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CEO Gerald Morgan confirmed that the KDS, now in 80% of restaurants, is a component helping to increase to-go capacity and improve the guest and employee experience. Michael Bailen, Senior Director & Head of IR, added that while he didn't have specific quartile data, there are definitely restaurants with higher to-go percentages, indicating further opportunity for the system.

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CEO Gerald Morgan explained that the initiative, especially the '$5 all day everyday' value offerings, was driven by direct consumer feedback. Operators were supportive and had input on the selections. He also noted that the popular new mocktails were another consumer-driven addition, and 2025 will be the first full year they are on the menu.

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CEO Scott Ford stated that the company is working towards a goal of driving EBITDA to $200 million within three to four years, up from $60 million last year, and believes they have the customer relationships to achieve this. Ford also explained that cross-selling momentum is strongest among their top 20-30 mega-brand customers, who have been more aggressive than expected in adopting products across categories like RTD. Other customer segments, like c-stores, are more exploratory, while many traditional customers remain single-product buyers.

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CEO Scott Ford explained that growth is driven by both large 'whale' accounts, which provide scale, and a broad base of smaller customers who benefit from the resulting infrastructure and cost efficiencies. Regarding the macro environment, Ford stated that while the core roast and ground business saw some softness, it has been improving. He noted Westrock's overall performance is strong due to significant market share gains, and the impact of tariffs has so far been offset by a corresponding drop in coffee commodity prices.

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CEO Scott Ford stated that growth is a mix, but the most significant wins are from new, large brands bringing their entire product portfolios to Westrock, leveraging the company's integrated capabilities. Regarding contracts, Ford emphasized a flexible 'do right rule' approach, noting that accelerated demand from some customers has offset delays from others, keeping the 2026 full run-rate EBITDA target of $130M-$150M on track.

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CEO Scott Ford explained that the previous delay was a rare, strategic accommodation that secured a contract extension. He clarified that new contracts for the Conway facility are structured as take-or-pay or include price adjustments for lower volumes, providing much greater certainty. He also noted that the company used 2024 to complete all necessary product approvals, allowing for an immediate and steep commercial ramp-up in Q1 2025 for already-approved products.

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CEO John Peyton stated the target holding period is approximately three years to improve operations before refranchising. CFO Vance Chang elaborated that current performance is choppy due to transitory issues like delays in re-acquiring liquor licenses, temporary closures for remodels, and investments in staffing. Chang outlined a clear path to profitability, projecting a run-rate AUV of $2.0-$2.5 million with low-to-mid teens four-wall margins once these one-time disruptions are resolved.

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CEO John Peyton explained that the strategy for Club Applebee's is to provide 'inside access' and special privileges rather than a points-based currency like IHOP's program. He stated the member data is 'good and getting better,' especially after consolidating CRM, digital, and off-premise teams under a single leader. This allows for better use of purchase history and demographic data to personalize offers and drive frequency.

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CEO John Peyton explained the takeback serves three strategic purposes: 1) to revitalize and refranchise the units for a profit within approximately three years; 2) to use 30 of the restaurants to pilot and showcase the new 'Looking Good' remodel program; and 3) to convert about six locations into dual-brand concepts, accelerating that key growth initiative.

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CFO Vance Chang stated he does not expect the current sales mix trends (flat at Applebee's, slightly negative at IHOP) to be interrupted in Q4. Applebee's President Tony Moralejo specified they are lapping last year's 'Holiday Skillets' promotion, which is being replaced by a completely different, all-encompassing value campaign.

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CEO Dan Fachner projected a potential 10% to 20% sales lift for the handhelds business in fiscal 2026 as capacity is fully restored. He described the new QSR partnerships for churros and frozen beverages as potentially 'meaningful,' noting that tests are progressing well and ahead of expectations, though the full impact of the beverage rollout would likely be seen in the back half of the year due to implementation timelines.

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Executive Daniel Fachner confirmed the margin outlook includes ongoing price realization and the seasonal mix shift to higher-margin products. He stated the theater channel remains about 25% of the frozen beverage business. Executive Shawn Munsell added that distribution costs are expected to be near 10% of sales in Q3. Fachner concluded that weather is a more significant factor than the Easter timing.

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Executive Shawn Munsell explained that approximately 80 basis points of the gross margin decline were due to the gap between input costs and pricing, with the remainder attributed to unfavorable sales mix. He quantified the peso headwind at nearly $1 million. Munsell confirmed that new pricing actions implemented in Q2 would have closed that 80-basis-point gap if applied retroactively. CEO Daniel Fachner added that while the company is closely monitoring consumer reaction to higher prices, the increases were necessary due to industry-wide inflation in key inputs like chocolate and eggs.

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CFO Ken Plunk projected the fiscal 2025 gross margin to be over 31%, showing improvement but noting that reaching the mid-30s target is a longer-term goal. He expects distribution costs to be in the mid-10% range of sales for the full year. CEO Daniel Fachner expressed significant excitement for the Dippin' Dots retail launch, believing it can be a major growth driver, and reiterated his confidence in doubling the brand's overall sales from its acquisition level.

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Chief Brand Officer Matt Eisenacher explained that marketing efforts were focused on key geographies, and the company has seen tangible traction and positive results in those markets versus control markets. CEO Chris Tomasso added that they are targeting both existing customers for frequency and new category users. Regarding real estate, CFO Mel Hope stated that the net build cost for second-generation sites is often similar to new builds due to landlord incentives, and the financial underwriting criteria for returns remain the same.

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CFO Mel Hope indicated that the company does not guide on mix but generally projects it to be flattish. Regarding guidance, Hope and CEO Chris Tomasso explained that the revision is based on the best information available regarding cost pressures, not on building in a cushion, and that the long-term strategy is to grow market share and guest loyalty.

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CEO Chris Tomasso stated that First Watch's scale and operational excellence position it to benefit from potential competitor contraction. He also confirmed that the Florida market has stabilized and contributed to the sequentially improving in-restaurant traffic. CFO Mel Hope added that despite choppy comps, the company is extending its lead through growth and efficiencies.

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CEO Kelli Valade explained that the current focus is on LTO value to address consumer volatility, with plans to re-engineer the everyday value platform for the fall. EVP & CFO Robert Verostek clarified the Kiki's refranchising was to optimize operations in Orlando, not part of the 'seed and feed' strategy. He also stated the 3% check growth was predominantly from rollover pricing, with mix being roughly flat.

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CFO Robert Verostek outlined a 2025 pricing outlook of 4% to 4.5%, comprised of rollover and new pricing, and stated the BOGO offer has a minimal impact on overall check. On Keke's, he noted the refranchising timeline for 'seed' markets might extend to the original 18-24 months, but other refranchising deals are proceeding. CEO Kelli Valade added that franchisee interest in Keke's remains strong.

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CFO Robert Verostek clarified that the 5% net pricing included a roughly -1% negative mix impact from increased value offerings. He noted California's sales were slightly below the system average but that Denny's gained share from QSR in the state. CEO Kelli Valade added that the new value menu is mixing in the mid-teens in tests without margin erosion, thanks to its engineering with add-on categories. Regarding Keke's, she confirmed strong franchisee interest following the high performance of new Tennessee locations, though there was no material change to the overall pipeline.

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CEO & President Lyle Tick noted pizza previously mixed at 5-10% and that test markets for the new platform show increased sales, traffic, and profitability. SVP Daniel Duran added that tests indicate a 10-15% lift in pizza incidence with minimal cannibalization. Lyle Tick attributed the strong performance during the high-volume Mother's Day week to better preparation and a focus on operational fundamentals. Daniel Duran clarified that carried menu pricing in the second half of the year is expected to be around 2.5%.

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CFO Tom Houdek clarified that the infill strategy is a near-term focus for ramping up the pipeline, but market expansion remains part of the long-term strategy, as the brand travels well. Interim CEO Brad Richmond added that the ultimate unit potential could grow as box economics improve. Regarding Q2 comps, Houdek stated that the lap is 'pretty clean' outside of the Easter shift and that California's performance was only slightly above average, not indicating an outsized benefit from an easy comparison.

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President Lyle Tick explained that marketing will remain targeted and efficient, focusing on connected TV and digital channels in key markets, without a major shift in overall spend. He described the value strategy as multifaceted, aiming to satisfy both price-conscious guests and those seeking premium options. CFO Thomas Houdek quantified the Q1 weather impact at over 100 basis points so far, noting that January's performance was near the high end of the full-year guide before weather disruptions in February.

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President Lyle Tick explained the approach to building awareness will be targeted by market, not a single national push, using a 'test, learn, scale' model with tests beginning in the next few quarters. Interim CEO Brad Richmond noted that marketing spend is unlikely to reach levels of heavy media advertisers but that pulsing media makes sense. CFO Tom Houdek confirmed the negative mix impact on check moderated through Q3 and is expected to continue improving, forecasting a Q4 average check of around +1%.

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CFO James Leddy explained that the best way to view the business is by excluding the exited programs. He stated that underlying aggregate inflation was approximately 3% in Q2 (2.3% for specialty, 4.1% for center-of-the-plate), and this moderate level is what the company expects for the remainder of the year, excluding any unforeseen impacts from potential tariffs.

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Christopher Pappas, Founder, Chairman and CEO, expressed cautious optimism, stating he hasn't heard any 'doom and gloom' from clients and expects core events and celebrations to proceed as planned. James Leddy, CFO, advised modeling overall inflation around 3% for the year, excluding the Hardie's cross-sell impact, and noted that chocolate and egg prices remain the most significant volatile components.

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CFO James Leddy explained that the 2025 guidance implies gross profit margins similar to 2024, as the company focuses on growing gross profit dollars, which can be affected by product mix. CEO Christopher Pappas added that the focus is on the spread between operating costs and GP dollars, which is more telling than margin percentages in a volatile cost environment. On labor, Pappas stated the company is ahead of the curve on wages, mitigating labor as a major headwind. Leddy also noted that investments in processing automation have reduced the need for certain skilled labor like butchers.

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CEO Chris Pappas explained the consulting firm provides a 'fresh pair of eyes' to help optimize projects and leverage new technology like AI. He noted a positive tone for the holiday season, with strong last-minute bookings for parties and corporate events. CFO Jim Leddy indicated the Q4 inflation and growth outlook is consistent with achieving their full-year 6-7% organic growth target, with no material changes expected.

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SVP Benjamin Porten explained that promotion has so far been limited to rewards members, but broader marketing is planned, which they believe will be a catalyst for new member registrations. He shared that over half of guests with reservations are seated within two minutes of arrival. Regarding the IP pipeline, Porten noted that fiscal 2026 will have the most campaigns ever (7-8), including major partners like Demon Slayer, One Piece, and Nintendo's Kirby, allowing for more experimentation and opportunities for success.

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CFO Jeff Uttz confirmed that IP partnerships will run from May through the balance of the fiscal year and that the expanded FY26 pipeline maintains a focus on impactful collaborations. Benjamin Porten described the reservation system test as a major success, noting that guest response in the high-volume Austin store was immediate and significant, which is fueling the desire to accelerate the system-wide rollout.

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Benjamin Porten outlined an ambitious goal for a full system-wide rollout of the reservation platform by the end of the fiscal year, with testing in February and a wider launch in April. While unable to quantify a specific traffic lift, he emphasized the project's guaranteed benefits in labor savings and guest satisfaction. He estimated that peak staffing has been reduced by about two people each in the front and back of house versus pre-pandemic levels. Hajime Uba confirmed two strong IP collaborations are planned for the back half of the year.

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CEO Hajime Uba, through interpreter Benjamin Porten, explained that regional comp differences are an artifact of growth patterns and infill, not an indication of market popularity, specifically citing new stores in Dallas and Houston impacting the comp base. Mr. Porten clarified the new IP strategy is to be more discerning, focusing on high-impact partnerships rather than a fixed number of 'rolling collabs'. He and CFO Jeff Uttz confirmed that revenue guidance has never contemplated the impact of IP collaborations, so any success from them represents potential upside.

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CFO Darin Harper stated that about 10 new items (8 cabinets, 2 attractions) were rolled out per location, consistent with pre-COVID levels. While declining to provide a specific traffic/check split, he confirmed the sales improvement was predominantly driven by traffic, with moderated discounting compared to the prior year.

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CFO Darin Harper estimated that the combined pressure from adverse weather and remodel construction had a 50 to 100 basis point negative impact on the quarter's like-for-like comparable sales decline of 7.7%. He also noted that unoptimized marketing efforts were a factor, with improvements and enhancements to the marketing strategy expected to be implemented in Q4 and beyond.

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SVP and CFO Craig Pommels stated that detailed G&A guidance for FY26 will be provided in September, but the goal is to return to historical levels as a percent of sales. He broke down the Q3 check increase of 6.6% into 4.9% pricing and 1.7% positive mix. He also anticipates that the positive mix contribution will moderate in Q4 as the company begins to lap stronger prior-year comparisons.

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CFO Craig Pommells explained that while the Q2 profitability benefit from holiday channels was significant and repeatable, he did not provide a specific number. He noted that Q3 will include training investments for new initiatives, with labor savings ramping up in Q4. He confirmed that add-backs for strategic transformation and proxy contest costs are complete for the fiscal year and will not be treated as adjustments going forward.

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CFO Craig Pommells reported that average check grew 5.8%, comprising 4.7% price and 1.1% favorable mix driven by the successful dinner strategy. He explained they don't track value platform mix specifically, as the entire menu offers strong value compared to the industry. CEO Julie Masino added that for Cracker Barrel guests, value is about abundance and large portions, not just absolute price. Mr. Pommells noted that while internal and external value scores have improved, the company is not yet sharing the specific metric externally.

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CFO Ravi Thanawala noted that with over 14 million active 12-month users, there is a meaningful opportunity with lapsed customers, and the company is testing trigger-based campaigns to win them back. President and CEO Todd Penegor broke down the 0-2% comp guidance, stating that pricing is expected to be around 2% to offset inflation, implying that transactions would be flat in the best case and likely slightly down, but with sequential improvement throughout the year.

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