Brinker International, Inc.

Good day and welcome to the Brinker International Q3 F25 earnings call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Kim Sanders, Vice President of Investor Relations. Ma'am, the floor is yours.

Thank you, Holly, and good morning, everyone, and thank you for joining us on today's call. Here with me today are Kevin Hochman, President and Chief Executive Officer and President of Chili's, and Micah Ware, Chief Financial Officer. Results for our third quarter were released earlier this morning and are available on our website at brinker.com. As usual, Kevin and Micah will first make prepared comments related to our strategic initiatives and operating performance. Then we will open the call for your questions. Before beginning our comments, I would like to remind everyone of our safe harbor regarding forward-looking statements. During our call, management may discuss certain items which are not based entirely on historical facts. Any such items should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such statements are subject to risks and uncertainties which could cause actual results to differ materially from those anticipated. Such risks and uncertainties include factors more completely described in this morning's press release and the company's filings with the SEC. And, of course, on the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business and believes will provide insight into the company's ongoing operations. And with that said, I will turn the call over to Kevin.

Thank you, Kim, and good morning, everyone. Thank you for joining us as we discuss our financial and operating performance in the third quarter. Chili's delivered another strong quarter with same restaurant sales up 31.6% and traffic up 21%. Sales leverage and simplification continue to drive improved four-wall economics, which allowed us to deliver a 18.9% restaurant operating margin for the quarter. These results were achieved by our continued focus on the fundamentals of casual dining, food, service, and atmosphere. Our Q3 sales performance significantly outpaced the industry, which is especially encouraging given we launched no new food or value news, remained on the same big smasher campaign, we continued reducing our menu and pantry SKUs, and we were still able to weather the increase in competitive promotional offers. These results further demonstrate the operational muscle we continue to build is accelerating performance. Marketing is driving guests in and operations is bringing guests back. I'd like to recognize the marketing team led by George Felix and our field operations team led by Doug Cummings and his VPOs for just exceptional teamwork that is driving our industry-leading results. Our restaurant support center and our field restaurant teams are operating as one team with the common goal of improving the guest and team member experience. Now let's talk about the operational improvements we completed in the third quarter. It starts with menu simplification as we removed three menu items as well as four lower-mixing wing sauces. Eliminating those sauces helped simplify Zone 1, our fry station, which also has gotten much busier with the increased volumes. This sauce reduction also allowed us to eliminate the sauce station and small containers, which freed up much needed space for our cooks and reduced the amount of Zone 1 equipment they need to clean daily. We also made three key operational improvements during the quarter. The first ops initiative was a renewed focus on burger mastery in preparation for our big QP launch in Q4. Burger mastery training and coaching involves making sure every burger is properly smashed, properly seasoned, and the flat top grill is properly maintained so we deliver a tasty, juicy, perfectly cooked burger every time. The second ops initiative was adding an all-day button to our kitchen display systems, which summarized the counts on high-mixing items for our cooks. Prior to this enhancement, cooks would have to scroll through several pages of screens and count how many crispers to fry or how many burgers to drop on the flat top. Now our cooks can easily see a running total of what to cook, which will reduce both response time and total ticket times during busy shifts. No more scrolling, no more adding in their heads, so they can focus on making great food faster every time. The third big Q3Ops initiative was making significant improvements to win with our dishwashers, one of our most important roles in our restaurants, and it's a high turnover position in the heart of house. We held listening sessions to understand what would make their jobs easier and more enjoyable. particularly given how much busier they are with our sustained higher volumes. We then made the changes that were most important to them that were rolled out in Q3. We believe this continued focus on operational improvements and making team members' jobs easier sets us up for more sustainable success in the out-quarters. Now I want to give an update on marketing and menu innovation. Two weeks ago, at the start of Q4, we launched a Big QP, a burger packed with 85% more beef than a quarter-pound burger. It's topped with two slices of American cheese, ketchup, mustard, pickles, and onions. It joins the big smasher on the three-for-me menu at the $10.99 price point. As consumers' frustration with high prices and shrinkflation continues, we're continuing Chili's Better Than Fast Food campaign to demonstrate our unbeatable value. To launch the big QP, Jesse Johnson, our Vice President of Marketing and our amazing PR team, opened up Fast Food Financing, a limited-time pop-up experience in the heart of Manhattan. This successful event generated more impressions than the Big Smasher launch did in both creating awareness of the Big QP and further strengthening our position as a great value our guests can count on. Our world-class marketing team also continues to find new ways to insert the brand into pop culture and differentiate Chili's from its casual dining peers. This is what we call building the brand over time and is a way to separate ourselves from the sea of casual dining competitors. On April 7th, we opened our Chili's Scranton branch, a new restaurant that pays homage to Chili's on-screen moments from one of the most famous television comedies of all time. This special location features 2005 decor seen in the famous Chili's episode, a booth for guests to recreate the scene for social media, and is now the only Chili's in the world to serve the Awesome Blossom, which was prominently featured in the episode. We surrounded the launch with ads featuring popular actors from the show, which appealed to both longtime viewers of the show's first run in addition to a younger generation that now streams the library of episodes. Chili's Scranton Branch is yet another way to reignite Chili's brand history in a modern, relevant way that no other casual dining brand could do. Fans are raving about this move, and this initiative has generated over 9 billion impressions for Chili's. And now the Scranton Branch is a place where super fans of the show can pilgrimage and be a part of the Chili story. We have also recently launched three initiatives designed to reinforce Chili's as the number one seller of margaritas, and bring us to the top of the consideration set when consumers are craving a mark. First, we partnered with Lifetime Television to premiere Chili's first-ever movie in celebration of National Margarita Day, the 15-minute original film titled I'll Be Home for National Margarita Day, starred Rhea Menounos and Taye Diggs, and leveraged Lifetime fans' love of holiday movies to bring top-of-mind awareness for Chili's and margaritas. We've also partnered with the JM&D agency to make Chili's first-ever music video entitled Ride the Dent Day, as a way to drive awareness of our famous Presidente Margarita with NASCAR fans and activate our sponsorship of the number 77 Spire Motorsports car, driven by Carson Posavar. And starting May 1st, our new Margarita of the Month will tap into the 90s nostalgia with the Radical Rita, featuring 90s pop TV icon Tiffany Thiessen. The marketing team has leveled up their Margarita of the Month strategy and is leading a record-breaking Margarita of the Month sales that both help protect alcohol incidents as well as give Chili's fans exciting new drinks to come try at a hot price point. Food news, drink news, culture pops of strategic marketing are all a part of our marketing team's plan to drive sales every night, as well as the brand over time. Now let's do an update on Maggiano's. The team continues to follow the Chili's playbook to bring the magic back to Maggiano's by simplifying and elevating the menu with innovation, removing discounting from the business, improving service levels, refreshing atmosphere to drive more sustainable traffic over time. Much like Chili's early turnaround days, we're doing the hard work in the gym to simplify operational complexity and invest in improving the fundamentals of food, service, and atmosphere. We're also stopping unprofitable discounting that's not consistent with the Maggiano's brand that has been embedded in the business for years. During the third quarter, the team launched a new menu with four significantly upgraded core dishes, including the Grand Chicken Parm, a new Fettuccine Alfredo, a new Lasagna Bolognese, and a Snake River Farms Wagyu Meatballs that are available both as an appetizer and part of our spaghetti and meatballs entree. These upgraded dishes along with four previously upgraded core recipes that President Dominique Bertolone and VP of Culinary Anthony Amoroso have brought to the menu now represent 50% of the entree mix. And I firmly believe the more mix we get into these new and renovated modern and delicious menu items, the more loyalty we will drive with Maggiano's guests over time. To enable the restaurant teams to execute these elevated dishes consistently, The Maggiano's menu has now been reduced by 20% over the last year, and we continue to simplify our cook's jobs by consolidating ingredients and removing process that does not add value for guests. During Q3, we removed eight lower mixing menu items, 10 pantry SKUs, and 17 prep recipes from the business. We have also removed the remaining deep discounts that were in the business, including double your portion, which gave as much as a 50% discount across our digital channels, Marco's meal, which was a significantly discounted meal for two, and discounted carryout meals. We're getting out of the discounts that were originally installed to drive sales in the short term and reinvesting those resources into more sustainable long-term business building activities that will upgrade the food, service, and atmosphere, similar to the Chili's playbook in year one. And just like Chili's in the early days of the turnaround, we expect to see traffic choppiness over the next four quarters as we build a stronger Maginot's brand for the long term. I continue to be encouraged by our business momentum, and I'm just so proud of our team. Our focus on the fundamentals has been at the core of the turnaround, and we believe it will continue to allow us to push through the macro pressures the industry is now experiencing. Guests are pulling back the number of trips across restaurants in the industry and are choosing those brands they trust to have a great experience. So those brands delivering on superior fundamentals will grow market share, and we believe Chili's is well positioned to be one of those winning share, and Maggiano's has now started the journey too. Now I'll hand the call over to Micah to walk you through the third quarter numbers and our updated guidance. Go ahead, Micah.