WEBVTT - Brinker’s Hochman on Chili’s Accelerating Sales 0:00:13.920 --> 0:00:16.600 Welcome to Chopping It Up. I'm your host, Mike Hanlon, 0:00:16.600 --> 0:00:19.640 the senior Restaurant and food Service analyst at Bloomberg Intelligence. 0:00:20.360 --> 0:00:23.119 Our research and that of bi's five hundred analysts around 0:00:23.120 --> 0:00:25.959 the globe can be found exclusively on the Bloomberg terminal. 0:00:26.440 --> 0:00:28.000 If you enjoy the pod, I'd love it if you 0:00:28.040 --> 0:00:30.920 could leave us a review on Apple or Spotify. Today 0:00:30.960 --> 0:00:34.240 we're joined by Kevin Hakman Brinker CEO. Thanks for joining 0:00:34.240 --> 0:00:35.960 me here in our New York studio. 0:00:36.080 --> 0:00:37.360 Kevin, Well, thanks for having me. 0:00:37.400 --> 0:00:40.479 Michael, I am a consumer of your pod, so I 0:00:40.520 --> 0:00:41.720 appreciate you having me it. 0:00:41.800 --> 0:00:42.480 Oh, that's cool. 0:00:42.680 --> 0:00:45.159 I appreciate you. I appreciate you listening in. I woke 0:00:45.240 --> 0:00:48.840 up to big news yesterday the opening of the Chili 0:00:49.000 --> 0:00:50.040 Scranton branch. 0:00:50.320 --> 0:00:50.600 Yes. 0:00:50.760 --> 0:00:54.800 Well, we were on a very famous show almost twenty 0:00:54.880 --> 0:00:56.520 years ago to the day, and. 0:00:57.840 --> 0:00:58.760 They ate that the. 0:00:58.760 --> 0:01:02.200 Chili's in Scranton, and we do not have a Chilis 0:01:02.200 --> 0:01:03.280 in Scranton, believe it or not. 0:01:04.240 --> 0:01:04.800 It's funny. 0:01:04.800 --> 0:01:08.440 We tape some of that content with many of the 0:01:08.480 --> 0:01:13.160 actors from that show and our guy on the ground, 0:01:13.200 --> 0:01:16.160 Jesse Johnson. He does a lot of our advertising. He welcome, 0:01:16.200 --> 0:01:18.760 he said, we welcome back to Scranton, and they're all like, hey, 0:01:18.760 --> 0:01:19.880 we've never been to Scranton. 0:01:20.040 --> 0:01:22.760 All this was filmed in la so this was a 0:01:22.800 --> 0:01:24.959 new experience for many of the actors of that show. 0:01:25.120 --> 0:01:28.479 And you know, so we basically have replicated the two 0:01:28.560 --> 0:01:32.360 thousand and five Chilies that was in that episode to 0:01:32.440 --> 0:01:34.120 the very details of the booths, etc. 0:01:34.560 --> 0:01:35.840 And it will. 0:01:35.680 --> 0:01:38.880 Also be the only Chilies in the world that now 0:01:38.920 --> 0:01:42.520 sells the Awesome Blossom, which was you know, our version 0:01:42.560 --> 0:01:46.160 of the bloomin Onion when that was a big business 0:01:46.200 --> 0:01:49.120 war back in two thousand and five. So if you 0:01:49.160 --> 0:01:51.520 want an Awesome Blossom at Chilies, there is one. 0:01:51.360 --> 0:01:53.240 You can go to, and that's in Scranton. 0:01:52.840 --> 0:01:56.360 Pennsylvania, only about a two and a half hour drive 0:01:56.440 --> 0:02:00.840 from Awesome Manhattan. Chili's Lifetime move I'll be home from 0:02:00.880 --> 0:02:03.880 Margarite today was pretty fantastic, by the way. I caught 0:02:03.920 --> 0:02:07.880 that recently. So your marketing team has been busy. 0:02:08.040 --> 0:02:09.480 Yeah, Well, first of all, I didn't know you were 0:02:09.560 --> 0:02:12.320 a lifetime movie fan, so I'm learning somebody. 0:02:12.040 --> 0:02:13.920 New about you every day. You know. 0:02:14.040 --> 0:02:15.840 You know our marketing team, you know, we're focused on 0:02:15.880 --> 0:02:18.280 a couple of things. It's sales overnight and brand over time. 0:02:18.360 --> 0:02:21.000 Sales every night is about driving you know, people and 0:02:21.040 --> 0:02:24.080 traffic into our restaurants, and then brand over time is 0:02:24.080 --> 0:02:25.799 where do we want to be positioned in the market. 0:02:25.880 --> 0:02:27.400 Right, And when Chili's was at its. 0:02:27.240 --> 0:02:29.840 Best, when we were growing in the eighties and the nineties, 0:02:30.160 --> 0:02:33.359 we were about Margarita's, we were about Fahidas, we were 0:02:33.360 --> 0:02:37.960 about chicken crispers, we were about ribs, and we're bringing 0:02:38.000 --> 0:02:40.120 all these things back right. You know, it's funny, like 0:02:40.160 --> 0:02:42.320 we've had this incredible success and you go across the 0:02:42.320 --> 0:02:44.360 country talking to managers, many of them in the business 0:02:44.400 --> 0:02:47.160 twenty thirty, some even forty years, and they're like, it 0:02:47.200 --> 0:02:49.320 feels like Chili's again. Like it feels like we're back 0:02:49.360 --> 0:02:53.680 to you know, slinging and having really busy restaurants, and 0:02:54.240 --> 0:02:56.320 the team members are having fun with the guests, and 0:02:56.360 --> 0:02:58.040 the guests are having fun with the team members. So 0:02:58.280 --> 0:03:00.000 it definitely is a little bit of throwback. Right now, 0:03:00.120 --> 0:03:02.000 based on the growth that we've had, it just feels 0:03:02.040 --> 0:03:03.600 like we're an upstart, new brand. 0:03:03.919 --> 0:03:07.880 It's fun. It's fun to watch, you know, sam store 0:03:07.960 --> 0:03:10.600 sales in the US up more than thirty percent in 0:03:10.720 --> 0:03:14.480 calendar for Q you're comping over a five plus percent 0:03:15.040 --> 0:03:18.239 result in the year prior, So absolutely unheard of for 0:03:18.360 --> 0:03:22.040 a mature brand. For the listeners that haven't been following 0:03:22.120 --> 0:03:25.040 this story as Colsey as I have and we have 0:03:25.120 --> 0:03:27.800 on the street, what were the primary drivers. 0:03:27.480 --> 0:03:28.919 Of the group. Yeah, you know, it's interesting. 0:03:29.240 --> 0:03:30.680 A lot of people ask me, like when I took 0:03:30.720 --> 0:03:33.320 this job, You're like, oh, isn't casual dining dead? And like, 0:03:33.360 --> 0:03:34.960 I can't believe you took that job. And it's like, well, 0:03:34.960 --> 0:03:37.240 if I believe that casual dining was dead, why would I. 0:03:37.240 --> 0:03:38.360 Ever take this job? Right? 0:03:38.920 --> 0:03:41.480 And there's some big leaders out there, you know, I'm 0:03:41.480 --> 0:03:43.200 not afraid to say it publicly. Like you look at 0:03:43.200 --> 0:03:45.280 a roadhouse and you look at Darden, and you look 0:03:45.280 --> 0:03:47.040 at what they've been able to do over the years, 0:03:47.040 --> 0:03:50.640 growing sales every year, expanding margins every year, doing the 0:03:50.760 --> 0:03:53.040 right things by the guest, and they don't really have 0:03:53.120 --> 0:03:55.560 secret sauce. It's about the fundamentals of casual diting, Like 0:03:55.600 --> 0:03:57.280 why do you go out to eat? Michael, Like, you 0:03:57.360 --> 0:03:58.920 go out because you want to have an hour with 0:03:59.000 --> 0:04:01.400 friends and family. And we're going to have some credible 0:04:01.440 --> 0:04:03.280 food and have it with great service and a fun, 0:04:03.360 --> 0:04:06.040 you know, friendly atmosphere. And that's what we wanted to 0:04:06.080 --> 0:04:07.920 get back to and that's why I took the job 0:04:07.960 --> 0:04:11.040 here at Chili's. And the team you know now that 0:04:11.040 --> 0:04:12.960 they've really been in lock to do the things that 0:04:13.000 --> 0:04:14.560 they know they need to do to make guests feel 0:04:14.560 --> 0:04:16.919 special and to support each other as team members. You know, 0:04:16.960 --> 0:04:18.960 the sky's limit on the business. You know, we focused 0:04:19.000 --> 0:04:21.840 on food, we focused on service, we focus on atmosphere, 0:04:22.080 --> 0:04:26.520 and we focused on making the team members job more fun, easier. 0:04:26.040 --> 0:04:26.839 And more rewarding. 0:04:27.120 --> 0:04:28.719 We've been able to do all those things in the 0:04:28.760 --> 0:04:30.240 last three years, and I think that's why we've had 0:04:30.320 --> 0:04:34.040 such tremendous growth. Fifteen consecutive quarters of same store sales growth. 0:04:34.080 --> 0:04:36.440 You know, our AUVs are up over fifty percent versus 0:04:36.440 --> 0:04:39.480 when I started, restaurant margins up five points. I mean, 0:04:39.520 --> 0:04:42.000 we are in a really good place. And the cool 0:04:42.000 --> 0:04:44.080 thing about this is that we're just getting started. There's 0:04:44.200 --> 0:04:46.520 more ahead of us on those fundamentals that we haven't 0:04:46.600 --> 0:04:48.800 changed yet than are behind us. So I feel like 0:04:48.800 --> 0:04:50.400 the sky's the limit for Chili's right now. 0:04:51.000 --> 0:04:53.560 Well, you know, last time we caught up you made 0:04:53.560 --> 0:04:56.680 a point of that, you know, you said, you know 0:04:56.720 --> 0:04:59.240 because I mentioned to you. Even though fourth quarter was 0:04:59.279 --> 0:05:02.600 a meaningful acceleration in your sales trends, you know, some 0:05:02.720 --> 0:05:05.800 investors were kind of concerned about your ability to comp 0:05:05.839 --> 0:05:10.120 the comp Let's say, but you know you're contending and 0:05:10.160 --> 0:05:11.800 you contend to you know, you said to me, it 0:05:11.880 --> 0:05:14.640 is like we still have a long way to go. 0:05:14.680 --> 0:05:18.159 We're in the early innings. Excuse the opening day baseball punt, 0:05:18.160 --> 0:05:22.280 but what are you working on right now? That's kind 0:05:22.279 --> 0:05:25.479 of maybe different, you know, that's going to keep the momentum. 0:05:25.760 --> 0:05:27.520 Yeah, you know, I get a question asked all the time, 0:05:27.560 --> 0:05:29.039 you know, how are you what you need to comp 0:05:29.080 --> 0:05:31.760 the comp? And uh, well, first of all, people don't realize, like, 0:05:31.839 --> 0:05:34.200 you know, we've been growing, you know, all twelve quarters, 0:05:34.200 --> 0:05:34.440 Like you know. 0:05:34.440 --> 0:05:35.960 I've been with this company and we've been we've been 0:05:35.960 --> 0:05:36.880 growing same store sales. 0:05:36.920 --> 0:05:38.839 So it's not like it's like everybody sees this plus 0:05:38.880 --> 0:05:42.159 thirty one and they're like, oh, they finally got it together. 0:05:42.480 --> 0:05:44.400 This has been happening for a while. And now you know, 0:05:44.440 --> 0:05:47.160 obviously we've been accelerating growth in the last few quarters 0:05:47.560 --> 0:05:48.960 because I think a lot of these things that we've 0:05:48.960 --> 0:05:51.640 been working on are coming together. But here's what I 0:05:51.680 --> 0:05:54.159 tell the team. As long as we continue to improve 0:05:54.160 --> 0:05:57.039 the fundamentals quarter after quarter, there's no reason why we 0:05:57.080 --> 0:05:58.760 can't comp the comp because if you look at the 0:05:58.800 --> 0:06:01.680 growth and how we're getting growth, it's not from like 0:06:01.760 --> 0:06:04.960 an lto or some kind of deep discount. And then 0:06:04.960 --> 0:06:06.440 we've got to figure out how to make the discount 0:06:06.520 --> 0:06:09.200 deeper the next year, and then eventually it will stop. 0:06:09.240 --> 0:06:12.120 You know, having the same efficacy that had when we 0:06:12.160 --> 0:06:13.760 first did it. You know, we're doing it with the 0:06:13.800 --> 0:06:17.200 fundamentals of casual dining. The food is better, the service 0:06:17.240 --> 0:06:20.560 is significantly better, the atmosphere is significantly better, and the 0:06:20.600 --> 0:06:22.400 team members are having a whole lot more fun and 0:06:22.440 --> 0:06:26.080 they're getting way more compensated because of the growth that 0:06:26.120 --> 0:06:26.960 we've had in the business. 0:06:27.040 --> 0:06:27.960 And so as long as. 0:06:27.839 --> 0:06:30.880 We continue to improve on those things, there's no reason 0:06:30.880 --> 0:06:32.760 why we wouldn't come the comp because we're not just 0:06:32.839 --> 0:06:35.720 getting boom splots. We're growing the business. It's maintaining that 0:06:35.839 --> 0:06:38.200 level until we get to the next big initiative. So 0:06:38.520 --> 0:06:40.719 you know, like for example, on food, you know, we 0:06:40.839 --> 0:06:43.000 fixed the core for that's about at the time when 0:06:43.040 --> 0:06:44.400 I started, it was forty percent of the business. 0:06:44.400 --> 0:06:45.679 It's now fifty percent of the business. 0:06:45.720 --> 0:06:50.560 That's chicken crispers, fajitas, margaritas, and burgers, and we just 0:06:50.640 --> 0:06:52.880 made those the best they could be. We expanded some 0:06:52.920 --> 0:06:54.880 of their presents on the menu. We got to a 0:06:54.880 --> 0:06:56.960 barbell strategy, so you can have an entry level price 0:06:56.960 --> 0:06:58.159 point and you can trade all the way up to 0:06:58.160 --> 0:07:00.640 whatever premium in those four segments. You know that's going 0:07:00.680 --> 0:07:02.960 to be finished as of this quarter when we do fajitas. 0:07:03.200 --> 0:07:04.800 We got the rest of the menu to go so 0:07:04.880 --> 0:07:07.040 q one of next year, which starts in July for us. 0:07:07.160 --> 0:07:10.000 We got a new Ribs relaunch that's coming that's just phenomenal. 0:07:10.080 --> 0:07:12.840 We've got a new Caeso coming. We've got a new 0:07:13.160 --> 0:07:15.800 trash can style nachos in the back half. You know, 0:07:15.840 --> 0:07:18.120 the planet is to get after things like steaks and salads. 0:07:18.160 --> 0:07:20.640 So it's actually more on the menu that we haven't 0:07:20.640 --> 0:07:23.480 touched than we have touched. And we're only as strong 0:07:23.520 --> 0:07:25.640 as our weakest thing on the menu, So we get 0:07:25.680 --> 0:07:28.200 everything up to like that high level that we know 0:07:28.280 --> 0:07:29.360 we can be at Chili's. 0:07:29.720 --> 0:07:31.480 I think this guy's loving for the business that's just 0:07:31.520 --> 0:07:32.920 one pillar. We also doing the same. 0:07:32.800 --> 0:07:34.840 Thing in service, We're doing the same thing in the atmosphere. 0:07:35.040 --> 0:07:37.480 So I just think there's a lot more runway for us. 0:07:38.560 --> 0:07:41.560 In our research, we've seen the ability to draw millennials 0:07:41.560 --> 0:07:45.120 and gen Z kind of correlates to same sotore sales outperformance, 0:07:45.160 --> 0:07:48.080 and you've done a great job resonating with those consumers. 0:07:48.640 --> 0:07:52.800 What are you seeing from the younger customers that are 0:07:52.800 --> 0:07:55.160 coming into your brand that makes you think, you know, 0:07:55.240 --> 0:07:56.640 the success with them can continue. 0:07:56.800 --> 0:07:57.080 Yeah. 0:07:57.080 --> 0:07:59.320 Well, the first thing is I think everybody sees the 0:07:59.360 --> 0:08:01.720 TikTok stuff like, Wow, they're just really winning with gen Z, 0:08:01.840 --> 0:08:03.800 and we are, and that's great, But I would say 0:08:03.800 --> 0:08:06.400 we're winning with every cohort right now. There's there's no 0:08:06.480 --> 0:08:08.600 corehord that's not growing. You know, gen Z is growing 0:08:08.640 --> 0:08:10.760 a little bit faster than the rest. They're talking about 0:08:10.800 --> 0:08:12.920 two points, but it's not like this. You know, fifty 0:08:12.920 --> 0:08:15.000 percent of the growth is coming just from young people. 0:08:15.040 --> 0:08:17.040 So it's a very balanced strategy, is the first thing 0:08:17.080 --> 0:08:18.440 I would tell you. The second thing is, I do 0:08:18.480 --> 0:08:21.800 think it's helpful to start bringing the next generation into chilies. 0:08:21.840 --> 0:08:23.640 You know, many of them have never even tried Chilis, 0:08:24.080 --> 0:08:26.120 and you know what's happening is we've been getting after 0:08:26.200 --> 0:08:28.520 social media in a lot bigger way. We're doing with 0:08:29.240 --> 0:08:30.720 menu items that young. 0:08:30.600 --> 0:08:32.760 People are excited about. So the Triple Dipper. 0:08:32.840 --> 0:08:34.960 Is really has been literally I mean it's been around 0:08:35.000 --> 0:08:37.880 for decades, but it's built for the younger generation because 0:08:37.880 --> 0:08:40.240 they like to like have lots of variety, lots of dipping, 0:08:40.920 --> 0:08:41.960 not commit to one entree. 0:08:42.000 --> 0:08:43.040 You can get multiple things. 0:08:43.080 --> 0:08:45.000 Eighty percent of the guests that come in in order 0:08:45.000 --> 0:08:46.520 to the Triple Dipper, that's what they eat their front of 0:08:46.520 --> 0:08:48.520 their entree because they like the variety that they get 0:08:48.600 --> 0:08:50.680 in it. So we use that item to kind of 0:08:50.760 --> 0:08:53.280 enter in the social media space in TikTok, and it's 0:08:53.320 --> 0:08:55.360 really exploded. I think people have a lot of fun 0:08:55.760 --> 0:08:57.520 with the different items they can get on a triple Dipper. 0:08:57.559 --> 0:09:00.120 And then when you actually get into the restaurant and 0:09:00.120 --> 0:09:02.040 you try the cheese pull that you see on TikTok, 0:09:02.200 --> 0:09:05.120 or you eat the honey Chipotle crispers, and it actually 0:09:05.240 --> 0:09:08.200 looks and tastes like what you see online, You're like, 0:09:08.280 --> 0:09:11.120 holy cow, Chili's low Key has gotten really, really good. 0:09:11.200 --> 0:09:13.040 And that's exactly what's happening, and they're like, Hey, this 0:09:13.080 --> 0:09:14.880 is going to be a part of our rotation. We're 0:09:14.920 --> 0:09:17.080 gonna come here every Thursday. We're gonna come here every month. 0:09:17.120 --> 0:09:19.840 And that's why the business is growing sustainably, is not 0:09:19.880 --> 0:09:21.600 just they're not just trying it and then we're waiting 0:09:21.600 --> 0:09:23.920 for the next trial driver. They're trying it and they're 0:09:23.920 --> 0:09:26.000 making it a part of the rotation. And that's where 0:09:26.000 --> 0:09:28.040 we wanted to be from day one. We talked about 0:09:28.240 --> 0:09:30.320 how do we get in your consideration set so that 0:09:30.360 --> 0:09:31.839 when you're thinking, hey, I'm in the mood for a 0:09:31.880 --> 0:09:33.880 margarita or I'm in the mood for text mes or 0:09:33.920 --> 0:09:36.680 whatever it is, at least you're considering chilies. Because if 0:09:36.679 --> 0:09:38.720 you're not considering Chili's, we have no chance of getting 0:09:38.720 --> 0:09:41.200 your trip. So we're now top of mind. We're delivering 0:09:41.200 --> 0:09:43.480 on the experience you're seeing in media, and that's why 0:09:43.480 --> 0:09:44.800 the business is sustainably growing. 0:09:44.840 --> 0:09:46.120 Yeah, that's what I was going to say. I was like, 0:09:46.200 --> 0:09:47.640 that's why it was so important for you to nail 0:09:47.640 --> 0:09:50.680 the ops first, right, so they don't they have a 0:09:50.720 --> 0:09:51.400 great experience. 0:09:51.400 --> 0:09:53.040 And then yeah, I think that's the big thing that 0:09:53.080 --> 0:09:54.800 I think a lot of people don't know about our story. 0:09:55.160 --> 0:09:58.520 And I ran into a restaurant CEO at a basketball 0:09:58.559 --> 0:10:00.520 game a couple months ago, and you can go gratulating 0:10:00.559 --> 0:10:02.080 me on the ten ninety nine meal and how good 0:10:02.080 --> 0:10:04.880 we were doing, and it's like he doesn't understand that 0:10:04.920 --> 0:10:07.000 we've been in the gym working out on the operation. 0:10:07.559 --> 0:10:11.960 The operation is so much improved. And you go to Chilis, 0:10:12.000 --> 0:10:14.200 you're going to have a good experience and you're gonna 0:10:14.200 --> 0:10:16.040 want to come back because it's fun, right, And when 0:10:16.040 --> 0:10:18.720 you when you can do that, the marketing, the marketing 0:10:18.800 --> 0:10:20.640 just gets so much more effective. And I was joking 0:10:20.640 --> 0:10:22.320 the other day, but I wasn't really joking with our 0:10:22.320 --> 0:10:25.040 team of like the number one driver wire marketing Oro. 0:10:25.200 --> 0:10:26.880 HASP skyrocketed so much. 0:10:27.200 --> 0:10:29.720 Is actually because the because the restaurant teams are doing 0:10:29.720 --> 0:10:32.600 a much stronger job delivering the experience. So when we 0:10:32.640 --> 0:10:35.040 put something on TV, we don't just get the spike, 0:10:35.080 --> 0:10:37.920 but we get to continued to repeat business. So it's 0:10:37.920 --> 0:10:39.520 an exciting time to be on this business. 0:10:39.559 --> 0:10:40.160 Yeah, that's cool. 0:10:40.800 --> 0:10:43.800 Alcohol mix is moderating for many of your competitors. What 0:10:43.800 --> 0:10:44.280 are you seeing? 0:10:44.480 --> 0:10:46.719 We really haven't seen much of a pullback in that 0:10:46.880 --> 0:10:48.280 you know. I think part of it is we have 0:10:48.320 --> 0:10:51.800 a really good barbell strategy. So yeah, we're still half 0:10:51.840 --> 0:10:53.720 of our drinks now or half of our market ratas 0:10:54.280 --> 0:10:56.640 are ten dollars are over, So that's more premium ones 0:10:56.679 --> 0:10:59.040 like you know, like a costam Egos or a Don Julio. 0:10:59.160 --> 0:11:01.480 But you know the majority of the units that we 0:11:01.520 --> 0:11:04.040 sell in Margarita's is our six dollars margarita a month. 0:11:04.120 --> 0:11:07.400 So you know, even though terrorists might be impacting tequila, 0:11:08.000 --> 0:11:09.760 or you go to a bar around here and you 0:11:09.800 --> 0:11:12.720 get a twenty dollars to margarita, you know, you can 0:11:12.760 --> 0:11:14.760 always come to Chili's. You don't need an app. It 0:11:14.760 --> 0:11:16.880 doesn't matter what time of day you come. You can 0:11:16.920 --> 0:11:18.920 always find a six dollars marguerite. And we make it 0:11:18.920 --> 0:11:21.400 with pretty good liquor, you know, name brand that you 0:11:21.440 --> 0:11:23.880 know and love, you know, fresh sour mix, all the 0:11:23.880 --> 0:11:26.240 things that you would expect with a high end margarita, 0:11:26.280 --> 0:11:27.760 but you get it for six bucks. And you know what, 0:11:27.840 --> 0:11:29.559 quite frankly, I think that helps us hold on to 0:11:29.600 --> 0:11:31.960 some incidents that otherwise would lose. So as long as 0:11:32.000 --> 0:11:34.720 we protect the opening price points and then allow customers 0:11:34.720 --> 0:11:36.160 to trade up for the ones that want to have 0:11:36.200 --> 0:11:37.679 something a little more premium. I think we're going to 0:11:37.720 --> 0:11:39.320 be okay on alcohol incidents. 0:11:40.280 --> 0:11:43.160 And you touched on tariffs. Do you think there'll be 0:11:43.559 --> 0:11:45.520 a significant tariff impact to your business? 0:11:45.679 --> 0:11:47.000 No, No, we know, we looked at it. 0:11:47.000 --> 0:11:50.640 It's probably about ten or ten to fifteen million dollar impact. 0:11:51.440 --> 0:11:54.160 There's nothing we can't management. I mean, we spend over a. 0:11:54.120 --> 0:11:56.959 Billion dollars in our COGS budget, so you know you're 0:11:57.000 --> 0:12:00.760 talking about about a point So we're going to manage 0:12:00.760 --> 0:12:02.760 it like we manage any other headwind. But that's not 0:12:03.120 --> 0:12:05.560 that that is not material to our business and we 0:12:05.760 --> 0:12:07.040 will have no problem getting through that. 0:12:07.320 --> 0:12:07.560 Okay. 0:12:07.559 --> 0:12:10.440 And I saw last quarter you reduced you can you 0:12:10.520 --> 0:12:13.679 continued to reduce SKUs some menu it. 0:12:13.920 --> 0:12:15.320 Yeah, well, and we'll continue to do that. 0:12:15.400 --> 0:12:17.319 So you know, part of the operational wins that we've 0:12:17.320 --> 0:12:19.520 had has not just been about investing in the labor. 0:12:20.559 --> 0:12:23.400 A big part of has been simplification. So you know, 0:12:23.440 --> 0:12:26.680 we reduced over twenty five percent of our menu. We've 0:12:26.679 --> 0:12:29.040 reduced a lot of prep steps, a lot of administrative 0:12:29.200 --> 0:12:32.880 things that we asked the managers to do, which prevents 0:12:32.960 --> 0:12:35.680 them from actually leading their teams or walking the floor 0:12:35.679 --> 0:12:38.439 and seeing how guests are doing. You know, for example, inventory, 0:12:38.559 --> 0:12:40.720 they don't inventory as often as they used to. 0:12:41.200 --> 0:12:43.400 They don't count all of the items every time. 0:12:43.440 --> 0:12:46.800 The inventory typically only the high cost items like alcohol 0:12:46.920 --> 0:12:47.480 or protein. 0:12:47.640 --> 0:12:50.040 So and we hear from the managers, this. 0:12:50.040 --> 0:12:52.760 Is so much easier today to work in a Chili's 0:12:52.800 --> 0:12:55.760 than it was three years ago. And there's still a 0:12:55.760 --> 0:12:58.320 lot more room for us to fix. So, you know, 0:12:58.760 --> 0:13:01.439 you know, I always it was like one simplification can end. 0:13:01.440 --> 0:13:02.360 I'm like, it's not. 0:13:02.480 --> 0:13:05.200 This is the way we do business now. And you know, 0:13:05.440 --> 0:13:07.280 every quarter I'm going to be getting an errings call 0:13:07.320 --> 0:13:09.120 and we'll go through the list of things that we 0:13:09.240 --> 0:13:11.520 rolled out for that quarter. That's going to simplify the 0:13:11.520 --> 0:13:14.000 restaurant because it's such an important part of our turnaround. 0:13:14.360 --> 0:13:17.520 Yeah, making place happier. And man, they hate taking inventory. 0:13:17.640 --> 0:13:22.719 So turbo chef ovens, how come they've been such a 0:13:22.720 --> 0:13:24.800 big hit with your operators? And how long to get 0:13:24.840 --> 0:13:26.200 them rolled out system wide? 0:13:26.440 --> 0:13:31.000 Yeah, so you're referring to is it's pretty awesome technology 0:13:31.400 --> 0:13:33.960 that allows you to replace There's a piece of equipment 0:13:34.000 --> 0:13:37.720 we have in the restaurant called it Impinger. It's basically 0:13:37.720 --> 0:13:41.360 a conveyor belt oven. Typically like QSR pizza concepts will 0:13:41.440 --> 0:13:44.520 use it. So you put an item on one end 0:13:44.559 --> 0:13:46.400 of the conveyor belt and then it slowly goes through 0:13:46.400 --> 0:13:49.000 an oven on the conveyor belt, comes out the other end, 0:13:49.000 --> 0:13:52.440 and it's you know, cooked perfectly in the ideal scenario. 0:13:53.240 --> 0:13:56.360 Those ovens, they tend to break down pretty frequently. They 0:13:56.360 --> 0:13:59.240 have a lot of moving parts, and when when the 0:13:59.280 --> 0:14:01.559 impinger is not working in a chilis, it is really 0:14:01.559 --> 0:14:03.880 hard to execute your venue. You gotta you know, you 0:14:03.880 --> 0:14:05.880 gotta hand an egg it across the other equipment. So 0:14:07.160 --> 0:14:09.480 we have this piece of equipment called turbo chefs that 0:14:09.800 --> 0:14:12.800 are much more reliable. They cook a lot faster, they're 0:14:12.880 --> 0:14:16.480 much more they cook much more evenly and consistently, and 0:14:16.720 --> 0:14:17.320 we put it. 0:14:17.400 --> 0:14:19.000 We've been testing it for a couple of years now. 0:14:19.040 --> 0:14:21.080 We've known that we've always wanted to move to it, 0:14:21.600 --> 0:14:23.960 but it'd be very expensive to write off the impingeride 0:14:24.040 --> 0:14:26.360 ovens as well as bringing in the new ovens. But 0:14:26.440 --> 0:14:29.480 we have a new rib recipe that we think we can. 0:14:29.520 --> 0:14:31.480 We're going to blow out the doors on and it 0:14:31.560 --> 0:14:35.280 requires having these turbos everywhere. It made it very easy 0:14:35.280 --> 0:14:38.320 for us to pay for the turbo chefs, so we 0:14:38.360 --> 0:14:40.600 decided to accelerate that We've nown sit in our last 0:14:40.600 --> 0:14:42.480 earnings call. So by the end of this quarter, we're 0:14:42.480 --> 0:14:44.160 gonna have turbo chefs in every restaurant, and then we're 0:14:44.200 --> 0:14:46.960 gonna be relaunching ribs in Q one. And I think 0:14:47.000 --> 0:14:49.280 anybody that tries our ribs after when we relaunch them, 0:14:49.280 --> 0:14:51.040 we're going to realize, boy, that was a good investment. 0:14:51.160 --> 0:14:53.560 It's nice when you're generating so much more cash than 0:14:53.600 --> 0:14:56.800 everyone expects, right, you can put more money into cap 0:14:56.840 --> 0:14:57.760 bags and investment. 0:14:57.920 --> 0:14:59.240 Yes, right, It's so funny. 0:14:59.360 --> 0:15:01.400 Like one of the big things that like I think 0:15:01.400 --> 0:15:04.160 I've learned in this turnaround has been, you know, whenever 0:15:04.240 --> 0:15:06.400 you get into a business that's that maybe things aren't 0:15:06.440 --> 0:15:08.440 going its way, A lot of it has to do 0:15:08.520 --> 0:15:10.760 with the bad habits that you've accumulated over the years 0:15:10.760 --> 0:15:13.040 because you've tried to claw back sales when things don't 0:15:13.080 --> 0:15:15.160 go your way, and then you put bad habits in 0:15:15.200 --> 0:15:17.440 the business that give you some short term relief on sales, 0:15:17.480 --> 0:15:19.040 but at the end of the day, it just makes 0:15:19.040 --> 0:15:21.960 it harder to do business. And we were pretty ruthless 0:15:21.960 --> 0:15:24.360 about removing all those bad habits in year one and 0:15:24.480 --> 0:15:28.480 year two, So things like having really bloated menus. Obviously, 0:15:28.480 --> 0:15:30.600 when you add items to a menu, that's going to 0:15:30.640 --> 0:15:33.080 give you sales, but if it doesn't grow your business enough, 0:15:33.440 --> 0:15:36.360 then you just have less same labor or less labor 0:15:36.400 --> 0:15:39.480 and you're trying to execute way more items. It's impossible. 0:15:39.480 --> 0:15:42.240 So we've ripped a lot of those smaller mixing items 0:15:42.400 --> 0:15:44.239 out of the business. We did a lot of discounting, 0:15:44.280 --> 0:15:46.480 which you know, brought in guests that I think, you know, 0:15:46.560 --> 0:15:48.480 really we're going to run across the. 0:15:48.440 --> 0:15:50.440 Street to the next big discount that they could get. 0:15:50.920 --> 0:15:52.480 Obviously, it costs us a lot of money that we 0:15:52.480 --> 0:15:55.040 can't plow into out of store advertising, you know, we 0:15:55.080 --> 0:15:56.080 got rid of most of that. 0:15:56.880 --> 0:15:58.600 We went to an everyday value she has you, which 0:15:58.640 --> 0:15:59.120 we have today. 0:15:59.160 --> 0:16:01.240 You know, And there's other bad habits in the business. 0:16:01.240 --> 0:16:04.000 But like when you pull those things out and then 0:16:04.040 --> 0:16:05.720 you get them to get them out of your base, 0:16:05.800 --> 0:16:07.920 and then you're able to reinvest in things that actually 0:16:08.000 --> 0:16:10.760 matter on the long term experience of the business, great 0:16:10.760 --> 0:16:12.600 things happen. And that's the lesson I want to take 0:16:12.600 --> 0:16:14.560 with me for the rest of my career is like 0:16:14.560 --> 0:16:16.880 like take the take the paint, get out of the 0:16:16.880 --> 0:16:20.040 bad habits, get them behind you, and then don't look back. 0:16:20.520 --> 0:16:22.880 Yeah, it was bold ripping out the discounting. At the 0:16:22.880 --> 0:16:24.920 time that you did, it was a time when the 0:16:25.320 --> 0:16:29.360 low income consumers first started pulling back. So kudos to 0:16:29.440 --> 0:16:31.760