Brian Bittner: Thanks. Good morning. As it relates to the U.S. company-owned restaurant margins, they expanded this quarter for the first time in two years, albeit modestly, but a good indication of maybe your franchise store level margins as well. What was the biggest driver of this? Was it simply easing food cost inflation against still strong pricing? Or was there anything else to point to? And could this be a potential turning point for restaurant margin stabilization in the U.S. or maybe even perhaps some expansion moving forward?
Ian Borden: Good morning Brian, yes, thanks for the question. Look, I think what I would say on company-operated restaurant margins, we’ve been pretty consistent in — if you look at the full year 2023, we expect company-operated margin percent both in the U.S. and IOM to be in line roughly with where we landed in quarter 4, 2022. I think that view hasn’t changed. Obviously, we’ve had really strong sales performance this year, which is helping. And I think as you’ve heard me talk about before, the only way you sustainably work through periods of higher inflation in the business is obviously to continue to grow the top line and deliver strong performance. And that’s what we’re focused on. And we’re obviously very confident as we’re able to continue to do that that we’re going to be able to kind of see improved restaurant margin from a percentage basis performance.
In addition, obviously, to the really strong dollar growth that we’re seeing on the back of those strong top line sales. So, I think no change to what we expect for the full year this year. But I think, we feel like we’re in a really good position with the momentum we’ve got across the business.
Chris Kempczinski: The other thing that I would just add on the [Macacos] side, but it’s also something that we’ve seen with franchisees is they’re experiencing these gains even though roster sizes are growing. And I think part of the benefit that we’re seeing is turnover is down. So, we’re – even as we’re expanding roster sizes in our Macacos restaurants, the team has done a really nice job, and we’re seeing turnover levels down pretty significantly from prior year. And all of that has benefits of what – associated with it, of course, you have less training, but you also have improved execution. So, I think that’s one thing that we’re seeing that also is to extend, out to franchisees, franchisees, roster sizes are up versus last year.
Applications are up significantly. So, I do think to this question about is something turning, on the labor side in the U.S. We’re definitely seeing a turn there to the positive in terms, of having our restaurants fully staffed and having lower turnover as a result of that.
Mike Cieplak: Our next question is from Brian Harbour with Morgan Stanley.
Brian Harbour: Yes. Thank you. Good morning. You commented sort of on the U.S. side, but just within IOM and IDL same-store sales, wondering if you had any comments on kind of the check versus traffic component. And then also just within the U.S., I was curious if you had a sense for roughly how much your California franchisees will be seeing wages go up and how much pricing that might presumably take to offset that?
Chris Kempczinski: Yes. I’ll cover just the California question, and then Ian can cover the rest of what you laid out, specifically around IOM. But as you mentioned and noted, California, with the passage of the recent legislation, there around what that’s going to do to wages, there is going to be a wage impact for our California franchisees. I don’t think at this point, we can say exactly how much of that is going to work its way through pricing. Certainly, there’s going to be some element of that that does need, to be worked through with higher pricing. There’s also going to be things that I know the franchisees and our teams there are going to be looking around productivity. How all of that plays out, there will certainly be a hit in the short-term, to franchisee cash flow in California, up to know exactly what that hit will be because of some of the mitigation efforts.
But there will be a hit. Longer term, what we’ve been talking about with our franchisees is this is an opportunity for us to gain share, because this is an impact that’s going to hit all of our competitors. We’re in a better position. We believe we’re in a better position than our competitors to weather this. And so let’s use this as an opportunity to actually accelerate our growth in California and accelerating our growth along with some mitigation. The two of those in combination is the best way to minimize any impact long term on franchisee cash flow. With that, on California, let me have Ian just cover the rest of your questions on IOM.
Ian Borden: Yes. Good morning, Brian. So let me try and give you a bit of texture on kind of IOM and IDL, I mean I think you’ve obviously seen the headline comp numbers for the quarter, which I think are obviously really strong. And I would say that the consistency is the broad based and I think consistency of the momentum we’re seeing, which just goes back to what we’ve talked about earlier today, which is our Accelerating the Arches strategy continues to really deliver pretty consistent results across the business. I mean, of course, when there are 100-plus markets, there are always a couple of markets that are maybe dealing with more kind of headwinds than others. I mean, I think in IOM, France would certainly be one of those markets.
We spoke a little bit about that on the quarter two call. But I think if you look at the IEO sector in France still hasn’t recovered back to where it was in 2019. I mean we have generally been taking share in the marketplace, but I think the consumer sentiment, with everything that’s going on, which is consistent, obviously, across all markets, higher inflation, higher interest rates. And then I think in France, as we worked through the summer, you saw a level of social unrest. You saw some kind of violent activity coming out of that social unrest. I think that’s all kind of dampened consumer demand. So I think our team in France is really, really focused on having good clarity on what we need to continue to do, and we’re going to continue to deliver even in that more difficult environment.
