Rick Cardenas: Well, let me start by saying, I think we serve about 100 — about 1 million guests a day. across all of our brands, or more than that actually. And so we get a lot of people coming in. Our frequency hasn’t dramatically changed over the last year. And our eClub is roughly between 25 million and 30 million guests, that’s active eClub. We have more members, but they’re active. And so we have ways to communicate with that and that’s across all of our brands. And so we’re really confident now that we’ve got our, as I said earlier, on the income demographic back to where we were pre-COVID, we know how to operate in that environment. We’re seeing some shifts at the above 65-years old, and we’ve talked about that before. They’re shifting a little bit more to lunch a little bit earlier to dine, and that’s great. But so those are the only real major shifts we’ve seen.
Operator: Thank you. Next question is coming from Sara Senatore from Bank of America. Your line is now live.
Sara Senatore: Great. Thank you very much. Just a couple of clarifications, please. The first is in terms of the gap in the industry. I know you mentioned that it widened from January to February. But I was curious if — it’s also been — have been widening before that from the fiscal 2Q to 3Q? I think historically, the gap has tended to widen when trends, industry gets tougher because of that sort of more selective consumer but I wanted to see if that was the case, kind of stepping back? And then the other question I have is, obviously, gotten a lot of questions about the low income. I wanted to understand how perhaps this normalization will serve as a headwind in the coming quarters? So for example, you’re back at the pre-COVID levels now.
Does that continue to be a bit of a headwind for the next three quarters until you lap this quarter? And are you thinking about offsets in the form of better mix? So perhaps that normalization continues to show up from a traffic perspective, but by the same token, less of a mix headwind. Thanks.
Raj Vennam: Okay. Let’s start with the gap itself. So if you look at the gap in January, the gap narrowed a bit, we think primarily because of the geography and the footprint we have that has disproportionately impacted by weather. If you look at the concentration of where the weather was, that was a higher concentration of our restaurants. And we think that’s part of the reason the gap was not as strong. Now the other part of this gap narrowing this quarter related to the last quarter was the fact that we’re wrapping on huge gap from a year ago. We had a very strong performance a year ago. So that’s really how we would kind of frame that. We’re not — look, we’ve been clear that it’s very hard to maintain multiple hundreds of basis points of gap forever.
We’re going to have that narrow over time. But things we’ve done with our pricing and our value equation have helped us continue to take share, and we’re happy with that. And as Rick said earlier, in an environment when there was intensity — in promotional intensity, more so than ever, we still outperformed, and we were able to gain share. So that’s the piece on the industry. Now as you look at the income mix, yes, we — so this has been an ongoing shift. So we’ve talked about in Q2 that we’re starting to see a shift a little bit more towards the pre-COVID mix. So we are — so as we wrap — as we looked at Q4 now, Q3 that just ended, we were right essentially where we were before COVID. So yes, the next three quarters, there’s a little bit of moderation of getting that, but it’s not as big as it was this quarter.
If you think about — we don’t think. I mean we’ll have to see. But based on the data we have, what we are seeing, it should be — it should moderate. But we would expect the next two to three quarters to kind of back to those levels. From a mix perspective, though, that mix, we actually think mix is going to get better. We expect mix to continue to moderate. I think I mentioned earlier that Q2, Q3, we saw an improvement. As we get into Q4, we should see that get better. And as we get into next year, we expect this to be not a huge headwind. And we’ll see how that plays out, but that’s our best thinking at this point.
Sara Senatore: Great. Thank you very much.
Operator: Thank you. Next question today is coming from Gregory Francfort from Guggenheim Securities. Your line is now live.
Gregory Francfort: Hey, guys. Thanks for the question. A lot of what I wanted to ask was asked, but I wanted to ask you about the commodity outlook and thoughts into the fourth quarter. Maybe what’s implied in risks to the upside or downside on that going forward? Thanks.
Raj Vennam: Hey Greg, sorry. As far as — on the commodity side, if you look at where — what we expect, we expect third quarter to be around — the implied guidance would be around 3% for commodities inflation. And part of the reason it’s going up relative to where we’ve been is that everything except for seafood is inflationary as we move into the fourth quarter. Now not huge, but as you look at beef and produce are more in the mid-single to high single-digit inflation. And then most other categories are in low single digits. So a little bit of that is just a comparison to last year, a function of the levels last year. But from a coverage point, we’re at 75% covered for Q4 which is consistent with historical average levels.
