Jeffrey Bernstein: Understood. Thank you.
Operator: The next question comes from Alex Slagle with Jefferies. Please go ahead.
Alex Slagle: All right. Thanks. Good morning. As you look across your brands, and think about what it really takes to win market share in casual dining and drive traffic outperformance and Carrabba’s performance really stands out. And I’m curious how much of that is related to the specific category dynamics versus more fundamental execution elements. And to the degree there are executional aspects that are driving that success? Are there bigger, more impactful actions that you think you need to take it out back to deliver the kind of experience that translates into more visible traffic share gains? I know some of that will come still with the equipment and technology recently deployed, but just interested in your thoughts there.
David Deno: Good morning. I’ll start with Outback and we’ll move to Carrabba’s. If you look at Outback and traffic, there are three or four things that are crucial. And the very first thing, which is our top priority is our restaurant operations — in restaurant operations and leveraging our technology investment and providing that great customer experience with very interesting food and service. So that’s job one. Our operating metrics are improving, and we’re leveraging our technology, and we’ll continue to stay razor-focused because that’s a big way of growing sales at Outback. We are going to spend more on media because we’ve got some really great ideas that we like. And you’ll see that in Q4, and we’ll see that going into 2024.
And Chris has talked about our initiatives and productivity to help pay for some of that as we look to do the magic and grow traffic and preserve margins. We want to make sure that we remodel and update our Outback restaurants to make sure that the consumer is getting that type of experience. We talked about our remodel program. And then finally, as we talked earlier about our price value equation and being very mindful about our price increase. And then we’ve got a really great off-premises business that we’ve got to continue to grow on leverage. Carrabba’s is just doing extremely well on the off-premises business, especially, but also in some of the in-restaurant experiences. Their margins are improving. And like I mentioned in the script, they earn the right to grow, and we’re looking to build that pipeline as we move forward.
So Carrabba’s has done a great job. And I think what’s helped them also they have a really strong off-premises business. That doesn’t mean that they’re not focusing on in-restaurant dining, but they have a really strong off-premises business that they’re continuing to leverage.
Alex Slagle: Thanks. And I have a follow-up on the other restaurant operating expense line. It was up quite a bit this quarter and it feels like it’s one place that has seen less of a relative improvement over the years versus the peers and relative to the big gains you’ve made in food and labor, and realize much of this has to do with your ability to drive volumes and leverage here. But are there opportunities to explore to be more efficient or to better leverage your scale here?
Chris Meyer: I think absolutely. Certainly, the productivity initiatives that we have in place this year have been highly focused on cost of goods sold and labor, not as much focused on the restaurant operating expense line. But I think the areas such as to-go packaging supplies, things like that are areas where you could tap into potentially get more efficiency on the restaurant line. And then, again, I think that, to your point, that this quarter, in particular, it was more just a product that we didn’t have the same level of productivity in that line as you saw in COGS and labor. And that’s why we weren’t able to leverage that line as effectively as we were the other lines. And we also had a tick up a little bit in marketing.
Alex Slagle: Got it. Thanks.
Operator: The next question comes from Sharon Zackfia with William Blair. Please go ahead.
Sharon Zackfia: Hi, good morning. I know you’ve been seeing negative mix shift for a number of reasons. I’m curious if you started to see that abate or a level of in the third quarter or into the fourth quarter. And then as you’re thinking about guidance for this quarter, I know you didn’t quantify how October is doing, but I’m very cognizant of you lapping Elliott later in the quarter. So does the guidance take into account kind of a potential uplift as you lap Elliott, or are you just kind of putting guidance out there that’s similar to where the current trend is?
Chris Meyer: Yes. So I’ll start with the mix piece, and then we’ll move on to the traffic assumptions for Q4. Menu mix was down as you start with Q3, it was down a little over 2% in the quarter. And that’s pretty consistent with what we saw in Q2. There’s a piece of that we’ve talked about. We think is consumer trade, app mix and alcohol mix are a bit lower. But the majority of that negative mix has to do with revenue center shifts, which have been engineered, right? So we know these areas have such as catering, et cetera, they carry a lower check average, which has been highly influencing the mix in our numbers. Now the good news is that you start to transition to Q4, we get the benefit of starting to lap some of the negative mix trends that we started to experience late last year.
