Kevin Hochman: Yes. So we won’t get like the current advertising campaign’s impact on awareness until a few months after. So I don’t have anything to like most recent report, I mean, I would assume based on, I think you guys probably see Chili’s everywhere, too. I would assume that metric has significantly improved in the last couple of months. I will say in the July advertising flight, we really didn’t see much movement in awareness. Now, that was very low TRP weights versus the March window and the current window that we have today. So it’s not like we saw any kind of significant regression or anything. It was basically flat. But I would expect that to continue to close the gap versus our key competitors that spend more during this quarter just based on the sales results and the fact that the quality of the buy.
Brian Vaccaro: Okay, thank you. And then also just I wanted to ask about average check at Chili’s. And Joe, what’s a reasonable cadence to expect pricing to moderate over the next few quarters. And then I think the lap of reduced discounts happens pretty soon versus late calendar 2022. Just curious where you see mix settling out.
Joe Taylor: Yes. So from a cadence standpoint, again, we would expect to see price moderate. Right now, we just lapped over one of the bigger pricing increases from last year. So we’re now down. We’ll exit the current quarter in the mid 5s. Now, if you look at the back half of the fiscal year, we have a menu that will come in, in February and then one right at the end of the fiscal year. So some will depend on the pricing decisions we make. If we – the pricing – if we make any pricing decisions there is going to be at a very low level. So you’re probably looking at pricing that is in the low-single-digit ranges if we move on those two menus. So that will help to continue to moderate as we kind of go through the lapse.
We’ll be down in that mid for the year. We’ll be down in that mid-single-digit range by year end, most of which is influenced by prior year actions. So if you think through the sequencing of those pricing moves, they’ll start to bring pricing even further down as we kind of go into F2025 and lap through earlier actions of this year. So that would be how I would anticipate pricing to move. From a mix standpoint, it’s going to depend a lot on what we do, the decisions we make around marketing and some of the merchandising. We still feel like we can maintain a low level of mix positivity as we go through. But if we have opportunities to grab traffic and as you think about the effectiveness of the marketing campaigns, we’ve been doing, we’ll take traffic, too.
So I expect, again, mix to stay in that neutral to slightly positive range, but kind of bounce around that neutral level as we kind of move forward.
Brian Vaccaro: Okay. And just to clarify, I think you said 5.5% was that exiting the second quarter. I assume you’re higher than that. So effective pricing in this current quarter we’re about to go into or that we’re in would be maybe somewhere in the 7%.
Joe Taylor: It’ll be a little bit below that. It’ll be built between 6% and 7%. Again, we lapped as we – very recently, so you have a higher level of price impacting in October and a more moderate level in the rest of the quarter. But you’re going to – for the quarter you’ll come out in that mid 6% range.
Brian Vaccaro: Okay. Great. And then just last one for me, the advertising spend. What was that in dollars in the current quarter, just to make sure we’re on the same page there?
Mika Ware: Yes. So for the first quarter, Brian, that was just over $28 million. And that’s where Joe was trying to clarify in his script that instead in the past where we split that or we evenly spread it, our advertising expense is now going to be more reflective of our actual spend. So the second quarter will be closer, a little over $32 million.
Brian Vaccaro: All right. Very helpful. I’ll pass it along. Thank you.
Mika Ware: Thank you.
Operator: Your next question for today is coming from Brian Mullan with Piper Sandler.
Brian Mullan: Thank you. Just a question on Maggiano’s. I’m wondering if you provide some early thoughts on the upcoming holiday season. Maybe if you have any early indicators you could speak to. And then remind us how did last year go around the holidays? Is there anything unusual you might be lapping either positive or negative would be helpful too.
Kevin Hochman: Yes. There’s no like big swings that we expect in the holidays. We see continued growth and recovery of the banquets. The bookings have looked fine. So there’s no outlier one way or the other that we’re seeing. Feel good about where we are. We’re prepared for the holiday season. Obviously, it’s a really important quarter for Maggiano’s based on the amount of sales and profits that we generate. But we feel very good about heading into the holiday season.
Brian Mullan: Okay. Thanks. And just to follow-up, balance sheet capital. Once you get to 2 turns traditional net leverage by the end of the fiscal year, what’s the plan for beyond that? Would you look to delever further or conversely should we be looking for maybe more capital return, while you maintain that 2 turns of leverage? Just any color on your current thinking would be great.
Joe Taylor: Yes. Brian, that’s obviously a discussion we’ll continue to have with the Board. Don’t have anything specific to say on any changes. I think the good news is we’ll have optionality around that based on the improved cash flow generating capabilities of the company. So it’s a point that we think is the right time to have some of those discussions and then we’ll come back to you with any updates as to what we’ll be doing from a capital allocation standpoint.
Brian Mullan: Okay. Thank you.
Operator: Your next question is coming from Jeff Farmer with Gordon Haskett.
Jeff Farmer: Great. Good morning and thanks. Just following-up on a handful of the earlier traffic questions. So Chili’s did see that positive traffic in October. But what can you share with us as it relates to what that implies for Chili’s October same-store sales number?
Joe Taylor: From an October standpoint, it’s going to be very strong comp sales. I think you’re going to see growth positivity coming on all three components. Again, I’ve already talked a little bit about the pricing dynamics. When you shift the positive traffic into the equation, it’s going to be a strong period for comp sales.
Jeff Farmer: Okay. And then as it relates to that October traffic result, did that meet or exceed your internal expectations that you had set sort of going into that new round of advertising?
Joe Taylor: I think we’ve exceeded our expectations. We were expecting based on the level of the buy, the quality of the buy, the fact that we’re on the shows of people watching for a good result, and it performed above that.
Kevin Hochman: We basically modeled the March window because they were similar weights, and we got a better result than the March window. And we think there’s two potential drivers. One is the service levels continue to improve, which is great. And then the second is the consumer more open to this message today than they were six months ago probably a little bit of both.
