Lauren Silberman

Lauren Silberman asked about any signs of check management or changes in consumer behavior beyond intentional mix pressure, such as attachment rates for appetizers or alcohol. She also sought clarification on the expected cadence of restaurant margins throughout the year.

Answer

CEO Mike Spanos noted that in Q4 2025, some sensitivity in check management was observed primarily in older cohorts, but no material changes were seen in attachment rates for desserts, appetizers, or alcohol. CFO Eric Christel indicated that restaurant margins are expected to be highest in Q1 and then decrease towards the second half of the year.

Lauren Silberman asked if, beyond intentional mix pressure, the company observed any signs of check management or changes in consumer behavior, such as attachment rates for appetizers or alcohol. She also sought clarification on the expected cadence of restaurant margins and commodity inflation throughout the year.

Answer

CEO Mike Spanos noted that in Q4, some sensitivity in check management was observed primarily in older cohorts, but no material changes were seen in mix levers like desserts, appetizers, or alcohol attachments across all brands. CFO Eric Christel indicated that restaurant margins are expected to be highest in Q1 and then lowest in the second half of the year. He reiterated that commodity inflation is expected to be in the 4.5%-5.5% range for the full year, with beef locked in at high single digits.

Lauren Silberman of Deutsche Bank asked for more detail on consumer check management trends and inquired about the company's outlook for beef inflation and its current hedging position.

Answer

CEO Mike Spanos noted a slight 100-150 basis point increase in check management from Q4 to Q1, which he views as short-term. He also stated that for the full year, the company is approximately 76% locked on commodities and expects beef inflation to be in the mid-single digits, which is included in the annual guidance.

Lauren Silberman inquired if the four recent restaurant closures were anticipated and if any further closures are expected in 2026. She also asked about regional or daypart differences in comparable sales and the outlook for North Italia's comparable sales in 2026, considering cannibalization dynamics.

Answer

President David Gordon confirmed that all four closures were anticipated, with no further closures expected in 2026. EVP and CFO Matt Clark noted that overall business has been predictable despite widespread weather impacts, with no specific regional or daypart call-outs. David Gordon added that North Italia's new units are split 50/50 between new and existing markets, expecting less cannibalization impact this year, with a focus on menu and bar innovation, and improving lunch daypart performance.

Lauren Silberman asked if the four restaurant closures to date were anticipated and if any further closures are expected in 2026. She also inquired about regional or daypart differences in comparable sales and trends in non-weather-impacted markets, and finally, about North Italia's comparable sales outlook for 2026, including cannibalization dynamics and new unit locations.

Answer

President David Gordon confirmed all four closures were anticipated, with no further closures expected in 2026. EVP and CFO Matt Clark noted that weather impacts were widespread, making regional comparisons complex, but overall business has been predictable. David Gordon added that North Italia's new units are split 50/50 between new and existing markets, with less cannibalization expected, and the focus is on stabilizing North Italia through menu, lunch, and bar innovation.

Lauren Silberman asked if the sales deceleration was broad-based across geographies or concentrated in specific markets, informing the view on government shutdown impacts, and if similar trends were assumed for the first half of 2026. She also inquired about the 2026 four-wall restaurant margin expectations and whether future margin expansion would be driven more by North Italia and other concepts or if Cheesecake Factory still had room for improvement.

Answer

Matt Clark, EVP and Chief Financial Officer, stated that Cheesecake Factory's geographic performance is generally stable, with D.C.-proximate areas being anomalies. He expects potential continuation of trends into Q1 2026, dependent on government and trade stability, drawing an analogy to a 6-8 month period in 2017. For 2026, he targeted 25 basis points of four-wall margin improvement, with Cheesecake Factory focusing on margin stability and opportunities for improvement primarily in early-stage concepts like North Italia.

Lauren Silberman asked if the sales deceleration was broad-based geographically and if similar trends are assumed for H1 2026. She also inquired about the 2026 four-wall restaurant margin target and whether future margin expansion would be driven more by North Italia and other concepts or The Cheesecake Factory.

Answer

Matt Clark, EVP and CFO, stated Cheesecake Factory's geographical performance is usually stable, with D.C. being an anomaly for shutdown impacts, and expects current trends to potentially continue into Q1 2026. He targeted 25 basis points of four-wall margin improvement for 2026, expecting Cheesecake Factory to focus on margin stability, with opportunities for margin improvement primarily from early-stage concepts like North Italia.

Lauren Silberman of Deutsche Bank inquired about performance differences across regions or dayparts, how sales mix is expected to trend for the year, and if there were any demand shifts within the off-premise channel.

Answer

EVP and CFO Matt Clark stated that sales patterns by daypart and day-of-week remain incredibly consistent, with regional variations attributable to weather and holiday shifts. He expects the negative mix trend to continue due to menu strategy and a shift from alcoholic to non-alcoholic beverages. President David Gordon noted that the off-premise business remains remarkably stable at 22% of sales, with consistent demand across delivery and takeout channels.

Lauren Silberman asked for color on the cadence of sales trends and confirmation of the Q1 comp outlook, and also questioned if there is a margin level at which the company would reinvest more heavily in price.

Answer

EVP and CFO Matt Clark described Q4 trends as steady and confirmed the Q1 outlook implies comps consistent with the prior year's performance. Regarding margins, he noted that Q4 is seasonally high and they focus on the annual rate (17% for 2024). He added that reinvestment also includes maintaining high standards in training and portion sizes, which competitors have cut, rather than just lowering price.

Lauren Silberman asked for clarity on Wendy's underlying sales trends and assumptions for Q1 2026, given the challenging January weather, and sought to understand the expected magnitude of sequential improvement throughout the year, considering the implied 1-2% full-year guide.

Answer

Ken Cook, Interim CEO and CFO, acknowledged January as a 'bumpy month' with U.S. same-restaurant sales down 8% due to significant weather disruption, despite initial improvements from late 2025. He anticipates Q1 2026 to perform slightly better than January, driven by the new Biggie platform, upcoming product launches (next week), and sharpened messaging. Cook expects sales to continue improving sequentially throughout 2026 as all Project Fresh initiatives—system optimization, operational excellence, and the new menu/messaging approach—take hold, including a significant chicken sandwich lineup upgrade in a couple of months.

Lauren Silberman asked about the underlying sales trends and assumptions for Q1 2026 comps, given the challenging January weather, and the expected magnitude of sequential improvement throughout 2026, which implies 1-2% comps.

Answer

Interim CEO and CFO Ken Cook described January as a 'bumpy month,' with initial improvements followed by significant weather disruption, leading to U.S. same-restaurant sales being down 8%. He expects Q1 to be slightly better than January due to benefits from the new Biggie platform, upcoming new product launches (next week), and sharpened messaging. Cook anticipates further boosts from the new chicken sandwich lineup in a couple of months and expects sales to continue improving throughout 2026 as all Project Fresh levers (system optimization, operational excellence, menu/messaging) take hold.

Lauren Silberman followed up on the comment that burger traffic was down mid-single digits, asking if this implied an even steeper decline exiting the quarter. She also asked for the expected cadence of same-store sales through 2025 and the outlook for the International segment versus the U.S.

Answer

Ken Cook, CFO, confirmed that the low end of the new guidance assumes the pressured traffic pattern seen in March persists. He projected that Q2 results would be similar to Q1, with momentum expected to build in Q3 and Q4 driven by summer initiatives, while noting the tough comparison in Q4. He highlighted the strength of the international business, which saw 8.9% system-wide sales growth with positive contributions from all regions.

Lauren Silberman of Deutsche Bank questioned whether the recent sales acceleration could be sustained after the current promotion ends and asked for details on performance across different consumer income cohorts.

Answer

CFO Gunther Plosch expressed confidence in sustaining momentum through Q4, citing a strong pipeline including a new Frosty flavor, the return of the Mushroom Bacon Cheeseburger, and national media for the Spicy Chicken sandwich. He also stated that Wendy's maintained both traffic and dollar share across lower and higher income cohorts in Q3.

Lauren Silberman asked about the primary drivers of the accelerating net new business growth, specifically whether it's more from headcount growth or existing salespeople expanding their book of business. She also inquired about any changes in the competitive environment, such as increased promotional activity. Furthermore, she sought clarification on the sales compensation change, noting that the 2-3 year transition period seemed more gradual than previously communicated, and asked about any feedback or attrition observed.

Answer

CEO Dave Flitman stated that net new business growth is driven by both existing sales force productivity and consistent hiring, describing the company's effective sales model. He noted that promotional activity ebbs and flows but hasn't significantly increased from the prior quarter. Regarding the sales compensation change, Flitman clarified that the timeline is not a change but rather a more detailed explanation of the dynamic, individualized transition process. He reported positive feedback from sales leaders and an improvement in turnover among experienced sales cohorts since the plan was first discussed.

Lauren Silberman asked about the primary drivers of US Foods' accelerating net new business growth, specifically whether it's more attributable to headcount growth or existing salespeople expanding their book of business. She also inquired about any changes in the competitive environment, such as increased promotional activity. Furthermore, she sought clarification on the 2-3 year timeline for transitioning the sales force to the new compensation structure, asking if this was a change from original communications, and requested feedback or observations on attrition.

Answer

Dave Flitman (CEO, US Foods) stated that net new business growth stems from both existing sales force productivity and consistent hiring, noting promotional activity remains stable. He clarified that the 2-3 year timeline for the sales compensation transition is not a change but a realistic operational approach, emphasizing positive feedback from sales leaders and improved turnover among experienced cohorts since the plan was first discussed.

Lauren Silberman of Deutsche Bank inquired about any change in US Foods' M&A philosophy from tuck-in to transformative, given the recent outreach to Performance Food Group, and asked for color on independent restaurant traffic trends versus the improvement seen in chain restaurants.

Answer

CEO Dave Flitman stated there has been no change to the company's M&A philosophy, referring to his prepared remarks about exploring strategic opportunities to create value. Regarding traffic, Flitman noted that while chain restaurant traffic improved sequentially, it remained down year-over-year. He confirmed that independent restaurant traffic also accelerated, per Surcana data, and that US Foods' own independent case growth accelerated through Q2 and into July.

Lauren Silberman followed up on independent case growth, asking for the specific run-rate in April and the key drivers behind the expected acceleration through the quarter. She also asked for an assessment of the current competitive environment and any changes in promotional intensity.

Answer

CEO Dave Flitman stated that while April's independent case growth was at the lower end of the 2-5% range, he expects it to move toward the mid-to-high end, driven by accelerating net new account generation, which was the strongest of the year in April. On competition, Flitman noted he has not seen a significant change in intensity, describing the industry as consistently competitive and fragmented, with the 'big 3' continuing to gain share.

Lauren Silberman from Deutsche Bank asked about the cadence of case growth seen in Q4 and into January, and whether the 2025 guidance assumes an improvement in industry trends. She also sought to clarify the M&A contribution within the case growth guidance and the outlook for the M&A environment.

Answer

CFO Dirk Locascio stated that growth slowed in December due to holiday timing but accelerated in a noisy January, with the expectation for growth to build throughout the year. He confirmed the 2-4% case growth guidance includes already-transacted M&A, like IWC and Jake's Finer Foods, and described the overall M&A pipeline as healthy, with the company remaining opportunistic.

Lauren Silberman questioned the drivers of the strong full-year EBITDA guidance despite a lowered case growth outlook and asked if underlying traffic trends were improving for independent restaurants outside of the hurricane-impacted Southeast.

Answer

CEO David Flitman and CFO Dirk Locascio attributed the strong performance to disciplined execution on initiatives across the P&L, including gross profit and operating expense management, rather than pulling projects forward. Flitman confirmed seeing an acceleration in independent case growth across the country, suggesting improving consumer confidence post-election.

Lauren Silberman (Deutsche Bank) asked for insights into McDonald's 2026 outlook, specifically Q1 expectations given weather and E. coli impacts, and the anticipated same-store sales progression throughout the year.

Answer

CFO Ian Borden stated that underlying momentum is expected to continue in 2026, with the first half likely stronger due to favorable year-over-year comparisons. He projected Q1 U.S. comp sales growth to decelerate from Q4's 6.8% due to strong Q4 activations and an an estimated 100 basis point impact from severe late-January weather. Similar sequential decelerations are expected for IOM (due to European weather) and IDL (due to macro pressures in China and Latin America), despite solid underlying momentum.

Lauren Silberman asked for insights into McDonald's Q1 2026 outlook, considering factors like weather and prior-year comparisons, and the expected same-store sales progression throughout 2026 amidst dynamic consumer environments.

Answer

CFO Ian Borden stated that McDonald's expects underlying momentum to continue in 2026, with the first half likely stronger due to favorable year-over-year comparisons. For the U.S., Q1 comp sales growth is expected to decelerate from Q4's 6.8% due to strong Q4 activations and an estimated 100 basis point impact from severe late January weather. International Operated Markets (IOM) and International Developmental Licensed Markets (IDL) are also expected to see sequential deceleration from Q4, with IOM affected by European weather and IDL by macro pressures in China and Latin America. Borden expressed confidence in the business's underlying momentum and execution despite challenges.

Lauren Silberman asked two follow-up questions: first, if there's evidence of share shift from the weaker fast-casual segment to QSR among higher-income consumers; and second, about trends across day-parts, specifically if there's been any pickup in the weaker breakfast segment due to the everyday value meals.

Answer

CFO Ian Borden stated that the trend for higher-income consumers remains consistent, with McDonald's continuing to gain share. He reiterated the goal to be strongly positioned on value and affordability for all consumer groups, leveraging McValue, loyalty, and now EVMs for the core menu, enabled by McDonald's financial strength. He does not foresee any near-term change in the external environment. CEO Chris Kempczinski addressed breakfast, noting it's the most economically sensitive day-part and remains under industry-wide pressure as consumers can easily skip or eat at home. He confirmed McDonald's is holding its share in breakfast, but the day-part itself is still pressured, with changes tied to broader macroeconomic improvements.

Lauren Silberman asked if there's evidence of share shift from fast casual to QSR among higher-income consumers, given the weakness in the fast-casual segment. She also inquired about day-part performance, specifically if breakfast, which has been weaker, has seen any pickup with the introduction of everyday value meals.

Answer

CFO Ian Borden stated that McDonald's has not seen a fundamental change in the trend of the strong higher-income consumer and continues to gain share with them. He reiterated the focus on strong value and affordability for all consumer groups. Chairman and CEO Chris Kempczinski noted that breakfast remains the most economically sensitive day-part and continues to be under industry-wide pressure, with McDonald's holding share but not seeing a significant pickup, as its recovery is tied to broader macroeconomic improvements.

Lauren Silberman asked about the challenges in achieving franchisee consensus on national price points, given varying local costs, and what strategies can be employed to address this, particularly for the core menu.

Answer

Chairman & CEO Chris Kempczinski acknowledged that inflation has pressured franchisee P&Ls but emphasized that there is strong alignment on the power of nationally advertised price points, which drive superior incrementality. He cited the $2.99 Snack Wrap as a recent success in franchisee collaboration. He recognized that diverse wage rates across the U.S. add complexity, necessitating ongoing dialogue to find solutions that support the P&L of every franchisee.

Lauren Silberman requested a deeper analysis of U.S. comps, asking about market share across income cohorts, the impact of McValue on value mix, and regional or daypart trends.

Answer

President, IOM Ian Borden reiterated that both low- and middle-income consumers are under pressure, cohorts where McDonald's over-indexes. Despite this, he stressed that McDonald's achieved a positive comparable guest count gap versus most near-end competitors in Q1, indicating traffic share gains. He expressed confidence that the combination of strong value and upcoming initiatives will allow them to win across all consumer groups.

Lauren Silberman asked for guidance on full-year 2025 comparable sales for the U.S. and IOM segments, as well as any expected progression or pacing of comps throughout the year.

Answer

CFO Ian Borden did not provide specific comp figures but suggested that Q1 2025 would likely be the low point for the year. He cited headwinds from lapping a leap year and a sluggish start to the U.S. QSR industry. Borden expressed expectations for a gradual and progressive improvement in operating conditions as the year unfolds, driven by the execution of the 'Accelerating the Arches' strategy.

Lauren Silberman asked if the sales impact from the food safety incident was concentrated geographically or more broad-based, and requested a breakdown of the U.S. comp across traffic, price, and mix.

Answer

CFO Ian Borden stated the impact was 'a bit more' concentrated in the affected areas but also had a 'broader impact' due to national news. He declined to provide a detailed comp breakdown but reiterated that momentum was strong before the incident, with the $5 meal deal resonating well and driving a strong check lift when combined with other marketing efforts.

Lauren Silberman asked for clarity on core underlying OpEx growth excluding Cheney Brothers, distinguishing between investments in the core business (e.g., sales force) and Cheney-related noise. Lauren Silberman also inquired about framing OpEx growth for the second half of the year, whether the Cheney overrun is a pull-forward or higher overall expense, and the competitive promotional environment among competitors.

Answer

CEO Scott McPherson stated that core food service OpEx performance was fairly consistent, showing leverage as a percentage of gross profit, with the bulk of the OpEx miss attributed to Cheney's situational overruns (new buildings, public company integration). He expects these Cheney-related costs to continue into Q3 but is confident in achieving overall OpEx leverage for the full year. Regarding competition, CEO Scott McPherson emphasized consistent market share gains and described the environment as 'always competitive,' without observing significant changes.

Lauren Silberman asked for clarification on core underlying OpEx growth excluding Cheney Brothers, distinguishing between investments in the core business and the noise from Cheney's new facilities. She also inquired how to frame OpEx growth in the back half of the year, whether Cheney's overrun was a pull-forward or higher overall expenses, and about the competitive promotional environment among competitors, especially with a major competitor gaining momentum.

Answer

Scott McPherson, EVP and Chief Field Operations Officer, Performance Food Group Company, stated that core food service OpEx performance was fairly consistent quarter-over-quarter, showing leverage as a percent of gross profit, with the bulk of the OpEx miss attributed to Cheney's overruns. He clarified that Cheney's overrun was situational due to new buildings and integration, expected to continue into Q3, but the company remains focused on achieving OpEx leverage across all segments for the full year. Regarding competition, Mr. McPherson emphasized consistent market share gains across independent and chain, noting the environment is always competitive without significant changes observed.

Lauren Silberman of Deutsche Bank questioned the dynamics of PFG's independent account growth, asking how new account additions translate into increased penetration over time. She also sought an update on the M&A landscape and pipeline.

Answer

CEO George Holm explained that new accounts are acquired with a significant piece of their business upfront, and the company is seeing positive trends with sales growing as fast as lines per drop. He added that a larger salesforce helps reduce account losses. Regarding M&A, Holm described the pipeline as having a 'great amount of activity' with actionable conversations, though none are of significant size. CFO Patrick Hatcher confirmed the company's M&A strategy remains unchanged.

Lauren Silberman asked to reconcile the adjusted EBITDA guidance increase with Cheney's trailing-twelve-months EBITDA, questioning if it implied conservatism or a change in the core business outlook. She also inquired about Cheney's current private label penetration compared to PFG and Reinhart.

Answer

CFO Patrick Hatcher confirmed the guidance increase reflects approximately 38 weeks of Cheney's results and expressed confidence in the core business. CEO George Holm added that initial guidance was cautious due to hurricane activity, but Cheney's performance has been strong. Regarding private brands, Holm noted Reinhart's penetration grew by about 10 percentage points post-acquisition but could not provide a figure for Cheney yet, as PFG is still evaluating which Cheney brands to adopt into its portfolio.

Lauren Silberman asked for clarification on quarter-to-date comp trends, particularly pre-storm in January, and what underlying assumptions are embedded in the guidance. She also asked about opportunities to strengthen the value proposition with entry-level pricing or smaller portions, and how to balance this without cannibalizing the core business.

Answer

Scott Boatwright, Chief Executive Officer, noted strong momentum in early January before the multi-state winter storm. Adam Rymer, Chief Financial Officer, added that Q1's underlying trend is in the -1% to -2% range, including a 100 basis point impact from storm-related closures. Scott Boatwright explained that the protein menu leverages existing items without discounting, offering approachable price points like a $3.50 taco, and that cannibalization from the high-protein menu was not observed.

Lauren Silberman asked for clarification on Chipotle's January comparable sales trends, particularly pre-storm, and what underlying trends are embedded in the guidance. She also questioned the strategy for strengthening the value proposition, including entry-level pricing and smaller portions, and how this balances with avoiding cannibalization of the core business.

Answer

Scott Boatwright, CEO, noted significant momentum in early January before the winter storm. Cindy Olsen, Head of Investor Relations, added that the Q1 underlying trend is in the -1% to -2% range, including a 100 basis point impact from the storm. Scott explained that the protein menu offers approachable price points like a $3.50 taco and $3.80 protein cup without discounting, solving for various consumer needs, and that future price-pointed ideas will be tested.

Lauren Silberman inquired about Chipotle's comparable sales outlook for Q4, where the company exited the third quarter, and current traffic trends. She also asked about the sources of traffic losses, specifically if customers are trading down, leaving the space, or if loyal customers are reducing frequency.

Answer

Adam Rymer (CFO) noted a 200-300 basis point step-down in underlying trends from late July into August, with marketing and promotions helping to offset some softness. He stated that underlying transaction trends remained pressured and softened further in recent weeks, leading to an expectation of low to mid-single-digit comparable sales decline for Q4. Scott Boatwright (CEO) attributed traffic losses primarily to a significant pullback from the under-$100,000 household income cohort (40% of sales) and the 25-34 age group (25% of sales), with customers shifting to grocery/food at home rather than competitors.

Lauren Silberman inquired about Chipotle's Q4 comparable sales outlook, seeking clarification on the exit rate from the third quarter and current traffic trends. She also asked about the primary sources of traffic losses, specifically if customers are trading down or if loyal customers are reducing frequency.

Answer

CFO Adam Rymer stated that underlying transaction trends softened further in recent weeks, leading to an expectation of Q4 comps declining in the low to mid-single-digit range. CEO Scott Boatwright attributed significant pullback to the cohort earning under $100,000 annually and the 25-34 age group, which over-indexes to Chipotle. He noted that data suggests Chipotle is gaining market share, indicating customers are not switching to competitors but rather reducing dining out frequency due to economic pressure, opting for grocery/food at home.

Lauren Silberman from Deutsche Bank asked for the one-year comp for July, whether Chipotle is now more susceptible to macro pressures, and if consumers are giving the brand credit for its value proposition.

Answer

CFO Adam Rymer confirmed a positive low-single-digit one-year comp for July, with a continuing mix headwind of about -1%. CEO Scott Boatwright stated bluntly that he does not believe Chipotle is getting sufficient credit for its value proposition and that the team is actively working on new ways to communicate this value to consumers without resorting to simple price-point advertising.

Lauren Silberman asked about the cannibalization impact from new stores, whether the comp guide implies a return to mid-single-digit growth, and for clarification on whether the Q2 exit rate would be positive comps or positive traffic.

Answer

CFO Adam Rymer clarified that the new store impact on comps is stable at 80-100 basis points and not worsening. He stated that reaching mid-single-digit comps for the full year would likely require macro relief, but the second half could get there with current initiatives. He confirmed the Q2 exit rate is expected to be a positive comp, with traffic near flat.

Lauren Silberman from Deutsche Bank followed up on the traffic commentary, asking for more color on the underlying consumer behavior and any shifts across income cohorts that could explain the deceleration in January.

Answer

CFO Adam Rymer stated there was nothing significant to report regarding shifts in income cohorts, noting that all groups were contributing nicely to comps, consistent with Q4 trends. He attributed the perceived step-down in transaction growth primarily to lapping a very strong prior year comp of 5.3% transaction growth.

Lauren Silberman inquired about consumer behavior trends across different income levels and regions. She also asked for a clarification on the Q4 guidance, specifically if it assumes traffic deceleration and what the implied comp range is.

Answer

Interim CEO Scott Boatwright stated that the brand is seeing strength across all income cohorts, attributing it to strong value perception. CFO Adam Rymer added that performance is broad-based across regions. For Q4 guidance, Adam Rymer clarified that the strong transaction trend from September has continued into October, and the assumption is for it to continue, implying a total comp in the mid-5% range, not a deceleration.

Lauren Silberman asked about the same-store sales momentum, specifically the non-rewards member growth outpacing rewards member growth, the drivers behind this differential, and opportunities to narrow the gap.

Answer

Brian Niccol, Chairman and CEO, expressed satisfaction with the growth in both non-Rewards and Rewards customer transactions, attributing it to broad marketing and relevant menu innovation. He noted that the Rewards customer base surpassed 35 million, with increased activity driven by personalization rather than discounting. Niccol highlighted future plans to enhance the Rewards program for a more personalized experience.

Lauren Silberman asked for a deeper understanding of the same-store sales momentum, particularly the non-rewards member growth outpacing rewards member growth, the drivers behind this differential, and opportunities to narrow this gap.

Answer

Brian Niccol, Chairman and CEO, explained the focus on winning with both rewards and non-rewards customers through broad marketing and relevant, culture-leading innovation. He noted that the Rewards customer base is growing through better engagement and personalization, rather than discounting, and expressed optimism for future enhancements to the Rewards program.

Lauren Silberman asked about the drivers behind the morning daypart's outperformance in transactions and sales, and how Starbucks assesses macro or competitive dynamics impacting afternoon business, particularly regarding shifts towards energy drinks.

Answer

Brian Niccol, Chairman and CEO, Starbucks, attributed morning outperformance to better staffing, improved speed of service, and consistent craft and connection. He noted sequential improvement in midday and afternoon, with opportunities in drink and food offerings. He emphasized that increased staffing in the afternoon, following the Green Apron Service model, is expected to drive similar business results as seen in the morning.

Lauren Silberman asked about the drivers behind flat morning transactions outperforming the overall business, and whether afternoon performance reflects macro or competitive dynamics, particularly concerning the 'energy' category, and Starbucks' future strategy in that segment.

Answer

Brian Niccol, Chairman and CEO, attributed the morning's outperformance to better staffing, speed of service, and consistent craft and connection. He noted sequential improvement in midday and afternoon, with improved staffing levels now supporting these dayparts. He emphasized the strategy to win the morning and then grow into the afternoon, with future focus on afternoon drink and food offerings.

Lauren Silberman of Deutsche Bank asked for specifics on the traffic lift seen in Green Apron Service test stores and inquired about what is missing from the current rewards program that a future version will address.

Answer

CEO Brian Niccol reported that Green Apron pilots showed 'really nice progress' in peak morning transactions and growth throughout the day. On the rewards program, he explained it had become a 'one size fits all' discounting tool. The reimagined program will move away from this to better recognize loyalty and build engagement, tailoring the experience for different customer frequencies rather than just offering broad discounts.

Lauren Silberman from Deutsche Bank asked for context on the traffic lift in 'Green Apron' test stores and inquired about what is missing from the current Rewards program that a reimagined version will address.

Answer

Chairman & CEO Brian Niccol reported that test stores saw progress in peak morning transactions and throughout the day. On the Rewards program, he explained it had become a 'one-size-fits-all' discounting tool. The future program will be more tailored to recognize loyalty and build engagement for different customer segments, moving beyond simple discounts.

Lauren Silberman from Deutsche Bank inquired about partner investments, asking how current staffing levels are assessed, the potential magnitude of future investments, and if these costs can be offset by other efficiencies.

Answer

CEO Brian Niccol explained that initial investments in 3,000 stores were based on precision scheduling to address thin coverage. A new 700-store pilot will determine the labor model needed for optimal customer connection and speed. CFO Rachel Ruggeri added that while these targeted investments have a near-term margin impact, they are expected to be accretive long-term by driving traffic. She reiterated that ongoing efficiency work will also help balance these investments.

Lauren Silberman inquired about Starbucks' current value perception among consumers, whether it's a significant factor in recent headwinds, and how the company is thinking about the architecture of its rewards program.

Answer

CEO Brian Niccol stated there is a major opportunity to simplify the pricing structure, particularly around customizations, to provide more clarity and value. He believes the brand's inherent value is strong, citing the quality of the core coffee. He is confident that initiatives like eliminating the non-dairy upcharge and improving the cafe environment will reinforce the brand's worth to customers, driving a positive perception of value.

Lauren Silberman asked for a breakdown of Local case growth between new account wins and increased penetration with existing accounts, additional color on the new versus loss accounts spread, and an update on sales force growth and changes in new hire profiles for FY26.

Answer

CEO Kevin Hourican stated that improvement came from all elements, with new customer win rates at all-time highs and a notable widening of the spread between new and lost customers due to improved colleague retention. He also highlighted improved penetration (cases per operator) despite declining restaurant traffic. CFO Kenny Cheung added that Q2 saw the highest growth of new accounts and the lowest level of loss in the past 12 months. He confirmed commitment to disciplined sales headcount growth in FY26, leveraging tools like AI 360 and improved training to boost productivity across all sales consultant tenures.

Lauren Silberman asked for more color on the local case growth, specifically the contribution from new account wins versus expanding penetration with existing accounts, the spread between new versus lost accounts, and the growth and changes in the sales force tracking in fiscal 2026.

Answer

Kevin Hourican, Chair of the Board and CEO, explained that the improvement in local case growth came from all elements: new customer win rates remained at all-time highs, customer loss rates improved due to better colleague retention, and penetration (cases per operator) increased despite declining restaurant traffic. He highlighted the widening spread between new and lost customers as the most notable improvement. Kenny Cheung, CFO, added that Q2 saw the highest growth of new accounts and the lowest level of loss in the past 12 months. He confirmed commitment to growing sales headcount disciplined to volume expectations, leveraging tools like AI 360 and improved training to optimize productivity.

Lauren Silberman from Deutsche Bank asked for insights into underlying market share dynamics for U.S. Foodservice, given that organic volumes were flat despite improved industry traffic, and requested details on the drivers of the announced $100 million in annualized savings.

Answer

CEO Kevin Hourican attributed the choppy Q2 performance to a hurricane and holiday timing shifts, asserting that underlying performance was solid versus Q1. CFO Kenny Cheung detailed the $100 million in savings, explaining it stems from strategic sourcing, supply chain efficiencies, and organizational optimization, with benefits to both gross profit and operating expenses expected to materialize starting in the second half.

Lauren Silberman asked about the cadence of Darden's actual comparable sales throughout Q2, any quarter-to-date Q3 trends, and observed regional differences. She also inquired about which brands in Darden's portfolio tend to benefit most from fiscal stimulus, and whether the impact is seen more through traffic or average check.

Answer

CFO Raj Vennam declined to provide specific quarterly comp cadence but explained that earnings growth expectations for Q3 (mid-single digits) and Q4 are driven by the narrowing gap between pricing and inflation. CEO Rick Cardenas stated that all brands benefit from stimulus, with Olive Garden, Cheddar's, and Chuy's potentially benefiting more from specific stimulus targeting median to lower-income groups (e.g., no tax on tips/overtime), and all brands benefiting from increased consumer spending.

Lauren Silberman asked about the cadence of Darden's comparable sales throughout the second fiscal quarter and quarter-to-date for the third quarter, as well as regional differences. She also inquired about which brands in Darden's portfolio typically benefit most from fiscal stimulus and whether the impact is seen more through traffic or average check.

Answer

CFO Raj Vennam declined to provide specific quarterly comp cadence but explained that earnings growth is expected to improve sequentially as the pricing gap to inflation narrows. CEO Rick Cardenas stated that all brands benefit from stimulus, but those with a higher mix of median to lower-income consumers, like Olive Garden, Cheddar's, and Chuy's, might benefit more from specific stimulus measures.

Lauren Silberman asked about the cadence of Darden's comparable sales during the quarter, specifically for July, August, and September, and any observed regional performance differences. She also inquired about the expected cadence of commodity inflation to reach the 3-4% full-year guidance, and if Q2 is anticipated to be the peak.

Answer

Raj Vennam, SVP & CFO, reported that July was the weakest month for comps, while August showed the biggest gap to the industry. Regional performance was generally consistent with Black Box data, with Texas underperforming and Florida improving. He expects Q2 to be the peak for commodity inflation, with Q3 and Q4 remaining elevated but slightly lower than Q2, and Q1 being the lowest at 1.5%.

Lauren Silberman asked about the cadence of Darden's same restaurant sales during the first quarter, any insights into September's performance, and observed regional differences. She also inquired about the expected cadence of commodity inflation to reach the 3-4% full-year guidance, specifically if Q2 is expected to be the peak.

Answer

Raj Vennam, CFO, noted that July was the weakest month in Q1, while August showed the biggest gap to the industry. He mentioned regionality was similar to Black Box data, with Texas still underperforming and Florida picking up. He confirmed that Q2 is expected to be the peak for commodity inflation, with Q3 and Q4 not much lower, and Q1 (1.5%) being the lowest.

Lauren Silberman asked about the cadence of Darden's comps during Q1, any insights into September performance, and regional differences. She also inquired about the expected cadence of commodity inflation to reach the 3-4% full-year guidance, and whether Q2 is anticipated to be the peak.

Answer

CFO Raj Vennam noted that July was the weakest month in Q1, with August showing the biggest gap to the industry. Regional performance is generally similar to Black Box data, with Texas still underperforming and Florida improving. He expects Q2 to be the peak for commodity inflation, with subsequent quarters remaining above 3%, leading to the 3-4% full-year guide.

Lauren Silberman from Deutsche Bank inquired about the strategy for profit flow-through versus reinvestment if top-line results exceed the fiscal 2026 guidance. She also asked about the expected cadence of same-store sales growth throughout the upcoming fiscal year.

Answer

CFO Raj Vennam explained that the company aims for flat to positive EAT margin growth, indicating a willingness to reinvest upside from sales to support long-term growth rather than maximizing short-term profit flow-through. He noted that while Q4 momentum has continued, the annual guidance is prudent due to macro uncertainty, and comps are expected to be stronger in the first half of the year before lapping tougher comparisons.

Lauren Silberman asked if the Q4 same-store sales guidance of 'above 3%' reflects the current run rate or an anticipated change. She also inquired about underlying demand trends for the steak category and LongHorn's performance.

Answer

CFO Raj Vennam confirmed that the quarter-to-date performance is running in line with the 'above 3%' guidance. President and CEO Ricardo Cardenas attributed LongHorn's sustained success to long-term investments in food quality. He noted that after adjusting for holiday shifts and weather, its Q3 performance was stable, and the brand is a significant contributor to the strong Q4 outlook.

Lauren Silberman asked about the sales cadence during the quarter, underlying trends adjusted for holiday shifts, and sought clarification on the upcoming January LTOs at Olive Garden.

Answer

Executive Rajesh Vennam noted that underlying traffic trends, when adjusted for weather and holidays, improved across all brands versus the prior two quarters. Executive Ricardo Cardenas clarified that of the three items being featured in January, two are permanent menu additions at regular price, while one will be a limited-time offer at a compelling promotional price point.

Lauren Silberman asked if the Never Ending Pasta Bowl promotion is seeing a higher take rate than in the past, given the current consumer demand for value. She also sought additional color on the potential incrementality of delivery for Olive Garden's already large off-premise business.

Answer

President and CEO Rick Cardenas noted that while the overall preference for Never Ending Pasta Bowl is up slightly, the mix of guests trading up to add a protein is up more significantly, now at 60-65%. Regarding delivery, he stated that while it's early, they believe it will be incremental over the long term by serving a consumer need for small-order delivery that has existed for years. The full impact will become clearer following the pilot phase.

Lauren Silberman asked about any volatility in October industry-wide trends beyond the Halloween impact and whether the 2026 commodity guidance reflects a step-up in underlying dollar costs or is primarily driven by year-over-year comparisons.

Answer

Michael Bailen, VP of Investor Relations, reported that October trends were very stable and consistent outside of the Halloween timing. Regarding commodity guidance, he explained it's a mixture of underlying cost changes and year-over-year comparisons, noting that beef prices are not linear and vary by cut, with some inflation in the first half of 2026 driven by lapping lower formula-based pricing from 2025.

Lauren Silberman asked about recent volatility in industry-wide trends for October, specifically if Texas Roadhouse saw any instability outside of Halloween's impact, given pressures like a potential government shutdown. She also sought clarification on the 2026 commodity guide, asking if it implies a step-up in underlying costs or is primarily driven by year-over-year comparisons, especially given high inflation in the second half of 2025.

Answer

Michael Bailen, VP of Investor Relations, stated that October trends were very stable and consistent for Texas Roadhouse, excluding the Halloween impact. Regarding commodities, he explained that the 2026 guide is a mixture of underlying costs and year-over-year laps, noting that beef prices have seasonality and vary by cut, so it's not a linear assumption. He highlighted that formula-based pricing escalated in H2 2025, significantly impacting 2026 comparisons.

Lauren Silberman of Deutsche Bank requested color on the monthly comparable sales cadence during the second quarter and asked if there were any notable performance differences across regions or days of the week.

Answer

Michael Bailen, Senior Director & Head of IR, noted that the April period had a 70 basis point negative impact from the timing of Easter, while the start of Q3 saw a 60 basis point negative impact from the July 4th calendar shift. He stated that performance was solid seven days a week across all regions, with no specific areas of weakness or outsized strength to report.

Lauren Silberman requested a breakdown of the quarter-to-date comparable sales into traffic, price, and mix, and asked if there were any notable differences in trends across regions or days of the week.

Answer

Executive Michael Bailen provided the breakdown for the first five weeks of Q2: a 5% comp increase consisting of 3.1% traffic growth and a 1.9% check increase (which included 2.3% pricing, implying a 0.4% negative mix). He reiterated that performance remains strong across all regions and days of the week.

Lauren Silberman of Deutsche Bank asked for more detail on the February sales slowdown, the commodity inflation step-up, and the expected timeline for rebuilding cattle herds.

Answer

CFO David Monroe attributed the recent slowdown to numerous external factors, including over a dozen named winter storms, flu, and school closures across the country. Executive Michael Bailen highlighted the negative impact of the Valentine's Day calendar shift and noted the Western U.S. outperformed, suggesting more normalized underlying trends. Regarding cattle, he stated it takes time to rebuild herds and that ranchers have not yet begun retaining heifers for breeding in significant numbers, suggesting the current cattle cycle could persist.

Lauren Silberman from Deutsche Bank inquired about any observed changes in consumer behavior across regions or dayparts and asked what was driving the traffic acceleration into the fourth quarter. She also asked about the impact of tougher upcoming comparisons.

Answer

Executive Michael Bailen reported that comp performance was consistently strong across all regions and dayparts in Q3. He attributed the October traffic acceleration to over 5% to operators' consistent delivery of a 'legendary experience' and strong value. Regarding tougher comps, management acknowledged they were strong but expressed confidence in the high demand for their brand.

Lauren Silberman of Deutsche Bank requested more detail on the Parmesan Stuffed Crust launch, including its incrementality from traffic versus ticket, how its sales mix is trending, and how it compares to the category benchmark.

Answer

CEO Russell Weiner reported that the launch met high expectations, with strong operational execution and consumer feedback. It drives ticket through a $4 upcharge on the Mix & Match deal. CFO Sandeep Reddy confirmed it drove incremental traffic and is viewed as a permanent, long-term market share catalyst. Weiner also noted the strategic choice of a medium size to differentiate from competitors' large offerings.

Lauren Silberman asked for clarification on whether the lower 50% third-party incrementality is a function of having multiple partners, and also requested an explanation for the deceleration in the carryout comp to 1%.

Answer

Chief Executive Officer Russell Weiner confirmed the 50% incrementality figure is a result of being on multiple platforms, especially with the addition of the large DoorDash marketplace. He attributed the carryout deceleration to lapping the very strong launch of a carryout special and the new loyalty program in the prior year, calling it an issue of timing rather than a fundamental slowdown.

Lauren Silberman of Deutsche Bank asked about the rumored launch of stuffed crust, how the company is thinking about balancing a high-volume LTO with adding new delivery partners, and if such a launch is already factored into the 3% same-store sales guidance.

Answer

CEO Russell Weiner declined to comment on future products but emphasized the company's focus is on permanent menu items, not LTOs. He expressed confidence in the system's capacity to handle increased volume. CFO Sandeep Reddy confirmed that all planned initiatives are included in the 3% guide.

Lauren Silberman from Deutsche Bank asked about the drivers of recent comparable sales pressure, seeking to understand the split between company-specific issues like the POS rollout versus marketing strategy, and what actions are planned for the second half to reaccelerate growth.

Answer

CEO Lance Tucker attributed an estimated 1% to 2% of same-store sales pressure to temporary IT integration issues and also noted the brand's over-indexing with the low-income consumer as a headwind. Chief Customer and Digital Officer Ryan Ostrom explained they are lapping the successful Smashed Jack launch and outlined a back-half plan focused on driving ticket with Munchie Meals, transaction growth with new curly fry flavors, and attracting guests with strong core value.

Lauren Silberman followed up on capital allocation, asking for an assessment of the strategy to ramp up company-owned store openings. She also questioned the sales strategy for the remainder of the year, focusing on how the company plans to use value and menu innovation to reaccelerate comparable sales in a challenging consumer environment.

Answer

Lance Tucker, Interim Principal Executive Officer, clarified that company-owned store builds are not intended to lead growth but rather to complement franchisee development in new markets, maintaining an asset-light model. Regarding sales, Tucker expressed confidence in the company's marketing calendar, innovation pipeline, value leadership, and expanding digital capabilities to regain positive momentum despite consumer pressures.

Lauren Silberman inquired about the drivers behind the significant quarter-to-date same-store sales acceleration of 1% and whether those positive trends are expected to continue.

Answer

CEO Darin Harris attributed the momentum to a well-aligned marketing calendar featuring both innovation and value. He also highlighted the growing contribution from digital initiatives, including the new iOS app, which are effectively driving sales.

Lauren Silberman of Deutsche Bank followed up on the expected improvement in average ticket throughout 2025, asking for the specific drivers behind this trend.

Answer

President and CEO Todd Penegor attributed the expected ticket improvement to a return to a more traditional barbell menu strategy with higher price points (e.g., $13.99 Epic Stuffed Crust), a robust innovation pipeline for the second half of the year, and strategic price increases. CFO Ravi Thanawala added that while consumers are currently favoring medium pizzas, the company is constantly testing to find the right balance between ticket and transactions.

Lauren Silberman of Credit Suisse asked about what Shake Shack is seeing from the underlying consumer, including any changes in behavior and the relative resiliency of its customer base.

Answer

CEO Rob Lynch stated that despite early concerns about a push to value, the company has found its premium positioning to be an advantage. He noted that Shake Shack's real estate and brand attract a higher-income, less price-sensitive guest, insulating it from hyper-value consciousness. The success of the high-priced Truffle Burger LTO demonstrates continued demand for high-quality food that customers perceive as a great value, especially as the price gap with QSR competitors has narrowed.

Lauren Silberman of Deutsche Bank asked about the expected composition of same-store sales in 2025, particularly the balance between traffic and negative mix.

Answer

CEO Rob Lynch stated that the negative mix is a direct result of strategic investments in promotions, which are successfully driving flat to positive traffic in a challenging environment. He affirmed that the company will continue this balanced approach, using promotions to drive traffic while mitigating inflation with pricing, a model they believe is sustainable.

Lauren Silberman requested color on underlying Q1 trends amid market volatility and asked for the traffic versus check breakdown of Tim Hortons Canada's Q4 comparable sales, as well as the pricing outlook for 2025.

Answer

CEO Joshua Kobza declined to comment on intra-quarter trends, preferring to wait for the full Q1 results. He revealed that Tim Hortons Canada's Q4 comp was driven approximately two-thirds by traffic. For 2025 pricing, he noted the company is mindful of CPI, and its hedging strategy creates a delayed impact from commodity price changes.

Lauren Silberman followed up on Tim Hortons' quarterly trends and the competitive landscape, and also asked a broader question about the key factors influencing the 2025 outlook, particularly the financial implications of the Reclaim the Flame advertising plan.

Answer

CEO Josh Kobza confirmed Tim Hortons' growth was healthy and transaction-driven. CFO Sami Siddiqui detailed the 2025 outlook, explaining that RBI's $60 million annual ad fund contribution will end, creating a significant tailwind for AOI and EPS. To maintain marketing firepower, franchisees will increase their ad fund levy from 4.0% to 4.5%. He also noted that capital investments in remodels are expected to accelerate.

Lauren Silberman from Deutsche Bank asked for an update on the visibility of the 2024 unit growth pipeline and how the development timeline is tracking against expectations, as well as any early outlook for the 2025 pipeline.

Answer

CEO Josh Kobza reiterated the full-year outlook for mid-4% net restaurant growth, noting that development is typically back-half weighted. He stated that it was too early to provide a detailed outlook for 2025, as franchisee planning for the following year primarily occurs in Q3 and Q4.

Lauren Silberman of Deutsche Bank asked for an update on the company's unit growth, seeking more visibility into the development pipeline for 2024 and any early indications for the 2025 pipeline.

Answer

CEO Josh Kobza reiterated the full-year outlook for mid-4% net restaurant growth, noting that development is typically back-half weighted and Q1 is seasonally quiet. He stated that visibility will improve as the year progresses and that it is too early to provide specific details on the 2025 pipeline.

Lauren Silberman of Deutsche Bank asked for an update on the company's unit growth, specifically requesting visibility into the 2024 development pipeline and how the 2025 pipeline is beginning to form.

Answer

CEO Josh Kobza reiterated the full-year outlook for mid-4% net restaurant growth, noting that development is typically back-half weighted and Q1 is seasonally slow. He stated that it was too early to provide specific visibility on the 2025 pipeline, with more clarity expected in the latter half of the year.