Brinker International, Inc. (NYSE:EAT) Q4 2023 Earnings Call Transcript

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Brian Vaccaro: Thanks and good morning. I just wanted to circle back on the market share discussion. Just so we’re on the same page Joe, and there’s a lot of different industry benchmarks that are out there. Would you be willing to provide any quantification of Chili’s relative traffic performance, moving through fiscal fourth quarter and what you’ve seen quarter-to-date?

Joe Taylor: Again, what our readout is, we saw improvements in traffic as we move through the fourth quarter, that momentum is continuing as we move into the first seven weeks here of – today’s the end of the 7th week of our of our fiscal year. During that time we’ve also seen a reduction in the negative traffic gap to the industry, which has also continued into – so the overall comp positive gap to the industry continues to widen, much of that driven by a shrinkage of the negative gap to the industry on traffic.

Brian Vaccaro: Okay. And on the fiscal fourth quarter, the traffic at Chili’s. I think last quarter you had said the Maggiano’s classics, we’re moving that and discontinuing that, what was a 60 basis point headwind to traffic. Could you help us frame how much of an impact that was here in the fourth quarter, now that it’s fully out of the system?

Mika Ware: So we – Brian, it’s Mika. So we closed the MIC brand, the very last day of the fiscal year, but we had closed some before that. So it’s still about 50 to a 100 basis points negative impact on the quarter.

Brian Vaccaro: Okay, great, thank you for that. And just a couple questions on the guidance, if I could? I think, Joe, I think you said 12 openings, gross openings for the year, should we expect relatively flat on a net basis, given kind of continued modest closures and relocations and that sort of thing?

Joe Taylor: Yes, that’s a good way to think about it.

Brian Vaccaro: Okay. And then I guess on the EPS guidance, could you level set us on what tax rate is embedded in your guidance and any directional guide on what you expect on general and administrative costs?

Joe Taylor: Yes, on both of those two, we’re expecting a mid-single digit, 5% to 6% kind of tax rate at this point. Obviously, you look at that and adjusted based on the flow of your credits. We had some really strong FICA and WOTC credit activity this last year, driven a lot by dining room traffic coming back in, and increased overall check, which actually drives up tip, so good credit components there. But we think we’ll be in that mid-single-digit range for the fiscal year. That’s what is implied currently in our guidance. And from a G&A perspective, I expect G&A to be up year-over-year, probably in the $10 million to $11 million range. Most of that is driven by various adjustments on comp related items, from stock comp, to payroll, to 41 k participation. And then there’s $2 million to $3 million of incremental spend from an IT perspective that makes up that that differential.

Brian Vaccaro: All right, thanks very much. I’ll pass it along.

Joe Taylor: Thanks, Brian.

Operator: Your next question is coming from Brian Harbour with Morgan Stanley.

Brian Harbour: Yes, thank you. Good morning. Maybe just kind of a bigger picture question on sales. You’ve seen kind of this improving trend more recently, and I think some of your peers have as well. Are you assuming in your guidance, that sort of – that that holds up, do you think there is anything that’s helped here kind of at the, at the end of the summer, just as we start to think about the next couple of quarters. I realize that maybe there is a tougher lap in the calendar first quarter as well. Could you talk about how you think about that?

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