to put marketing dollars behind the Bonus Jack and more price-point value, with no significant differences across geographies or demographic cohorts. Regarding store margins, Mr. Tucker expects improvement from Q4's performance (which was impacted by overstaffing new Chicago market restaurants) due to ongoing supply chain and labor initiatives. He anticipates improved restaurant-level margins for both company and franchisees but did not have pre-pandemic numbers for a 'new normal' comparison.

Jim Sanderson of Northcoast Research asked for an update on the performance of new markets like Salt Lake City and Louisville, comparing them to the recent Chicago openings. He also inquired about the traffic share from low-income and Hispanic consumers.

Answer

CEO Lance Tucker stated that Salt Lake City and Louisville continue to perform very strongly and that the new Chicago restaurants opened with even higher volumes. Regarding consumer mix, he noted that Jack in the Box 'significantly over-indexes' on Hispanic consumers at about 1.7 to 2.0 times the industry average, while its low-income consumer base is more in line with industry peers.

Jim Sanderson asked about the notable demographics of consumers purchasing the lighter portions at Olive Garden, such as gender, household income, or daypart. He also inquired about holiday bookings, asking if they are exceeding expectations or in line, as a test of consumer behavior.

Answer

CEO Rick Cardenas stated that more work is needed to analyze the demographics of lighter portions purchasers due to its limited rollout and 1.5% sales mix. He noted that Darden's fine dining brands experienced record Thanksgivings and that holiday bookings are currently strong.

Jim Sanderson asked for notable demographic details (gender, household income, daypart) of consumers purchasing Olive Garden's lighter portions. He also inquired about holiday bookings, specifically if they are exceeding expectations or in line, as an indicator of consumer behavior.

Answer

CEO Rick Cardenas stated that more work is needed to gather detailed demographics for lighter portions due to its recent rollout and 1.5% sales contribution. He noted record Thanksgivings in fine dining brands and strong holiday bookings.

Jim Sanderson asked about the incremental percentage of delivery sales mix for Olive Garden and Cheddar's Scratch Kitchen, and if the absence of negative mix at Olive Garden implies that smaller portions and promotions are not significantly impacting the average check.

Answer

Rick Cardenas, President, CEO & Director, stated that approximately 50% of delivery sales are incremental for both Olive Garden and Cheddar's, outside of promotions. Raj Vennam, SVP & CFO, explained that while smaller portions could have a negative mix impact, it was offset by other factors, such as strong preference for higher-priced items like the Calabrian steak and shrimp at Olive Garden.

Jim Sanderson asked for a breakdown of LongHorn Steakhouse's same-restaurant sales between traffic and ticket, and how pricing is expected to trend relative to inflation throughout the year. He also asked if value-focused menu expansion, similar to Olive Garden's lighter portions, could be seen at LongHorn Steakhouse.

Answer

CFO Raj Vennam 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 pricing to be about 100 basis points below total inflation in Q2, narrowing later in the year. CEO Rick Cardenas stated that the lighter portion test is currently Olive Garden-focused, but other brands might implement similar initiatives based on learnings.

Jim Sanderson asked about the percentage of sales mix from delivery that is incremental for Olive Garden and Cheddar's, and if it has remained stable. He also inquired if the absence of negative mix in Olive Garden's same restaurant sales breakdown implied no meaningful impact from smaller portions or promotions on check.

Answer

Rick Cardenas, President and CEO, confirmed that outside of promotions, delivery is about 50% incremental for both Cheddar's and Olive Garden, remaining relatively stable. Raj Vennam, CFO, clarified that while smaller portions had a negative impact, it was offset by other mix factors, specifically strong preference for higher-priced items like the Calabrian Steak and Shrimp, which tended to shift the entree mix towards higher value.

Jim Sanderson of Northcoast Research asked about the implied restaurant closure rate in the fiscal 2026 guidance and if Darden is considering streamlining smaller brands. He also questioned if the incrementality of Uber Direct was consistent during the May promotion.

Answer

CFO Raj Vennam clarified that after a year of higher-than-normal closures as part of a portfolio review, no significant number of closings are assumed for fiscal 2026. President & CEO Rick Cardenas explained that the incrementality of Uber Direct remains fairly consistent, as free delivery offers can also attract existing pickup guests, which increases total delivery sales without necessarily spiking the new-customer percentage.

Jim Sanderson asked for more detail on Signet Jewelers' Q4 guidance, specifically what average unit volume declines in bridal and fashion would lead to the -5% low end, and where the greatest risk might emerge. He also inquired about the company's satisfaction with its price and promotional position relative to peers entering the December holiday season.

Answer

COO and CFO Joan Hilson clarified that at the -5% low end of the Q4 guide, both bridal and fashion units would be down roughly mid-single digits. She added that even at the high end of the guide, bridal units could be down low-single digits, expressing confidence in bridal performance, particularly in large brands like Kay, Zales, and Peoples. CEO J.K. Symancyk stated that Signet is satisfied with its price position but remains vigilant, continuously monitoring the market. He emphasized balancing a less promotional approach with targeted promotions to maintain competitive positioning in commodity-based categories and key price points, while preserving brand equity.

Jim Sanderson asked about the unit volume declines (bridal and fashion) that would lead to the low end of the Q4 guidance (-5% comp). He also inquired about the company's satisfaction with its promotional price position relative to peers entering the December holiday season.

Answer

COO and CFO Joan Hilson stated that at the low end of the Q4 guide, both bridal and fashion units would be down roughly mid-single digits. She noted that even at the high end, bridal units could be down low single digits. CEO J.K. Symancyk confirmed satisfaction with the company's price and promotional position, emphasizing vigilance in monitoring the market and maintaining competitive positioning, especially in commodity-based categories and key price points.

Jim Sanderson from Northcoast Research asked for the specific unit decline in the fashion category for the quarter and the outlook for bridal unit performance for the full fiscal year. He also inquired about the potential long-term sales mix for the lab-grown diamond assortment and the expected marketing spend trend for the second half of the year.

Answer

Chief Operating & Financial Officer Joan Hilson reported a high-single-digit unit decline in fashion, driven by gold prices impacting Banter and a strategic shift away from low-price promotional items. She stated the outlook for bridal units is relatively flat to up low-single-digits. CEO & Director J.K. Symancyk declined to give a specific LGD penetration target but noted significant runway for growth. He described the marketing spend outlook as neutral overall, not necessarily higher than revenue growth.

Jim Sanderson asked for the unit decline in the fashion category for the quarter and the outlook for bridal units for the fiscal year. He also inquired about the expected long-term penetration mix of lab-grown diamonds in the assortment and the marketing spending trend for the back half of the year.

Answer

COO and CFO Joan Hilson reported a high single-digit unit decline in fashion, mainly due to gold pricing impacting Banter and a strategic shift away from lower-price promotional items in Zales. She expects bridal units to remain relatively flat, potentially up below single-digit, consistent with previous guidance. CEO J.K. Symancyk stated no specific penetration target for LGDs, as they aim to grow both sales and category expansion, emphasizing LGDs are adding to consumption. J.K. Symancyk clarified that marketing spending for the back half is expected to be neutral overall, with adjustments based on performance rather than a fixed increase.

Jim Sanderson of Northcoast Research asked about the company's ability to achieve the high end of guidance if tariffs from India increase, whether bridal unit growth was in line with the industry, and the specific share of bridal sales from lab-grown diamonds.

Answer

CEO J.K. Symancyk expressed confidence in managing potential tariff impacts, stating that lab-grown diamonds are less of a pressure point due to greater control over design, fabrication, and input costs, allowing the company to engineer products to specific price points. CFO Joan Hilson noted that based on external indicators, Signet is gaining traction and market share in bridal. She specified that lab-grown diamonds now represent a 'mid-thirty' percent share of bridal sales, an increase from last year driven by improved assortment architecture.

Jim Sanderson asked about the new unit growth plan, specifically if multiple store formats like Chili's Express or reduced square footage are being considered, and requested an update on ribs performance and its expected mix evolution.

Answer

CFO Mika Ware stated that for new unit growth, Chili's is currently focusing on the normal full street-side footprint, emphasizing the dine-in experience. Regarding ribs, she reported that the business was up 35% in Q1, contributing about a point of incremental mix, and they expect continued strong sales from this investment.

Jim Sanderson asked about Brinker's new unit growth plan, specifically if multiple store formats (e.g., Chili's Express, smaller square footage) are being considered, and requested an update on the ribs mix in the quarter and its expected evolution.

Answer

Mika Ware, EVP and CFO of Brinker International, stated that for Chili's, they are currently focusing on the 'normal full street side footprint' as their primary dine-in format for the foreseeable future. She reported that the ribs business, a $150M segment, was up 35% in Q1 with the new ribs, contributing about a point of incremental mix, with expectations for continued growth.

Jim Sanderson of Northcoast Research asked about the key drivers to achieve the higher end of the same-store sales guidance, the expected impact of the new loyalty program, learnings from the San Mateo opening applicable to other stores, and the outlook for future restaurant closures.

Answer

President & CEO Emanuel Hilario identified improving Benihana's table turn times and a strong holiday event business as key to reaching the upper end of sales guidance. He expects the new 7-million-member loyalty program to build momentum in Q3 and show a payoff in Q4. Key learnings from San Mateo to be applied elsewhere include moving sushi bars to add tables and creating dedicated takeout stations to improve flow. He also noted that portfolio optimization is ongoing, with capital allocation decisions weighing heavily on whether to renew leases for older, underperforming assets.

Jim Sanderson sought clarification on the traffic outlook, asking if achieving a flat full-year result implies positive traffic in Q3 and Q4. He also asked if recent marketing was the primary driver of the July traffic improvement.

Answer

CFO Katie Fogertey confirmed traffic trends have improved monthly and were positive in July, but did not provide a specific quarterly forecast. Both she and CEO Rob Lynch clarified that the 3.2% comp in July was driven primarily by the culinary launch itself, as the significant media spend began at the very end of the reporting period.

Jim Sanderson inquired about the ultimate store capacity for the Flower Child concept given its rapid AUV growth. He also asked if there were any noticeable traffic trend changes in Q2 or July related to weather events like heat waves.

Answer

Matthew Clark, Executive VP & CFO, stated that they don't know Flower Child's ultimate capacity, as the team continues to improve throughput, with some locations already reaching $6.5 to $7 million in sales. He noted there is a long runway for AUV growth. Regarding traffic, he said trends have been very steady and predictable across the company, with no significant widespread impact from weather.

Jim Sanderson asked about the expected progression of the sales mix component of same-store sales, whether the new reservation system has increased loyalty memberships, and for an update on technology initiatives like the robotic dishwasher.

Answer

SVP Benjamin Porten expressed excitement about improving the sales mix in fiscal 2026, driven by initiatives like 'light rice' and higher-threshold IP giveaways. He noted that loyalty membership growth rates are currently stable as the reservation system has not yet been marketed to non-members. For technology, he highlighted the dish robot as a major FY26 opportunity that could reduce headcount, and mentioned ongoing improvements to the reservation system to enhance front-of-house efficiency.

Jim Sanderson asked for more detail on the expected drivers of G&A leverage going forward. He also requested clarification on the components of the quarterly comp, noting that the price and traffic figures implied a negative mix, and asked for an update on DoorDash's contribution to sales.

Answer

CFO Jeff Uttz identified support center salaries as the biggest driver of G&A leverage, emphasizing efficiency gains from technology over headcount growth. CEO Hajime Uba, via interpreter, added that regional density from infill growth creates synergies, allowing area managers to handle more stores and reducing travel for facilities teams. Mr. Uttz explained that while the mix was slightly negative, it was a significant improvement from high single-digit negative mix in prior years and they were happy with the result. Benjamin Porten stated that off-premise sales were 3.2% of total sales, up from 2% before the DoorDash launch.