Brinker International, Inc. (NYSE:EAT) Q2 2023 Earnings Call Transcript

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Brian Vaccaro: Okay. Got it. Thank you. Joe, I wanted to just circle back on your labor comment a couple of questions I’ve got. I think you said, in that up 40 bps to 60 bps versus what you just saw in the second quarter. And just a quick skim of historical pre-COVID, it would seem that your second half labor cost ratio is typically a little lower than Q2 or even the first half just on higher seasonal sales volume. So I just wanted to clarify, is that 40 to 60 kind of trying to hone in on the actual investment that, that we need to think about other dynamics around seasonality or perhaps that’s an all-in expectation, call it that, that you’ll be kind of in the mid-33s embedded in your second half guidance. I just want to clarify that.

Joe Taylor: Yes, Brian, I put it in the latter piece of the equation. It’s kind of the all-in, obviously yes, you would expect to see some sales leverage benefiting that area if you had a normalized set of hours going into the system. Obviously we’re going to be putting some more hours in as we go through the rest of the fiscal year. We’re also anticipating it probably some higher opportunities to on the manager bonus side of the equation, things of those nature. There’s all kinds of puts and takes in that line. But the guidance I kind of gave you relates to the all-in effect of what else would expect to see coming on the labor side.

Brian Vaccaro: Okay. Okay. Thank you for that. And then also, Joe, while I have you, can we just drill down on the other OpEx line for a second? And I know there’s a lot of moving pieces, R&M, utilities, and now thinking about bringing advertising back, just to name a few. And are there certain categories, you talked about advertising going up in the second half of the fiscal year, but are there certain categories that are expected to decline and help offset those dollar increases? Or should we expect that other OpEx dollar line to be moving higher than the high-260s it’s been in recent quarters?

Joe Taylor: I think as we — as you kind of move forward and talking absolute dollars, I would expect it to move up. Again, you cited one of the key drivers will be the advertising piece of the equation as you build that advertising accrual that goes through the OpEx line. So that’s where we’ll see that. I think generally speaking, R&M expense, I expect to be at a little more elevated level than you might have typically seen it as we continue to move forward on improving the condition and cleanliness of the restaurants are some of the investments you make back in such as janitorial costs flow through that line as opposed to labor. So where you might have thought that something might be going to labor, it’s actually going into OpEx as it relates to more hours for the janitorial side of the equation.

And again, you just have a number of things in there that are still kind of in an inflationary environment. I think most of those will start to normalize and mitigate as we move through the year. But you have to build some expectation of continued inflation when you think about things year-over-year. So yes, so I think you’ll see the absolute dollars tick up over what you just cited. There’s also very good chance of that’s where sales leverage also starts to hit some of those items too. So on a percentage basis; I think it should be a fairly stable to possibly slightly improving on a percentage basis of sales. But we’ll make the right calls as it relates to some of the expenses that are kind of run through that as it relates to advertising and R&M as we kind of move forward.

Brian Vaccaro: Okay. Okay, great. And then just two quick housekeeping items. Do you have the percent of sales that was off-premise for each brand in this second quarter?

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