John Ivankoe

John Ivankoe asked if Chipotle's core consumer, with 60% earning over $100,000, will benefit from various D.C. policy changes in 2026, potentially creating a tailwind for spending. He also inquired if North America company development is reaching a natural plateau or if there's ability to ramp up further. Finally, he asked about confidence in international development outside of Central London and Frankfurt, specifically in other parts of the UK, Germany, and France.

Answer

Scott Boatwright, Chief Executive Officer, believes the consumer income profile will be a nice tailwind for spending, especially after tax season. He confirmed building 334 restaurants in 2025 and targeting 350 in 2026, seeing this as the right growth rate for 60% returns, with potential for 9-10% new unit growth including partner-operated. For international, he noted France is challenging due to wage/occupancy costs, while the UK strategy focuses on Central London for high ROI, with future expansion to adjacent markets.

John Ivankoe asked if Chipotle's core consumer, with 60% earning over $100,000, will benefit from various D.C. policies like tax refunds and student loan changes in 2026, impacting their spending ability. He also inquired if the current North America company development rate of 330-350 units is a natural, absolute level going forward or if there's an ability to ramp it up. Finally, he asked about confidence in international markets beyond Central London and Frankfurt, specifically in the UK, Germany, and France.

Answer

Scott Boatwright, CEO, believes D.C. policies will provide a nice tailwind for spending, especially for the under $100,000 income group after tax season. He confirmed 334 restaurants opened in 2025 and 350 planned for 2026, stating this is the right growth rate for 7,000 North American restaurants with 60% returns. For international, he noted France is challenging due to wage inflation and occupancy, while Central London remains a significant opportunity, with a strategy similar to New York or Chicago, and plans to expand to adjacent markets like Benelux, Nordics, Poland, or Spain.

John Ivankoe of JPMorgan Chase & Co. asked about performance variations across different regions, such as the Northeast, and between urban and suburban locations, noting increased competition in some markets.

Answer

CEO Scott Boatwright responded that performance has been surprisingly consistent across all regions, with no single area lagging. He noted the Northeast remains a strong performer. CFO Adam Rymer added that urban restaurants have actually slightly outperformed suburban locations, with some minor softness observed in vacation-heavy areas around holidays.

John Ivankoe of JPMorgan Chase & Co. asked about the labor market, seeking reasons for the cooperative wage rates and low turnover levels recently, and whether management sees any forward indicators of change in the market.

Answer

CEO Scott Boatwright attributed Chipotle's improved retention to its own best-in-class wages, benefits, and culture, noting the company is at all-time highs for staffing. He stated he has not seen a 'canary in the coal mine' signaling a market shift and believes Chipotle continues to take share due to its strong value proposition, which consumers see as a benefit over just a low price point.

John Ivankoe asked if the investment in Brassica signals a move toward becoming a platform company and also questioned the feasibility of using centralized prep kitchens to serve clusters of restaurants to reduce in-store labor complexity.

Answer

Interim CEO Scott Boatwright clarified that the Brassica investment was a passive, minority stake from the Chipotle Next Fund and not a distraction from the core business, though it could be a future growth platform. Regarding central kitchens, he explained that while they have explored the idea, it presents significant complexity, food safety risks, and has been cost-prohibitive, making the current in-restaurant prep model the best approach for now.

John Ivankoe asked for confirmation on the planned remodel acceleration to 60-80 units in FY2027 and further increases in FY2028. He also inquired about the expected percentage unit growth for Chili's in FY2028 and beyond, and the broad capital intensity for the business in FY2027 and FY2028.

Answer

CFO Mika Ware confirmed plans for 60-80 remodels in FY2027, ramping up to approximately 10% of the system (over 100 units) in FY2028. She noted that new unit growth would be flat next year due to the 18-24 month development cycle but expects a significant increase in FY2028, potentially in the low single digits for percentage unit growth. Mika emphasized that the company has ample capital for these investments and is excited about the expanded opportunities for new Chili's locations.

John Ivankoe inquired about the long-term opportunity to potentially double the Chili's brand footprint, considering its improved returns and capital availability.

Answer

Mika Ware, CFO of Brinker International, described the idea of doubling the brand as 'quite aggressive' but affirmed that the company believes it can build more Chili's. She indicated that more specific details on the brand's long-term growth potential and new unit cadence would be provided at an upcoming Investor Day, emphasizing the company's strong capital position to support profitable expansion.

John Ivankoe from JPMorgan Chase & Co. asked about the long-term vision for capital expenditures, particularly for a large-scale reimage, relocation, and rebuild program for Chili's aging restaurant portfolio, and how high that spending could go.

Answer

CEO Kevin Hochman stated that while past atmosphere work focused on repairs, a new reimage prototype is being developed for rollout next fiscal year, targeting roughly 100 buildings annually, starting with 200 high-priority older assets. CFO Mika Ware added that while the scope and cost are still being finalized, the company will not be "scared" to add this to the capital plan, as investing in the business is a core strategy. They are even testing their first scrape-and-rebuild project.

John Ivankoe asked for any case studies or paradigms that inform the company's remarkable turnaround and its potential for sustainability, and also requested an update on the planned fajitas relaunch.

Answer

CEO Kevin Hochman cited inspiration from a best-in-class casual dining competitor focused on fundamentals (food, service, atmosphere) combined with modern marketing tactics. He confirmed the fajitas relaunch is still planned for Q4 as a menu and feature-card focus, but the primary advertising will remain on the successful value message. He also mentioned innovation is expanding to appetizers, ribs, and the Triple Dipper.

John Ivankoe questioned Starbucks' approach to AM versus PM daypart execution, suggesting a focus on faster morning service and more innovative afternoon offerings. He also asked about Starbucks' competitive strategy against drive-through and takeout-focused chains.

Answer

Brian Niccol, Chairman and CEO, described the morning as a 'ritual' and the afternoon as a 'reset,' indicating plans to daypart the menu with customized energy, sparkling drinks, and indulgent options for the afternoon, complemented by on-trend food. He emphasized Starbucks' unmatched 'ecosystem' of cafe, drive-through, and mobile order pickup, which he believes will allow them to win on any street corner, supported by new cost-effective building formats and enhanced people capabilities.

John Ivankoe questioned the opportunity for Starbucks to differentiate its morning execution (faster, consistent) from its afternoon execution (more innovative, e.g., handcrafted blended energy). He also asked about Starbucks' competitive response to the accelerating trend of drive-through and takeout-focused chains.

Answer

Brian Niccol, Chairman and CEO, described the morning as a ritual and the afternoon as a reset, indicating plans to use digital menu boards to daypart the menu. He highlighted opportunities for customized, sparkling, and blended energy drinks, along with complementary food, for the afternoon. Niccol emphasized that Starbucks' ecosystem of cafe, drive-through, and mobile order pickup, when working together, is unmatched and provides a competitive advantage, with plans to rebuild the pipeline for new units.

John Ivankoe questioned whether the Green Apron Service was primarily a defensive measure to address system gaps or an offensive strategy to drive traffic, exploring opportunities for further expansion (2.0/3.0) and the communication plan to re-engage lapsed customers.

Answer

Brian Niccol, Chairman and CEO, Starbucks, explained that Green Apron Service was a combination of fixing missteps (staffing, order sequencing) and an offensive move to provide the best customer experience. He highlighted that improved performance at peak times earns more hours, creating a self-feeding flywheel for growth, and noted that high frequency and social sharing quickly communicate the improved experience to customers.

John Ivankoe questioned whether the Green Apron Service was primarily a defensive measure to address system gaps and traffic decline or an offensive strategy to drive growth, asking about potential for further staffing investments (2.0/3.0) and how Starbucks plans to re-engage lapsed customers.

Answer

Brian Niccol, Chairman and CEO, explained that Green Apron Service was a combination of fixing missteps (staffing, order sequencing) and an offensive move to provide the best customer experience. He noted that customers quickly notice the difference due to high frequency, and the Protein Platform is already bringing back low-frequency rewards customers. He added that improved performance at peak times allows the company to earn additional hours, creating a positive feedback loop.

John Ivankoe from JP Morgan Chase & Co. asked how Starbucks plans to introduce significant innovation without complicating operations or slowing down service speed.

Answer

CEO Brian Niccol emphasized that a core principle for all new innovation is that it cannot negatively impact service speed goals. He highlighted the 'starting five' approach, where innovations are co-developed with baristas in stores from the beginning. This ensures operational feasibility and avoids the old method of developing concepts in a support center and 'throwing it over the wall.' He also noted that recent menu simplification created the necessary capacity for this new, executable innovation.

John Ivankoe of JP Morgan Chase & Co. asked how Starbucks can introduce significant innovation without complicating operations or slowing service, and if solutions like new equipment or dayparting are being considered.

Answer

Chairman & CEO Brian Niccol emphasized that a core principle is that innovation cannot negatively impact service speed. He detailed the new 'starting five' approach, where innovations are co-developed with baristas to ensure operational feasibility. This process, combined with prior menu simplification, creates the capacity to roll out new items that are both unique and executable at scale.

John Ivankoe asked about the decision to pause the Siren station equipment rollout, which was intended to improve drive-thru speed, and whether it made sense for Starbucks to implement a split menu for different dayparts.

Answer

Brian Niccol, Chairman and Chief Executive Officer, clarified that the Siren system is not being abandoned but will be deployed in a highly targeted manner only in stores where volume justifies it, rather than a broad rollout. He confirmed they are exploring a split menu, citing an 'aperitivo' afternoon menu as an example of how they can use different offerings to drive traffic in other dayparts, enabled by digital menu boards.

John Ivankoe from JPMorgan Chase & Co. asked about the possibility of having different menu offerings for morning and afternoon dayparts and requested an update on the rollout of food warming cabinets as part of the Siren equipment initiative.

Answer

CEO Brian Niccol confirmed that the planned rollout of digital menu boards will provide the flexibility to merchandise different offerings by daypart. He also mentioned a planned 30% menu reduction to free up space for targeted innovation. Regarding warming cabinets, he clarified that their use is contingent on store transaction volume thresholds, not just speed, as the trade-off versus cooking to order isn't always beneficial.

John Ivankoe questioned the strategic priority for the food category, which constitutes nearly 25% of sales, asking whether the focus would be on broad improvements or on narrowing the menu to 'do fewer things better.'

Answer

CEO Brian Niccol affirmed that food is a 'key piece of the puzzle' and that the strategy is to improve quality by focusing on 'fewer, better food executions.' He emphasized a commitment to matching the quality and craftsmanship of the food offerings to that of the beverages, with changes expected to roll out in the coming months.

John Ivankoe asked about Sysco's opportunities and conversations with AI and automation technology providers, specifically concerning warehouse distribution and SKU optimization, and the progress towards piloting or implementing Sysco-specific automation solutions at scale.

Answer

Kevin Hourican, Chair of the Board and CEO, discussed investments in material handling automation for warehouses, noting that while current facilities are mostly manual, future net new or expanded buildings will incorporate more automation due to rising labor costs and availability, with a focus on strong ROI. For AI, he highlighted AI 360 as a sales productivity tool and mentioned exploring agentic tools across all functions (HR, merchandising, finance) to achieve 'better, faster, cheaper' outcomes. Kenny Cheung, CFO, added that Sysco has a healthy pipeline for productivity and cost-out initiatives, leveraging technology and automation to enable teams to do more with the same or less, with positive results already seen in the finance department.

John Ivankoe asked about Sysco's engagement with AI and automation providers, specifically regarding opportunities in warehouse distribution, SKU optimization, and the potential for piloting or implementing Sysco-specific automation solutions at scale.

Answer

CEO Kevin Hourican addressed automation, noting that while current warehouses are mostly manual, rising labor costs and availability challenges necessitate investment in physical automation, likely in new facilities or expansions. He confirmed meetings with top engineering firms. Regarding AI, he stated that Sysco is leveraging agentic tools across all functions (HR, merchandising, finance) to improve efficiency, reduce costs, and speed up work, with AI 360 being an example. CFO Kenny Cheung emphasized the company's focus on productivity and cost reduction, leveraging technology and AI tools to enable teams to achieve more, citing success in the finance department with working capital and transactional work.

John Ivankoe asked about independent restaurants, specifically the difference in performance between existing account penetration and new account generation, and whether Sysco observes the industry's growth in new independent units. He also inquired about specific tools the salesforce uses to generate new account penetrations, given that AI 360 and Perks 2.0 seem geared towards existing business.

Answer

Kevin Hourican, Chair and CEO of Sysco, highlighted Q1 improvements in both new-to-lost account spread (220 basis points year-over-year, 40 basis points Q4-Q1) and penetration with existing customers (90 basis points Q4-Q1), attributing the latter to AI 360 and Perks 2.0. For new account generation, he pointed to the incremental headcount investment (750+ people) building their book of business, improved colleague retention reducing account churn, and AI 360's prospecting tool, which provides target accounts and selling suggestions. Kenny Cheung, CFO, added that AI 360 shows a correlation between usage and results, shortening the lead time for sales development representatives (SEs) to become fully productive, acting as a 'pocket teacher,' and emphasized that these tools offer accretion upside beyond current targets.

John Ivankoe questioned the performance difference between existing account penetration and new account generation for independent restaurants, noting industry growth in new independent units. He asked about tools available to the Salesforce specifically for generating new account penetrations, given that AI 360 and Perks 2.0 seem focused on existing business.

Answer

Kevin Hourican, Chair and CEO, confirmed improvements in both new-loss spread and penetration in Q1. He explained that AI 360 and Perks 2.0 are indeed focused on increasing penetration with existing, profitable customers. For new accounts, the primary driver is the incremental headcount investment (750+ new hires) who build their book of business. Improved colleague retention also frees up existing sales reps for prospecting. He added that AI 360 includes a maps app tool to help colleagues identify and target new accounts within their geography, providing selling suggestions and aiding in closing new business. Kenny Cheung, CFO, noted a correlation between AI 360 usage and results, shortening the lead time for new sales consultants to become fully productive, and emphasized these tools provide accretive upside.

John Ivankoe from JPMorgan Chase & Co. asked for Sysco's perspective on industry consolidation, considering factors like AI and automation, and how the company might leverage opportunities to enhance efficiency, particularly in the U.S.

Answer

CEO Kevin Hourican acknowledged that size and scale are crucial in the industry. He highlighted AI's role in improving back-office efficiency and turbocharging the sales force's effectiveness, rather than replacing them. He confirmed Sysco will continue to evaluate M&A opportunities, including tuck-ins and specialty acquisitions, to capitalize on its scale advantages, but did not comment on specific rumors.

John Ivankoe of JPMorgan Chase & Co. asked about the slight underperformance of local case volumes compared to restaurant industry traffic, seeking to identify any specific pockets of weakness by customer type, geography, or share that could be targeted for improvement.

Answer

CEO Kevin Hourican attributed the Q2 local performance to quarter-specific disruptions like a hurricane and holiday timing, stating there are no systemic or regional themes of underperformance. He emphasized that the disruption from the new sales compensation plan is now over, with sales reps benefiting, which is expected to drive momentum. CFO Kenny Cheung added that they see a strong correlation between incremental headcount additions and volume growth in specific markets.

John Ivankoe of JPMorgan Chase & Co. asked for clarification on the transitory impact of the sales force compensation change, questioning whether turnover was concentrated among underperformers and if the 20% sales force growth target remains appropriate.

Answer

CEO Kevin Hourican explained the change was an intentional move to a pay-for-performance culture, which top performers have embraced. He confirmed that the increased turnover in July was anticipated and primarily involved underperformers, with retention now stabilized. CFO Kenny Cheung added that Sysco remains committed to growing its sales headcount but will be disciplined in its pacing to ensure a positive return on investment, noting a high correlation between headcount additions and volume growth.

John Ivankoe asked about broad inflation, specifically labor inflation running lower than pre-COVID, and whether this indicates a good labor supply or hidden pockets of turnover. He also inquired about regional demand shifts and whether beef packers constraining supply could be linked to immigrant worker situations, potentially signaling broader industry trends.

Answer

CEO Rick Cardenas confirmed no material impact from immigration on team member turnover, citing record retention. He could not comment on the reasons for beef packer supply constraints or any link to labor issues. CFO Raj Vennam noted regional sales differences, with the Midwest showing strongest growth and softness in New England and the Pacific Northwest, while Florida and Texas were improving.

John Ivankoe asked about broad inflation, noting labor inflation is lower than pre-COVID, implying good labor supply, and inquired if there are any underlying issues in specific restaurants or pockets. He also asked about changes in regional demand ripples and if the comment about beef packers constraining supply could indicate an immigrant worker situation, potentially a leading indicator for other industries.

Answer

CEO Rick Cardenas confirmed record retention and no material issues with restaurants experiencing team member turnover due to immigration. He could not comment on the reasons for beef packer supply constraints or if it's labor-driven. CFO Raj Vennam noted that in Q2, the Midwest showed the strongest sales growth, while New England and the Pacific Northwest experienced softness, with Florida and Texas lagging but closer to the company average than in the prior quarter.

John Ivankoe asked for clarification on Darden's observation of demand destruction at retail for beef, contrasting it with other data. He also inquired about lessons learned from past unsuccessful attempts at smaller portions and 'Hawaiian steak' concepts in casual dining (circa 2007-2008) and how Darden's current strategy differs.

Answer

Raj Vennam, SVP & CFO, clarified that recent (last month) retail data showed a low single-digit year-over-year volume decline for beef, a shift from prior months' resiliency. Rick Cardenas, President, CEO & Director, explained that Cheddar's Hawaiian sirloin is not a smaller portion, and LongHorn previously had success with a similar item. For Olive Garden's lighter portions, he emphasized they still offer abundance (with unlimited soup/salad/breadsticks) but provide price breadth for consumers seeking 'just the right amount,' differing from past attempts that may have gone 'too far' with reduced portions.

John Ivankoe of JPMorgan Chase & Co. asked how the slowdown in overall restaurant industry unit growth is affecting Darden's ability to secure desirable real estate for its expansion plans.

Answer

President & CEO Rick Cardenas stated that Darden is in a strong real estate position with a robust pipeline of sites, and is better positioned now than a year ago. He believes the industry's unit growth slowdown is primarily affecting smaller independent operators and chains, whereas large, well-capitalized companies like Darden continue to have excellent access to capital and development opportunities.

John Ivankoe asked whether Darden would consider using personalized digital marketing for targeted discounts and questioned what a fair long-term margin for Olive Garden is, suggesting a potential need to reinvest for volume growth.

Answer

President and CEO Ricardo Cardenas stated that while they can use digital marketing to re-engage guests, they prefer to avoid a return to broad discounting but may test targeted offers. Regarding Olive Garden's margins, he noted they are strong due to operational efficiencies that haven't impacted guests. He does not foresee margins reaching 25%, indicating a preference for reinvesting to enhance affordability and drive sales over maximizing margin rates.

John Ivankoe asked what factors distinguish the performance of better-performing Olive Garden markets and stores from those that are slower. He also inquired about the tools Darden has to improve the results of underperforming locations.

Answer

President and CEO Rick Cardenas stated that while some geographic softness exists (e.g., Florida and Texas in the quarter), the single biggest determinant of a restaurant's success is the quality and commitment of its local management team to executing operational standards. He cited offering refills at Olive Garden and cooking steaks correctly at LongHorn as examples. The primary tool for improvement is the direct involvement of Directors of Operations, who work with underperforming managers to elevate their execution.

John Ivankoe asked about the company's IPO in 2004 and subsequent unit growth. He inquired if 20-year-old restaurants face step-ups in rent and if there's a need for major remodels (beyond cosmetic work) for the next 20 years of a restaurant's life, considering future CapEx cycles.

Answer

Michael Bailen, VP of Investor Relations, clarified that rent is straight-lined, so there are no step-ups, though lease term resets could lead to higher costs for a small number of stores. He emphasized that continuous maintenance prevents major CapEx spikes, although some early stores were relocated. Keith Humpich, Interim CFO, added that an aging restaurant base has led to an uptick in maintenance CapEx, expecting similar levels going forward.

John Ivankoe inquired about potential rent step-ups on 20-year restaurant leases and the future capital expenditure needs for major remodels or asset reinvestment for the company's aging restaurant base.

Answer

Michael Bailen, VP of Investor Relations, clarified that rent is straight-lined, so there are no inherent step-ups, though resets could occur at the end of negotiated lease terms for a small number of stores. He emphasized that continuous maintenance prevents major CapEx spikes for remodels. Keith Humpich, Interim CFO, added that due to an aging restaurant base, CapEx for maintenance is expected to remain at current levels going forward.

John Ivankoe asked about the year-over-year decline in average unit volumes for the cohort of stores open 6-18 months, questioning if this was due to intentional market fill-in strategies or other factors.

Answer

Executive Michael Bailen explained that the lower AUV for this specific cohort is not a concern and is primarily a function of its geographic mix compared to the prior year's group, which had more high-volume California locations. He affirmed that the company is comfortable with the returns and that the newest stores are performing very strongly.

John Ivankoe referenced Australia's value strategy, which provides consumers with predictability and confidence, and asked if broadening the U.S. Extra Value Meals (EVM) discount from 11% to 15% aims to achieve similar price certainty and predictability for consumers, potentially migrating the brand towards a sustainable national pricing model for EVMs.

Answer

Chairman and CEO Chris Kempczinski affirmed that the move to increase the EVM discount was precisely to reestablish the predictable value consumers expect from these items, which had drifted. He expects the program to continue beyond the initial corporate support period because it aligns with consumer expectations and, once incrementality is achieved, it becomes self-sustaining. He emphasized that EVMs form a foundational, predictable value, complemented by the evolving McValue platform and disciplined regular menu pricing.

John Ivankoe referenced McDonald's Australia's value strategy of providing predictability and confidence to consumers. He asked if broadening the US Extra Value Meal (EVM) discount from 11% to 15% offers similar price certainty across 30% of US sales, and if the US brand could migrate towards a sustainable national pricing model for EVMs.

Answer

CEO Chris Kempczinski affirmed that addressing the EVM discount was precisely to reestablish consumer expectations of value and that the company expects this predictable value to continue beyond Q1 2026. He explained that EVMs serve as a foundational, predictable value offering, complemented by the McValue platform's evolving deals and offers, alongside disciplined pricing on the regular menu board. He emphasized that once the initial period of building incrementality is complete, the system would not want to lose the established value perception.

John Ivankoe requested a deeper diagnosis of the prolonged weakness in the low-income consumer base, noting that some traditional macro pressures appear to have eased, and asked if the U.S. situation is a leading indicator for other markets.

Answer

Chairman & CEO Chris Kempczinski attributed the weakness to the fact that real incomes for low-income consumers are down despite wage gains, coupled with high anxiety and negative sentiment. This leads them to skip meals or eat at home. EVP & CFO Ian Borden added that international markets face similar dynamics, particularly with families under pressure, but McDonald's often performs better there due to a less intense competitive landscape, allowing its value offerings to stand out more effectively.

John Ivankoe asked about the wide variation in core menu pricing across the U.S. and the expected success of the new McCrispy chicken strips in a changed competitive landscape.

Answer

CEO Christopher Kempczinski defended local pricing as essential for competitiveness within specific trading areas. On the chicken strips, he noted strong customer demand and explained the product will launch under the McCrispy platform to leverage its brand halo. He also revealed that the introduction of strips will enable the return of snack wraps later in the year.

John Ivankoe questioned the timeline for seeing financial leverage from the Global Business Services (GBS) initiative, noting that benefits are not expected in 2025 or 2026, and asked for examples of qualitative improvements.

Answer

CEO Christopher Kempczinski clarified that the company is in a peak investment phase and never expected material financial benefits in the early years, with efficiencies anticipated in 2026 and a steady state in 2027. CFO Ian Borden provided a qualitative example, stating the new people system reduced the time-to-hire for restaurant managers in Australia by 50%. Kempczinski added that G&A as a percentage of system-wide sales was held constant in 2024 despite these investments.

John Ivankoe questioned if McDonald's is shifting its value strategy towards a more global, standardized platform, and inquired when the mobile app might become the primary driver for delivering value to customers.

Answer

CEO Christopher Kempczinski unequivocally stated that value strategy remains a local, market-level decision, not a global, top-down mandate. He clarified that the company shares global frameworks and best practices, but execution is tailored to local conditions. CFO Ian Borden added that while digital is growing, traditional 'front counter' value will remain critical for the foreseeable future as digital users are still a minority of customers.

John Ivankoe asked about the opportunity to optimize growth by potentially finding new franchise partners for successful legacy businesses, considering generational shifts and the need for partners committed to both running and growing the business, referencing the large Taco Bell acquisition in the Southeast U.S.

Answer

CEO Chris Turner reiterated Yum! Brands' asset-light model and reliance on capable, committed franchise partners. He clarified that the Taco Bell acquisition in the Southeast U.S. was a unique opportunity to unlock unit development in a specific geography, provide immediate EBITDA and operating profit lift, and solidify operational capability, including innovation testing. He emphasized that this is a strategic use of equity investment, citing other examples like the Saucy pilot and Live Más Café expansion, but reaffirmed the broader asset-light strategy.

John Ivankoe from JPMorgan Chase & Co. inquired about the strategic rationale behind the large Taco Bell franchisee acquisition in the Southeast U.S., particularly in the context of generational shifts in franchising and the opportunity to optimize legacy businesses for renewed unit growth, both domestically and internationally.

Answer

CEO Chris Turner reaffirmed Yum's asset-light, franchise-driven model, emphasizing the importance of capable and committed franchisees. He explained the Taco Bell Southeast acquisition as a unique opportunity to unlock unit development in a high-potential geography, provide an immediate EBITDA lift, and solidify operational capabilities for innovation testing. Turner also highlighted other strategic equity investments like Saucy and Live Más Café pilots.

John Ivankoe asked about the long-term outlook for free cash flow generation and capital intensity, questioning how CapEx should be benchmarked and the future role of company-owned unit development.

Answer

CFO Chris Turner reaffirmed Yum's commitment to its asset-light model, maintaining 2% restaurant ownership. He noted that the overall store estate has grown faster than the company-owned portion. Strategic store acquisitions are made to enhance operational capabilities and unlock development, yielding strong returns. Turner stated that technology investments are also structured for high returns, with franchisees sharing in the costs, and that no dramatic change to the capital-efficient strategy is planned.

John Ivankoe inquired about the new partnership with NVIDIA, asking what Yum! expects to accomplish and what makes the collaboration proprietary or unique compared to competitors.

Answer

CEO David Gibbs expressed excitement about the partnership, which was over a year in the making. He stated that while many details are proprietary, the collaboration focuses on voice AI, computer vision, and analytics, with 40 distinct AI initiatives currently staffed at Yum!. He positioned Yum! as the perfect partner for NVIDIA in the restaurant space due to its extensive, internally-built tech capabilities, suggesting the $1 billion investment is now beginning to be fully leveraged.

John Ivankoe asked about the challenges and strategies for attracting and retaining best-in-class technology talent for the 'Bite' platform, particularly given the intense competition for AI specialists.

Answer

CEO David Gibbs expressed strong confidence in Yum's ability to compete for talent, stating it is a 'competitive advantage.' He cited the company's renowned culture, talent development programs, and significant growth opportunities as key attractors. Gibbs noted that the technology team is highly motivated and that the company is successfully attracting top talent without experiencing high turnover.

John Ivankoe asked about the long-term potential for Yum! Brands to 'bend the curve on G&A' by capturing fees from franchisees for proprietary technology, effectively creating a new revenue stream from its tech investments.

Answer

CEO David Gibbs reiterated that the company's 'north star' for technology is to provide franchisees with the best tools at the lowest possible cost. He explained that the primary financial benefit to Yum! comes from improved franchisee profitability, which in turn drives top-line growth and new unit development. While the company will recover its investments, the strategy is not to generate significant profit from technology fees but rather to use technology as a lever for system-wide growth.

John Ivankoe from JPMorgan Chase & Co. asked about new marketing opportunities now that CAVA has surpassed $1 billion in sales, and also inquired about the competitive landscape, particularly in dense markets like New York.

Answer

CEO Brett Schulman stated that competition is a constant, and they have not seen any unusual competitive pressures in New York or elsewhere. On marketing, he agreed that reaching scale opens up new levers like CCTV and outdoor advertising, which they have tested but have not yet been a meaningful part of their growth story.

A representative for John Ivankoe of JPMorgan Chase & Co. questioned CAVA's performance in existing markets amid growing competition and how these dynamics influence the brand's long-term potential.

Answer

CEO Brett Schulman affirmed that CAVA has seen consistent performance and no market-specific weakness across all regions. He emphasized that the industry has long been about competing for market share, and CAVA's sustained positive traffic growth proves customers are actively choosing the brand. Schulman highlighted that no region has an average unit volume below $2.6 million, underscoring broad and resilient demand.

John Ivankoe of JPMorgan Chase & Co. asked about the specific speed and productivity benefits of the Kitchen Display System (KDS) rollout and if it could pave the way for in-store ordering kiosks.

Answer

CEO Brett Schulman highlighted that KDS improves second make-line productivity, order accuracy, and the guest experience through dynamic status updates. He firmly dismissed the idea of kiosks, stating a strong belief in preserving human interaction in restaurants and directing kiosk-like experiences to the mobile app.

John Ivankoe of JPMorgan Chase & Co. asked about Restaurant Brands International's strategy for leveraging digital data, artificial intelligence, and personalized marketing to support its franchisees and gain a competitive advantage.

Answer

Executive Chairman Patrick Doyle stated that while RBI is 'very excited' about its work in this area, the company is intentionally not disclosing many details, believing it has a competitive advantage. He emphasized the focus is on using AI to improve in-restaurant operations, efficiency, and the customer experience, promising more information as initiatives are rolled out.

John Ivankoe asked for clarification on the company's capital intensity guidance through 2028. He specifically requested the expected number of Burger King remodels for 2025 and 2026 and sought details on the composition of the long-term $300 million annual CapEx projection beyond 2028.

Answer

CFO Sami Siddiqui clarified that RBI expects about 400 Burger King remodels in 2025, with an acceleration in 2026, aiming for 85% modern image by the end of 2028 through a combination of remodels, new builds, and closures. For the long-term $300 million CapEx run rate post-2028, Siddiqui explained that a significant portion will be for the Tim Hortons system, covering a steady pace of remodels and new unit real estate. The remainder will support the company-operated portfolio and corporate needs like IT.

John Ivankoe questioned the 2025 CapEx guidance of $400M-$450M, asking if this represents a peak level given accelerated refranchising plans for Carrols, and whether the current $1.3B cash balance is appropriate for future needs.

Answer

CFO Sami Siddiqui clarified that the higher CapEx is driven by accelerated Burger King remodels and Tim Hortons Canada development. He indicated this elevated spending level will persist for a couple of years before declining. He also stated that deleveraging remains a key capital allocation priority after investing in the business and paying the dividend.

John Ivankoe inquired about the plan to expand the Burger King U.S. franchisee base from 300 to 500 operators, focusing on the strategy for the newly acquired Carrols units and the potential to elevate general managers into franchisee roles to foster more direct, local ownership.

Answer

CEO Josh Kobza confirmed the strategy, stating new franchisees will be sourced from RBI's internal teams, Carrols' management ranks, and other operators. He and Executive Chairman Patrick Doyle stressed the goal is to create 'closer ownership' at the restaurant level, which they believe is key to outsized performance. Kobza also noted the success of a new profit-sharing program for managers in company-owned stores, which reinforces this strategy.

John Ivankoe of J.P. Morgan sought clarification on the 'not recreating the wheel on value' comment, asking if Burger King might pivot back to a more explicit, price-point-driven value strategy as the industry shifts.

Answer

CEO Josh Kobza affirmed their satisfaction with the current balanced approach, which includes offerings like '$5 Duos' while avoiding deep discounting. Executive Chairman J. Patrick Doyle added that RBI has multiple growth levers, including remodels, new products, and service improvements, reducing reliance solely on price-based promotions.

John Ivankoe of JP Morgan Chase & Co. asked about the company's marketing spend as a percentage of sales, how high that could potentially go, and whether the company's increased scale unlocks new, broader-reach marketing efficiencies.

Answer

CFO Josh Guenser stated that while they don't disclose the total marketing budget, they have been leaning into it more but are likely on the lower end of the industry range. CEO Christine Barone added that the high performance of earned media from merch drops and the efficiency of their Dutch Rewards program (with 72% of transactions) have negated the need for a significant increase in paid spend. The ability to communicate directly with a majority of customers via the rewards program is a key efficiency driver.

John Ivankoe observed that the 900-square-foot store prototype has not changed significantly despite major operational evolutions like mobile order and food tests, and asked if there is an opportunity for a new box design in the future.

Answer

CEO Christine Barone acknowledged they are always evaluating store design but emphasized the current prototype's inherent modularity. She explained that shops can be customized with dedicated production zones for different beverage types and layouts can be adjusted based on a market's specific product mix, making the box more adaptable than it appears.

John Ivankoe asked about the strategy and media types used for paid advertising in mature markets and whether the company would consider incentivized influencer marketing.

Answer

CEO Christine Barone explained that even in mature markets, brand awareness trails larger competitors, creating an opportunity for growth via targeted digital marketing. Regarding influencers, she stressed the importance of authenticity, stating their approach is to engage with existing 'super fans' in a unique 'Dutch Bros way' rather than pursuing standard paid partnerships.

John Ivankoe of JPMorgan Chase & Co. inquired about the compensation structure for Outback General Managers, asking if the company is considering alternative methods beyond direct pay to drive performance.

Answer

CEO Mike Spanos responded that Bloomin' Brands aims to pay at the market average and considers the current structure effective. He confirmed they are assessing the structure within the broader strategic plan and remain committed to a variable component that rewards sales and profit growth.

John Ivankoe asked about the performance disparity within the Outback brand, seeking to understand what distinguishes high-performing stores from underperformers. He also inquired about what employees, from managing partners to hourly staff, are asking for to improve their work experience.

Answer

CEO Mike Spanos identified consistency of execution and continuity of managing partners as the key differentiators for store performance, noting recent softness in Texas and Florida. He shared that employees are consistently asking for simplification and less complexity to make execution easier. This feedback on food quality, value, and service models is being directly incorporated into the company's strategic work.

John Ivankoe of JPMorgan Chase & Co. inquired if Outback's average ticket is at the right level or if it could be lowered to drive sales. He also asked for details on remodel costs and expected sales lift ratios.

Answer

CEO Mike Spanos and CFO Michael Healy explained the focus is on 'abundant everyday value' like the Aussie 3-Course to meet guest needs, while managing for gross profit dollars, acknowledging this is embedded in guidance. Regarding remodels, Spanos indicated a shift toward 'lower spend, higher touch' projects to achieve better returns, with capital previously earmarked for new units being redirected to remodels starting in 2026.

John Ivankoe asked about the condition of the existing restaurant asset base, the urgency for modernization investments, and the company's view on the current average ticket, questioning if it might be too high to drive desired frequency improvements.

Answer

CEO Mike Spanos affirmed that reinvesting in the base business, including remodels and maintenance, is critical for sustainable growth and a key part of their capital allocation strategy. CFO Michael Healy added that operational execution works best when paired with reinvestment in the restaurants. Regarding pricing, Spanos emphasized a balanced approach to revenue management, using volume, price, and mix levers, while being mindful of the competitive landscape and guest value perception.

John Ivankoe from JPMorgan Chase & Co. asked if the refranchising of 36 company-owned stores to a single franchisee signaled a philosophical shift towards consolidating the system with larger, more professional operators to accelerate growth.

Answer

CEO Russell Weiner clarified that this was a unique situation and not a departure from their strategy. He highlighted the strength and diversity of the current franchise system, where the average franchisee owns nine stores. He stated that this diversity prevents concentration risk and that the new franchisee in this case was a long-time Domino's system veteran, not an existing large operator.

John Ivankoe questioned the rationale for franchisees to continue building new stores, which serve delivery customers, at a time when the overall delivery channel has been choppy and new stores might cannibalize existing ones.

Answer

Chief Executive Officer Russell Weiner clarified that store splits are primarily driven by the carryout business, as a new split store generates about 80% of its carryout sales from incremental customers. This allows the store to break even, after which the delivery business becomes more efficient due to shorter, more predictable drive times, improving service and driver tips.

John Ivankoe of JPMorgan Chase & Co. inquired about promotional price points, asking if Domino's can effectively market offers above the $10 threshold or if the brand faces a consumer-perceived cap around that price.

Answer

CEO Russell Weiner emphasized that the key differentiator for Domino's value offers, like the $9.99 deal, is their sustainability for franchisees due to the company's scale and supply chain efficiencies. He noted that while $9.99 is a good price point now, the company will pivot as needed.

John Ivankoe from JPMorgan Chase & Co. asked about U.S. unit development for 2025, questioning if the target of around 175 new stores per year is still appropriate given the slower overall delivery market and the fact that new stores often open in existing delivery areas.

Answer

CFO Sandeep Reddy confirmed the company remains committed to its plan of opening approximately 175 U.S. stores annually. CEO Russell Weiner elaborated that new store growth is a critical part of the market share strategy, as it drives significant incremental carryout volume and improves delivery efficiency in split territories. He stated he loves the progress being made on this front.

John Ivankoe of JPMorgan Chase & Co. asked about the long-term outlook for COGS as a percentage of sales and the company's sensitivity to absolute menu price points. He also inquired if the new menu's focus on vegetables was informed by Flower Child or broader trends.

Answer

EVP and CFO Matt Clark acknowledged the constant balance between margin and guest value, stating the company is always focused on having attractive price points across the menu. President David Gordon explained that the menu's evolution, including more Mediterranean and vegetable-forward items, is driven by following broad consumer trends to appeal to every guest and cuisine preference, rather than being directly informed by Flower Child.

John Ivankoe from JPMorgan inquired about the potential scale of the tuck-in acquisition opportunity for broadline distributors to grow independent case volume. He also asked if US Foods has gained any surprising operational learnings from the businesses it has acquired.

Answer

CFO Dirk Locascio stated that while there are numerous tuck-in opportunities, the company's primary engine is organic growth, making acquisitions a complementary part of the strategy. He noted that they have learned from acquired companies, citing learnings about local customer relationships, density, and specific capabilities in areas like logistics and produce that have been leveraged across the broader US Foods network.

John Ivankoe questioned the durability of the company's long-term market growth assumption of 2% for local case volumes and asked if its outperformance target of 5-8% growth is achievable regardless of that baseline.

Answer

CEO David Flitman reaffirmed his confidence in achieving the 5-8% case growth target outlined in the 2025-2027 long-range plan, even if underlying market growth is slightly softer in the 1-2% range. He cited the company's strong execution, sales force momentum, and a stabilizing macro environment as key factors supporting this conviction.

John Ivankoe of JPMorgan Chase & Co. highlighted the company's high prime cost ratio of approximately 63% and asked about specific opportunities to improve this metric and align it more closely with industry norms.

Answer

CEO Kirk Tanner affirmed that improving restaurant-level margin is a key focus. He outlined three primary levers: enhancing labor efficiency with technology like drive-thru AI, managing food costs, and driving sales in mix-accretive categories like beverages, supported by the new Coca-Cola agreement.

John Ivankoe of JPMorgan Chase & Co. sought clarification on the comment about not 'reinventing the wheel on value,' asking if Burger King U.S. might adopt a more explicit value menu to compete for price-sensitive consumers.

Answer

CEO Josh Kobza defended the current balanced strategy, highlighting the effectiveness of platforms like '$5 Duos' which avoid deep discounting. Executive Chairman Patrick Doyle added that the company is pulling multiple levers for growth—including remodels, service, and marketing—and is not solely reliant on price-based value promotions.

John Ivankoe of J.P. Morgan sought clarification on the comment about not 'recreating the wheel on value,' asking if Burger King U.S. might pivot to more explicit value messaging as the industry becomes more competitive on price.

Answer

CEO Josh Kobza affirmed that the current balanced value strategy is working, citing strong relative sales and traffic. He pointed to existing platforms like '$5 Duos' as effective without resorting to deep discounting. Executive Chairman Patrick Doyle added that RBI is pulling multiple growth levers, including remodels and marketing, not just focusing on price.