Brinker International, Inc.

Good day and welcome to the Brinker International's Q3F26 conference 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, the 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, Chief Executive Officer and President of Brinker International 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 for the third quarter. as well as our outlook on the remainder of fiscal 26. Q3 Chili's same-store sales of plus 4% marked our 20th consecutive quarter of same-store sales growth and outpaced the casual dining industry by 420 basis points. This strong result was rolling a plus 31% from last year for a two-year cumulative comp of 37%. A list of the top 500 largest restaurant chains for all of 2025 just came out, and I'm proud to say Chili's is now the number two casual dining brand for sales, in addition to maintaining our status as the number one casual dining traffic brand. To put our sustained growth into perspective, if Chili's nearly $1 billion of sales growth in calendar 25 was its own business, it would be larger than most of the restaurant chains on the list. After delivering a plus 15% in calendar 24, we often were getting asked, what's going to be the next Chili's? With the 21% we posted in calendar 25, the answer was resoundingly Chili's. And in 2026, our sales growth has consistently outpaced the industry, with our outperformance continuing to accelerate from 320 basis points better in February to 550 points in March, and now 560 points month to date through April. Chili's momentum is sustaining, driven by quarterly improvements in food, service, and atmosphere, as well as continuing to make Chili's more fun, more easy, and more rewarding for our team members. These experience improvements, coupled with our everyday value leadership, represented by a per-person average guest check that is $3 to $4 below competition, are supporting a powerful flywheel of traffic, sales growth, margin expansion, and reinvestment into our business. Now I'll give some updates on the Chili's business. We spent Q3 continuing to work on the fundamentals, preparing for our new chicken sandwich platform launch, and bringing in new guests with relevant marketing to experience Chili's. In Q3, our restaurant teams remained squarely focused on the fundamentals of the guest experience. From a food standpoint, our primary focus was chicken breading and cooking perfection, which involved retraining the teams on perfect execution of hand breading our chicken crisper and chicken sandwich lineup, which will ensure those items are freshly cooked, hot, and crispy. A key differentiator of our chicken sandwich is that we hand bread the chicken in restaurants. We believe a freshly breaded filet tastes better than chicken that has been breaded and fried by machines in a factory, frozen, shipped hundreds of miles, and then refried in a restaurant. And in anticipation of our Q4 chicken sandwich launch, our teams were busy ensuring restaurants were ready for the guests that will come in, including reinforcing daily procedures for sparkling clean restaurants and emphasizing key areas to double down on Chili Head hospitality, our differentiated customer service that drives memorable experiences to grow sales and traffic over time. While our competitors ramp up limited time offers, we spent the quarter investing time in operations training and culinary resources into everyday capability that more closely correlates with long-term sustainable traffic growth. We believe doing fewer things bigger and better is a more sustainable way to build traffic and grow our business over time. The result is continued momentum on the business, attracting new guests in and retaining the ones we have converted. Dine-in GWAP, or guests with a problem, continued with three-year decline, finishing the quarter at 1.9%. Food grade finished at 75%, and intent to return was also an all-time best at 79%. Our operational improvements continue to deliver better experiences for our guests, and our tokenized cohort tracking yielded similar results from previous quarters. New guests are coming into the restaurants and following the pattern of existing guests on frequency, which gives us confidence growth will continue to sustain. Our chicken sandwich platform launched on April 14th with our new menu drop. The lineup features two sandwiches at our $10.99 for me opening price point, the Big Crispy and the Spicy Big Crispy, which includes fries, a bottomless Coca-Cola drink, and bottomless chips and salsa. Given a wide range of guest preferences, we also offer three-flavored chicken sandwiches, National Hot, Signature Honey Chipotle, and Buffalo, with two sides as well, as well as the Big Crispy Deluxe with lettuce, tomato, and bacon. All sandwiches are served with our Chili Signature house-made ranch for dipping and dunking that our guests absolutely love and pour on everything. This adds an additional point of differentiation you can only get at Chili's. The sandwich platform was launched behind our Better Than Fast Food campaign, this time tapping into an insight we have seen among consumers frustrated with what they call shrinkflation, where portion size is reduced to offset rising input costs. For example, a post went viral a few months ago when someone posted a photo where a famous fast food chain's burger pickle was actually thicker than the burger patty itself. We believe Chili's over-the-top generous portions are a great way to resolve the biggest challenge facing our customers today. In a world of rising inflation, how do I get the best value for my money? Our TV ads both show and tell our chicken sandwich is way bigger than the leading fast food restaurant's most premium chicken sandwich. And at $10.99, this addition to the three-for-me platform is the perfect antidote for corporate shrinkflation. The launch campaign heroed a before-your-eyes demo of a balancing scale holding our Chili's Big Crispy in one pan with its lighter fast food foil in the other. The scale is not in balance, with the new Big Crispy demonstrating it is the exact opposite of shrinkflation, weighing down the scale heavily. In fact, our test conducted in the Dallas-Fort Worth area, weighing a large sample size of sandwiches, the new Big Crispy filet was over 80% bigger than the leading fast food restaurant's premium chicken sandwich filet. I know many of you are interested in specifics on how the launch is performing. And while it's only been two weeks in market, with only one week on TV, initial response to the new sandwich platform has been encouraging. So far, the overall platform is selling 161% more sandwiches than pre-launch, and it's significantly outpacing the numbers we saw in the 200 test locations. From a total business standpoint, we've been copping in mid-single-digit sales in April with positive traffic, which is rolling a plus 29% in April, driven by the big QP launch the prior year. As I said earlier, we've accelerated our sales outperformance versus the industry to 560 basis points in April, which only includes two weeks of chicken sandwiches. So while it's still early, the initial results on both the platform and the total business are both encouraging. I also want to give an update on our north of six initiative and how it will be a key to continued sustainable comp growth. Our question we get asked a lot is with all the traffic growth you've had the past few years, do you still have capacity for more? So let me start with the numbers. Our average traffic is now back to 2013 traffic levels, but that's still about 20% less weekly guests from our peak in 2000 to 2005. And our north of six restaurants serve anywhere from 20% to 80% more guests than our current average restaurant traffic. So the first point is we know we have a lot more capacity in the buildings. The second question is what are we learning for the north of six restaurants? And first of all, the dramatic business simplification has been a huge enabler for our restaurants. And the direction we are getting from the managers of north of six restaurants is we need more simplification. So our teams are going to challenge every requirement that slows down our restaurant teams. We'll continue to remove items and processes that don't help the guests or team members. And a new initiative I'm most bullish about is speeding up cycle time, meaning looking at everything that goes into the total time of kitchen prep and the dining experience and finding ways to simply remove time. For example, if one of our restaurants are on a wait on the weekend, the average wait time is about 15 to 20 minutes. That number is pretty good, but remember, that's just an average, which means there are about half of restaurants with longer waits. If we have enterprise project teams studying every bit of that weight to understand what are the bottlenecks we need to remove to reduce that cycle time, whether it be at the host stand taking orders, kitchen ticket times, checking out the ZEOS payment system, and ultimately resetting tables for the next wave of guests. Chief Operating Officer Aaron White and her cross-functional teams are hard at work to reduce cycle times across the entire dining experience. I look forward to sharing new additional initiatives, which should be a continual tailwind for traffic on future earnings calls. On the Maggiano's business, we are continuing to make progress in its turnaround. When you adjust for Christmas Day, falling in Q3 this fiscal, and the January weather, we did see sequential improvement in traffic and comp sales. Customers are noticing more abundant portions, more generous family style, and the return of classic Maggiano's dishes like eggplant parm and Gigi's butter cake. Value scores are improving. We still have a lot more opportunity ahead of us with service and removing non-value added process to improve Maggiano's dine-in times, but the important thing to know is we are making sequential progress. This turnaround, like the Chili's turnaround, will take time, but as long as we focus on important areas of food service and atmosphere and make progress every quarter, I'm confident we'll return this business to growth. As a reminder, Maggiano's is only 8% of our company sales and low single-digit percentage of our profit contribution, but it can be a source of growth in the future given the white space opportunities. To close out, I want to do some recognition of our integrated marketing team and our supplier partners on industry recognition. The industry-leading publication Ad Age named Chili's the brand of the year for the second straight year, an award that has never, ever been awarded to the same brand two years in a row. This is an award recognizing the best work in all industries, not just restaurants. In addition to Chief Marketing Officer George Felix and our Marketing Vice Presidents Jesse Johnson and Steve Kelly, we have developed a deep bench of directors, managers, and a collection of world-class agencies in various disciplines who have delivered the results over the past three years to earn this industry recognition. And the last bit of recognition I want to do is to congratulate our driver, Carson Hossevar, and the entire Spire race team for their first ever NASCAR Cup Series win in Talladega last Sunday, driving the number 77 Chili's car. Carson is a servant leader to his team and his fans, and always makes those around him feel special. He's a perfect representative of what we like to call Chili head hospitality that our guests experience in our restaurants. And hats off to our Mooresville, North Carolina Chili's restaurant team and area director, Rachel Austin, who stayed open late Sunday night for Carson and the Spire team to celebrate their victory with a lot of triple dippers and a few presidentes. To close, Chili's delivered another strong quarter, rolling big numbers from prior year. The quarter got stronger as we moved out of January, and we accelerated our market share growth as the quarter closed, and now into April, driven by the chicken sandwich launch. Yes, there are macro headwinds the industry is experiencing, but Chili's is well positioned to continue winning in this environment given the improvements in food service and atmosphere and our industry-leading everyday value. That formula has proven quarter after quarter to be resilient in driving traffic and outperforming the industry. Now I'll hand the call over to Micah to walk you through fiscal 26 third quarter numbers. Go ahead, Micah.