Jeff Farmer: Alright. Thank you for that. And just a quick bookkeeping. I think you qualitatively called it out or mentioned it, but could you just provide the commodity and wage inflation levels you saw in Q3?
Matt Clark: What was the specific commodity, I think wages were around 4% to 5%. And then we saw 2% to 3% on the commodities.
Jeff Farmer: Alright. Thank you.
Operator: Your next question comes from the line of Jim Sanderson with Northcoast Research. Your line is open.
Jim Sanderson: Hey. Thanks for the question. I wanted to talk about unit growth. And if you could provide some more feedback on how to look at store closures to net against the new unit openings for the 7% growth rate you mentioned for 2024 and then the 16 new units for 2023. Thank you.
Matt Clark: Jim, this is Matt. So typically, we evaluate restaurants on an annual basis for where their cash flow is, the life of the lease, all of the normal attributes. And I think we have probably averaged about one closure a year. So, I just don’t think that’s a significant driver of where we think aggregate unit growth will be. And if we are closing a location, it’s going to be net accretive to us in any event. And so I think I would just kind of say 7% is going to be gross and net, roughly the same, give or take a unit a year kind of thing.
Jim Sanderson: Alright. Thank you. Just a quick follow-up, could you provide a little bit more detail on the same-store sales trend for North Italia breaking it out by traffic and mix and pricing going into fourth quarter.
Matt Clark: We haven’t done the mix versus traffic versus anything, but we do provide the prices Jim. Okay. It’s about 8% and 5% comp.
Jim Sanderson: Excellent. Thank you very much.
Operator: Your next question comes from the line of Brian Vaccaro with Raymond James. Your line is open.
Brian Vaccaro: Hi. Thanks. So, just two quick ones for me. I am sorry if I missed it, but what was the off-premise sales mix at Cheesecake Factory in the quarter?
David Gordon: Brian, this is David Gordon. It was 21% same as it was…
Brian Vaccaro: Okay. Great. Thank you, David. And then, Matt, can you just – on the menu pricing comments at Cheesecake Factory, did I hear correctly, you plan to take around 2% in February, so you would be settling into the 4% range basically moving into the early part of ‘24, just wanted to clarify.
Matt Clark: Yes. Brian, this is Matt. We haven’t finalized that number, but we do feel like 1.5 to 2 on a regular basis is kind of where it’s heading back to. And the only thing I would say is it depends on geography, right. As we noted, just to carve out, and I think some others have done this. We are going to look at California and what the FAST Act impact is, right. So, it may not be the same everywhere, and it may not add up exactly that way, but we feel like those are some guardrails for use today.
Brian Vaccaro: Alright . Great. I will pass it on. Thank you.
Operator: Your next question comes from the line of David Tarantino with Baird. Your line is open.
David Tarantino: Hi. Good afternoon. Matt, I think your guidance for next year as you gave it assumes margin expansion and maybe I missed this, but could you maybe explain how you are going to deliver that margin expansion? And I think your comments suggested pricing and inflation should be roughly match, so I guess what is the key driver of the margin expansion in that scenario?
Matt Clark: Yes. So, a couple of things. One, I think that it does imply that we think we will be in positive territory for comps, and we think there could be some leverage opportunity. I think in the Q1 specific scenario, certainly, we are lapping really heightened commodity inflation there, too, as well. So, I think that there is just some natural progression. Right now, on a sequential basis, just from a pure operational standpoint, we are driving some incremental profitability in the range of 25 basis points to 50 basis points. So, there is some of that’s the four-wall. We target getting a little bit of leverage off of G&A as well. So, I think within that range, David, particularly at the high end of the sales range, you are going to get a little bit more from the four-wall piece of it than at the low end, which is relatively close to where we are today. So, it’s a combination of those factors.
David Tarantino: Great. And what sort of traffic assumption are you making for next year when you set either the revenue or the margin target?
Matt Clark: Well, I think we are kind of looking at a combination of traffic and mix, right. Because they sort of, they have been going a little bit of hand-in-hand, and I think it’s important to accommodate for both of that. Looking at some of the industry outlooks that we have gotten from some of our advisors as well as some of the other guidance, I think it feels prudent today to expect that those two combined are negative, probably in the low-single digit range.
David Tarantino: Got it. Thank you very much.
Operator: Your next question comes from the line of Brian Bittner with Oppenheimer. Your line is open.
Brian Bittner: Thanks. I wanted to ask about net income margin guidance, specifically for the fourth quarter. I think you said net income margin is in a 4.25% range. And I am just wondering the path to get there because I think if you assume a normalized tax rate, it would suggest like 200 basis points of operating margin improvement, and that would be against a comp that I think is implied to be like 2%-ish at the midpoint of your revenue range. So, is that the right way you are thinking about 4Q, or is there a big tax benefit coming in 4Q that we should be modeling?
Matt Clark: I think this is where we – Brian, this is Matt. This is where the sequential modeling with the year-over-year pricing, I think always gets a little bit hung up in the modeling, right. Because think about the components we are talking about. As Etienne noted, the pricing for the quarter is going to be 7% to 7.5%. And yet, the inflation for wages are going to be low to mid-single digits, and the inflation for commodities are low-single digits, right. So, effective pricing over effective inflation in our key categories creates a pretty significant margin pickup for four-wall. And remember that because we were really behind on pricing last year, so we ended up taking that 3% roughly on December 1st. And so we are lapping that benefit that we didn’t get in the fourth quarter of last year. And I think that’s the big difference.
Brian Bittner: And when we think about next year, the 4% to 4.5% net income guidance, as David Tarantino said it implies margin expansion, but can you shed some light on what the tax rate assumption is in that range so we can think about, how to think about…?
