Raj Vennam: Well, I think we’ve talked about inflation being one of the big things, right? When you look at construction costs have gone up quite a bit, especially when you compare it to pre-COVID, and we’re ramping up growth. So, we do have — I think this year, we said we’re approximately 55 new units and then we talked about next year kind of in that 50 to 55 as well. So, it’s really a function of the increase in construction costs. I think on the construction cost front, especially the FF&E for new restaurants has been growing quite a bit. And so that’s — it’s — you’re seeing a 25-plus-percent increase in those costs related to pre-COVID. So those are really the big drivers. But having said that, given the improvements we’ve made to our business models and where our unit economics are, we still have pretty strong returns on our new units, and we continue to want to grow that.
And that’s why we do want to try to target as much growth as we can. Now, we’re going to be disciplined in how we do that. But we have — we’re being a little bit more selective, but still, we feel like we have opportunity to take share.
Operator: Our next question comes from David Tarantino with Baird.
David Tarantino: My question, I guess, Raj, if you could just tell us what level of pricing you are running in the fourth quarter. And just trying to frame up the comp guidance of 3% to 5% and what might be implied from a traffic perspective in that number.
Raj Vennam: Yes. David, I think we have — basically, we’re going to be under 6%. So call it, 5.5% to 6% is probably what we’re running or expect to be running in Q4.
David Tarantino: Got it. And then, I guess then the guidance implies maybe slightly negative traffic. And I was wondering if you or Rick could you comment just on why you think that is? And is it a macro issue, or is it something else in your view? And maybe, Rick, I’d love to hear your thoughts on the current macro environment given all the volatility we’ve seen lately. Just how are you thinking about kind of the outlook for the next several quarters?
Rick Cardenas: Yes. David, let’s talk about the macro for the macro consumer. But if you think about where our guide is for the next quarter, if you look at it versus pre-COVID, you take out the Omicron change and the Never-Ending Pasta Bowl change that we did in Q2. When you think about pre-COVID, our trends are very similar, even what we’re thinking about for Q4. So — but as you think about the state of the consumer and the state of the economy, we’ve said this in previous calls, there’s been a shift in spending from durable goods to services, restaurant businesses are benefiting from that. What’s interesting is, for most of calendar year 2022, customer sentiment was pretty bad, but consumer spending was significantly high.
So even though they were thinking that things were bad, they were still spending. And so, we think as long as the unemployment rate is low and wages are increasing, consumers should continue to spend. Casual dining same-restaurant sales improved sequentially each quarter during the fiscal year and our positive gap to the industry improved, especially in traffic. So, we feel like what we’re doing is really helping us. I will also say the data from our proprietary brand health tracker suggests that most consumers are not pulling back from restaurant visits and they do not appear to be trading down from full service to limited service based on the data that we have. Now there is a tension between what people want and what they can afford. Consumers continue to seek value, which is not about low prices, consumers are making spending trade-offs.
