Karen Holthouse

Karen Holthouse asked about the underlying health of the Florida market, excluding Cheney Brothers' noise, specifically addressing concerns around travel, tourism (international, theme parks), and the impact of snowbird season. She also inquired about geographic performance in the quarter to date prior to the recent major weather events.

Answer

Scott McPherson, EVP and Chief Field Operations Officer, Performance Food Group Company, expressed satisfaction with Cheney's independent share gain in Florida. He acknowledged a slowdown in international and Canadian travel, and theme park attendance, but maintained confidence in Florida's overall growth and the company's performance in the state. Regarding geographic performance, Mr. McPherson noted pretty consistent performance across the map in January (the start of Q3), with no material lulls or surges, contrasting with prior calls.

Karen Holthouse asked about the underlying health of the Florida market, excluding Cheney Brothers' noise, specifically addressing concerns about international tourism, theme park attendance, and Canadian snowbird travel. Karen Holthouse also inquired about geographic performance in the quarter to date, prior to the recent major weather events.

Answer

CEO Scott McPherson noted Cheney's strong independent share gains in Florida and acknowledged a slowdown in international/Canadian travel and theme park attendance, but expressed overall confidence in Florida's growth. He also stated that January (start of Q3) showed pretty consistent performance across the map, without material lulls or surges, contrasting with prior reported slowness in the Midwest and Canadian fringe travel areas.

Karen Holthouse, on for Jon Tower at Citigroup, asked if Texas Roadhouse would consider offering third-party delivery on a unit-by-unit basis, particularly if managing partners in certain markets requested it.

Answer

CEO Gerald Morgan responded that the company has resisted third-party delivery for the core Texas Roadhouse brand, with the exception of one urban location in New York. While it is used at Jaggers and Bubba's, the current focus for Roadhouse remains on the in-restaurant and proprietary to-go experience. He stated they will continue to have conversations but are holding the line for now.

Karen Holthouse from Citigroup noted the 80 basis point increase in private label penetration and asked if the company is now past the post-COVID challenges that hindered growth in this area, and what the outlook is from here.

Answer

CEO Dave Flitman confirmed that the post-COVID supply chain challenges for private label products are 'behind us.' He stated that momentum has been ramping up for the last 12-18 months and that he sees 'no near-term ceiling' to penetration growth, supported by a confident sales force and a strong product innovation pipeline, including an upcoming Scoop launch.

Karen Holthouse, on for Jon Tower, asked for the Q3 commodity inflation figure and requested more detail on customer engagement with the rewards program, particularly the role of reservation access.

Answer

EVP and CFO Matt Clark stated that Q3 commodity inflation was approximately 1%. President David Gordon explained that high usage of reservations indicates their importance to members. He added that the program is successfully driving incremental visits from moderate and frequent guests, who report even higher satisfaction scores, and that the company continues to test unpublished rewards to maintain margin neutrality.

Karen Holthouse, on for Jon Tower, asked if menu simplification could lead to smaller kitchen and restaurant footprints for new builds in the future. She also requested the marketing spend for the quarter and clarification on the adjusted EPS calculation.

Answer

President Lyle Tick confirmed that menu simplification could absolutely enable different, potentially smaller, restaurant formats in the future as part of a 'right cost, right size, right place' strategy. Interim CEO Brad Richmond added that they are also exploring menu regionalization for the existing store base. On the modeling questions, management stated that marketing spend was approximately 1.9% of sales in Q3 and that they would follow up regarding the specifics of the adjusted EPS calculation.