Brinker International, Inc. (NYSE:EAT) Q2 2023 Earnings Call Transcript

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And then we added an expeditor position who is managing the heart-of-the-house. And that really frees up the manager to stop doing that team member task and actually do leadership things and coaching and all the things that you want a highly paid manager to do. So that’s kind of the changes that we deployed in round one. Round two is still being worked on and tested, so I don’t have the details to give you that until we’re ready to go. The metrics that we’ve seen improve, so guest experiencing a problem, which is like our number one guest metric that we look at daily, has improved pretty significantly throughout the quarter. So we feel really good about that. I shared at our last call our team member engagement had significant bumps increases both in the field as well as at our RSC.

So we’re seeing the changes in the field having a meaningful impact on manager turnover. We were pleased to report in our prepared comments that manager turnover is now beneath where it was pre-pandemic. So we feel like we’ve made huge strides there and we’re starting to see hourly turnover now improve too. But obviously there’s some more work to do to get to pre-pandemic levels on that. So when we talk about metrics, we’re talking about team member engagement, manager engagement and then obviously whether the guest is having a better experience and we’re seeing all those things improve. The other thing that we’re seeing is our food grade scores. We had some of the best food grade scores that we’ve had a long, long time. And so as you think about the team members having a better experience, having more labor in the restaurants, they can make better food.

And then if they make better food and provide better service, then the guest has a better experience. And so we’re seeing all those things trend in the right direction. I don’t want to say that victory is accomplished and there’s not a lot more work to do. But as I said in previous calls, as long as we continue to make progress every quarter, we know that we’re making the right moves. We’re heading the right direction.

Andrew Strelzik: Great. I appreciate all the color.

Operator: Your next question is coming from Dennis Geiger with UBS.

Dennis Geiger: Great. Thank you. First I wanted to ask about pricing levels and what you’re seeing with respect to any pushback from the customer. It sounds like the customer satisfaction levels are improving and traffic was largely consistent with your expectations, which is encouraging, but any additional commentary on what you’re seeing as it relates to pricing levels and how the customer’s digesting that?

Kevin Hochman: Yes, I’ll start and then I’ll see if Joe has anything to add. So we have seen the low end customer tail off. And we saw that before we took incremental pricing. So the low end customer was coming less frequently before we even started the new strategy and that is continued. We haven’t seen a change in that trend one way or the other. For the guests that are coming they are willing to spend considerably more. So we’re seeing mix shifts pretty significant. So we had a 10% price increase effectively on a — on the stack, right? And we had a 5% mix increase that is a result at the end of the quarter. And so what’s happening is the folks that are not buying Three for Me, they’re moving the à la carte items that are priced higher, but they’re also buying more appetizers and more non-alcoholic soft drinks because they’re not included in the à la carte, right?

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