Brinker International, Inc. (EAT) Earnings Call Transcript & Summary

Good morning, everybody. I'd like to welcome you to the 2023 Brinker International Investor Day. Thank you to everybody that is joining us here in Dallas. We're happy to provide such a nice day here in town as we kind of head into our summer months. It's only going to hit about 90 today. So it will be a nice cool and relaxing. Also, welcome to all of you that are watching and on the webcast that are taking part in the presentations virtually. As we move throughout the day, we're going to have a series of presentations, and we're also going to do a couple of Q&A sessions. We want to make sure we have plenty of time to answer the questions that either come up out of the presentation so that you brought with you today. For those of you that are on the webcast, there's also an opportunity through a link that is established there for you to be able to submit some questions. So we'll try and take questions both in person and to the extent we get any online, we'll deal with that in the Q&A also. So today, full agenda and what we really want to do is lay out for you our thinking on the strategies that are going to drive the business for the next 3 to 5 years. And there organized around our 4 key pillars, which are team members, hospitality, our food and beverage, which we define as the Core 4 [indiscernible]. You'll get a good in-depth dive into all of those as we move throughout the day. We're also going to talk a lot about how we're going to speak with the louder voice and have some great presentations from the marketing team and how that is going to create more breadth and brand awareness as we kind of move forward. There's a good array of presenters, as you see here, senior leaders of the company that are going to walk us through the different presentations and also participate in the Q&A. Now before we get going on that, I do have obviously that -- a little bit of the legal side of the equation to deal with. So what I want to make you aware of is obviously anything that we're talking about today that is not a historically reported fact does fall under the safe harbor statements as it relates to forward-looking statements. I'm not going to read it for you, but here it is on the screens for your reading enjoyment, and I want to make sure that all of our commentary and thought processes and anything we're talking about on a go-forward basis is under this safe harbor statement. With that, let's get started on the presentations. [Presentation]

So welcome, everybody. I'm the CEO and President of Brinker International. I'm really excited that all of you are here in person. Thank you for those that are joining us online. We're excited to have you here to experience everything that we've been working on Chili's and Maggiano's. And it's a new day at Brinker, and I hope you guys leave that -- leave today believing that, and we are excited to share what we've been working on to better serve our guests and our team members. You'll hear from key leadership today about what we're working on, the progress that we're making and why we believe these are the right decisions to unlock value in our business. And then for those of you that are here in person, after the formal presentation, we'll be able to get up -- we'll go over to the test kitchen and you'll be able to taste and also drink many of the innovations that we're going to see today and then for those of you that are online, most of this innovation that we're going to talk about today is actually now, as of a couple of weeks ago with our new menu drop is in your local Chili's. So take a friend or take many friends, and please make sure you enjoy those things and see it in person. And then send us a feedback of what you see in the restaurants, but we're very excited to share all that innovation. Okay. So a quick reminder of our brands at Brinker. So we have Chili's Grill & Bar. We've got Maggiano's Italian restaurant, and we've got our virtual brand, which is It's Just Wings. For perspective, Chili's is roughly 84% of the business. Maggiano's is 13%, and then It's Just Wings is just a little over 3%. We own most of our own restaurants, and most of the business is in the U.S. So even though on this slide that you're looking at, it says 78% of the restaurants are domestically, when you look at sales and profit, it's considerably higher than that. And then the only other thing on this slide that's important to note is we've eclipsed over $4 billion of sales for the first time in Brinker's history. What I'm really proud of this year is I think we're doing it in a different way. So we've been able to rightsize the virtual brands as a part of that growth. We have less deep discounting into the business. A significant percentage of our checks are now not going on deal, right? So if you think about we had record growth and we eclipsed this $4 billion route, right? But we've also been able to take out some of those sales that, quite frankly, aren't as profitable, right? And that will continue to cycle through the business. But as long as we continue to grow and we see that good sustainable growth, the growth that is really margin accretive, I get excited about where the business is headed. So we hope that you leave today with 3 important things. Number one, that you understand the multiyear strategy to unlock brand value to unlock value for Brinker to unlock value for our shareholders. It's critically important to us that you understand why we're making the decisions that we're making. Some of them are not as conventional as you've probably seen in the past. And -- but we do believe in them. We do think that will create value for the business. The second is there are definite green shoots in the business right now from the strategy coming to life. And so we are going to talk about some of the progress that we've made in the last 9 or 10 months due to the changes that we're making inside the restaurants, that are making the experience better for both team members as well as making the experience better for guests. And then we hope that you'll leave with a clear path on how we're going to sustainably grow this business and do that in a profitable way, right, where we expand margins, we grow the right way, we grow sustainably. And that's -- these are tough decisions that we're making to do that, right? And it's really important that all of our stakeholders understand why we're making those decisions. So you understand that the long term -- we're looking at the long term of the business on how we're going to grow this business for many, many years to come, okay? So let's get started. And what I wanted to start with is our value creation strategy. And I think you guys, especially -- I mean we have a lot of expertise in this room that know restaurants, right? And you know that in casual dining, there's a couple of concepts that have done this really well for a long period of time, where they have sustainable growth, they're expanding margins, right? They're delighting guests. And the formula really isn't that much of a secret. And if you're looking at the formula right here, and this is the formula that we want to follow, right? Number one, a differentiated brand experience, right? There's literally hundreds of thousands of restaurants that are -- that we're competing against. And a lot of it is so sameness, right? And the good news is we have a very differentiated Chili's brand that we're very excited about and we'll talk about. And Maggiano's is also a very differentiated brand, right? And the key is we've got to live that brand experience in everything we do, was the menu, the branded service model, the atmosphere, how the restaurants are decorated and remodeled, right? Everything has got to ladder up to that positioning because if you live that positioning and you believe in the positioning, you're going to grow traffic over time and you're going to grow the business, right? The second one is the concepts that win, they have a few craveable signature food items. So when I think of X, I go to concept Y, right? And the good news is we have a lot of craveable signature items that people know us for at both of the concepts, right? Now the challenge is how we focus on them, how do we make sure that the best they can possibly be. And then how can we innovate off them because we knew those things we're going to drive traffic. We're going to drive sales. We're going to drive margins, right? The third one is a consistently good experience, hot fresh food or cold drinks served in a fun and friendly atmosphere, right? It's kind of the basics of why people come to casual dining. It's like this is the 1 hour I want to be waited on, I want to be served. And we've got to make sure we deliver that every time. It doesn't matter what time a day you go into one of our restaurants, what day of the week, what area of the country, you've got to have a consistently good experience and we need to do that all in a fun and vibrant and well-maintained atmosphere, right, critically important. So you say, okay, these are kind of the basics and the fundamentals of casual dining and restaurants. But here's the problem. It's not easy to do these things. That's why there's not a lot of folks in casual dining that have done this year after year, expanding margins, growing sales, right? And the former CEO, many of you probably know him, Doug Brooks, he's still quite involved in our business, and I talked to them all the time that we're having lunch tomorrow. And we were talking about this and we're getting back to the fundamentals. He's like, you know Kevin, the fundamentals, it seems easy, right? You can talk about it's really easy, but they're really hard to do, right? And then you get distracted or you get a challenge in the business and then you kind of lose your way. We've got to stick to this plan. We believe if we stick to this plan, we'll create value for Brinker, we'll create value for shareholders. We'll grow sales, will expand margins, we'll grow traffic, all the right things that we can do this in both of our businesses, will lead the value creation for our business, okay? And pretty much everything that you're going to see today focuses on that slide, okay? So now let's jump into the Chili's strategy. So I wanted to kick off the day with my initial impressions of Chili's strength, so we'll go through that. I'll walk you through the new Chili's that we're building. So kind of on all the key things, what are you going to see differently in the Chili's business. And then we're going by Aaron, who's our Chief People Officer. She's going to talk about the 4 key strategies or pillars that we have in the strategy of how we're going to bring this vision to life, the choices that we're making that we think will deliver that model I just showed you long term. And then I'll come back and wrap it up and talk about specifically why we think those choices are going to create value for our business. So let's start with Chili's strengths. And so about a little over a year ago, when I was talking to the Board about taking this job, I did a lot of go visits to Chili's to understand the business, what were the challenges I talked to a lot of team members. They obviously didn't know who I was. I watched guests, interact with the business. I've now been here a year, so I have some -- even a better idea of what our strengths are. But what I wanted to do was walk through a little bit about what I think we need to build this whole foundation off of because this brand has some towering strength. I would be a miss not to start building the whole foundation off of that versus starting a new. So the first thing that I noticed was -- and you guys probably all know this, too, is we're incredibly strong iconic American brand, right, like who hasn't heard of Chili's. Everybody has got a story when they went to Chili's, this is my first day, or I went there after my kids sporting event, and we've had lunch or dinner there. I just went out with Bud and had margaritas and chips and salsa, right? But it's always associated with something that it's a good time, right? Like we're kind of the good guys in casual dining. We have a little bit of a family slant, right, but we also have an active environment bar. We're the good guys in casual dining, people want us to be successful. The second thing I'd tell you about the brand is it's got a very iconic like logo, like you don't need to write the word Chili's like you see that when you're driving by and you immediately register what Chili's is and what it stands for, right? That is critically important. In fact, this brand is not only recognizable, very recognizable in restaurants is one of the most recognizable brands in the United States for any industry. It's something that you immediately recognize. And then the other thing is we have a lot of key things that we're known for. We have all these menu items like Southwest Egg Rolls and Baby Back Ribs and our famous Presidente Margarita and chips and salsa the list goes on and on. And these are equities, brand equities that brands could take decades to build. In fact, it probably took us decades to build these equities, right? And our competitors would love to have these equities, right? Now I've heard from many of you, and I've heard some others that, hey, maybe this brand isn't as distinctive as the new leadership thinks it is, right? And that might be the case, but our job is to awaken these equities, like that's the value of the brand. And George Felix, who's our Chief Marketing Officer, he's going to come up and talk to you about the world of Chili's and how we're going to reignite this brand, and we awaken those equities that really make us special in the marketplace. The second towering strength that I saw was a relevant food offering. And so you're going to hear this a lot today, our Core 4, which are burgers, fajitas, Margaritas and our chicken tenders or chicken crispers is what the branded chicken tender that we have, right? And why that's important is we're playing in the right segments. So those 4 items make up about 40% of our sales. They are huge growing segments that Americans eat and drink, right? Burgers are consistently a top 5 item that Americans eating drink, right, and certainly fries too, right? Boneless fried chicken has been growing in the last 30 years. So I'm not sure to be honest, but I'm guessing it's going to continue to grow, right? And we have a large business in that. Tequila and margaritas are now the #1 drink in America, so tequila recently over tipped Bourbon as the #1 spirit. And then Tex-Mex which is fajitas has been growing for a couple of decades now, right, as you think about the changing demographics of the United States. So we are in the right segments, right? We don't have to reinvent and go into some other segments. We just got to build on this 40% of business that make it a whole lot bigger, right? The third carry strength I saw was size and scale, and I'm talking to a group right now that understands the importance of size and scale in the restaurant industry. Like think about all of the costs that are coming our way, all of the innovation that we need to do, technology, operations, purchasing, even just attracting and retaining talent, much easier to do in a business that you have all those growth opportunities in one that is independent or a smaller opportunity, advertising their huge scale synergies and advertising and much, much more. So it's really important to be big in restaurants. And I think we all witnessed that during the pandemic when the bigger got stronger and grew market share, the smaller ones had trouble competing, right? The other thing I get excited about our business model when I was looking at it is we own most of our own restaurants. So if there's always margin opportunity as we think about really transforming the business, most of that value will accrue to Brinker and our shareholders. That's personally very exciting to me to be a part of a transformation where we get most of that value, then we capture it. So huge opportunities in our size and scale and our ownership model. And then the last one is our Chilihead culture. And everybody really talks about culture. I do think it's a differentiator for Chili's and I've been here for a year. I think there's 2 things that separate our business from a lot of other businesses. One is most of our -- many of our executives are promoted from within. They started either as hourly bar tenders or hourly servers, or they were heart of house, a cook, and they worked their way up because we own most of these restaurants. We have a large business and you can be anything you really want at this company. It's a super cool thing. And what that means for us is we have a long tenured people, that's one which is really good in a world where turnover is a challenge, right? And the second thing is our executives, they know the business, right? These are not people that need to learn a business or they need to go get their hands, they already lived it, right? So 2 of our folks that will be talking today on stage they start as hour lease 20 and 28 years ago, right? And you're going to see, as they talk about the business, they know this business. And you guys see a lot of leaders, right? Some know the business, some don't. Our leaders know the business. And that's personally really exciting to me because we have operational challenges we've got to get after, right? So the other thing I would tell you about the culture is we have this thing called Chiliheads. So you'll hear this today. We also call them Brinker heads. It sounds a little weird. Like it was a little silly to me when I first heard it, but now I've been in the business a year, I totally get it. Chiliheads, we don't take ourselves too seriously. We love to serve the guests, servant leadership is like part of the DNA of a Chilihead. And what that means is they want to serve each other. So they want to -- like there's nothing better than having a busy shift where you get your butts kicked, right? And you think about how amazing the service was, right? The teams love that. The other thing they love to do is they love to serve guests. That's why they joined Chili's and they want us to get out of our own way so we can go focus on winning with the guests. They love winning with the guests, right? And I think between being a Chilihead and his idea of tenure and growing from within, it's a very special recipe that maybe there's a few other concepts that have it, but most don't. And I think that is a differentiator, especially in this new day and age of where we're headed. Okay. So now I'm going to shift gears, and I'm going to -- from outlining our strength, and I'm going to talk about the new Chili's that we're building. And here's a snapshot on this slide of the new Chili's that we're building. It's a vision that's much more focused on the guest and the team member and winning with them. It's a vision that really respects the power of the Chili's brand. So we believe in the Chili's brand. We believe we can grow the business. We don't need to go get other brands, like this is the brand that we're going to grow with, and we think it's going to accelerate the business. It's now a business that's willing to invest in top line growth in order to grow sales and margins. So we are now in a growth mindset, our leadership teams in a growth mindset. We see the opportunities in the business, and we want to get after it. And I think as -- when you leave today in a few hours, you're going to see this is a business that has a growth mindset now. We're super fired up about winning with the guest, expanding sales and growing margins, okay? So let's start. I'm going to touch on a couple of these ideas. I'm not going to touch on all of them because we got others that are going to come up. But I think I'm going to touch on 4 of them right now. The first one is our Core 4 focus. And we've talked about the importance of these segments, right? But let me get a little bit deeper into the strategy of those segments. So the first thing I'd tell you is we need to make these 4 segments the best they can possibly be. So we're talking about handshake premium Margaritas. We're talking about sizzling fajitas. We want the best burgers and fries in the industry -- the best burgers and fries in the industry, and we need a modern chicken tender lineup because young families are the ones that are eating these chicken tenders, right? When you look at chicken on the bone versus boneless chicken, it's critically important that we modernize what that offering is. And George -- and you'll be able to taste that later today of what we've just done, but it's a major undertaking, and it's going to make a major impact in our business, right? In each of these 4 segments, we have 2 simple strategies. The first one is we need to have the most competitive best offerings in each of the 4, which means delicious food consistently served and clearly differentiated for Chili's, right, meaning things that you can't get anywhere else in these Core 4 segments. The second one is we need to have in each of these segments, what we call a barbell pricing strategy, which means no matter how much money you come in with, you need to be able to partake in these segments, right? So for example, in Margaritas, we will always have a margarita of the month. It will always have some high-quality spirits in it. It will always taste amazing, right? It's going to be $6 or $7, right? So if you compare that to the drinks that you have and the margaritas you have, that is incredible value, right? We're always going to protect that, right? Now if you want to get some more benefits like you want Patron BlackBerry Margarita or you want our Signature Presidente, which is a larger serving and a beautiful shaker glass. That's going to be $9 or $10. And then you can go all the way up to our new Casamigos margarita, which is a super premium for those of you that drink tequila and that's a super premium tequila, and that's going to be $12 or $13, right? So if you only want to spend $6 or $7 for a margarita, you can get that, but you can trade all the way up depending on the benefit spaces that you want. And burgers, another great example is on the entry price point where we want to make sure people can get an amazing value -- an unbeatable value in the marketplace, you can get a $10.99 Old Timer with cheese, comes with fries, bottomless chips and salsa and the bottomless drink. And $10.99 is unbeatable. It's unbeatable in QSR. It's unbeatable in fast casual and it's certainly unbeatable in casual dining, right? Now if you want a burger with a few more ingredients or a little bit more special things like our Alex Burger, you're going to pay a few dollars more for that. If you want to get a double old-timer with cheese or best-selling burger, that's going to run over $15, right, to get almost -- but that's almost a full pound burger, right? That's different thinking around here. It's not just about innovating on the low end, it's making sure that we have a good, better, best strategy and that each of those items having unbeatable value in the marketplace regardless of whether you pay for the Casamigos margarita that might have cost you $20 in another bar or you're getting a $6 margarita of the month that features patrolling our premium spirits. So that's very important to us. I think you're going to see and taste a lot of that today, okay? Second big change that we're focused on is operations. And the idea here is successful restaurant concepts that have the complexity labor equation all figured out, right? It's all in balance so that we could handle what's coming at us, even in peak times, right? And there's really 2 things that we're doing here. One is we are dramatically simplifying the operation. So that looks like less menu items, that looks like less kitchen ingredients, that looks like less press test, less small wares, less dish wears, less administrative tasks. Anything that gets in the way of us delighting the guest, we are either going to reduce or eliminate. And all these ideas are really coming from the field. So we're asking them what are the things that we can do to make it easier to do your job and delight the guest, and we have more ideas that we can actually execute, right? And so every month, we're just cycling through them, right? And what's happening now is the team members are like excited about it, because like, "Oh, my god, I saw our ideas are now showing up in the restaurant." So they feel like they are empowered for the future of Chili's. They're staying longer. And they're more excited about serving the guests, and we're seeing in all the metrics. So Aaron is going to come up with Doug, and they're going to talk to you about all the improvements that we see in the metrics. It's because these simplification ideas they're working and are coming from the teams, they're insight-driven and they're making a real difference, right? The second thing that we're doing in this area is we're going to add some investments to improve service levels where we need to. And Joe is going to take you through how we're thinking about those investments and how we're paying for them, but we've got to make sure that we have the right amounts of labor in the places that we need them so we can get to that consistent experience I shared with you on the success model for winning, okay? So third area that we're going to see that you're going to see a big difference is advertising. And we made some significant investments this year. We'll be making more incremental investments next year. Joe will take you through what our plan is on those incremental investments. But the idea here is we've got to get back in top culture. We got to get back to being top of mind aware. We've got to get back to being active about driving traffic, right? In this day that you literally can order food anywhere. You don't have to be in a restaurant. So if you're not top of mind aware, right, it's very hard to be in the consideration set to get your people to order you, right? And over time, our top of mind awareness has dropped. The good news is we've restarted it. So even in that short burst, of advertising we did for 5 weeks this year. We saw significant changes in top of mind awareness. We saw improvements in traffic. So we do believe we have a success model that we can now redeploy more and more in the following fiscal years. George Felix, our Chief Marketing Officer. He's building a world-class advertising team, which I couldn't be more proud of. He's also attracting world-class agencies. So we now have Wieden & Kennedy who's coming to do work for us as well as Mischief. These are very well-known agencies that have worked on incredible brands that you've probably known and love, right? And they want to work with Chili's now because George is building a world-class team. He'll be sharing all these details later in the presentation. I think you're going to be as excited as I am and agree it's going to grow traffic, it's going to grow top of mind awareness for our brand. And then the last area I wanted to touch on was the off-premise opportunity. And I know the last Investor Day, I think it was about 1.5 years ago, maybe 2 years ago. Off-premise and virtual brands was a very big focus for us. And it was because it's a big opportunity. It continues to be a big opportunity. So I'm not going to tell you, hey, we're not going to do anything in this. We are going to do stuff, we're going to do different things, though. The opportunity is very obvious in front of us. So right now, where about 30% mix is in off-premise. The industry is about 25%. So we already have a pretty big lead. It's because the team has done a good job of making sure the operation was ready to take off premise. We had an app in place, we already had a decent following then COVID hit and we kind of rode that wave. And that's been great for us. But there's still a much bigger opportunity for us. So if you look at limited service restaurants, we'll talk about QSR and fast casual, over 80% of the transactions and the entire restaurant are done by those concepts, right? And most of those transactions are actually consumed, not in a restaurant, they're consumed off-premise, right? Now that like Chili's and other casual diners are in the conversation for off-premise, that whole set of hundreds of millions of transactions of traffic are a jump ball, right? So then the question is what do we need to do differently? And on the core Chili's brand and the core Maggiano's brand in order to go after that jump ball, right? And there's a couple of things that are really, really important for our business. The first one is we got to make sure the actual experience just like the experience inside the restaurant, the experience of off-premise has got to be better. And there are 3 things that are causing us to not have the same satisfaction levels in off-premise that we have in restaurant dining. The first one is a challenge for the entire industry, it's accuracy. And accuracy, meaning either the food wasn't made properly or it was missing a sauce or was missing an item. And say, why is that an issue on off-premise, and the issue, it has everything to do with the idea that if it happens inside the restaurant, I can fix that immediately, right? I didn't get my sauce. This came with onions, I didn't want onions, right? If that happens at home, you can't fix it, right? So you have -- there's a built-in issue with off-premise eating in that if you make a mistake, you can't fix it. So the remedy is you've got to get more accurate before the food goes out of the door. And so right now, we're in the middle of a process of updating our kitchen display system. So for those of you that are not that close to the heart of a house kitchen. These are all the display monitors that tell the team members what to pack out and make. We have a very antiquated system. We're going to go to a more modern system that allows for a lot more -- it will enable a lot more accuracy. So for example, they're touch feeding, you can hit a button. You can see exactly what's supposed to be how that item is supposed to be built. You can color coat it. You can have much better descriptions, which is important when you have a lot of turnover. A lot of people don't speak KDS language, so we got to have an English language, right. And so having a new KDS is going to help the time. And that's a really important one to fix. The second thing that we can do on accuracy is just -- make sure that we're assorting that area, that integrated line in a way that it's easier to make sure we don't miss things like sauces, right? So we've got a team working on that, too. That will take a little bit of time about KDS project, my guessing will be -- it will be sometime in the next 12 months, it will be done, but it's not something that takes 30 days or 60 days. It's going to be a full cross-functional process to work on. The second area is temperature of food. And the main driver of temperature of food is actually the packaging. And when casual dining got into the off-premise business -- it was kind of a bolt-on to the business. Like we didn't really think about like how do you design the package so that it's more sustainable and keep the food hotter and it's cheap and it's easy for the operators to use. Well, the good news is there's a couple of other types of restaurants that have been in the packaging business a long time, right? It's called fast food, and it's called fast casual, right? And so we can go to those packaging suppliers and get them to design things that are perfect for our food, right? Ones that are cheaper, ones that are more sustainable, ones that keep our food hotter and fresher longer. Great example is the way we pack out our fries, right? We packing our fries, we just throw them in the -- I call them like the hotel Tupperware, right? That all the casual diners do. Well, that makes fries pretty soggy, right? And we have a huge opportunity to just put them in a fry carton, right? So the fast food does stays crispy, right? So right now, we're meeting with all these major packaging guys. They're bringing us amazing ideas. I would expect that the phase over the next year to 2 years. It takes a long time to get packaging in place. But I'm very bullish that we're going to be able to improve packaging. The third area of off-premise I want to talk about was nailing promise times. So this is the idea of like if it's going to be ready in 30 minutes, you don't want to be too early because the food will be cold, and you don't want to be too late because obviously, it frustrates our guests. And we are working on right now, basically at pacing and sequencing AI-driven system internally that we're going to roll out probably in the next months where it will pay some sequence that order. So we'll get the promised times more nailed. A lot of concepts have this, especially in pizza. So this is not new technology, but it's important that we put it in our business to make sure we nail promise times, okay? And then after we nailed the operational experience, we will be relaunching a website and a new ordering experience on the app. That will be in fiscal year '25. It's going to be about an 18-month project, which is okay because I think we've got to fix these operational challenges before we get after that. So the point here is like we're going to focus less on virtual brands. We're going to focus more on the meat of the business, which is Chili's and Maggiano's and we're going to focus on the key fundamentals on growing that business over time. Okay. All right. So I look forward to -- for the leadership team, they're going to share more about what you're going to see here on some of these other elements on the new Chili's we're building. And at this point, we're going to segue into the strategy and the progress that we're making. So I'm going to invite our Chief People Officer, Aaron White, up to the stage. She's had over 2 decades of both people and operational roles and she knows the business inside and out, and she's going to be joined by -- on video with Doug Comings, our Chief Operating Officer, and they are going to walk you through the choices that we're making and then some of the progress that we've made.

Awesome. Thank you, Kevin. And good morning. So I'm excited to be talking to you about the strategy today. So as we think about our strategy, this really was focused for us to improve the core business. These 4 pillars that we have are already producing results. If you think about team members, food and beverage, hospitality and atmosphere, I'm going to turn it over to Doug Comings, our Chief Operating Officer as he takes us through how the team member pillar is coming to life in the restaurants.

Let's talk about our team members. They've been telling us we've got to make Chili's easier and simpler that the restaurant has gotten too complex. So we simplified the menu and we simplified our procedures and processes back there. We've removed 55 SKUs over the last year, which has translated to approximately $2 million of annual waste savings and has made our team members' job much easier. [Presentation]

A great example of that is our shrimp tacos. They're difficult to make. They take a lot of time. And by the time they get to the guest, they're cold as we put [indiscernible] on top of the shrimp tacos, now we can redirect our guest to shrimp fajitas. It's part of our Core 4. It's a higher margin item and it gets much better scores from our guests. We're challenging the complexity of our recipes and making sure we simplify them down to the steps that make them taste great and improve the guest experience. It's a lot less prep, less things to inventory, less things to pay attention to, which means a lot more time for our teams to focus on what matters most, getting ready for service and preparing great food for our guests and our managers are happier and they're more likely to stay with Chili's.

So let's talk a little bit about how this translates to results. So as we think about our team member pillar, you can see from a manager turnover perspective, we're back to pre-pandemic numbers and also beating the industry. So this last year, we really have focused on stabilizing those managers because we know when we stabilize the managers, the team members are going to stay. Doug mentioned simplification, and you've probably heard us talk about simplification in the past. What I would tell you is different -- we actually went across the country. We took our officers here at the office and went across the country to 114 locations. We talked to 3,300 managers. We took their suggestions, and we turned them into actions. And so as you think about really creating the job and making it easier and more fun, we're able to do that because we're simplifying and making the job that way. Now what I would tell you is you're seeing the team member turnover, even though we're not back to industry levels, we have seen a 10% drop this last year, and we are putting a stake in the ground that this year, we will be going over and really focusing on our team member turnover, so we stabilize that. So we know when we're stabilizing managers that team members will stay. So we're going to turn it over to Doug as he takes us next through the food and beverage pillar and really focus on our Core 4.

So we're really going all in on our Core 4 items, our burgers, fajitas, crispers and ritas. These are the items our guests love, and we want to make sure that we can execute them every single time. So we're really going all in on our crispers, our crispy crispers. A year ago, we had 2 different types of crispers, our original and our Crispy crispers. Crispy crispers outsold the original [ 4:1 ]. 2 different batters meant we could only bread 1 or 2 crispers at a time, and we struggled with consistency enduring volume. So we made a decision to get rid of the original crispers and go all in on the Crispy crispers. Now we can bread more crispers at a time, which allows us to create bigger piece counts on the menu. Whether it's Friday night or Tuesday lunch, these crispers are hot, fresh and delicious. We can market them with confidence to drive our crispers business. Margarita is part of our Core 4. It's also the hottest drink in America and right on trend. Freshly Made, handshake and margarita will look and taste better every time. So we're freshly preparing and hand shaking the #1 selling margarita in the world at Presidente. [Presentation]

So as we think about this pillar and really our Core 4, so winning on burgers, fajitas, crispers and ritas, we measure that by our food grade scores. So you can see that we have some of the highest food grade scores that we've ever seen, and really this focus has given our chance for our Heart of the House team members, we call it Heart of the House because that truly is where the guest experience has that heartbeat because it's this delicious food that we're making. So this Core 4 focus brings the pride back but also lets us think about future innovation for our Heart of the House team members. So lastly, I'm going to have Doug walk you through the hospitality and also the atmosphere pillar.

In order to provide great hospitality to our guests, we had to reinvest back into our labor model. We did this with 3 primary positions. The QA position to make sure that the food is made right and they hand off to our next spot, which is our runners, their job is to get the food out to the table quickly. And then finally, bussers with bus hubs out in the dining room, keeping our floors and dining them clean and turning the tables. For our servers, these investments allow them to spend more time engaging with our guests. They're able to spend time because they're not as stretched as far and they're able to go focusing on the basics of pre-bussing and drink refills and providing great Chilihead hospitality. And our guests are valuing what we're doing. We're seeing all-time guest metric scores right now, and we're working on continuing to make sure that they have a great experience every single time. So they leave with the intention of returning quickly. [Presentation]

Final pillar on our strategy map is atmosphere. It's an important part of the guest experience. We want you to walk into Chili's and see a beautiful restaurant, whether it's a brand-new Chili's here in Anna, Texas or anywhere across the country. We want you to feel the energy and that you're having a great time with your family, so that you'll leave Chili's with the intention of returning quickly. I've been with Chili's for 28 years. I've never been more excited about the future of Chili's. We're taking a long-term approach to building the business and driving it forward. We're investing back into the facilities, back into the team member and more importantly, back into the guests. We've made a ton of progress and the future is bright.

As Doug talked about, we have some great momentum right now. And the way that we look at our hospitality pillar is through our guest metrics, and we look at that through guests with a problem. So he mentioned and as you can see on the screen, this is our best guest metrics that we've seen. So this simplification and really focusing on this vibrant atmosphere. So that energy, that Chilihead hospitality and also that freshly made food is a big piece of that. That's critical to our guest experience. He also talked about clean and well maintained. So if you think about our last pillar, the atmosphere, that really is about cleanliness. So the investments that we've made in the restaurants such as bussers, so we brought those back, making sure that we're not only spending money to keep our restaurants well, clean and well maintained, but also to make sure that we're keeping them clean during the shift. So that's sweeping, that's restrooms. You can see we're making great progress with that. So we'll continue to focus on all 4 of these key pillars as we move forward. I'm going to turn it back to you, Kevin, as you talk about how our strategy is going to create value with our shareholders.

Yes. Thank you, Aaron. That was awesome. So let me just recap what you heard. So you saw the simplification. We'll talk a little bit more about it when we are in the test kitchen, but that is going to reduce the amount of work that our teams need to do in order to allow them to focus more on the guest. You've heard about some labor investments that we're making and making sure that we're turning tables faster, they're cleaner. We have the new QA role or we added hours to QA in order to make sure the food is going out and then the managers can spend time on actually leading instead of worrying about doing tests in the restaurant. You heard about the Core 4 focus. So you can see how it's starting to come alive. By freeing up time, we can focus more on the things that are really important that are going to create differentiation for our brand. And then as a result of that, we're seeing our customer metrics move in the right direction, so intent to return, guests experiencing a problem. Food grade scores are all headed in the right direction, some are at all-time highs. And then turnover is coming down. Certainly, we made incredible progress with the managerial turnover, which is now below prepandemic, we've got a little bit more work to do. It's headed in the right direction, we have a little more work to do with the team member turnover -- or the hourly turnover. Okay. So I did want to spend a little bit of time just recapping what you heard and why we think it's going to create value. So by working on the foundations of the business, we believe over time, we'll grow sales overnight. We will build the brand over time. By building the brand over time, we will see traffic increase over time. And so we believe that a better guest experience will allow us to both attract new guests more rapidly as well as get them to come back more frequently with existing guests. We think we're going to get improved pricing power. So we still -- we've made up a little bit of the pricing gap versus the industry in the last few years, but we're really pretty far away from our nearest competitors on a lot of different items. So we think that making the items better will continue to allow us to have some pricing power. We've obviously got to balance out with what's happening with the macro customer. I'm talking about long term. The third thing is you're going to see is accelerated mix probably faster than you've seen in other restaurant concepts. So as you think about moving from a good strategy to a good, better, best strategy, that will show up in mix will also show up in mix as less discounting. So as you think about reducing the number of checks that are sold on deal, removing the amount of freebie coupons that we send out through our e-mail database, those dollars will show up in a mix, right? So you'll see accelerated mix as we balance out the traffic mix equation. And eventually, you'll see traffic start to grow again as we kind of roll through some of these changes in a year. And then the last thing is -- which we'll have George come and talk about is the enhanced marketing that you're going to see is also going to drive both incremental trial of new guests as well as frequency of existing guests by making the brand more top of mind aware as well as give people reasons to come to Chili's, okay? So with that, we're going to move to George Felix, and I just want to give a quick interest, you know who George is. So this is the fourth time I worked with George in my career. We've worked on a lot of legacy brands that had this amazing opportunity where you've got all these amazing brand equities that I just need to be reawakened in a little bit of a way. George is well known in the advertising industry because of the work that he's done on these legacy brands and bringing them back into -- just back to relevance and making them really top of mind aware. He's a track record of success. So I couldn't be more excited about having both him on the business as well as the people he can attract to the business because he's so well-known for doing these things with these iconic brands. So with that, I want to invite George Felix to come up, talk to you about the marketing plans.

All right. Thank you, Kevin. It's awesome to be with all of you today. Really excited to tell you about what's going on here with the Chili's brand. So I'm going to take you through what our new marketing strategy looks like today. And that really starts with our brand positioning. So as Kevin mentioned, in my career, I have had experience repositioning a few brands and brands like Old Spice, KFC, Pizza Hut and Tinder. And the first thing you do when you step into a role like this, I stepped in about 10 months ago is kind of do an assessment of where is the brand. So these are some of the opportunities that I identified when I stepped in. First off, our menu is too complex. It was cluttered. It was difficult to navigate, difficult to really say what we stood for as a brand. Over the last several years, Chili's has pulled back from being a national advertiser and redirected a lot of those funds into heavy and frequent discounting to our CRM database. And then as a result of that, top of mind awareness has actually started to lag behind key casual dining competition. So that's kind of the landscape. But the flip side of that is I firmly believe, and that's why I'm here, that Chili's is a brand, that's a marketer's dream. And here are a few of the reasons why. As we've talked about, we already specialize and sell the food that Americans love and the drinks that Americans love. As Kevin mentioned, people know Chili's and they have memories of Chili's, and they love the brand. Now a lot of times, the memories are I used to go to Chili's. We have to do a better job of inviting people back into Chili's and remind them why they love our brand in the first place. And then finally, we have these amazing distinctive assets, whether it's the food and the drinks that we sell or these other iconic things that are part of Chili's heritage and as a marketer, that is a lot of fun to play with. So I want to introduce a framework that I've used in a few of my previous stops. This is a framework called RED, which is really a guide for the key areas to focus on for a brand builder. And this was developed by a great marketing strategy firm in California named Collider. And so when we talk about being a RED brand, what we're saying is we need to be a brand that is relevant, easy and distinctive. So when we talk about relevance, we are going to be a brand that is relevant in the food and the drinks that we serve, but we're also going to be a brand that's relevant in culture. Being an easy brand, we are going to be a brand that is easy for our guests to transact with, but we're also going to be a brand that is easy for our team members to work on. And finally, we are going to be distinctive. Everything we do has to be unmistakably Chili's. How many times have you guys seen a commercial food for a restaurant brand that has amazing delicious food. And at the end of it, you can't actually remember which brand it was for. So it's a huge problem in the food industry. And so everything we do has to be unmistakably Chili's. So I do get the question a lot, what makes Chili's different. So there are a few things that I do think makes Chili's stand out and different amongst our competition. One, going all the way back to 1975, when the brand was started, Chili's has always been a place where everyone is welcome, and you can come as you are. Second, we've talked about Chiliheads. Chilihead Hospitality, that is our secret weapon. Our Chilihead always go above and beyond to make sure the experience of the Chili's is amazing and that you leave there having a great experience and a fun atmosphere. And all of that adds up to are the core part of our brand purpose, which is to make everyone feel special. And when we say everyone, we mean both our guests and our team members. Now I realize that some of you may not have been to a Chili's recently. A lot of you coming from New York. There isn't a Chili's conveniently located. So I want to give you a sense of what a quintessential Chili's experience is like. [Presentation]

All right. So when we talk about -- we've talked about the brand. Now I want to shift our attention to our guests. So in the past, Chili's has talked about our guest segmentation in terms of different personas. We're actually shifting that to an occasion-based segmentation. We think -- this is going to give us a better understanding of the key need states on all of our 3 key occasions, which are dine-in, off-premise and bar. So I want to talk a little bit about how we think this can work. So let's take a typical family. Here's the Jones family in Chicago family forum. In our old segmentation, we would have probably fit this family into a persona that we called the values-oriented family. Now one of the limitations of a persona-based segmentation is that we were probably overly focused on one occasion for this group and in this case, probably dine-in. The reality is with really this family or any guest, given the circumstance, they probably fit into some or all of these different occasions, depending on the circumstance. So in this case, for a family night out on a Friday night, the need state is probably a bit different. They're out looking for connection with the family. Timing is probably not as important, but they want to fun atmosphere and just a chance to connect. Now flash forward to Wednesday night, both kids might have extra curriculars, dance practice, a basketball practice, homework, so there's a lot of drop-offs pickups. That's probably more of an off-premise occasion where ease of ordering is going to be super important, timeliness and accuracy. So that's going to be what they're more worried about on that on particular night. And then maybe on the weekend, Mom or Dad wants to go out with their friends and watch their favorite team. When they're looking for a place to go, #1 thing is the game that they want to watch and their team has to be on the TV at that bar and then the food and the drinks that they would associate with watching the game need to be available. So you can see here that this family would actually fit into all 3 of these occasions and for us to better understand those need states will give us an opportunity to better show all of our guests how we can meet their need states depending on which occasion they're most interested in. So we've talked a little bit about the brand positioning. I now want to dive into the menu and where we're headed from a menu standpoint. This is a high-level look of where we're going to play and how we're going to win. We've already talked about it a few times today, but we are going to hammer the Core 4. That is where our focus is, and that's what we want to stand for at Chili's. In addition to that, though, we have industry-leading value. It's unbeatable amongst casual dining, and frankly, unbeatable across the restaurant industry. We just have to do a better job of telling our guests about it. And once we get our guests into the restaurant, we need to be sharper from a merchandising standpoint so that we're driving trade up once our guests get into the restaurant. So digging a little bit deeper. Why are these the right choices? Why did we pick the Core 4. Well burgers, fajitas, which you can bundle under Mexican or Tex-Mex, Chicken crispers and fries are all in the top 10 foods for menu importance in the United States. And I included fries in here, even though it's not part of our Core 4, fries go out with every crispers and burger dish, so 2 of the Core 4 and actually go out with about 40% of our plates in general. So know that craveable fries are critical for driving traffic and driving repeat visits. And so later today, you're going to see a little bit more about how we've modified our fry procedures so they're hot, crispy and well seasoned every single time. Now you flip to the beverage side, we're in a great place, too. Margarita is top cocktail in the United States, tequila fastest-growing spirit. In fact, if Chili's, if you took all the Chili's and you said Chili's were a country, we would be the third largest imbibing tequila country in the world behind the United States and Mexico, and we are right on the hills of Mexico. So we know we're playing in the right spots. So now that we've got the Core 4 identified, how are we going to go innovate on that? When I got here, we hadn't really been innovating on our core menu in the last several years. And so there was no formal process. So we've instituted a process that we call the Pepper process. And this is a basic stage gate process that is going to enable us to kick start our innovation process, but also build our innovation pipeline. This is going to help us align our resources internally and investments but also help us work more collaboratively as an organization cross functionally. And so I'm not going to go through the details of the process, and stage gate process are pretty common in most large companies. But what I do want to say is just after 6 months of putting this process in place, we have some wins that we can share with you in terms of how this is enabling our innovation to come to life. So one of the first ones we ran through the Pepper process were chicken crispers. And so the early stages of the process are all about defining the business case. What is the size of the price, what is the wide space opportunity and what do we have to do to win in this space. And here's the checklist that we came out with after doing that exploration. We've got to be able to serve chicken crispers that are hot and fresh every single time. Sauce is critically important because I'm guessing anytime you or your families have chicken tenders, they dip them in sauce. And so having the right sauce lineup is going to be really important. We also have to serve relevant sites for our core guests, millennial families and Gen Z. We also want to give size variety. So some people want a bigger eat. We should give that option. And finally, as I talked about the importance of craveable fries. This is where we were just several months ago. Actually, where we're up until about 2 weeks ago. You can see here just from this picture, crispers were buried on our menu, taking up less than 10% of a menu page, no image and we weren't really meeting any of those key need states that we identified through our pepper process. Now as of May 23rd, this is where our new chicken crisper bundle is. This is an enlarged image of how this is now featured and merchandised on our brand-new menu. You can see here, we have craveable photography that's driving people to understand exactly how great this chicken crispers basket is. We now have a 4, 5 and 6 count on crispers, which is how people are used to ordering chicken tenders at other concepts, and it enables trade-up for those that want a bigger eat. We now -- we took some of the sauces we already had in our heart of house with It's Just Wings, brought them in to offer a better sauce variety. We also innovated and brought in new sauces that are awesome Buffalo Ranch and Sweet Chili Zing. You'll get a chance to try those at lunch. And then finally, we used to serve this with corn on the cob, which is a bit of an outdated side. We now improved that with a brand-new white cheddar mac & cheese. So all in all, we've now significantly upgraded our crisper bundle, and we now have created what we think is a great growth layer for us going forward. Now let's look at margaritas, okay? So this is the next one that we ran through the pepper process. And where we were to begin with was -- all of the innovation that we had on the Margarita lineup was really focused on the discounted value margaritas through our Margarita of the Month program. And then when you looked at the breadth of margaritas that we sell, we were basically had a lot of margaritas that were clustered in the same flavor profile, which was kind of a sweet margarita profile. So as we went through the early stages of the process to explore what do we need to do to really show that we are the margarita leaders, we found that we needed to innovate both in terms of flavor breadth in terms of different varieties of margaritas. That's sort of great Margarita join, if you've been to a great Mexican restaurant that has margaritas, you got to have that variety and some key staples and you also need to innovate in terms of price. And so we've got into a good, better, best model. So on the good side of things, we know that, that opening price point in value margarita is critically important. There are some guests that just really need that value margarita. And so we're not going to change that. We're always going to have that margarita of the month, that's at that $6 or $7 price point. We've now upgraded our flagship Presidente Margarita. So you heard Doug Comings talk about that, the most popular margarita in the world. It's now going to be -- we're going back to handshaking that every single time, so you get that classic Presidente taste and that's at a $9 price point, which makes for a pretty easy trade up for those that are looking for something a little bit better than that opening price point Margarita of the month. And then what we're really excited about is that we're focusing our innovation on this best pillar to create a premium layer of margaritas. And we're going to do that by bringing in premium ingredients and premium spirits. For instance, Casamigos. So Casamigos is an absolutely like trending tequila over the last several years, it's exploded. I'm sure you guys are familiar, George Clooney, and you're probably seeing it now. They're advertising more. Casamigos is definitely -- it just signals that we are a tequila leader. So we have brought in Casamigos Reposado and we've now offered the Casamigos margarita, which now is priced at $13. So we know that some of our guests come to Chili's and they're looking for a trade up. They're looking for an indulgence. They want to have a great margarita. And now we've given them an ability and a lineup to do so. So really excited to be able to show you more of these later today. Now how do we bring all of this to life? This is when we talk about the creative side of this and the advertising side. And so we've developed a creative platform that we're really excited about to drive our -- to drive the leadership that we have in Margaritas. And it's called It all starts with the Marg. And because at Chili's, your visit should always start with the Marg. But what we think is really exciting about this platform is that it has a huge runway to show all the different occasions that can start with the margarita. So whether it's a fun night out with friends, it could be a happy hour that starts with the Marg. It could be date-night that starts with the Marg, could even be Investor Day that starts with the Marg. And we will be giving you guys margaritas just in a couple of hours, so hang on. But you can just see that there's any -- there's endless possibilities for where we can take this. And so for us, being the leaders in margaritas, we want to establish not only with the leaders, but margaritas are an occasion, knowing that it's the #1 cocktail in the United States. There are so many ways that you can enjoy a Margarita. So we just launched this campaign yesterday. So the way that we did it was with enlisting some help from a few celebrities you might recognize. And if you got any fans of the office out there, Jenna Fischer and Angela Kinsey, they played Pam and Angela on the office. And so the office, if I got to imagine all of you are fans. But if you aren't, there are a few episodes that Chili's was prominently featured in. So there's a strong connection already between our brand and the office. And so these ladies are currently the host of a very popular podcast called the Office Ladies where they go back and recap episode by episode of the office. And so they're known for this witty banter, they love our brand, and so we thought they'd be the perfect people to kick off It all starts with the Marg campaign. So we'll share the video asset that just launched yesterday right now. [Presentation]

So this is a campaign that's going to be focused on running digitally. So it will be on social media platforms, digital video streaming platforms. What we're really excited, though, yesterday, this is just covered from yesterday. So this just launched yesterday. We actually got 1.6 billion PR impressions on this campaign just from yesterday. So outlets like people, food and wine, today.com, Yahoo Entertainment, all these people talking about Chili's, but they're talking about Chili's in a new way. These are places that weren't covering Chili's really for the last several years. And you can see here the headlines themselves, they really they give permission, when you see people that you love, when you see people that you recognize, it gives you permission to come back to Chili's. I love this quote. This is from Jenna Fischer. She said, "I actually met the folks from Chili's in an event in Los Angeles. I cornered them in the room and told them that I wanted to do a campaign with them because I love them" this actually happened. This was in November at an event called Chain, which is done by another office star, BJ Novak, and these people love Chili's. And that's what I'm talking about when I say this is a brand that people love. We just need to do more to ourselves and culture and give people permission to say that they love Chili's again. So moving on to the actual menu itself. So this is what our menu looked like about a year ago. And so you just opened it up as 2 pages front, 2 pages on the back, but you can see here, super text heavy. If I asked 10 people, what does Chili's stand for? I'd probably get 10 different answers. And it just didn't -- it wasn't terribly clear. Now as of May 23rd, we launched a new menu and you all should have those new menus right in front of you on your table. So feel free to look at those. But if you look at the cover right from the jump, we are boldly saying we are the margarita experts. And we are saying that, hey, you're at Chili's and your visit of Chili's should start with a Marg. And if you look at what we've pictured on that cover, they are premium margaritas, Patron, the Henny Rita, which is delicious a brand-new margarita we've launched, the Sangria Rita, which is an amazing new frozen margarita. We've got the premium, the Presidente. We've got the ones that we're really proud of and that we want you to order right there front and center. Now when you open up the menu, hopefully, you can see now that the Core 4 is jumping out in a stronger way. We've got burgers prominently featured in the middle. We've got that new chicken crispers merchandising panel in the middle and then a huge panel on the right for our sizzling fajitas. So the Core 4. So now it should be much more clear here, when you come to Chili's, these are the things that we stand for, and this is what we want you to have. Now how do we make these changes? It was enabled a lot by the simplification efforts that you heard Aaron and Doug talking about. So we've removed over 50-plus menu items and SKUs over the last year. What that does is it allows our team members not only to deliver these meals more consistently, but it also gives us more real estate that we can reinvest back into the Core 4 so we can communicate those more clearly on our menu. The last piece of the menu I want to focus your attention on is if you flip to the back page, so on the left-hand side of the slide, you'll see what our menu used to look like. Half of that back page was taken up by our 3 for Me value menu, and we also had bright colors that are kind of drawing your attention there. So there are guests that came in looking for the 3 For Me would definitely find it. But we probably had guests that didn't even know about the 3 For Me that was drawing their attention to that too. So now on our new menu, you can see we've reduced the prominence of the 3 For Me value menu by about 60%. We've taken the bright colors off. And so the people that come in, looking for the 3 For Me, they're still going to find it, and they can absolutely order off that part of the menu. But for those that didn't even know about it, we want them to be focused on our Core 4, and we want them to see the other things that we have to offer and our full priced [ non-trades ] across the menu. So we think that these -- this -- when we talk about sharpening our merchandising strategy, these are the types of moves that we think we can make that will set us up for success going forward. All right. So I've talked about our brand positioning. I've talked about our menu vision, the Core 4. You heard about Aaron and Doug talking about all the improvements we made from an operations standpoint, how consistent we can be, okay. So now we're ready to turn the advertising on and get people back into Chili's and really delight them with a great experience. So how are we going to do that by building top of mind awareness and driving traffic into the restaurant. So this is part of our new advertising strategy. And the reason I say it's new is that for the last several years, Chili's hasn't been a national advertiser. They really pulled back during the pandemic years and since then -- and has really been focused more on just communicating with the CRM database and really using discounting as a way to drive traffic. We have a new approach now. And so this is all about having 3 to 4, what we're going to call media spike tent poles throughout the year that will focus either on our core 4 or our traffic driving value. In between those big moments of media spend, we're going to have a cadence of what we call culture pops, which are things like you just saw with Jenna and Angela. But these are in between those big media spikes where we want to get Chili's in headlines, and we want to keep Chili's top of mind when we're not on TV spending in a big way. And all of that needs to be underpinned by distinctive advertising that's unmistakably Chili's. So let's take a look at how this strategy first came to life this past March. So when I think about the job that my team has to do, you can really sum it up by saying, we need to be driving sales overnight and building our brand over time, meaning we have to balance the short term sales and traffic driving efforts with long-term brand building. So we're building our brand for the long term. Now in March, this is our first go at implementing this new strategy. And so the way that this came to life was we had a kind of a two-pronged attack that we're driving sales overnight and brand over time. On the one hand, we had hard-hitting craveable food-focused advertising that had a sharp price point of $10.99 that we felt confident could drive traffic into our restaurants. We supplemented that with more brand building creative that we thought would be kind of more cut through, break through the clutter, shareable, talk worthy, but still focused on educating people on our 3 For Me. In this case, a creative starting R&B Singer, Brian McKnight literally singing his way to explain to you how to order a 3 For Me. And so we think this kind of continuing this balance of both driving sales overnight and brand over time is a long-term strategy that can be a winner for us. So I'm going to walk you -- I'm going to show you now both of these pieces are creative, just so you can see how we brought this to life in March. If you can roll the first one, please. [Presentation]

So you can see there a few things, hopefully, craveable food. Hopefully, you're getting hungry. In the background, you might have heard an instrumental version of our famous baby back ribs jingle, trying to bring the Chili pepper. We're trying to bring all these distinctive assets, the old tile tables you might have noticed, if you remember the old days of Chili's, trying to bring all those distinctive assets back. But also the best $10.99 you can eat, really kind of hard hitting there. Now I'm going to share another piece of creative we launched in the same campaign, again, featuring Brian McKnight, more playful are the brand tone of voice that we want to get across. Chili's, we don't take ourselves too seriously, but we still want to talk to you about amazing 3 For Me deal. So if you can run that. [Presentation]

All right. So hopefully, that songs not stuck in your head for too long. So hopefully, you can see how those 2 pieces can really pair together, and we want to kind of continue that rhythm as we go forward. So how do we bring this to life? Again, this is another part of the strategy that we changed a bit. I think in the past, Chili's had been focused on efficiency when they were talking about their media plans. And so we tended to be on second-tier kind of placements across cable and things like that to maximize efficiency. We want to be where the eyeballs are. We want to balance impact with efficiency. And so we're going to be on prime time highly rated network TV. We're going to be on premium cable, and we're going to have a strong presence in live sports because frankly, that's just where people are, and that's where we want to be, and that's where we want our advertising to show up. Now we want to supplement that with a strong presence in digital. So whether that's streaming platforms as we know more people are migrating their viewing habits to streaming platforms and also social media. We have to have a strong presence there and be relevant on all of those platforms. And so speaking of social media, this is going to be a critical component of Chili's being relevant, again, in reaching a new audience and bringing a different audience into our restaurants. Just looking at consumer trends on screen time, I think you guys are well aware of where people are spending their time. And increasingly, it's on social media platforms. And so this is going to be a big part of us becoming a brand that's relevant in culture again. And I'm happy to say the team has really embraced this. I think you saw a stat on the opening video that just in September, Chili's has been a trending topic, the video said 5x since September, including twice being a #1 trending topic video is already out of date because yesterday with the -- day starts with the Marg campaign, we're actually that's the sixth time we were trending nationally. I think we made it up to #8 yesterday, but that's a sign for us that we are inserting ourselves into conversations that are happening in culture and on the social media platforms, and that's something we're going to continue to do. So you've heard me talk about a lot about putting Chili's back in culture and being part of a cultural conversation or being relevant on social media. We have an example just from the last 2 weeks that I want to take you through that really explains what we mean by that. So rewind a couple of weeks. This story made the rounds on, I want to say, May -- around May 22. And so I'm this woman, the bride in this photo, her name is Madison Molke, and she posted a TikTok, you can see here with her Chili's receipt, and this TikTok went crazy. And the reason it went crazy is that she just got married earlier in May in Georgia. And she had 100 guests that are wedding. And instead of getting it catered by the place that she had the reception, she went out and just put in a $2,000 order at Chili's and brought it and serve it to her guests, her guests loved it. They had a great time. And she said, "You can't beat the price", and I agree, you feed 100 people for $2,000. So whether it's a 3 For Me at lunch, that beats the drive-through price or feeding 100 guests at a wedding, Chili's has great value. So it was something that was just fun. It took off just because of the fun nature of the story. Now in the past, I think Chili's, this is the kind of thing that happens to Chili's. We're a brand that people love and we kind of find our way into culture here and there. In the past, I think we would have let this kind of go by and just say, "Hey, that was fun. I'm glad that happened. We got a little free press". But our team, we worked with a great agency Mischief. They did that Brian McKnight work. We worked with them and we said, "Hey, how can we take this, how can we make more of this? How can we participate and jump in on this fund story? And how can we extend the life of the story and give it a little bit more legs." And so we worked with them in just a couple of days after the story went crazy, we made a TikTok of our own and then we put it out. And so a week later, we put this TikTok out, and I'll roll it right now, so you guys can see it. [Presentation]

It's going to be one of the best taglines I've ever had. I guess we do that now. Chili's wedding catering. So we call is moving at the speed of culture. So that video now has about 2 million views on TikTok. So that gave this whole thing a new life cycle. And we've gotten stories like this just in the last week, on big outlets like today.com, Delish and other places because, in fact, 3 couples did get engaged in the last week at Chili's. And so again, it's a way for our brand and we are going to pay for their wedding to feed all their guests at their wedding. So again, when I talk about putting our brand in the cultural conversation, it's doing more things like this and really taking the opportunity to put Chili's in that moment. And we talk about our brand purpose making -- to make people feel special. I think it's a pretty good example of the way we can do that. So why does all this matter? Why should you care about this new part of our strategy? We're seeing this already have some pretty big results. So just from 1 month back on TV, as we looked at the last quarter, we saw a 3% jump in unaided awareness, top of mind awareness for our brand, which is a pretty significant jump in a short amount of time. And again, we talked about the importance of being top of mind aware, especially in our industry, it's critical. And those are the brands -- the brands that are top of mind are where are the ones that are going to be able to grow share and get into that mental carousel of where I'm going to go eat and when I'm going to get my next meal. So looking ahead to F '24, I want to give you a top line of how we're approaching next year from a marketing strategy standpoint. And this is a plan that we think will drive both traffic, but also brand relevance. So we're going to have these tentpole moments. We're going to think about 3 to 4 of those tentpole moments a year. And when I say tentpoles, I mean TV and digital plan that we think is a mass reach plan. And again, these are going to be campaigns focused on our Core 4 and our traffic driving value. In between those times when we're on media in a big way, we're going to be taking swings at these culture pops. We're going to try and keep putting Chili's back in the news, back in the headlines and keep Chile's top of mind when we don't have the big TV spend. Every single day, our organic social team is going to be focused on mining the stories, what are the things people are talking about? What's trending online, are there conversations that it makes sense for Chili's to jump into. Not all do, but the ones that do, we should have a point of view, we should have a voice. We should bring our brand voice to people on a daily basis. And then finally, we're going to have this brand health line, which is kind of the nuts and bolts stuff, search, performance media, that will always be kind of underneath all the other media activity we have. And so just given the success we saw from our first go around in March, we're poised to increase our advertising investment next year. And so you can see here, as we look ahead to F '24 that advertising bar is going to grow to just shy of 3% of sales. And this really starts to get us back in line from a pure advertising spend standpoint, closer to where we were pre-pandemic, which we're really excited about. All right. So now I'm going to move to the last part of the strategy, which is CRM and loyalty. So just to ground everyone, my Chili's Rewards, we have about close to 11 million members that we can directly e-mail or SMS in our loyalty database. Now what we're going to do over the next 2 years is really kind of revamped the way that we think about this program. We are going to sharpen our focus first off and get the fundamentals right. And then we're going to work on how can we drive smarter segmentation. So when I talk about sharpening the focus, we need -- what we're going to do is we're going to change the mindset in terms of how we interact with our guests in this channel. Right now, and we've made some changes, but we need to kind of continue to do this. we were just kind of bombarding our guests with discounts. It was discounts that were coming in every single week, and there really wasn't any segmentation there. And we were kind of just -- our guest, for now, just expecting that they were just going to be getting offers and discounts. That's not really the way we want to build a relationship with our guests. And so we want to get smarter. There is a place for offers and discounts, but it doesn't need to be done on a mass scale to everyone. We want to be smarter about sending offers to the right people at the right times to drive people maybe back into our restaurants. The other thing that we're going to do is we're going to be more relevant in terms of the messaging that we sent to them. So things like -- we don't have to send an offer, we can talk about the 3 For Me deal, which is amazing value that we have available every day on our menu or the new Casamigos margarita, A lot of people might not know that Casamigos is a tequila they could find at Chili's. And so just making sure people understand more about the things that we have to offer, it doesn't always have to be discount or offer-based. Now once we get the foundation set, we'd love to then start testing what are things we can do to give more localized capabilities to our operators where they can pull some levers to drive traffic into the restaurants. So a couple of examples here. Let's say, an operator says the last 4 Tuesdays, Tuesday nights have been super slow. Can we test ways that they might be able to send a time-gated or day of week gated offer so we're kind of limited in the exposure but seeing if we can drive traffic during slower day parts or slower days of the week with really targeted offers. Another thing we do, so at the Chili's bar, we have the ability for every single one of our Chili's restaurants to have 2 local beers on tap at any given time. So in addition to getting the assortment of great national beers, we can give you local fan favorites, and that's up to the General Manager of each restaurant. So I was down at a town hall. Aaron talked about, we were all at town halls for a couple of months, crossing the country talking to our team members. And I was down in Austin. And there is a really popular beer in Austin, if any of you guys have been there. It's called Electric Jellyfish. It's an IPA. It's really good if you're ever in Austin, I'd recommend you pick one up. People line up in the grocery store to get it. And they were saying, "Hey, if we could carry an Electric Jellyfish in Chili's that could actually be a real traffic driver in Austin." And so the idea that if -- our restaurants can make some of these decisions that they think can be driving traffic in a local way, we can hopefully give them the ability then to drive that traffic and get the word out that, "hey, come to any Chili's in Austin to find an Electric Jellyfish." So these are the types of things that we got to get the foundation right first, but we think we can make some smart improvements on where we're headed to give some localized capabilities to our operators. So in summary, this is the new marketing plan strategy that we have in place that we believe will both drive brand awareness and traffic into our restaurants. We're going to do that with a focus on the Core 4, which we know are big growing segments in the American cuisine. We've got a new merchandising strategy in place that's going to drive trade up and profitability once our guests are in the restaurant. We have a traffic driving advertising program that we think can drive sales overnight and brand over time. And finally, we're going to evolve our my Chili's Rewards with less of a focus on discounting and more of a focus on consumer relevance. Thank you for your time. I believe you all have earned a 10-minute break at this point. So let's see, it is 10, why don't we say, so for those watching online, we are going to come back at 10:31 back here for Q&A. They'll be right up here and there are people for in the room that can direct you if you need a restroom break. So thank you. [Break]

Okay. Welcome back. I think we're back up on the webcast, Steve. So what we would like to do now is transition into about 20 minutes or so of Q&A. I'm sure you guys have been generating some questions as we've gone through the presentations. We have 2 gentlemen here on both sides. We'd like to ask you to -- if you have a question, to signal to one of them, wait until you get the mic because we want everybody that's on the webcast to be able to hear the question also, and that's the only way that they'll be able to do that. And then Mika is manning the desk over there that has gotten some questions in from the webcast. And Mika, I'm going to start with you and then if people have questions, they want to start identifying both Clark and Jeremy can start to get mics located too.

All right. Well, thank you, Joe. Okay. So one of the first questions is very compelling strategy to grow Chili's. With that said, if the U.S. consumer softens in coming quarters, what levers can you pull to sustain traffic growth?

Yes. Well, I'd start with just, number one, we know that if the consumer was going to pull back, they're going to take less trips to restaurants in general. And so the most important thing we can do is make sure we have a great experience so that we get more of those trips because in recessionary times, customers can't afford for things to fail, whether they're consumer goods or restaurant visits. They have -- they're going to -- they don't have as much disposable income to spend on them. So the ones that they choose to -- they need to have confidence in, right? So number one, just making sure that we continue to improve our experience, the quality of the food, the consistency of the service, that's going to help us whether there's recessionary times or there's -- or in a growth stage, right? So we're going to continue to do that. We're not going to change that strategy. As far as how do we drive traffic in those situations, number one, being able to advertise unbeatable value is obviously going to help you in tougher times. And when you look at the $10.99, 3 For Me meal, and we have multiple options on that menu, I think it'd be very, very important to continue to hammer that because it is unbeatable, I think, in all of the restaurant industry. And then the third thing I'd say that we need to do is we need to get the CRM program that George talked about rolled because I think just having more relevant offers and even talking about all the different value that you can get in the Core 4, those are the trip drivers like things that you don't get driven on restaurants for sides, you get driven for the main things. And we're focused on the main things. We're going to have unbeatable value at least an entry point of all 4 of those, and we got to make sure we're telling our customers about them repeatedly versus other things. So I think between making sure that we continue to innovate on the experience and get it as good as it possibly can be so we can win market share, which is happening right now in conjunction with getting actual advertised value out there and then activating our CRM, I think we're going to be okay.

Yes, I'd say that being true to the strategy is going to be an important part of that, again, the fundamental changes we're trying to make to invest in the business, be it within the food, particularly within the atmosphere of the restaurant, how we're trying to raise brand awareness. We're going to have to continue to make those investments on an ongoing basis. So our intent would be to be true to the direction we're taking the investments we're making. That being said, we can modulate things a little bit when you think about how you make and the timing of those investments, you can -- we can probably space some things over some slightly larger times. It's going to be a matter of degree. So what is the degree of pullback that you see or the degree of economic change that we might experience. And we'll be able to modulate based on whatever we see within that side of the equation.

It's Eric Gonzalez from KeyBanc. Just curious about the room on the menu for innovation. You talked about the Pepper process, the stage gate process for bringing on new items on the menu, but it sounds like you're really committed to the core -- the Core 4. So I'm just wondering how much room is there for new innovation and how much of a part of the new advertising message will that be going forward?

Yes, I can take that one. It's a great question. We think there's a lot of room. If you think just the Core 4, so don't even take anything else, we think there's a lot of room for innovation just within those categories, right? So crispers is -- what you've seen us do on crispers right now is really get the core offering right and expand that and that's innovation of itself by bringing in new sauces, different sides. But you think about where crispers can go. There's -- we have Honey Chipotle toss crispers, which are a cult favorite amongst our fans. There's room for more like flavored, tossed crispers probably going forward, tons of innovation there. We can probably find other ways to serve crispers if you look at chicken tender concepts. There's other places that you can serve those. So just looking at that one, there's a lot, but the same would apply to fajitas, Think about all the different proteins. If you want to spend a little extra time in Dallas, I'd encourage you to go to test fajitas that at a local Tex-Mex place. It's pretty -- there's a lot we can do there and the same goes for burgers and certainly margaritas. So we think there's a lot just on the Core 4 itself but there's a lot of room and runway for innovation.

There's a saying I learned when I worked in the CPG company, big dogs have big puppies. And we start with big segments and you innovate on them, you're going to have much bigger businesses than the outcome versus innovating on small things. That's why the Core 4 is still important because they are huge segments, and there's a ton of runway for transactions on them.

And George, maybe touch a little bit on interest on merchandising is a piece of that equation, just besides the menu?

Yes, absolutely. So when you think about just some of the examples that I shared with you today, just the way that we can merchandise some of these things and really showcase the breadth of options we can have and just give it the prominence that it deserves, I think, is another lever we can pull also a way to drive trade up. And so you've seen that with crispers, you see - you're going to see it continue to play out in other areas as well.

And I just -- I would just build one thing on this. I think the Core 4 has unlocked innovation here. Like I think there's innovation mindset. We have tastings pretty regularly. People are fired up about the ideas they're seeing on how you can innovate on these Core 4. Will there be more innovation beyond that? I don't know because there's way more ideas right now than we can handle. And so we're just -- that's a reason the stage gate process to say, how do we make them as big as we can be and make sure the ones that need to graduate or graduate and the ones that fail in test, fail in test.

Dave Palmer, Evercore ISI. I wanted to ask you about the guest scores that you showed up there. And you showed how they compare favorably to COVID era and pre-pandemic, which is great. There have been times in the past, we've seen guest scores, and it feels like -- it never really mattered that didn't seem to correlate very well with sales. So I'm wondering about just your -- the way that you do some of your work on this. But I'm also wondering about how it compares against peers in a way that informs your opportunity for the brand about where you can go, not just versus yourself, but like versus a near-end peers.

Yes. I would tell you the guests with a problem that we're measuring along with food grade, we have another score server attentive, all the highest we've ever seen. They all correlate to intent to return. So it's about the guests coming back. So they're all as a direct correlation to those. So we're seeing it through even with Mother's Day, some of our highest traffic days. We're continuing to see those better guest scores, the best we've seen.

And we've done a lot of work internally understanding intent to return on high-performing restaurants versus some lower-performing restaurants over time, what have we seen from a sequencing standpoint. And we're very comfortable in the correlation that improving intent to return will drive future traffic. In fact, we can put it down to for every 1% improvement in intent to return, you can look to see about mid-teens percentage of 0.17 incremental traffic down the road. Over time, that's going to be pretty powerful. And that's why that guest experience is such a critical piece to the sustainability of the execution.

Yes. And let me just add one more thing to put more color on your specific question on internal scores versus external scores. So we get a lot of data internally. We get over 20 million transactions a year get a guest survey sent to us because of the tabletop device. So it's a very reliable metric to look like how we compare versus ourselves, right, at over time. And so that's -- so because we get so much data, it's the thing that we look at every day to understand are we moving the needle on guests having a problem, food grade scores intent to return. It's an important metric and it certainly tells us whether we're improving versus ourselves, which will be an indicator or frequency of existing guests, right? What it doesn't tell you, which I think you were getting at the end of your question, which is how are you doing versus the outside industry and we do look at those metrics, then those metrics we get on a more quarterly basis just because it's not -- this is more syndicated data on how we compare. It doesn't necessarily correlate exactly what the measures that we have internally. I will say we've seen some slight movement in that, but not as much progress as we've seen on the internal scores because we have ways to -- we have more work to do, right? Like we're not -- I don't think -- I don't want you to take away from this presentation that "hey, these guys are done, look how much better the food grade and intent to return scores are." What that's telling you is exactly what your question was saying, which is, hey, you're doing better than against yourselves that should lead to more frequency of existing guests but we've got some more work to do to be where we want to be competitively.

Patrick Johnson, Stifel. I appreciate all the detail in the presentation today. And I guess, Kevin, just to build on that. I mean, clearly, one of the things that the marketing should be driving or you're hoping for the marketing to drive is reaching younger demographics and younger cohorts and making sure that you bring those in. So I know it's early, but I'm curious what you guys are seeing in terms of activations and either lapsed users in, say, millennials and younger or any other indications that you're reaching those groups and getting penetration and trial there?

Yes. So with the campaign we just ran in March, we were really happy to see that one of the largest segments of new traffic that we're bringing in was lapsed or just new guests that had not been to Chili's in over a year. So we're feeling really good that we are activating a new user base. We also feel good, our demographics are actually pretty evenly spread in terms of our guests. We're not overskewed older or younger, but we are seeing now with some of the latest marketing work that we feel like we are engaging with the younger audience at a higher rate than we were before. Now that's not always going to translate into a trip into Chili's right away. But we feel confident if we can keep this momentum up and keep this cadence up, that those -- that engagement will lead to trips from younger audiences. And then frankly, the things like innovating on crispers, we think, is a home run for bringing in a younger demographic as well. So we're pretty bullish on that.

I mean in the experience that we've had and some of the brands that George and I have worked on, it takes a little bit of time, like you got to have the right relevant product. You got to pull out of the stickiness in a way that younger customer is going to receive. We've got to make the investments in things like TikTok and some of these other channels that we made have been investing as much in, right, but as long as the metrics continue to move in the right direction, I think we feel confident we'll get it solved. But we typically have you ever seen it happen in a couple of quarters.

No. I mean, like I said, you're not going to go from like Chili's is not on my radar to you see a funny TikTok or a video, and it's like I'm sold, but that's where we got to continue that engagement and continue to keep that dialogue, that 2-way dialogue going between us and the younger guests.

And then tying that back really to David's question before, really staying focused on those guest metrics as you bring new trial back into the restaurants because they're coming with a different level of experiences and expectations. So that we're going to have to watch those very closely as we go forward.

Dennis Geiger, UBS. Wondering if we could talk a little more about the improved pricing power opportunity? And what that means going forward based on the enhancements to menu, to service probably where you're priced relative to your peers, it clearly seems like there's that opportunity. Anything more to share yet on kind of what that means over the coming years from a pricing perspective? Joe, I'm not sure if you're going to get to that later, but just curious if any additional thoughts.

Yes, happy to. And I will touch a little bit on it later in the day, but we think there's a great opportunity. One, we -- as you all are aware, underpriced for a period of time and really have put ourselves and that was reflective in the first quarter results when you got hit with that wave of inflationary factors and you were not priced to be able to handle it. We've made a lot of moves since then to get the right size, and we still have room to go. The nice thing about the -- I guess, the silver lining to that cloud of underpricing for a while is we are relatively well positioned from a pricing standpoint. I do think price/mix will continue to be a very meaningful piece of the equation going forward. I think we can get very selective in how we think about pricing. And we're doing a lot of work, and we're going to engage even some third-party experts on how you think about pricing. It's not a white wash of pricing across. I just want to take the menu up x percent. It's how do I really understand elasticities and where can I look on my menu to lean more aggressively into price? How do I protect -- where I have to protect on the value side of the equation, creating that true barbell over time? And then how do we build the opportunities to allow the guests to make some of that decision as we kind of go forward on the mix side of the equation. So I think we will be more sophisticated in our pricing. I think we -- as we do improve the guest experience both from a hospitality service and atmosphere standpoint. I'd like to be able to get that pricing up into that -- the upper end of the lower single digits. So if you thought -- if you remember, we used to talk about pricing kind of that 1.5% to 2%. I think there's a great optionality to move that and earned pricing power that's more in the 3% range and maybe even greater. At a minimum, we have to be diligent in pricing above inflationary factors. So I think that's an important philosophy change, too, is that we have to -- I think we have the ability to do that, but we're going to need to protect margins in those higher inflationary environments by making sure we're taking price all the other things we're doing is going to allow us more confidence in the ability to do that over time.

Brian Vaccaro with Raymond James. A question on the merchandising strategy and both on crispers and Margaritas. Could you help level set where the current sales mix is on those categories and also help frame the opportunity you see to grow those respective categories as customers hopefully trade up.

I don't want to miss -- you guys know the exact numbers. I don't miss skewing get them to you.

I have them bundled as part of the Core 4, so I don't want to give you the wrong numbers as an individual breakout, but we can follow up with that. In terms of the breakout now -- sorry, the second part of your question?

It's going to be like 15% to 20%, but what the...

It's in the mid-teens.

Will get to the exact number.

Kind of mid-teens between the 2 of them?

From a crispers standpoint...

Between 15% and 20% total.

Maybe elaborate on how you see the opportunity to grow those categories, if you could, as you have the 4, 5, 6...

Yes so okay. Let's start with crispers because it depends on the category. There are several things that we're doing with this new menu update. The first and obvious one is we're just going to get significantly more crispers to the tail, right? So in the test market, we saw -- it was like 30% more crispers just by offering guests bigger accounts to purchase. They weren't -- we didn't have that before, right? And so there was no advertising to that test. So without any traffic gains, just with the existing guests that are going to order crispers we're going to see -- it's going to flow through mix, right, because those are bigger bundles. But you'd see that -- so for example, if that played out -- based on the size of crispers, that could be 2 to 3 points of sales growth just on that -- just on that area of that innovation, right? We also took pricing behind the crispers upgrade and there are several things just in the core. Even if you just got the 4 count, we have an improved fry process, which we'll show you, which is much hotter and fresher. We had an improved crispers process. So has a lot to consume what we shared this morning. But like in the video, it showed the old way with the 2 different flavors. So that's important that original crispers and the Crispy crispers, we can only do 1 at a time -- 1 to 2 at a time when we were breading and putting them in a fryer because we got rid of the [indiscernible] one, we can do 24 at a time in a bull, right? So we can go through a lot more of them. But it also allows us now to be able to crisp them up right before service because we only have one. So every crispers that you order now should be literally piping hot, fresh out of the fryer because after you order it, we have a crisper process will literally come out hot and fresh every time, right? So you're going to have an improved product. The actual meat is actually bigger now, too, than it was -- we upgraded right when I got on, but so it's a bigger meat block. It's going to be hot and crispy every time, the fries improved. We now have additional sauces -- 3 additional sauces that you weren't able to order. We only were able to get honey mustard and barbecue. We believe all those things will allow us to earn price. We've also upgraded to a premium Mac & Cheese from a corn on the cob. Now while we did that, if you look on your menu, the new menus, we took the premium Mac & Cheese and we now have a premium sideline that's anchored by the Mac & Cheese that allow us to price on sides, too, right? So in that example, you're getting pricing -- you're getting -- sorry, sales from mix because of the bigger bundles, you're getting sales from price because we took pricing behind the upgrades. You're also getting incremental price and mix from the size improvement that we did that's on your menu, right? And then what George said earlier, is it's going to allow us to innovate with some new flavors of crispers going forward as LTOs to help continue to drive that bundle. So margarita's a similar idea in that that's really more of a trade-up strategy, right, which is if you have items that people are willing to trade up for in benefit spaces, you're going to get higher pricing will come through on mix, right? In addition, you're going to get more incidents. So I'll give you an example on incidents, because -- so remember what George was talking about, there's all these free flavors that we have, right, but we're also missing benefit spaces that we don't have today. So by reducing some of the free flavors, we're able to launch things like the Casamigos. There's another one we didn't talk about that's on your menu now called the skinny margarita. It's a very common margarita a lot people order and they want a lower calorie drink, right? We have a premium, the Rocks' Tequila Teremana Blanco is in the skinny. We don't just merchandise it on the margarita as you actually hope we've never done this before, if you open the menu and you go to the [ Gitless Grill ] which is a great seller for us. We've put the skinny in there, too. So we might get some more attachment with some of these new benefit spaces, because we just didn't offer them before, right? So if someone is looking for us skinny margarita or a lower-calorie drink, they might have just -- they didn't want light beer, they might have just opted out whereas now maybe we get attachment, right? So on the margarita example, you're going to get both, an attachment to check as well as incremental mix to the pricing on the higher innovation.

And just to add on, like I think there's more things we can do or that we will do. So even it all starts with the mark. We want to bring that into the restaurant. So our bar menu literally says it all starts with the marg now. But we want our servers and they come to a table and say, "Hey, welcome to Chili's, at Chili's, it all starts with the marg. If we get that first drink to a guest quicker, better chance that you're going to get a second drink and so on. And then when you think about just the way -- if you walk into a Chili's bar now, you might not know exactly what we stand for. We want to get to a place where you see patron bottles, Casamigos bottles. And really, it signals to you like we are a premium tequila margarita destination, so encouraging more of that. And then there's a lot more we can do in terms of the assortment. The frozen margarita you're going to try later, the Sangrita. Frozen is a really popular form of margarita. We haven't innovated on that maybe ever. And so that's the first step on that. But then skinny is a great one. Another one that every great tequila or margarita place has is a spicy. We don't really have a signature spicy yet. So that's something we're going to be working on. So there's a lot of runway that we see, both in terms of breadth of offerings and price spread.

And then the long-term plan, so we take sales overnight, we're talking about sales overnight ideas right now to answer your question. There's also this brand over time thing, which is think about like when you or your friends are thinking about where they want to go eat, right? Typically, they start with what am I in the mood for, right? It could be a center of the plate thing. It could be, oh, we're going to get margarita and chips. The more we can stand for those things, right, which especially when you're big segments, you're going to have more occasions, over time, the belief is we'll get more traffic. If we own these things, right? Like we really can reclaim ownership of margaritas and tequila, we're going to get more traffic over time, because that's what people think about when they think about where am I going to choose to go.

And when you combine the last 2 conversations together, pricing power with our ability to drive [ P mix ]. And when we think about mix, we're typically thinking per 100 guest orders. If you can lean into your core equities on a pricing and mix standpoint, you don't have to change [ P mix ] nearly as much to change the impact of the sales side of the equation. You can start to create a multiplier effect through the price mix combination on -- because [ P mix ] will change slowly over time. And do you think you'll probably see core equities inch up over time on the P mix side of equation, but the ability to price and mix into those occasions give you a more powerful engine on the sales side of the equation.

Brian Harbour, Morgan Stanley. I was just curious about that slide that showed kind of the customer segmentation by kind of like off-premise bar dine-in. I guess the question is just, have you seen results yet for example, where, okay, this is a reliable dine-in customer coming more often to the bar, or do you think that's kind of like still to come? And then I guess the question is just from a marketing standpoint, do you have -- will there be more and will be there more tailored marketing to, okay, like we're going to drive the bar business specifically with this campaign or maybe like marketing off-premise more heavily, how will you handle that?

Yes. So we're in process, I would say. So we haven't necessarily been able to bring that to life quite yet, but I do think there's going to be opportunities, right? So when you talk about the evolution of our CRM program, we want to get to a place where we can understand that Joe has been to Chili's 6 times this year. They were all dine-in occasions. Is there something we can do that kind of shows, Joe, that there's an off-premise? Chili's can also be used for off-premise occasions. That might be a strategic time to use a discount or an offer to see if we can get an incremental trip from him in a different type of occasion. So that's something we want to get to. We're not there yet. We are -- we have made a more deliberate focus on the bar, though, in the last year. So we've brought -- last football season, we had a whole program around when football is on, happy hours on, and we tailored that to Thursday nights, all day Saturday, all day Sunday and Monday nights when the kind of core football watching occasions are on to have a more relevant, happy hour in food and drink special. So we're going to continue to focus on driving people into the bar. I think you're going to see wings being a bigger part of the Chili's business as well going forward. So we want to continue to drive that bar occasion because we think that's been an under-leveraged part of the business for a bit.

I also -- just to build I'd also tell you, I think it's changed the way we're working. So like we're thinking about how do we make the bar more competitive? So we now have happy hour menus. We didn't have those before. George is looking at how do we take IJW, which is the virtual brand of wings and bringing it to the Chili's bar, so we can blow that out? We're looking at how do we use the tabletop device that we use for payment to create content for the bar, right? So I don't -- we weren't thinking about things like that before. It was all kind of just like go after these targets versus like how do we innovate on the bar, how do we innovate on the dining room? And my opening now, we talked about the things that we're working on to figure out off-premise. Like that's a very different set of things that we need to make off-premise win than we necessarily would need for the dining room, right? So I don't know other than the bar work that we've done, that we've seen some drink incidence improvement. I wouldn't say, less so we've seen results from that change, but we definitely have changed what we're working on and how we're organized to get after those things.

Katherine Griffin from Bank of America. I wanted to ask a little bit more about market share? And sort of as you are shedding the unprofitable transactions, where do you see -- where are you finding, I guess, the more profitable traffic? And I think across this space, you're certainly not the only ones who are aiming to kind of go after that higher dollar or higher-margin transactions. So how do you see yourself positioned competitively in order to make that strategy work?

Yes, I think the innovation and the insights that we're trying to bring to our business, I think, is helping us right now grow market share. So I think let me look about the innovation that we're bringing to food and innovation to being to drink, I think it's starting to show up in the results pretty consistently. And we really saw a market change 2 times this year that we saw -- this fiscal, we saw a market change in market share growth. One was the menu update that we did in October, and the other was the start of the advertising that we did in March. We've seen acceleration of market share. And I think that's really been driven by bringing some fresh new items to the menu, driving mix through some of the menu merchandising strategies we talked about as well as removing discounting, which has helped us grow overall dollars faster than the category. I think going forward, I think that will be a driver of growing market share. I think the additional one will be over time, the hope would be to close the gap on traffic. So for example, the move to remove Maggiano's Italian Classics, which is our virtual brand, that will have an impact on traffic trends because those are transactions, right? But we'll have a much less impact on sales and profit because it's just -- they just weren't -- they weren't performing in those areas, right? So as we cycle that through, I think you'll continue to see -- our belief is you'll continue to see dollar share growth. The hope would be once we cycle through some of the purposeful traffic reductions that are low margin, eventually, you'll also start to see traffic share growth, right? But I think that's probably at least 12 months away where you'll see this dynamic of growing dollars a lot faster than traffic.

Probably time for one more, and we will have another Q&A session, too. So not the only. David, you might.

Just there was a comment on the video about reinvesting in the guest. And I don't know if this is better for later, but there's obviously the benefits of simplification you're reinvesting back in marketing, obviously. What are some examples and maybe numbers of what your reinvestment in the guest is? What does that look like and maybe some unwind of team service and maybe some more people on the floor, I don't know, but any thoughts on that would be helpful.

We made quite a few labor investments already this year, bringing Bussers back. So if you think about we had them 7 years ago, most of our competitors had Busser, so bringing that support back. What we've seen with team service is our team members and the guest experience, the money they're making plus the guest experience is good, right? We want to be better, of course, but there are some labor investments we had to make in the heart of the house. So we made some additional cooks on at peak times. We've made additional labor investments in the QA, which is also -- this is our quality assurance that sits in the window and looks at every item before it comes to the guest. So those additional investments from the heart of the house, the QA and also the front of the house investments, that's where we're seeing a more of an investment to the guests and that guest experience. So really making sure that we're defining their roles. I mentioned this year, we're going all about team member turnover and making sure we retain those. We've got to continue to look at that simplification. When we say simplification, it's not all about the menu. There are processes with our front of the house and our managers that will help with that retention too. So when we think about investing back to the guest, at some of these labor investments to make sure -- and you think about pandemic and you think about these last couple of years, our managers have had to go and actually be in function as a team member, because we had no team members in some of the restaurants. So these labor investments have allowed them to now step back and be able to coach behaviors that matter, like silent refills, pre bus, making sure that they're connecting with the guest.

I would say it's been pretty significant like when I do my listening sessions, I do them all the time in restaurants all around the country. And I always have a question when we go around the table. I'm like, start with something that's a positive that you appreciate and then let me have it, right? And I can't tell you how many times, they'll say we've never felt more supported. We see the changes that are happening, both in simplification and the added dollars. Like there's definitely like I would challenge you to go into a Chili's without me around and find someone ask them do they feel a sea change difference in being supported, both from an investment in labor dollars but also the other stuff that we're taking away. And we're not putting -- we're not taxing them with additional figure out -- waste more. Because we've taken these things away, we're letting that help pass through. They feel very, very supported. It's to the point where there's definitely a difference in how people are feeling in the restaurants now.

And I'll have some numbers for you in that area later. So again, let's -- we're going to wrap up this part of the Q&A session. We'll have a second one coming in very short order. Thank you, all panelists. And we'll keep going with -- and so we're going to keep going.

We have a couple of more presentations before we wrap up with the final Q&A and get on to some of the tastings. And I'd like to introduce -- we're going to shift a little bit over and now talk a little bit about Maggiano's. And backed by popular demand from his recent engagement in Vegas. I'll give you Steve Provost, the President of Maggiano's.

Hey, I'm really excited to be here. Remember, 2 years ago, I sat down at lunch at this same event. And the first question I got was, can you squeeze even a dime of profitability out of Maggiano's? This year, the person who asked me that question isn't here today, so I won't roll them under the bus. We did, and the good news is now we can address two bigger questions. One, you're probably thinking about it if you've seen our earnings the last 3 quarters is, can you keep this plus 20% quarter-after-quarter sales going and build on it? And then the other one is, can you make any money on these sales that are coming in, so that as Kevin and team reinvest in Chili's, Maggiano's can play a more material role in Brinker's future? That's what I'm going to talk about, here's what I am going to cover. I'm going to cover first our sales recovery post COVID, which I think is a not-surprising story. And then the fact that we're the rare casual dining chain with a better business model post COVID, that is surprising, and I'll tell you how that happened. And finally, how we're going to shift into a more aggressive growth. Here's the story. If you don't -- aren't familiar with Maggiano's, you live in a city and we're now located 52 restaurants, 22 states. We're now at $480 million annual sales out of just 52 restaurants. And while we have work to do every shift, every day and rebuilding the capability, as Aaron just talked about, of all our new teammates and all our new managers, we've held on to our 4.5 Google rating. That is the highest among reported casual dining chains that are publicly owned, okay? Here's our sales. We came into the pandemic $8.3 million, post-pandemic $9.3 million for a 12% lift. That's not the cool part. Here's the cool part, how we got there. I'm going to call out Mr. Ivankoe, because this gets to the role of off-premise. So dining room is 61%. So a $300 million on $480 million roughly. That is the lowest percentage of dining room sales we have ever had since the first Maggiano's opened in downtown Chicago. Banquets, 14%. So we're right around $70 million this quarter between the pent-up demand and social and now corporate coming back, we're actually indexing. Parties are smaller, but we're indexing 98% a pre-pandemic sales. So the part of our business is most differentiated and most profitable is back and then finally off-premise. Now 25%, Kevin mentioned it at the beginning, that's the average for average casual dining. Mr. Ivankoe, who reports this every quarter and I look at it studiously, realizes that in a business like ours with 14% in Banquets, that can be misleading. So I'm going to dig a little deeper. So check this out. And I'm going to call out Larry Konecny, here who I had the privilege of going back to work with him and the Maggiano's team a couple of years ago and saw the opportunity right away. We went into the pandemic doing this as sales per week, $23,000 a week out of the average Maggiano's. Then like everybody else in the industry, the first year, we jumped up to $38,000 a week. America was huddled there at homes with mass watching Dr. [indiscernible], we're up at $38,000. Then most of our competitors gave it back. We actually grew again year-over-year, and now we're growing again plus 15%. We're now at $44,900 a week, I am much less mathematically capable than anyone in this room that's $2.3 million a year. It's basically a casual dining restaurant out the side door of Maggiano's, okay? Now 4 reasons that happens. First, it's pasta. It travels very well. It's probably not a shock that first, there was pizza then there was Chinese, pasta is the logical third choice. It's Friday night. The kids get 2 more [indiscernible]. I was going to cook, but I don't feel like cooking, pasta travels very well. It's hot. We can get it there on time. We won't forget the sauce. Number two, it's highly incremental for us. I know you hear all kinds of statements about incrementality, but think about this, our dining room guests, 40% of whom are there for a birthday or anniversary celebration in a lot of large parties, very unlikely you're going to cannibalize that with Carryout or DoorDash. And then our bank would guess even in this unromantic digital age in which we live. It's the rare person who's going to say to the -- about to be betrothed, let's invite 100 people over, gather around the couch, order Maggiano's carry out, and we'll have a rehearsal dinner here while we all watch last episode of [indiscernible]. That's not going to happen. So for us, off-premise really is new guests and new occasions. Okay? The third thing is we are very blessed in that we get to execute with the intensity of a small brand about this opportunity, but shamelessly borrow from [indiscernible] and from [ Doug Cummings ] both the tech and the operating systems that the big brands Chili's develops. And then the final thing that we're very proud of is we're built for complexity. We have 8 managers. So at 4:30 on a Friday when it's like clockwork, when the Carryout screen lights up with 10 orders, we have a manager over there for the next couple of hours. We have 126 teammates in the average Maggiano's. So we can staff 2 to 4 people on Monday dinner, and we can staff 6 to 7 or 8 people on Saturday and Sunday. And that's why on the basics that Kevin talked about, is it accurate? Is it hot? And please if I order extra bread, don't forget the extra bread. We're better than the rest of the category. That's why we think we've had this growth, okay? So now that probably is not surprising. What may be surprising is in the face of this historic inflation even with these sales increases, we actually have -- are back to the same ROM that we had pre-pandemic and with higher sales, we're more profitable. There's not a long list of casual dining chains that can say that. And here's why, and again, I'll compliment Larry Konecny, Stacey Hunter, Ernest Perez, Mike Taylor, Anna Williams. This is the team that just -- well, along with our GMs and ECs, knows this business so well. We have so many 20-year veterans and owns it, that when the opportunity of a pandemic came, they reset our business model. First thing we did is we used to give away 200 pastas for free every single day in every restaurant. Now we charge $6. Three things happened when that happened. The obvious one is we now make money on the food cost and labor of making these -- well, used to be giveaway process. The second thing is the guests who came in for an incredible Linguine Di Mare or a Lobster Carbonara, or steak used to trade down to a lasagna because you'd be crazy not to order the lasagna and take home a Chicken Alfredo. They no longer do that PPA and [ check ] rose almost immediately. And the third thing is we got 1/5 of our guests, and we doubled their frequency in the dining room, because they are basically at that moment, buying a second eating occasion from us. People still call the restaurant. I will tell you this most subtle thing it does that reinforces our brand is our best service, not all, but our best now walk up the table and go, what's going on in your life? And if people are extroverted and they say, "Hey, we're so crazy. Our kids are back to school. We don't have any time to cook". I've got a solution for you next Thursday night when you told me I have that school board meeting. Okay. Now the other thing we did, and we had to be very delicate, Kevin Ripley, our head chef, we did prep simplification. That is not easy in a brand with 200 chefs, the majority of whom are educated at culinary schools and a 30-year tradition of scratch cooking. So we focused on items that are not core to us, like salad dresses. We also focus, by the way, and you can judge me on this if you want to go to a Maggiano's later in the day, on our lemon cookies, we make 7 million lemon cookies a year, we only sell 2 million because we give them away for free. Breakfast, we found a partner who could make them with the delicacy and softness. We did that very surgically. And then the big thing we did, and this is probably only something a 50 restaurant brand could pull off is we had our managers in the summer of 2020 rewrite our labor model. Now keep in mind, we got lots of tenured managers, Monday through Thursday and in the summer, Maggiano's like a Chili's, 300, 400 guests a day. On weekends and especially in the celebratory months like May and December, over 1,000 covers. So how do you build a labor model that can handle that kind of difference? You give it to the people who run it every day. We took every single part of the restaurant, including the kitchen, we rewrote it. Coming into the pandemic, we were running 62 labor hours per 100 guests. Now we are under 50 labor hours for 100 guests. And the thing I'm proudest of for Larry and the team is like some own [ files, ] they stuck the landing, that labor model has held with all these guests coming back into the business, 4% higher transactions than we had prepandemic. The final lever is pricing. There's been a lot of discussion about pricing today. One of the great things about being old is you get to live long enough to reverse all the dumb a** things you did when you were younger, we were pricing under inflation in Maggiano's. Maggiano's is not built to price under inflation. So this year, we have 9% traffic. Let's be honest, a lot of that is banquets coming back, off-premise, sticking and growing. We also have an 11.4% PPA growth on top of that. Don't expect that next year, but we believe, given the fact that we have three distinct channels with distinct guests and user occasions, that we have very diverse trade areas from exurbs to the Vegas Strip to downtowns, we believe we can -- and we still have a price gap to our polished casual competitors on core items like lasagna and Chicken Alfredo. We will price above inflation for the next 3 years. And just like Chili's, what Kevin and what George talked about, we will reinvest back a portion of that in lifting the guest experience, because as prices rise, guest expectations rise. Okay. Now let's talk about shifting to growth and how we build on this momentum. The first thing is probably our biggest priority this year and that is to relaunch this book that was originally written in 2004, the Maggiano's way. It is as old school as it gets, 27 pages. I've never worked with the brand where it's so alive. People still read it every day and shift meetings, but it's not really built for a digital world. And so what Kevin and Larry have been working on together is to take this down to a one-page Maggiano's way, develop real guardrails for our North Star as we build this brand going forward. You can see 3 areas that we especially emphasize are specialties. When Maggiano's was created, Richard Melman and Mark Tormey went around Chicago and interviewed Italian grandmothers, their best recipes for Spaghetti, Lasagna, Alfredo. Many of those recipe are still on our menu today. And that's the -- our core for, we're going to innovate, and I thought the question was great. It's a lot more powerful to innovate up and to innovate out. And we will bring the best dishes you can imagine in these areas. Since our first [indiscernible], his name was Marco. And he literally greeted everyone who came into the restaurant in downtown Chicago with "Welcome to Maggiano's" and he hugged them, we have been the place that we'll do whatever it takes to make people feel special. Now we have to teach 4,000 teammates and 200 managers who've only worked for us for 18 months or less about what that really means. And finally, we got to create a warm and inviting atmosphere. Here's a little of what this is going to look like, and you can see for us over the next 24 months. Here's the categories we own, that dish, Lobster Carbonara, if you have not had it, it's fresh-made lobster, it's got bacon, Parmesan cheese, a white truffle garlic cream sauce and combined with the lobster is just out of this world. Our chefs can create many of those where you combine high-end proteins with the accessibility of Pasta. On the other hand, we've been the #1 place for birthday celebrations for 30 years. We don't have a celebratory large priority dessert. That's an item in development called Holy Cannoli that you could bring out and get everybody around the table to get excited about eating cannolis. These are the areas you're going to see innovation from us in service of driving PPA in a higher [ run ]. The next thing is we're not going to be content with where we are in off-premise, we're going to lengthen our lead. We launched last month our first app, so we're doing well over 100 orders a day, and we still don't have an app. We launched our app. We have in California, thanks to [indiscernible], are of our restaurants actually testing AI. I was there last week. I can tell you customization and 40% of our orders are customized. It's not easy. The voices are uncanny. The first guest who walks in and goes, "Hey, I like Becky." I'm like, Becky is a large language learning model. That's not a real person. So -- but that -- if we could get that taken care of, we could move that -- the person answering the phone into the parking lot to actually greet you as you come in to pick up your off-premise order. We have a restaurant right now, increasing throughput that is making changes to where we do our packing of the orders using new equipment that enables us. Right now, we can do about 4 to 6 orders simultaneously. This way, we could do 8 to 12 orders simultaneously and not interfere at all with either banquet production or dining room production, which would be huge on Mother's Day and Valentine's Day and any Friday in December when you -- when we sometimes do 400 to 600 off-premise guests a day. And then finally, we will market ahead of this occasion. We are proud to be the #1 Italian place if you go into the Carousel on DoorDash, the #1 recommended on Uber Eats with the highest rating but we recognize that the majority of people in our trade areas have never even thought of using Maggiano's for off-premise. So we will market ahead as this channel grows. And then finally, we will address and become even more warm and inviting to a new generation. I happened to be last summer in Maggiano's Nashville, which is one of our just meteoric rise restaurants. I was working to carry out, a woman came in who had done a lot of catering orders with us, and she was very excited and she didn't know who I was. And she said to the team I was working with, she said, "You know that order 2 nights ago? The weird one that was 3 chicken breast and asparagus, actually was for the Backstage at Nissan Stadium. It was for Mick Jagger and Keith Richards. And I was like glowing and the teammate next to me, senior in high school, she looked at me and I knew exactly what he was going to say before she said it. She said, "Who's Mick Jagger?" And I was like, "Oh my God! My baby boomer soul is just tortured now." But here's the thing. This is a concept that was built around the Sonata era that came to fruition and popularity in the Jagger era that we are now, for the first time in our history, in our dining rooms, have a majority of people who grew up in the Beyoncé and Taylor Swift era in our dining. So if you get a chance and you can stop by either the two Maggiano's here in Dallas, one in North Park Mall or one in Willow Bay, you will see our new remodel. You'll see a whole new banker room, much lighter and brighter than the old dark where it has an Instagram wall because today's meeting planner and today's shower creator wants, it's all about Instagram. You'll go in our dining rooms, you won't see red check table cloth. You'll see an elegant black table cloth with white on top. You will hear Frank Sinatra. You'll also hear a group called, Postmodern Jukebox on the Soundbox, which is a Jazz band out of the upper east side of Manhattan that does jazzy remakes of wrap heavy metal and pop songs that you all grew up with. So this is how we reinvent Maggiano's for a new generation and keep the current momentum going. What does it all add up to? The 2 things I will say. Our goal is north of 10 million AAV. And as an old boss of mine used to say, like in my life time, like sooner rather than later. And then our ROM is in the mid-teens right now with this recovery. All these strategies will be intended to build that ROM higher into the high teens so that we can be best in class in this category. That's it, and the talk of ROM is a great segue to bring up again, Mr. Joe.

Thank you, Steve. I look forward to all the notes on how he is unwinding his useful indiscretions as we kind of go forward. But one more presentation to go, and we want to actually now provide you some financial context everything we've been talking about from a strategic initiative. But I do want to start by thanking the production team for digging back into the Chili's archives and finding one of my early pictures from when I was new at the company in that. So if only that was the truth. I don't get the flashy videos or anything of that nature. I just get the number, so I got to start somewhere. It's -- what I want to do as we wrap up presentations is want to give you that financial context and talk about the green shoots that we are seeing. Kevin mentioned the business is already starting to see the traction and the green shoots coming. And I want to put that a little bit into the financial context of how we're reporting out against that. We'll talk about the capital allocation priorities that we're going to look at over the next several years, a lot of that focusing on the investments back into the guest experience and the business that we've talked about and then provide you some multiyear targets. How are we going to align the business towards growing both, top line and bottom line, and where you can hold us accountable for the targets we think that this business is capable of generating through these new strategies? And as part of that, too, I'll touch a little bit on how you could be thinking about F '24. I don't have specific guidance for F '24 for you today. We will do that as is typical in our August earnings call coming up in the next couple of months, but I do have some considerations for you and to think about how you might be doing some of your early modeling work around F '24 as we head to the beginning of that fiscal year in the not-too-distant future. Let's jump into the financial green shoots that I was mentioning about. This is a top line focused strategy. We are going to look to drive the business as aggressively as we can from a top line growth standpoint. And we're starting to see that happen. This year, we are starting to see the top line move using that broader marketing voice, improving the guest experience. We're anticipating our revenue top line to be a little over $4.1 billion as we wrap up the fiscal year. And we particularly have been able to lean more aggressively, as you all have commented on and talked about over the course of the fiscal year on the price mix side of the equation. That is really playing out as our same-store sales have materially improved throughout the year, another indication that we are driving the business in the right direction. Obviously, we had an extremely disappointing first quarter, but now bouncing back nicely from that and being able to drive same-store sales of about 8% and 9.6%, respectively, each of the last 2 quarters. And that has been reflected in the price and mix dynamics that we've talked about already today. Now we've been able to keep price at around 10% each of the last 2 quarters. It will be relatively in that same range as we move through this last quarter. And then you've seen that nice jump up in mix, which is reflecting our move away from discounting, reflecting, obviously, the opportunity we have given the guests to spend more that guest coming in the restaurant is still willing to spend, and we're giving the opportunities to do that. But as we move away from discounting and move away from and move towards a greater focus on the core brands and the core equities. We will continue to see mix working well for us, more than offsetting the trade that we've made on traffic. Again, as we've moved strategically away from less profitable traffic, we're pleased with the trade we've been able to make on the price mix side of the equation as we kind of go through from a comp sales standpoint. It's also starting to reflect itself on the margin side of the equation, lots of work to do in the space. But again, coming off a very low margin performance in the first quarter, we've now stabilized margins back up into those low teen levels and have been able to start to move margins on a year-over-year basis on a positive manner. We're doing that also by moving that investment in the business we talked about. And here's one of the numbers, David, that we had mentioned. This year, we made the decision, because we were getting the traction on the top line to move forward some of the investment we originally had thought we would be making more in F '24, and you're seeing about $55 million of OpEx investments going into the P&L primarily here in the back half of the year. And those are focused on labor and focused on incremental R&M expense. So that -- and some marketing expenses as we put together the March campaign. So that's about $55 million of unplanned OpEx we brought in to continue to build the business and start to drive us in the right direction and able to stabilize margins even with that expense coming into the equation. Another great reflection of how we think the business is moving forward is the performance of the new restaurants. We've opened a number of new restaurants across the country. You look at the representation here, several in Texas, which obviously is a fortress market, but also you see Kentucky represented, California represented and Ohio represented. And at that very end that great tall bar [ Tango wood ] is up in Wisconsin and that is an all-time record for a Chili's new restaurant opening. And the great thing about these restaurants as they open, they're opening well above our average weekly sales for the brand and they're holding their levels at higher than you typically see. Generally speaking, you would see a nice pop and then a settling down into more normalized, and that settling is settling at much higher levels than we would have typically seen. So we're thrilled about the receptivity. It speaks to the improved [indiscernible] economics of the brand, but it really speaks to how well this brand is received in a lot of these markets. And in some cases, first movers into markets as they're developing and opening up. So excited about our ability to continue to open very relevant and profitable new restaurants. Let's talk a little bit about that capital allocation side of the equation. We're really going to be focused on one pieces of the capital allocation equation. One, that investment side of the equation. What do I want from that? I want to say, again, guest experience needs to improve, and we're going to focus our capital dollars into those areas, primarily around when you think about the atmosphere, when you think about the technology side of the equation to grow now to shift to growing that traffic. And this, again, capital dollars. And then we're going to strengthen the balance sheet. We have functioned at a higher level of leverage for an extended period of time, and we're systematically using the free cash flow generating capabilities of this brand to bring that down. And you will see that steady decrease as we move down. We're targeting now under 2x. We had talked previously publicly about getting down into the 2.5x. We want to keep moving the ball forward more aggressively on further deleveraging to give us better operational and financial flexibility. So specifically in that first part of the capital allocation, what do we expect the expenditures to look like? There's no new news here really. We're going to lean into the areas that we have typically invested in, but lean in a little more aggressively in a couple of those areas. We expect CapEx to be $175 million to $200 million over the course of the next 3 years with restaurant -- with R&M expense being the biggest bucket. Now it's $75 million to $80 million. For those of you that have followed the company for a while, that is an increase roughly of $10 million to $15 million. We've completed a full assessment over the course of the last several months of the fleet's condition. There's an opportunity to go back now post COVID, post acquisitions of some franchise operations and really assess what is the state, the deferred maintenance needs and where can we make sure that we're adequately creating an environment that our guests are going to find receptive and a willingness to dine with us. And so we're taking that -- those dollars up into the $75 million to $80 million to make meaningful moves forward over the next couple of years on the condition of the fleet. We will continue to open new restaurants. Obviously, when you see the performance of those restaurants, it makes all the sense in the world to bring more profitable restaurants into the equation. I expect to be in the low teens on an average basis as we kind of go forward over the next several years. But I also want to comment that we're going to be equally disciplined on how we prune the fleet at the other end of the equation. Clearly, with a 48-year-old brand, we have a large spectrum of performance across our restaurants and we have some older, some tighter, some less profitable and cash flow-generating restaurants, and we'll be more disciplined in bringing those out of the equation as they get to the end of their useful lifetime. We typically try and time that around lease expiration dates. And so you'll see probably a similar amount to possibly even in some of the next couple of years, maybe even a slightly larger amount of closings and openings. But the good thing about that is, if you remember back to that slide of those new openings, if I can open in Anna, Texas at $5.5 million a year, at the same time, closing a restaurant, we made a decision not too long ago to close a restaurant, I won't name it, that was doing about $1.8 million that -- I'll make that trade every day. So while the numbers of the fleet won't change dramatically over the next couple of years, the profitability and cash flow components of the fleet will start to move more aggressively in the right direction through those trades. And then technology will always be a piece of the equation. We have embraced technology from a brand standpoint. We believe that is an opportunity to provide a better guest experience to interact more aggressively with guests and make sure that we are being as efficient as we can in a lot of different aspects of the business. And we'll continue to invest at a good clip within the technology side of the equation. And as I mentioned, reducing debt is a key priority for the company for the next 3 years. And as you can see, our anticipated cash flow generation is going to take that debt down over the course of estimating by the end of F '25 to below that 2.5x and that suggestion that we'll stop there, but I think we're getting down to very much more solidly and much more strengthened balance sheet, which we think is the appropriate way to function and drive the business forward. And then finally, let's go over a little bit of -- let's go over the 3-year annual growth targets that we're setting as part of the strategy. So I know that you're all interested in what do you think we can do with all this from a number standpoint. And this is -- and these are the targets that we're laying out for you today. So from a top line standpoint, we think we have the ability to grow consistently in that 3% to 5% top line growth over the course of the next 3 years. Importantly, we can drive EBITDA in the 5% to 8% range as we kind of flow through that price mix combination. And that should translate into an EPS growth in that mid-teens range. And we've given you 13% to 17%, that mid-teens area. Very comfortable and confident in these targets. One of the things I'd say about F '24 as we kind of shift to thinking about that is -- and I'll make some general comments about F '24. I think we can be at the upper end, if not above, most of those targets as we start to lap through some of the issues that we have gone through here in F '23. So more to come on that as we put the F '24 plans in front of you in a couple of months, but we like what we're seeing and the ability to grow the business even in the current environment. So let me talk a little bit about F '24 specifically. Again, these considerations, I'd like you to take away as to how we're thinking about the business and make sure you understand where we're looking to move the needle and how we're looking to invest. As I said, we've already pulled $55 million of investment into F '23 on the OpEx side of the equation. F '24 will continue to be an investment year. And I want to be clear about that. We will bring more dollars into the equation from an expense standpoint to drive the business forward. These are incremental dollars on the top 2 advertising and labor. So incrementally, we'll spend approximately [ $50 ] million more within the advertising piece of the equation. That's where George [indiscernible] ran you through the opportunities there and how we want to drive closer to that 3% of sales, a little bit under that on an annual basis. But those are the incremental dollars that will allow us to do that. And we're continuing to invest on to the labor side of the equation. Now the labor investment started about midyear this year. So we have an annualization of those as we look through the first 2 quarters, and that's going to be about $20 million of incremental expense in the F '24 numbers relative to what was in the F '23, most of that on the hourly side of the equation. And in F '23, we took our repair and maintenance on the OpEx side of the equation. So we have CapEx, obviously, that goes into R&M side of the equation, the OpEx side of the equation, we took about $15 [ million ] increase in that, just again, move the needle forward on the condition and the atmosphere of the restaurants, and we're going to continue at that pace. So we're considering that our base now, which I think is realistically reflective of a brand that on the Chili's side of the equation, the average is about 20 years of age within its fleet. So that's just an expense that should be in the base, and we will make sure that we price accordingly and return against that ongoing investment in the condition of the brands. So as you think about F '24, and I know everybody is trying to figure out their crystal balls as to what really is going on. And obviously, we start in about a month or so. It's a cloudier macroeconomic environment out there. Now interestingly, we continue to do well on a year-over-year basis, and we're going to go through some lapse here of a slowdown this time last year. So I think there is still positive growth, and we expect to see positive growth in the business. But the consumer does appear to be getting more cautious in its approach and whether or not you put that into a softening category or however you want to characterize it. I think it's a more discerning and a more skittish consumer out there. What's interesting is you see a little bit more of a discernible reaction around events like bank crisis or debt level debates that take a lot of public space and a lot of public discussion. I think you're seeing an environment where that is creating a little bit more skittish environment and these episodic pullbacks from time to time. So that's very much present. So we're being mindful of that. We're watching it closely as we finalize our plans, but we do expect for some period of time to have a level of softening in the macroeconomic environment. It doesn't mean that we don't have opportunity in that environment, particularly to take market share, and we'll lean where we can to make sure that happens. But we do expect it to be a little bit softer environment, particularly as we head into the first part of our fiscal year. Now we do still have price mix opportunity. We expect price mix to be an important piece of the equation. We will not be pricing at the same level that you saw us price here this year. That will start to slide down as we lap some of the moves that we've made in the current fiscal year. So you'll see price come down throughout the year, but the impact of the full year price/mix will still be in those mid-single-digit ranges. So again, I think -- and we're very comfortable with that. Again, relative to the competition, relative to, I think, the experience and the increased value we're bringing to the guest, I think we have a lot of opportunity. We're not going to be afraid of price, and we're not targeting, I can only price to a certain level. We're going to price to where we think we have the opportunities to price and understand those opportunities more acutely as we kind of go forward. We are seeing commodity moderation finally. It seems a long time ago since that first quarter when we looked at 24-some percent of year-over-year commodity inflation. So the commodity inflation has moderated, but it's also still present in some areas, particularly the beef complex and within the produce world, the French fry complex are going to be inflationary as we kind of go through the next year, but we will be operating at an overall lower inflationary environment on the commodity side of the equation. Conversely, we'll be operating at a higher interest rate environment. Again, the entire commentary around rates staying higher for longer is definitely playing out. And we can see -- we don't see a moderation in those rates in the near time. So we will carry probably roughly $10 million of incremental interest expense in F '24 versus F '23. I think that's the -- after that, you'll start to see both, the impact of a rate environment and the impact of lower leverage coming down impact us on the benefit as we go into '25 and '26 from that period on, but this will be a year of higher interest rate environment. So I think those are the major factors when I think -- what I want to like you to think about as we kind of go through F '24. It's -- one of the other persistent issues out there from an inflationary standpoint is wage inflation. And wage inflation is again when I think of higher for longer from a rate standpoint, underneath that is wage inflation higher for longer. So I think that's really what's driving a lot of commentary within that from a Fed perspective, and we're experiencing that. But we're still going to do the right thing for the business. We're still going to make sure we're making the right labor investments. We understand the cyclicality of that cost dynamic, but we're not going to be deterred by that higher -- by longer to make the investments we need to make, but it will have an impact in the short run. So finally, again, from a finance perspective, investing in the business to drive top line. Again, it's important to manage margins. It's important that margins can be leveraged over time, but most successful strategies are not focused on driving margins from a cost-cutting standpoint, they're folks that are driving top line from a growth standpoint. And that's what we're going to continue to do. The improved guest experience is specifically designed to get us that pricing power that we think we need to not only improve margins but to make sure that we're staying ahead of the game from a cost dynamics and give us the firepower to make the right decisions from an investment standpoint. And then we will have a stronger balance sheet. That's an imperative for this company. And over the next couple of years, you will see the benefit of the increased cash flow from a ratio standpoint, but we will bring absolute debt down steadily over the course of those next couple of years. And all of that will accrue to the benefit of that long-term ability to drive EPS and EBITDA growth through the brands -- through the company.

So with that, let's shift back into a little bit more of Q&A. I'm sure that's given you enough fodder to have some questions about. I'm going to ask the panel to come back on up, Kevin, Aaron, George and Mr. Provost. We'll take some questions. We got another 20 minutes or so. Michael?

Joe, you mentioned episodic pullbacks. So I'd like to drill down into that a little bit more on what you're seeing. Is it more of check management? Is it more visits? How does that change based on the customers' income and also the difference between what you're seeing in those periods between off-premise and in-restaurant dining?

Yes. Good question. A lot to unpack there. The -- from an episodic standpoint, it's interesting as you kind of go back and reflected some of the -- if I look at the timeframes directly around all the commentary on the banking crisis when the banks were all about to go under. And then you look at that week or two when you had a lot of discussion around the debt ceiling and what does that mean for the creditworthiness of the U.S.? So you can actually see some wobble in the consumer side of the equation. See, when I look at industry numbers, I did see when I look at some of our numbers, too. So I think those types of events seem to be impacting the consumer a little bit more acutely, which tells me that that's the cautiousness that's working its way into the consumers, how they want to be a little bit more discerning with their spend. I mean the macro clearly seems all the data I look at, all the data I read that you guys published, a lot of this great data comes out of the work you guys are doing, seems to be -- the retail side of the equation seems to be taking some of the bigger hits. There's still decent levels of spending going on in the restaurant inside of the equation. But I think you've got to earn those visits and those dollars a little bit more than you've had to in the past. So Off-premise in our world seems to be impacted a little more than on-premise. One of the nice things, and we talked about that on the last earnings call, is a move back into our dining room. So that's a good trade is to see the positive traffic coming back on to the dining room side of the equation. Generally speaking, your off-premise guests can be viewed as probably being a little more value-oriented, a little -- probably, in essence, managing their check a little bit more anyways and choosing off-premise. So that pullback is probably maybe a little more reflective of that value focus, if you think about it going forward. Any other?

It's Eric, KeyBanc, again. I appreciate all the details on the 3-year targets. But maybe if you could help us with what you're thinking in terms of margin? You have this top line growth strategy. Can you just help us understand the margin potential of this business now that you have stabilized the restaurant margin in the low teens, where do you think you can get to over the next 3 years? And how do you -- how should we think about that in terms of staging that from '23 through '25?

Again, a great question, Eric, and I think we can improve our margins. First of all, I think that -- I mean, a lot of the work we're doing is predicated on the ability to do that. I'm not looking to drive them excessively because we're going to make the right investments. When you think about -- and I'm assuming you're talking about restaurant level of margin, a lot of the investments obviously are going to go into those areas from an expense standpoint to impact ROM. I think we'll grow them steadily over time, but you're talking probably 20, 30 basis points year-over-year as opposed to percentages. I think we can get up into over time, a couple of percent higher than we currently are, but ability to add a lot more top line growth at or slightly better margins than we currently have really translates well into the bottom line, particularly if we can do it from a price mix standpoint, which has stronger dynamic flow through than traffic does.

Nerses Setyan from Wedbush. I think there was a comment from Kevin that the transaction growth may not materialize in the previous Q&A for another 12 months. And I'm not sure if I understood that comment correctly, but just given the uptick in advertising, and I think you talked about the potential for '24 to be above the high end of the 3-year targets. Can you just revisit that and just make sure we're all on the same page around what your thoughts are around '24 transaction growth?

Yes. So there's a couple of things that we started doing that we really started in Q2 of last -- Q2 of this fiscal year, and we've continued to do them in Q3 and Q4. That will take probably another 10 to 12 months to cycle through. The first one was we removed a lot of the free coupons that we were sending out in our CRM program. And when we did that, that started in Q2, we saw an immediate traffic decline from that, like in the run rate, anywhere from 1 to 2 points, right? So that's going to be a headwind for another 2 quarters, right, until we cycle that because we're not going to -- the plan is not to put all that back in, and the plan is not to take more out. Plan is to get that cycle through, okay? Does that make sense, the first one? The second one is our virtual brand, Maggiano's Italian Classics, which we had launched, it was over a year ago. It's a little under 2% of mix, and we're discontinuing that brand. So we've talked about this in prior calls. The last of that brand will come out at the end of this month that will take 12 months to cycle through until next June, and that's anywhere from 1.5 to 2 points. That over time, will get less and less until it cycles through. So those are two headwinds that -- we're not going to try to do something else to try to offset those other than the incremental investments in advertising. We are adding the advertising in a -- as a positive building block on traffic, right? But I don't think it's going to net up to positive traffic growth when you net those two things out, at least until we cycle through the purposeful things that we're removing. Does that make sense? Now I will tell you, I do expect to grow market share with the changes that we're making, right? But it's going to be a while before I would say we're going to grow traffic ahead of the industry.

John Ivankoe from JPMorgan. It's interesting to see how supply growth is changing in the U.S.. And Dallas is, gosh, it feels like I can spend a month here to seeing so many of these beautiful freestanding, what seem to be like flagship boxes of a lot of different brands that have been growing just kind of on the road. And a lot of them, quite frankly, are new-ish competition that maybe wasn't around 5 years ago. Few chicken type of brands that kind of mention or just like acceleration in these brands in terms of the growth. So I guess I'm asking, I guess, a specific question and then I'll ask you a more general one. How do you feel about competing against some of these current generation, next-generation types of -- you really focus QSR that might be going after exactly the type of customer that maybe previously would have used Chili's for lunch. And secondly, the Chili's that we see today, yes, there's different colors and some different seating and what have you, but it's largely the same type of box that you're opening 20, 30, 40 years ago in a lot of cases. Has there been a thought of rethinking the dining room physically? I know you're making the bar more present, I get that bar area music, televisions, what have you. But is there anything you can do with the dining room, say, listen, you're going to compete with QSR, but what you can do you think about things that you can do to actually lengthen the amount of time that customers want to spend in your restaurant. Actually increases like, hey, listen, we're going to be true full service, not necessarily turn Chili's into a lounge. I get that, but things where you can just come in and spend an afternoon for example, and kind of spend the time. That's going to be something very different than what some of the new quick service chains that I see all over Texas and quite frankly, all over the country you're doing. Extremely long question, but competition is the first thing you had to address and really opportunity to just rethink the on-premise Chili's dining experience beyond what you've done in the past. That's the summary.

Yes. So let me -- I'll start with the competition question, and then I'll touch on the asset of the future question. So from a competitive standpoint, I think the occasion-based targeting that George talked about unlocks different competitors for each of those occasions, right? So if you think about the bar occasion versus the dine-in occasion versus the off-premise occasion, and I think that's causing us to think differently about what are the benefits that we need to innovate on in each of those spaces in order to win. So we spent probably the bulk of our time today on the dine-in occasion, just because it's the bulk of our business. It's about 2/3 of our business, and we're focused on improving the experience, the dine-in -- casual dine-in experience in order to win transactions from other casual dine-in concepts. I'm not necessarily worried about some of the chicken tender concepts that you were talking about when it comes to the dining occasion, because our job is to have great chicken tenders, but it's the food that we're serving when we're selling a dining occasion. I think if we continue to innovate on better food and better service in a clean and friendly atmosphere, I think we'll win more dining occasions. And I feel very confident about what we're working on there. From the off-premise standpoint, what I talked about was I think the opportunity is much bigger from a transaction standpoint, just because there are so many more off-premise transactions that are available as a jump ball, right? Because then we are competing with some fast casual and some QSR depending on the at-home occasion, right, where I feel like if we innovate on the right things in terms of making the app more sticky, getting -- improving the experience in terms of accuracy, and temperature and promise time, I do think we can capture some of those transactions. Are we ever going to be a major player in off-premise in the context of fast casual QAS? No, but if we can get even a small percentage of those hundreds of millions of transactions that are consumed off-premise, we'll see a noticeable difference and improvement in transactions in the off-premise business. And then from a bar business, I think we probably made some progress on the new bar menu, happy hour, we're now going to looking at bringing in a much bigger wings program into the bar. And then you've seen some of the drink innovation. You'll experience some of the drink innovation in a few minutes. So I do think that we're -- that this occasion-based strategy is allowing us to be more hyper-focused on innovation that's going to matter for each of those channels versus the competitor that we're going against. And I feel confident that we'll make progress in all three of those. As far as the prototype of the future, we do need a new prototype. So I don't -- I agree 100% of what you said, right, in your question. In order to do that, we've got to finish the North Star, which we finished. And then we've got to say, what is the visual identity of the brand and all the things that we want to do based on that North Star? And only then can we go to a concepting agency with other things beyond just the North Star, which is, hey, we're a much bigger off-premise business than the last time we designed at Chili's. So how do we design the side door to be much more easy in and out. Do we need order screens where it tells you whether the order is in process or the order has been packed out. What are ways we can get guests in and out faster to drive the off-premise part of the business? How big does the bar need to be? How big this dining room need to be, et cetera, right? So 100% aligned that we've got to do that work, but we're now waiting on the North Star to translate into a visual identity. Once that's then, we're going to kick off the prototype work.

Yes. And what I would add to that is it doesn't necessarily mean that you're going to have a small footprint Chili's, like chasing a fast casual down into the 2,500 square foot because, again, all of those different pieces of the equation need to work when they really are driving the business, dining rooms on the evening and on the weekends, obviously. The volumes I showed you on this new restaurant developments can't be done in a small footprint. So again, the volumes are there to work within the prototype size. Can the prototype be restructured a little bit more efficient? A lot of your size dynamics for a restaurant drive off the kitchen, okay? So the design elements actually will start first on what is the kitchen I need to drive the business that I've designed from a culinary standpoint, and then you kind of work forward from there. But there's definitely some flexing that you could see happening. The bar, again, we haven't spent as much time over the last several years, thinking and reacting and developing the bar side of the equation. So that's existing footprint that has capacity and utilization that we can do a lot better at. So how we use the existing square footage is a big piece equation, too.

Yes. So you see when you travel, there's just so many different types of seating and seating areas and plug-ins and how people do want to interact, don't want to interact anyway. There's a lot of different things that I think you guys -- you have a very underutilized dining room from 15 years ago. That's where the whole genesis of the question comes and it's like, okay, well, how do you make itself more attractive to more people at different times of the day? Thank you for the answer. Joe, I just want to make sure I heard you. Interest expense at $10 million higher '24 versus '23, correct?

It's going to be in that range, yes.

Are you assuming all free cash flow goes to paying down debt? I mean does that include that the debt balance goes down from here?

Yes. The debt balance is definitely going to be going down from here.

So up $10 million on a down debt balance by the end of '24.

Yes, your debt balance is -- again, you saw -- so some of it is the timing of when the interest rate cycle moved up to the higher end. It's now going to have a full annual impact in F '24. We really had a partial impact but we will start to bring those dead loads down. That's why you'll see a year-over-year increase in interest in '24. Then, I would expect to see a reversal of that. You'll start to see that interest expense come back down as you see the -- what I would anticipate a lower rate environment, but I've been anticipating a lower rate environment for a year now.

Or it will be down even in a higher rate environment.

Correct.

Alex from Jefferies.

It's really busy over here.

If we could expand on the TV advertising spend outlook for and how that dollars compares to historical levels and maybe even like digital spend, the dollars, how that compares and just to get a framework of what '24 is going to look like in terms of dollars? And then if you want to expand on that percentage of sales what the longer-term outlook might be as we go forward.

Yes. From -- so the projection for F '24 is about 2.8% of sales into advertising. We have not gone out into breaking out the exact spend by channel, partly just from a competitive standpoint, like not kind of laying that -- laying it out in those details yet. So -- but I think you saw in that chart, on a percentage basis, we are kind of getting back now to where we were pre-pandemic from a percentage of sales standpoint, dedicated to advertising as we've reduced the comp expense that we've incurred over the last few years.

I think there's -- I mean, again, I would -- I'd anticipate keeping it at that level. Obviously, you grow that top line, that gives you more actual working dollars. It's a nice thing about the incrementality of the marketing spend as you're taking your nonworking dollars, your production costs, and you're leveraging them at a much more effective and efficient rates. I'd like to be able to see that done over time. There's no set target yet, do I want to get to 3x -- 3%, 4%? I think we'll let the strategies and the opportunities and the performance kind of dictate that as we go forward. We'll obviously watch this closely from a return standpoint on what drives the business. The interesting thing, too, is from a marketing perspective is George has a lot more tools to use than historically you would have used. So how you deploy them on TV versus how you deploy them digitally, I think that's going to be a work in process, and that's what the art to the science will come into play. But I think the clear message is we're going to speak with that ladder voice and be willing to make the investments to do that as we kind of go forward.

I have a question on your sort of your traffic philosophy and what's sort of okay, what it's telling you about the business, maybe specifically by channel. I know you're going to have -- you're lapping some stuff in the next 2 quarters particularly. But thinking forward, are you okay with the overall traffic coming down, if it's really this off-premise decline? If that dining room traffic is going up, you're kind of okay with an overall traffic decline, because you're kind of achieving what you're trying to achieve. So any thoughts about what sort of traffic is okay and how you look at it?

Well, the first thing I would just start with is we've got to grow the business and we've got to grow the business profitably. That's what I'm primarily focused on right now, which is reducing some of the things that are kind of dragging us down from a margin and an activity and a lack of focus standpoint, so we can double down on the things that I think will really create the long-term change that I talked about in the beginning of my opening comments. That's what I'm primarily focused on. Now that's causing some turbulence, right, in the numbers because I just shared with you an initiative that we did that's going to cause 1 to 2 points of traffic loss. And the way I think about that is like a dollar sale of that virtual brand I talked about that we're discontinuing, it's really only -- it's worth only $0.20 on the Chili's brand, right, when you look at the margins and sales and everything else, right? So they're very purposeful things that we're doing where you'll see mix accelerate at the same time as traffic goes down, because we're now investing in pricing and driving innovation, the things that are driving those mix numbers to be much higher than they historically have been, right? I think over time, we need to grow traffic. Like we can't -- like I don't see this in perpetuity where 3 years from now, where I'm telling you the same story where we're okay with it. I mean, we've got to get more people coming to Chili's over time, but that's why we're working on the things -- that's why we're in gym working out with weights right now, so we can get strong enough, so we're ready to do that. We're working on the right things that I believe, that's why I started off with -- you guys know the concepts that we have with [indiscernible], right? You know the ones that every year, you can expect traffic growth and margin expansion, right? We want to be one of those guys. And the way to do that is to work on the fundamentals of casual dining. And so that's how I think about it. And as long as we continue to grow the business profitably, as we continue to build muscle and build the investments that Joe just talked about, I feel really good about where we're at, right? And even in a slowing economy where we might have to slow down investments as long as we continue to make progress on the things that are going to set us up for success and grow market share, I feel like we're still headed in the right direction. I -- would I like to get to that faster? Absolutely. This is the reality of how long these things take. And some of these things need to cycle through. And I think as long as we can communicate with the stakeholders like you guys, so you understand what we're doing and why we're doing it, I think we'll get to where we need to go, right? But it's harder to do a in a setting that we're doing, but that's why we're trying to overcommunicate on this stuff. So I hope you guys can understand like why this is important and why this will set us up for long-term growth. And I think as long as we continue to improve the metrics, both the financial metrics and the consumer metrics, I hope you'll stay with us for the journey.

And Kevin, I would just add what you said in your opening about Doug Brooks, right? So he said easy isn't hard or easy is hard sometimes. Some of these decisions are not that easy. They are hard decisions we need to make, but it's making it easier for the team member. And you think about these heart-of-the-house team members. For example, Maggiano's Italian Classics is clearing that deck of lots of SKUs, that's allowed them to clear the deck to get more efficient at the core 4 and lean into some of these items, making sure that they're better for the guest, they're more accurate for the guests, maybe when they're coming out the side doors. So we think long term, we know these investments that we're making in these changes are going to really make an impact on the guest experience.

I'm going to take one more question before we break and then reconvene in the [indiscernible] dining area. Brian?

Can I ask about just the labor side. Are all the changes that you intended to make done now. So therefore, the labor investments in '24 are purely just things that have already been done annualizing? Or is there other things that need to change there? Or is there still work you're doing to assess what might need to change [indiscernible].

Yes, I think there's always work -- always assessment for what we're doing as we've made. I think we've made most of what we believe are the big moves back in the labor side of the equation. We'll assess those moves and evaluate what, if anything, are they being effective in driving the guest experience? Or are we missing something that we need to look at? I think, again, the -- so we have the annualization of that expense that I talked about. And then we'll work through the elevated wage inflation that accompanies that. So -- but we're not going to back off the labor that we've made because it is making a difference in the restaurants.

And I would just add from the manager perspective and that investment we're making, we have a program right now called, Certified Shift Leader, that's an hourly program. That's not been implemented yet. That will be implemented at the beginning of this year. So as we go into our new fiscal year, we'll make those changes. And we think that will be meaningful because as you look at our manager turnover beating the industry, that's still the largest turnover within that category right now.

That was on the chart. That was the manager piece that you saw on the chart that I put up there before. I have one more over here, Andrew.

Kind of building off of that, and I appreciate the '24 investment spending, the detail on that. How do you expect the buckets to evolve over the next couple of years? Just trying to kind of think about the investment spending relative to the 20 to 30 basis points margin improvement kind of per year that you talked about. It sounds like most of the labor stuff is done to that point. Maybe marketing goes up, R&M, I guess, is more permanent. So how do you expect that to evolve over the next several years?

Yes. I think these are establishing the basis that we would expect to see and that obviously with the normal inflationary factors that would impact some of those areas you kind of go forward, but from an R&M standpoint, I think we have the base established. Inflation, obviously, will impact some of those dynamics. Labor, I think by the time we get through probably the middle of this fiscal year, we'll have most of that established in the base a little bit on the CSL program that will be incremental to the back half. And then marketing, I think, will be a journey as it relates to effectiveness. So again, I think that might be the base if that's what it needs to be, but we won't be [indiscernible] about investing to make sure we're maintaining that voice as long as it's generating the appropriate size. But I think the bases are getting pretty well established through these moves. With that, again, thank you. And I think you want to kind of bring us home.

yes, I will close this out. So I hope everybody saw a new day at Chili's and Maggiano's. I think these are very different choices than where we've been in the past. We're working on the things that are going to long term accelerate this business, do it in a profitable and a sustainable way. I think it feels different. I think when you saw Aaron and Doug talk about the changes that we're making inside the restaurants, I would encourage you to not take our word for it, but to get into Chili's and talk to the team members. I'm pretty confident they're going to tell you it's a different place right now than it was 18 months ago. And it's only going to get better from there. I think you saw a much different program of marketing and innovation, one with a growth mindset of how we're going to explore this business, get closer to the guest to understand the things that they want and that they need that we can provide them in a very uniquely Chili's way. And I hope that you believe that we pave the road to where we want to go and then we just got to now prove it, right? So every quarter, every fiscal, we've got to show that we're making progress, both in the financial metrics and obviously, the metrics that will prove long term for the business. So thank you so much for the time that you spent. Thank you for those that were online. We do have a feedback link. So there's a link to serve those that are online, you could probably just click it or take a picture of the QR code. We'll make sure we get you guys the link that are here. We would love to get your feedback on what you appreciated about today, how we could make this day better in the future. Ultimately, it is very important for us that you understand how we're thinking about the business and what we're working on. We believe it's the right thing to do, and we believe it's the right decision, but it's important for us that you understand at least our thinking behind them, so that you can make your own decisions about what are the right decisions moving forward. So let us know what your feedback was how we can make this better and better use of your time. And then I just want to thank everybody for their time and attention today. And those of you that are online please make sure you get to a Chili's soon and let us know what you think. And then we're going to do a quick 10-minute break. So maybe at 12:20, we have people that can show you where it is. We're going to all go to demo dining, and we'll start the short program, and then we'll have lunch after that. So thank you, everybody. Thanks for a great day.