Rick Cardenas: Hey Lauren, this is Rick. 700 basis points of outperformance is pretty strong. It all really depends on what the total traffic growth is for the industry. If we do — if the industry is growing at 1%, do we expect to get 7% every quarter in outperformance, no? And if anybody would say that, I think that’s thinking a little bit too hard. We’re very pleased with that outperformance of 700 basis points this quarter, but we wouldn’t expect to be 700 basis points every quarter. And there might be quarters that we have lower performance and traffic than our competition. But we think about this over the long term. And over the long term, we expect to outperform.
Lauren Silberman: And then just on M&A, I know you’ve talked about that in the past and interested in another brand. I guess what are you seeing in the current environment? Any change in the calls that you guys are getting or valuation?
Rick Cardenas: I don’t want to get into the detail on calls we’re getting or valuations we’re getting. All I can say is we’ve said before, biggest competitive advantage we have is our scale. And one of the ways to build that scale is to buy other brands. And as volatility reduces, price discovery improves. And so, that’s what we’ve got to continue to think about. And interest rates have made some change. So, we still feel like we’ll talk to our Board when the right opportunities come to play, and we’ll be ready when they do.
Operator: Our next question will come from Brian Bittner with Oppenheimer.
Brian Bittner: Just as we look at the quarter, your EBIT margins obviously expanded this quarter, but it was the first time in many quarters that we saw EBIT margin expansion. And it seems to be primarily driven by Olive Garden when we look at the segments. Olive Garden was the only segment that showed measurable margin expansion this quarter. The other segments were actually down on average. So, can you talk about the drivers of the bifurcation in margin performance for Olive Garden versus the rest of the segments? And is that kind of how the margin trend should continue over the next couple of quarters?
Raj Vennam: Hey Brian, any given quarter, I think the brand to brand, it’s a function of the pricing versus inflation. So, if you look at — and frankly, as I mentioned, in the third quarter, beef was the biggest surprise, right? So for instance, our LongHorn and to some extent, our Fine Dining brands, they weren’t prepared for that level of inflation. So the pricing hadn’t been in place. And like I said in the past, the way we think about pricing is we’re not going to overreact to near-term fluctuations. We kind of think about what’s truly the more secure part of the inflation and try to price for it. And so, there was a little bit of really noise on that front this quarter that impacted the other segments. With that said, Olive Garden is our largest brand.
I mean, that is — it makes up over 50% of our sales and 55% or more of that profit. So for us to grow, you got to see Olive Garden to have some growth, or it takes a lot of heavy lifting from everybody else to make up. But the other thing with Olive Garden was we did — some of the costs did moderate from where they were in the second quarter. So if you recall, second quarter, it was the other way around where the margins were deteriorating. And the third piece is Olive Garden was disproportionately impacted by Omicron last year. We talked about that last year. Now, as we wrap on it, they’re benefiting from some of that. There were labor inefficiencies last year, so — especially for them because of their geography and because of the demographic mix of their gas, it hurt them most and now you’re seeing them outperform the most.
