Sales Outlook and Guidance
Q: What's your sales outlook and drivers for fiscal '25?
A: We expect 1% to 2% same-restaurant sales growth for the full year, with underlying traffic trends gradually improving throughout the year [0]. This outlook considers expected weakening GDP growth and the cycling of prior-year weaknesses [0]. There's a shift in Thanksgiving from Q2 to Q3, impacting quarterly sales by 80 to 100 basis points [0]. Despite more variability around our sales guidance, we have higher confidence in our earnings outlook [0].

Pricing Strategy
Q: How are you approaching pricing in fiscal '25?
A: We'll keep pricing modest, expecting it to be in line with inflation at 2.5% to 3% [1]. Over the last 5 years, we've underpriced compared to the overall CPI and industry, having priced only 20% compared to 23% CPI and 28% for full-service restaurants [1]. This strategy gives us flexibility to continue keeping prices low [1].

Olive Garden Performance and Marketing
Q: How will you address Olive Garden's weak comps?
A: We're focusing on profitable sales growth, not buying sales through discounting, even with competitors increasing discounting [2]. We'll slightly increase marketing spend by a couple of tenths in fiscal '25 [2]. We're highlighting Olive Garden's everyday value with promotions like Create Your Own Pasta at $12.99 with unlimited first course [6]. We'll continue menu innovation and leverage digital marketing [6].

Consumer Environment Impact
Q: What are you seeing across income segments?
A: The softness is mostly among consumers below the median household income of $75,000, more pronounced below $50,000 [3]. These impacts are greater in our Fine Dining brands [3]. However, guests aren't managing their checks like in prior quarters [3].

Margins and Cost Management
Q: Despite low pricing, how are food margins better?
A: Although pricing was 2.5%, below the 3% inflation, our teams managed costs effectively [12]. In a slow growth environment, costs improve, and controllable expenses come in better [12]. This reflects our ability to manage through different cycles [12].

Inflation and Input Costs
Q: What's your inflation outlook for 2025?
A: We expect total commodity inflation around 2%, with beef in mid-single digits and low single-digit deflation in chicken [10]. Labor inflation is expected to be around 4%, with hourly wage inflation close to 4% [10]. Other restaurant expenses are projected at 2.5% to 3%, leading to overall inflation close to 3% [10].

Guidance Confidence and Variability
Q: How confident are you in your guidance?
A: While there's more variability around our sales guidance due to economic conditions, we have higher confidence in our earnings outlook [0]. If sales are weaker, inflation should improve, and our teams can manage costs effectively to meet earnings targets [15].

Ruth's Chris Acquisition Strategy
Q: Are you considering more franchise acquisitions like Ruth's?
A: The acquisition of the Ruth's Chris franchisee was opportunistic [7]. We value our franchise partners and will continue as is [7]. This doesn't indicate a change in strategy [7].

Consumer Check Behavior
Q: Why aren't guests managing checks as before?
A: We're seeing significant improvement; the sales mix was flat at Olive Garden and LongHorn, with no negative mix [4]. In Fine Dining, negative mix has moderated from 200 basis points to 80-90 basis points [4]. Guests aren't managing their checks as much as they used to [4].

Advertising Value Proposition
Q: Can you better highlight your value in advertising?
A: Yes, we're promoting offers like Create Your Own Pasta at $12.99 on TV [9]. Olive Garden offers great everyday value, and we aim to highlight that instead of discounting [9].