Jeffrey Bernstein: Understood. Thank you.
Operator: Your next question is coming from Eric Gonzalez with KeyBanc.
Eric Gonzalez: Hi, good morning. Just wondering about the advertising strategy, specifically the additional four weeks of marketing that you’re adding this year. If you tie that back to your revenue guide, it looks like you don’t expect to see much of a jump in sales. So am I reading that the right way? Do you still expect mid-single digit comp for the year? Maybe you’re being a bit too conservative based on the consumer environment. And then, relatedly, is the baseline assumption for industry traffic still down about 4% to 5% for the year?
Joe Taylor: So we do expect revenue benefit from that incremental four weeks. Again, it’s a smaller window. Its four weeks. It’s not going to be comparable to the October window we’re in from a buy standpoint. But I think it will be added to the equation. We gave you a pretty large range for revenue, so yes. Do I expect the revenues to move up higher in the range? Yes, as we kind of move through those windows. We’re adding the window from an opportunistic standpoint, not a defensive standpoint if I could put it in that way.
Eric Gonzalez: Got it. And then just if I can ask about the off-premise business. I apologize if I missed it. But did you provide the off-premise mix? And maybe you could speak to how that channel fared during the quarter, specifically whether you’re seeing the delivery channel fall off, as it is a more expensive way to access the brand?
Mika Ware: Hi, Eric. It’s Mika. Our off-premise business at Chili’s and Maggiano’s was really relatively stable quarter-to-quarter. So it was 28% off-premise at Chili’s and 25% off-premise at Maggiano. So we’re seeing them hold in there.
Eric Gonzalez: Anything to call out on the delivery versus carryout breakdown?
Mika Ware: Not really. No, I think it’s all pretty steady.
Eric Gonzalez: Great. Thank you.
Operator: Your next question for today is coming from Alex Slagle with Jefferies.
Alex Slagle: Thanks. Congrats on the momentum. So along the lines of playing smart on price, your cost of goods was down pretty substantially 25.8% of sales. And they have to go back to 2017 to see anything that low and expected leverage, but it seems like the dynamics here were more powerful. So just trying to get a sense of how much of this is concentrated in the 1Q and the relative pricing and mixed dynamics of that specific quarter? I mean it would seem 1Q marks the low for cost of goods. And maybe we expect it to tick up a little bit higher into the 26 plus percent, mid-26 or so for the rest of the year, but any color there will be great?
Joe Taylor: Hey Alex. Thanks. And yes, there was definitely going to be year-over-year, an outsized improvement in the first quarter coming off of last year. But I actually expect it to be a fairly stable environment from a percentage of company sales as we kind of move through the year. So you’ll continue to get some of the pricing benefits that price moves slowly down as you kind of move through the year. So the price mix benefit will continue to accrue throughout and I expect a fairly stable margin.
Alex Slagle: Great. And repair and maintenance stuff, how far along are we on sort of getting all the new equipment into the restaurants, fixing broken things and refreshes and you think you’re sort of getting close to where you want to be with the assets?
Kevin Hochman: I think we’re getting close to where we want to be with the ongoing spend level. We still have a lot in the pipeline. We’ve made great progress on the equipment side of the equation, so I’m not as concerned as you would have been a year ago or 18 months ago on equipment. The supply chain is making equipment available to us and obviously you update that as quickly as you possibly can. We’ve done a lot of work around the fleet and understanding where the opportunities lie. We have a great plan in place and our teams are executing against it. It’s going to be a progress over really an extended period of time, 18 months, 24 months, but I like the spend levels we’ve built into the plan and the ongoing progress we’re making against it. And you’re capturing the real high net need areas quickly and we’ll continue to do that.
Alex Slagle: Got it. Thank you.
Operator: Your next question is coming from John Tower with Citi.
John Tower: Great, thanks for taking the question. Run through quite a bit already, but maybe I guess to start going back to the advertising conversation, I appreciate the color around moving to 25 weeks from 21 previously. Can you maybe help us think through a reasonable range of outcomes in terms of where that could go over time? Meaning, is 25 weeks the level you feel is kind of optimal for this brand, or do you see that potentially flexing higher as we move into out years depending upon consumer response, et cetera?
Kevin Hochman: The bigger question is how do we sustain traffic over time? That’s what we’re laser focused on as a leadership team and it starts with continuing to improve the guest experience, while we do these traffic driving initiatives like advertising or CRM. So we’re looking at all three of those things as potential investments to make into creating sustainable traffic for Chili’s in the long-term. I do think in the advertise to answer your question more directly on the advertising component, I would see adding weeks over the next few years being the likelihood of one component of increasing traffic over time. Another big component is when we get the CRM – new CRM program up and running. I think that is going to be an avenue for sustainable traffic growth over time.
And obviously as we continue to improve the guest experience that will become a more meaningful traffic builder over time like you see in some other concepts that don’t advertise as much, right. So for sure we would see that 25 weeks is not our final number and really how fast will we build on top of that really will depend on the returns that we’re getting as well as the alternative investments that we can make in CRM and the experience.
John Tower: Got it. Okay, thank you, I appreciate that. And then maybe Joe, just to follow up on the value conversation earlier; can you provide where that settled out as a percentage mix for Chili’s during the period?
Joe Taylor: Values again very stable, it’s in that 28% to 30% of total check have a value component to it. The three for me again also remain very stable in that 16%, 17% range. So we’re seeing responsiveness from the guest but we’re seeing very good stability in the levels of value we have in the mix.
John Tower: Great, awesome. All for me. Thank you.
Operator: Your next question is coming from Chris Carril with RBC Capital Markets.
Chris Carril: Hi, good morning. Thanks for the question. I guess following up on mix, can you maybe expand a bit more on what you could potentially do to drive that sustainable benefit from that component of the comp? It seems like there’s a lot in your control around price and traffic but curious how you could potentially further drive mix just like you have with Crispers?
