Brian Vaccaro: And then on the dollars of ad spend, Mika, on the last call, you provided some helpful color on sort of what the dollar spend was in the quarter and how to layer that out just to set reasonable margin expectations. I don’t know if you have that in front of you, but could you share that if you do, and that’ll be it for me.
Mika Ware: Yeah, and so, and they do alter just a little bit as we move and that it’s a big ad spend, but for the third quarter, I would expect about a $20 million increase year-over-year in advertising spend.
Operator: Your next question is coming from Chris O’Cull with Stifel.
Chris O’Cull : Kevin, the company mentioned the slowing comps toward the end of the second quarter. Obviously the weather impacted the start of the third quarter. So I guess I’m just curious what gives you confidence to raise the total residue guidance for the year?
Kevin Hochman: So, let me just share with you how we’re thinking about the business, and I’ll let Mika chime in if there’s any additional detail on the numbers that you want to give. So number one, we haven’t seen any material change in the operations of our business. Like the measures that we track internally, which we believe are a key indicators of what will happen in the future, they continue to get better. So, we didn’t talk about it in the prepared comments, but things like food grade scores, server attendance scores, intent to return they all continue to improve. And so that gives us confidence that the strategies that we put in place just continue to work. And so putting forward the advertising that continue to drive the business, we don’t believe we’ll have any — we won’t see any different changes to the outcomes of the things that we’re doing.
So we feel very confident in the plans. We don’t look at the weather being a long-term thing. So, certainly, we look at the measures of how we’re doing versus the industry when we see an event like weather to make sure that the continued operational performance ahead of our industry peers is continuing to happen. And we’re seeing that. So there’s nothing that would tell us that anything operationally has changed in the business or that our strategy needs any kind of tweaking. I mean, the other thing that we haven’t talked about is the success of the barbell strategy. So we’ve talked a little bit about the consumer pulling back, who’s coming in for 3 for Me. But we’re also seeing very healthy trends in the other areas. So, that’s really allowed us to continue our margin improvement, even though as you guys have seen, mixes pull back a little bit.
So we feel very confident about the operational metrics of the business. We don’t think anything has changed from what we’ve been looking at, and that’s why we’re very confident in the balance of the year.
Joe Taylor: And Chris, this is Joe. The change we made was raising the lower end of that guidance up, I mean, again, we’re continuing to outperform where we thought we would be. From a top-line perspective, we have much better insight to the ability to move the needle from an advertising perspective. So that 11 weeks that Kevin was talking and the sustainability of those sales that come out of those gives us a lot more confidence as we move our internal expectations up further in that original range. So it’s really bringing the bottom up basically sending the message that we’re comfortable at functioning at, and the middle to upper middle parts of that range as we kind of go forward.
Chris O’Cull : And then Joe, just as a follow-up, was the EPS guidance increased a result of other line items besides just the revenue?
Joe Taylor: Yes. It was really a great reflection on the margin improvements we are seeing. Again, sales leverage contributes to those margin improvements, so they are obviously directly tied together. But not only the ability to move the revenues up and get that incremental sales lever, but continuing to make some progress on further margin expansion, as we go into the rest of the year.
Operator: Your next question is coming from John Ivankoe with JPMorgan.
John Ivankoe: As I hear about the effectiveness of advertising and you are going to think I’m trying to be your CMO. Why not significantly increase your percentage of spend where you currently are? I mean, if the industry, I mean, at least it used to be both consider that you could get $2.5 of sales for every additional dollar of advertising that’s something that you would want to do. I guess how far are we, do you think in terms of just kind of getting back to that marginal level to where you are deciding it’s like, additional advertising brings additional profitable sales versus not. I mean, if you were to completely clean slate ’24 is maybe you can think about ’25 what would that advertising be as a percentage of sales?
Kevin Hochman: Let me answer how we think about it and then I’ll let Mika talk about the actual percentage that you are asking for, John. So number one, we are making a pretty big bet on the increase in advertising. So we did 20 incremental million last fiscal this year, it’s more than 50 more million incremental on top of that. From my perspective, I feel like we have been moving very fast to reset demand creation in this business. And it can be point one is that the numbers are pretty significant. Number two, it takes some time to build capability to do all these things right, so obviously, we had to rebuild our TV capability. We had to rebuild some of our insights capability. Now we are in the middle of rebuilding our CRM program to be much more effective and efficient.
So these things take time. So even if I said our endgame is to continue to move that higher in the next couple of fiscal years, it takes time to build capability to be able to effectively deploy those dollars. And so far, the team has done an excellent job. George Felix and his team couldn’t be more proud of them on how they continue to build our capabilities. I think we have done a great job with TV and now we are really focused on digital. I would expect that to continue to ramp up we continue to build that capability. So the answer to your question, John, is we are spending significantly more and investing more in the business, but we also have to continue to build capability in order to effectively deploy those dollars.
Mika Ware: John, it’s Mika. Just to back that up is, we doubled our advertising as a percent of sales. So last year we were about 1.5% and this year we are just at 3%, so that’s getting close to pre-COVID level before we pull back on that. The pieces are a little bit different like Kevin said, but we are definitely going to continue to look at that line and invest where it makes sense.
