Good morning, ladies and gentlemen and welcome to the Third Quarter Fiscal Year 2020 Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Joe Taylor, CFO. Sir, the floor is yours.

Thank you, and good morning, everyone. And thank you for joining us. With me on today's call is our CEO Wyman Roberts; and Mika Ware, VP Finance and Investor Relations. Now my first comment this morning is we hope everyone participating on today's is in good health and doing well during this unique time. This morning we released the business update related to the last several weeks of our operations as well as our results for the recently completed third quarter of fiscal year '20. Once we anticipated this call, would detail another strong quarterly operating performance for Brinker. We are for a period of time living in a different environment. As a result, our prepared comments from Wyman will focus primarily on recent business performance and trends, but less commentary devoted to our third quarter results. We will also provide some insights to the dining room reopening process now beginning in some regions of the country. Following the comments we'll spend most of our time answering your questions about the business. But before beginning our comments, I would remind everyone of our Safe Harbor regarding forward-looking statements. During our call, management may discuss certain items which are not based entirely on historical facts. Any such items should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such risks and uncertainties include factors more completely described in this morning's press release and the company's filings with the SEC. And of course, on the call, we may refer to certain non-GAAP financial measures that management uses in its review of the business and believes will provide insight into the company's ongoing operations. And with that said, I will turn the call over to Wyman.

Thanks, Joe. These are indeed challenging times for the world, our country, our industry and Brinker. We're focused on moving forward and how to effectively deal with this pandemic. But let me first review how we ended third quarter. Third quarter started out strong and was shaping up to be another great quarter for Brinker, if circumstances had remained normal, we'd be marking our eighth consecutive quarter of comp sales growth and an app track category beat of 2% to 3% driven largely by our focus on growing our off-premise business and our commitment to driving traffic. We've been executing that strategy for two years before the pandemic hit. It provided a strong foundation when the world changed. For us that was March 8th our last day of positive comp sales, but that strategy sets us up as we plan our recovery. Since that day as we narrowed our focus to effectively deal with the crisis at hand, we strengthened our resolves to remain a strong viable company through this crisis. To us, that means three things. First, keeping our team members and guests safe. Second, getting the most out of the business we can in this environment. And third, remaining nimble and building on our strengths as we develop our strategy to emerge from this crisis. Our team reacted quickly to protect our business during the first few critical weeks of the crisis. We took significant cost cutting measures by eliminating nonessential spend and delaying our capital projects. We worked with our vendor partners and our landlords to reduce our near term spend and we reduced payroll across our salary team with the exception of our restaurant managers. With the reduction in sales, we set up a relief fund and spent more than $15 million to support hourly team members we couldn't schedule. We provided them a bridge to government assistance programs. Unfortunately, we had to furlough many of our hourly team members. We have kept half of the team actively working to support our off-premise business. And with the continued acceleration in sales, we're busy enough that we've already brought back more than 10% of those furloughed team members. As we start to bring our dining rooms back online, we look forward to welcoming even more of our team back. We've navigated through the initial negative working capital environment and we estimate our average weekly burn rate now to be approximately $5 million, while our business is primarily operating as off-premise. We continue to work to ensure we have necessary liquidity to manage our business in this environment. As of the end of last week, our liquidity was approximately $175 million comprised of cash on hand and revolver availability. We continue to evaluate opportunity to raise incremental capital, including increasing our revolver. And while we're taking advantage of the tax savings and deferrals that are available through the CARES Act, we are not participating in the PPP programs. These actions paired with meaningful, improved operating performance over the past several weeks give us confidence in our liquidity position as we begin to reopen our dining rooms. For the past two years, we focused on operational execution both on and off premise, which enabled us to pivot quickly in response to the sweeping changes across the US. We became really good, really fast at running a takeout and delivery business. Our managers are on the front lines engaging our team members and guests during every shift. They are optimizing labor, maximizing flow through and most importantly, delivering a safe experience our guests can trust. I couldn't be proud of the work they'd been doing. While this is far from an ideal situation or a long-term business model our team has certainly made the best of it. We're one of the few casual diners that's been able to keep nearly all of our restaurants open and we've grown our absolute sales every week. Over the past four weeks, Chili's has gone from running close to 35% of our prior year's total sales to more than 50% of our total sales with just takeout and delivery. This is a testament to the quality of our operators and support teams, our ability to use direct marketing effectively, our strong value propositions and our reliable and consumer friendly technology solutions. Our brands are resonating with consumers during this crisis. And as we compare ourselves to the category, we continue to significantly outperform. Black Box data shows, Chili's gap to casual dining last week at 14%, a gap that widened every week since the crisis started. Part of the reason for that performance is our unwavering commitment to keep our guests and our team members safe during these uncertain times. We've instituted enhanced safety standards to protect our guests and team members and made those efforts visible to the guests to increase their comfort and confidence in us. Our guests receive touchless curbside takeout and we're providing masks and gloves to all our team members. Additionally, our investments in technology offered a competitive advantage for us in this environment because guests can access us in ways that are quicker and safer for both them and our team members. More than 70% of our restaurant transactions are coming through Olo, which means the majority of our guests are ordering and paying from their own devices. For the remaining few who pay at the restaurant, we're implementing touchless portal payment in the parking lot. As we are beginning to reopen our dining rooms in parts of the country, we are prepared for an extended recovery. We're working through operational plans to adhere to CDC, state and city guidelines. We're setting up our dining rooms and bars for social distancing. We're configuring takeout areas to accommodate both increased volume and safe practices. We're getting our team ready and training them to protect themselves as well as our guests. We have plenty of masks, clothes and sanitizer. And we are putting our in restaurant touchless order and payment systems in place. And we're putting systems in place to make sure our team members are healthy so guests can be confident when they dine with us. No one asked for the situation. And no one welcomes the upheaval it's caused in our world. But it sounds like these that prove who's strong enough to weather a storm of this magnitude. We are established brands in our communities. Chile's been around for 45 years and Maggiano's for 25 years. Guests know, they can trust us to provide great food at a great value in a safe environment. And our team has demonstrated their strength, resilience and commitment during this crisis. So I'm confident that whatever environment comes, we will overperform just like we have over the past few years and especially during the past couple of months. No one knows for sure what lies ahead. But I know this. If it's a half a dining room scenario, no one will get more out of a half a dining room than we will. When we return to full dining rooms, no one will outperform us. We have the best operators in this business. We've invested in the right model and we have the technology respond to ever changing environment. We walked into this thing strong, we remain strong, and we will emerge strong. And with that, I'll turn it over for your questions.

Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] Your first question is coming from Jeff Farmer. Your line is live.

Great. Thanks. [Indiscernible] for your restaurants that are seeing off premise sales volumes approach will look to the almost 60% off premise or pre-COVID sales volumes. What are the pros and cons of reopening those restaurants to in restaurant dining at a limited capacity? It seems like you could be giving up some off premise sales when you actually turn on in restaurant dining.

Hey, Jeff. Well, I mean first, let me just talk about what it takes to do that volume in a system that wasn't set up for takeout and delivery of this magnitude. So it really was a testament to the investment we've been making, primarily in technology. When you are used to getting a handful of cars to pull up for takeout delivery on a Friday night. And now it turns into 20 or 30 cars in a parking lot. And you have to figure that out. Our operators in our teams did an amazing job reconfiguring our table management system for the dining room to work in the parking lot. And so those cars became tables. We took our tabletop payment system [indiscernible] and converted the technology to be a pay at the car touchless system for those guests that don't pay online, which we still have quite a few guests that call in and place their orders. And so we've got - we've very adept at taking our technology and reconfiguring it to work in the parking lot. And so that system is well established. With regard to what we think will happen as we open the dining rooms in terms of the tradeoff and the incrementality that that will bring. We're confident that it's going to be fairly incremental. And so we don't think that the cannibalization will be large up front. Because again, every restaurant is opened, under as you mentioned some restricted capacity guidelines. And so we don't see that being a huge issue for us. We think it will be incremental. It will drive the total sales number. We need to get our restaurants to some higher volumes to get to this next level in terms of growing the business back. And the consumers want to get out to eat and they want to in a safe place. And these restaurants are set up to do that for them.

Thank you.

Thanks, Jeff.

Your next question is coming from Brett Levy. Your line is live.

Great. Thank you. Thanks for sharing all the information. And again, and I'll echo what you said, I hope everyone over there is doing all right. Thanks for taking my call. I guess if we could just go a little bit further into just how you're planning on reopening the units whether it's just - are you going to go with a capacity above below what you think the local jurisdictions are saying? You can have a national approach. How you think America regionally? And then just when you think about the - you said you brought back 10% of the furloughed. As you're building up sales, how are you thinking about layering on costs given that we just don't know what the demand is going to look like? And you'd obviously like to care on the side of caution both for your people but also from a financial standpoint. And what do you think you need to see to get that cash burn? What's a fair number, once you start reopening the stores to get that cash burn rate to a breakeven? And I'll turn it to the queue from there. Thank you.

Okay, thanks Brett. I'll cover the first part of that question, which is what's our system for opening, reopening our dining rooms. Like I said, all of these states and counties are appropriately limiting the capacities. So what we've got is a floor plan that is laid out for every one of our restaurants according to their configuration. That's probably around 50% capacity. That's where most of the restaurants are starting. But then you have states like Texas who then are taking it a little bit, even more conservative with 25% limits in most cases for the next couple of weeks. So we didn't then just ex out a couple more tables. This isn't a random process. We have a system. We have a team intact that's working with every operator and every state as they become able to open their dining room to put in the system that puts in the safety, the sanitation and the systems in place for safety as well as the restaurant layout necessary to provide that distancing that's so important in these environments, and that will work. But it's absolutely a systemized approach that then gets modified for this specific restaurant in this specific market. And Joe can talk about the costs and how we make sure we're doing this in a cost efficient way.

Yes, Brett, good morning. We will take an extremely disciplined approach to any incremental spend as you go through this process. And it's going to be very much guided by those traffic increases that we see. Again it's looking at how we balance the go off-premise side of the equation, and bringing dining back in. The incremental spend will lag as we move through those upticks in traffic. We'll be very judicious and turning on some of those nonessential spends as we go. There's something that does come back in, in line. We want to make sure the restaurants are obviously airing significant on the side of being clean and sanitized and cost associated with that. But I think, in short we can manage that process. We scale and systems matter in this. Again, it's why haven't had indicated the ability to give our team members, a very detailed labor models as they come move back into these systems is an important piece of the equation. So lots of guidance coming from with the RSC giving people the tools and disciplines to be able to manage those to come back in. And when I think through, I think the base of the question as to where do you see cash flow neutrality from a performance standpoint. I look into the down 30% range, may be down 35%, something in that range. It will depend, there's a lot of inputs. And it depends to go into those numbers. But I think that's the range we would have expectations around starting to move back onto the good side of the cash flow situation.

Thank you very much.

Your next question is coming from John Ivankoe. Your line is live.

Hi, thank you. I think there are two related questions. First, I mean obviously, you guys most didn't have the financial ability to hold on to all of your workers, but putting some workers on furlough would actually allow them to make more compensation for a four month period than they would perhaps working in certain jobs within the restaurants. Can you talk about that dynamic and your ability or what you think? If you wanted to turn the switch back on and retracting some of those workers, if that's something that you think. That you can do fairly easily, like as if it was a normal environment. Today is the first point to talk about that. And then secondly, obviously looking at your financials, and I'm sorry it happened, it does look like there is a fairly big reversal. And I see in the G&A side this quarter. Can we talk about - as I think every company is re-evaluated the fixed versus variable costs in their business? What you think the underlying run rate back to normal G&A level is for your business. If you guys have been able to sit down and go through that?

Hi, John. Good to hear your voice.

From a compensation perspective and the unemployment benefit, we have mixed feelings about it. On the one hand obviously nobody asked for this pandemic, and nobody asked to have their businesses shuttered and there was nothing we really could do especially given that we weren't been supported with any other government programs to help keep our team members on the payroll. So we spent $15 million regime to unemployment and to the relief funds checks. And then we were grateful frankly that they had some government support with these improved and increased unemployment checks. That said, it is not a sustainable model obviously for the country and we need to get back to work. The good news is, what we're seeing and we brought 10% of those team members back already, is that we're seeing them wanting to come back to work for a lot of reasons. Financially it is probably a push as you mentioned for a lot of our team members. These benefits are fairly good. But they also know that they need a long-term job. And they have a commitment to this company. And they have been in some cases part of this company for many, many years and they are looking to get back to work. Than us so short sighted to say hey, I am just going to take these benefits and when the job comes, I'll take a chance that I'll get it later, especially when you look at the potential unemployment situation down the road. So I think we're going to get pass that. I think the other challenge is just how strong COVID is in the market. So those two factors are dictating how many people are wanting to come back to work. But right now we're bringing them back. We're not having a problem staffing our restaurants as we start to reopen. And Joe, you want to talk on G&A.

Yeah, John, I think as you pointed out that, the delta in year-over-year G&A of almost 17 is almost - is all driven by incentive comp. Some of that was a little bit of a timing. A small portion of it is timing related to the previous conversations we've had about retirement eligible comping in the first quarter. But 15 to 16 of that number is driven by reversals of our existing annual performance comp plans. We obviously are near the end of our fiscal year. So those reversals are more acute in this timeframe as you reversing once you have been accruing that throughout the fiscal year. But it does show the variability in that number. I mean again from a go forward basis, I think we'll have opportunities to talk about what that looks like as we get farther down this path. We will be reestablishing programs of that nature as we look to the next fiscal year. And we'll talk about that as we go through that process. But that is the biggest delta you're seeing in these numbers right now. And I think it'll be a couple quarters before you would get back to probably a more traditional G&A spend that you've seen, if you look at the first and second quarters.

Thank you.

Your next question is coming from David Palmer. Your line is live.

Thanks. Good morning and congrats on that take out business looking very strong there. The first question I wanted to ask you was about the timing of these stimulus checks. Then does that coincide with a step change in your business? I think it really started on April 15. I'm wondering how you're thinking about that. Is that a sugar rush that might burn off or are you concerned about that? And then I guess on the other side, you're going to start to open up for a lot of the restaurants I would imagine starting next week. Do you envision that being a vast majority of your restaurants by June being open? And what is that capacity versus previous for those dining rooms? Thanks.

Hey David, again, really good to hear your voice. Stimulus checks were absolutely a little bit of a boost to the category. I mean, you can look at everybody's - there are a lot of folks that have put out weekly results now through April. And you can see that pop, especially on that midweek direct deposit day where they just hit the direct deposits on in one push of a button. So you got that, it seems to be maintaining. Again every week we've seen sales grow. So it wasn't like it was a sugar rush, it only lasted for a few days or week, it's now moving through. As I think, again there's a lot of stimulus checks that are still going through the less efficient channels. Whether it's the direct deposit they didn't have as much information on, or whether it's paper checks. So there's still a lot of money that the government is going to be putting out there. Again, I think it helps to sustain an economy that's in a very unique situation. But it's not the model that we're going to obviously live under. So we see it having a nice little pop. But it's not the foundational thing that we're counting on. And I don't think it's the driver of the overall results we're seeing. And so I think as we think about opening restaurants, by this weekend, we'll have 300 restaurants, over 300 restaurants open. So Texas, Oklahoma, Utah, and parts of Tennessee open Friday. We always - we already have Georgia opened for two days. So we have a little bit of - so we have two days' worth of experiment data points this looks like. We will continue to open with guidance from the states and the governors of the states that set really this the precedent for us to be able to open. We are confident in how we are opening. We're being very safe, very, very systematic about how we do this. Our restaurants are now planning to open. Obviously, this came a little faster than we had anticipated. So we were scrambling a little bit this week to get, 300 restaurants opened in some cases days' of notice. But for the rest of them, they're out prepping and getting themselves set up for restaurant openings. And we anticipate what do you think, Joe by June, the majority of the system probably will be open?

I would anticipate that being the case. I think you'll probably see a steady flow of incremental opening plans. It appears that a number of other states have already made indication that those plans are forthcoming. So I'd expect to see that as we can move forward. But it'll still be some levels that probably delay after the other ones.

And it'll be very interesting. Obviously, we along with everyone in the country will be watching the spread and the cases. And these openings are, we don't know if they're premature. Those are big questions. Those are questions above our pay grade. We are relying on the guidance from the people that are running these government frankly. And we'll monitor that with everybody else in the country to see if we're too fast. And we'll probably end up dialing it back. But we're optimistic that these levels and when I walk into our restaurants and see the spacing and I feel pretty good that the distancing, I felt really good that the distancing in our restaurants is safe. And that you could feel comfortable in these restaurants. There's nobody within six to eight feet of you. Your almost private tiny. So that gives us a lot of confidence that we're doing the right thing.

I think the other thing too, David, from an opening standpoint is that even within a state, you're going to see, I think, some different approaches based on urban versus suburban versus rural, particular in your bigger states. And when you think about, again, the footprint we have, which tends to err on the suburban and ex-urban side of the equation, and in some states, great, like Texas, great grade rural penetrations. But I think, you probably have - you'll probably see some expediency in some of those openings around the country. So I think that plays well in that regard.

And Georgia has been a good example, of where our size helps. Our dining rooms are fairly large. And they give us a lot of room. And so when you end up with that - the Georgia Major, Georgia Constraint was 10 guests per 500 square feet. A lot of restaurants especially smaller, independent and a lot of urban restaurants, 500 square feet could be your dining room. A lot of fast casual, you don't have a whole lot more room than that. So with us, we have significantly larger dining rooms than that. So we can put quite a few more bodies in there and that's going to be a constraint for some of the competitive for some of the competition.

Interesting. Thank you.

Yes.

Your next question is coming from Brian Vaccaro. Your line is live.

Thanks, and good morning. On that last point while, on reopening and just taking out two days into it in Georgia, obviously, give a little more detail context around what that will look like from the guest experience standpoint, whether it be the safety measures that are in place, whether it be the spacing that you're going to have in Texas versus Georgia? Just maybe some broader context of what it will look like from the guest experience? And is there any early feedback? I know we're two days in, but any early feedback on how the customers were using and what's been the response thus far?

Hey Brian. So let me just maybe paint a visual for you. So if you walk into our restaurants, the doors will be open, there'll be sanitizer right there at the front of the doors. You'll be sat at a table and there won't be - and the two tables next to you for the most part won't be sat. And so there won't be a table next to you that's sat. There'll be a table that's usually a sanitizing station. That has paper towels and sanitizer. The table will be clear of almost there won't be anything on the table. And the menu will be - we're working quickly to get new menus out. But there will either be paper or there'll be easily cleanable menus one or two pages. So everything that's gone into it. The bars will not be set at the bar top. So the bars, we won't have patrons at the bar because that's very hard to distance. And it's also hard to regulate. So we will have some tables pushed up to the bar. So the bartender could react with a party interact with a party, but they'd be six feet away or more. And that's how it feels. And so when you walk in, again the spacing is there and all of our servers will be masked and gloved. And they will also have been asked before they can check in several questions about how they're feeling, have they have taken their temperature that they. We have a temperature - we have a thermometer in the restaurant that they can use if they haven't. And before they can check in, they have to validate that they feel good and they're ready to work and they haven't come in contact with anyone they're aware of. So we're taking all the steps necessary we think. And I think as a guest. And everything we've heard in Georgia over the last couple days has confirmed that the guests that are coming in are feeling good about it. They're going to talk about what we've seen in Georgia for two days. So let me just caveat. It is two days in 38 restaurants on a Monday, Tuesday, but here's what we've seen in two days.

Yeah. And, Brian, one of the things too that. I think that's very relevant here is that we've had operators in restaurants, game planning this for a couple of weeks now. So the ability to go into restaurants and work the floor plans, have had the design teams helping from a safety and security standpoint, understanding how these flows can work. I mean - again we're getting a little - we've got some openings happening slightly faster than we thought they might. But we're prepared for that because of the work again. And the backdrop and the scale that we can bring is to the operators and helping in this regard. First couple days in Georgia, again, we think the dining room pieces equation has been incremental. We've seen on an aggregate basis down in the mid-20s is been the first to today's response. The interesting thing is - and there is going to be some great learnings over the next several weeks coming out of these areas that you do see some variances too. We actually have had several restaurants with positive comp sales year-over-year. That's total positive comp sales. So you do get a wide variety of responses depending again, I think some of my comments about the regional flavor and responses and where people's heads might be at from. But there's clearly a demand side out there that we're seeing in a number of locations.

That's really helpful. And just switching back to the weekly cash burn that you gave, the $5 million a week. Can you run through the primary buckets within that burn rate? And does it include full rent payments?

It's a comprehensive number looking at again the entire revenue and disbursement size of equation. So it does include CapEx and some of those things. It does not include full rent payments. We, in April made rent payments that approximated about 56%, 57% of expected rent. We've obviously been working aggressively with landlords and in a very cooperative environment too, I think. I mean again we're pleased with the discussions on what deferrals look like going forward. But it'll be - there will definitely be a level, meaningful level of rant incorporated into that. And of course, those numbers will adjust Brian as we now move into the new environment. But it's comprehensive besides that.

All right, thanks. I'll pass along.

Your next question is coming from Greg Francfort. Your line is live.

Hey, guys. I have two quick questions. The first is can you talk about like how you're thinking about 2021. And I think a lot of people are listening to this call are trying to balance maybe a more pressured consumer with significantly reduced competition. And I'm curious just what your thoughts are. And then the other question I had was a couple of your competitors have done equity raises to kind of, I don't know if it's shore up the balance sheet or maybe increase the flexibility coming out of this. I'm curious what your thoughts are on the possibility of Brinker doing that and balancing raising cash with the dilution that would bring. Thanks.

Hi, Greg. Listen we're in the same boat with everybody else. What's the recovery going to look like? Is it a V? Is it a U? Is it an L? Who knows? So what we are committed to doing is just really performing at the top of the industry in whatever environment it shows or given in our fiscal '21, which starts in a couple months. So I can't tell you, I know there will be obviously some headwinds. The unemployment situation isn't going to rectify itself overnight. But there are also going to be some tailwinds. There are going to be less seats in the category. I mean, they're absolutely going to be less seats. And so how that all maps itself out and how much pressure you get from the front versus a push you get from the back. I don't know, we'll start to get a sense for that here over the next couple of months. But, we're going to commit to just performing at the top of whatever environment gets to put in front of us.

And Greg to the second part of your question, I don't have anything really specific to say to any type of capital raise. But again, we start the position being more comfortable today from a liquidity standpoint. I think the numbers we gave you this morning show the ability to work through the bridge to the other side of the equation. The bridge is actually starting, in short order here as we move back into dining room openings, I do believe those will be overtime positive to the liquidity set. So we're comfortable from a liquidity standpoint. That being said, we're monitoring capital markets closely. We have great conversations with our bank group and their important partners in working through these situations. And we continue to have those constructive, comments, particularly as it relates to some of the incremental availability on the revolving credit. And we'll just monitor capital markets as we go forward from that position.

Thank you, guys, for the thoughts and good to talk to you.

Great. Thanks Greg.

Your next question is coming from Nicole Miller. Your line is live.

Thank you. Good morning. Could you talk a little bit about the supply chain? Now we've heard about plants closing down and I'm just wondering if there's going to be a lag there, if there's any concerns that might materialize or not? Thank you.

Hey Nicole, really not right now, not in the near term. And again, I think if you're, and I know you are aware that a lot of the supply chain issues that are out there are because of the lack of demand in the food service sector. And obviously we're one of the bright spots in that sector that's allowing them to produce product that gets to us. And again a lot of our protein has already been put up. And we're not dealing with a lot of fresh protein. So we're in pretty good shape. And we don't see any near term issues. Obviously, if this goes on forever or for a longer or extended period of time then there could be something. But in the near term, we don't see any major issues. And our supply chain feels pretty confident in that.

Earlier you address labor and the ability to get the employees back into the restaurant across the board in restaurants and retail. Some premiums have been paid in the market recently. What's your outlook on labor inflation please? And thank you very much for your time today.

Well, there's two things that I'll mention. One is just it's been really uplifting to see the generosity of our guests during this crisis. And the level of tips and I could tell you stories of - multiple stories of guests coming in and tipping team members hundreds of dollars. And so there's a lot of, again, a lot of our team members rely on tips. And that piece of the income has been really done, they've done really well with that. So they're making good money. The ones that are employed with us. And with regards to what we're going to need to bring people back so far, it hasn't taken a lot. Again, this is the good news, bad news of unemployment. So 26 million people looking for work, I don't think we're going to have a hard time finding people to fill our jobs. That's going to have a bigger issue with what's the economic impact of that on the other side. But we're not seeing or we don't anticipate a big inflationary impact due to this virus or this crisis.

I will say, Nicole, let me just mention one more thing with regard to the people in the restaurant. Our managers and they're doing an amazing job. When we talk about frontline workers through the pandemic, people that are out there allowing businesses to stay open, to keep people employed, in the face of the pandemic. I couldn't be more [ph] proud of the work they're doing. And because of the financial implications it's had on the business, they're not getting the level of bonuses and some of the things that they've used to get because of just what's happened financially to the economy. And our first commitment is to making sure that we take care of those people. And so we may pay bonuses out to team members for levels of performance that we typically wouldn't during this crisis. And that has nothing to do with, what we have to do to keep them. That has more to do with what we need to do to be, to really recognize the sacrifices they're making during this crisis.

Your next question is coming from Chris O'Cull. Your line is live. Chris O'Cull: Thanks. Good morning guys. First Joe, I appreciate the update on the Georgia locations. But I'm wondering if you could quantify the limits to sales recovery as a result of maybe reducing the capacity of those locations?

Well, Chris, again, it's going to depend, because you're dealing with typically capacity restraints are based on your occupancy levels or in Georgia's case you've got a square footage restriction. But that plays differently in each restaurant and frankly almost every day part throughout the week. So obviously a capacity constraint on a Friday night is different than the capacity constraint on a Monday lunch. So what we'll see the progression of that. We'll learn from that as we go. But different restaurants are going to react differently. There're going to be restaurants that from their traditional operating performance level may not have as much of a capacity constraint. And then there'll be others that have a more significant one, particularly in those busier day parts. So but you also have the robust to go side to the equation. And we don't expect that to go away anytime in the near future. Again, I think there's - we have introduced a significant number of guests to Chili's during this process in particular. Maggiano's has had some of the same benefits and folks getting to experience to go operations and how we perform to their liking in that regard. So I think to the extent that the consumer continues to gravitate towards an off premise environment, we will benefit from that.

I'll just add, Chris, the tradeoffs are going to be, as Joe mentioned, really on those high volume time periods, you're going to - how much you're going to shift from takeout to dine in and how does that play? I also think it's going to be a very interesting dynamic to see how long people will wait for a table. So my hometown here in Texas, Colleyville opened up their patios this weekend, you may have seen in a national news. And people were waiting 2.5 hours to get a patio seat. Now we have a great table management system that allow people to wait in their cars and we can pay them when their table's ready. And I anticipate people will wait a little longer to get a seat and to be taken care of in the dining room. We're seeing people dining in our parking lot in the back of their cars and their trucks. So it'll just be very interesting to see how they play out this summer as we get through some of these capacity issues. But overall, the tradeoff between dining room and takeout delivery will be the dynamic that really matters to overall volumes. Chris O'Cull: And then just one last one, Wyman. How does a company plan to utilize advertising as stores reopened? You talk about the long waits right now. I mean, is it worth using advertising to generate more demand or do you plan to maybe delay that?

Yeah, we're right now really leaning into, again, this is where all the investments in all the expertise we've developed over the years with direct and digital and loyalty have really come in handy and paid dividends for us. And that's what we're leaning into now. I think mass and broad traditional marketing is probably not going to be as effective in this environment where we've got capacity demands and we're really being much more targeted and we'll evaluate future marketing spends as the environment starts to move. But right now we're really doubling down on the digital social and direct marketing and our team's doing a great job with that. Chris O'Cull: Great. Thanks guys.

Alright, Chris, good talking to you.

Your next question is coming from Robert Derrington. Your line is now live.

Thank you. Bob Derrington with Telsey Advisory. My question I guess Joe or Wyman, I'm not sure who best handles this. Typically we've seen, illness, food borne illness across the industry, pop up from time to time. And all of a sudden, you've got lawyers chasing lawsuits. And I'm just wondering, how do you minimize that risk or is there any risk of an employee a customer leaving and ultimately saying, listen, I was - I got ill by visiting a Chili's restaurant in a certain location? Do you require your employees to wear masks? Do you take their temperature? Does that vary by store? And what about consumers, do you require them to wear a mask? I'm just curious from your standpoint.

So Bob. Our standards are nationwide. And we are strictly adhering to them and making sure that happens. And so it's masks and gloves and sanitizer and distancing. And we take it very, very seriously. I think one of the reasons, if not the most important reason as to why we continue to see our sales grow every week and our gap to the category grow every week since the pandemic hit is because of the obvious seriousness with which we've taken safety. And it's visible to our guests and to our team members. And that's non-negotiable. Now we do ask them, as I mentioned, are they feeling well, have they taken their temperature, have they been in contact, do they feel ill. They have to answer these questions before they can clock in. And if they haven't taken their temperature and can verify that they don't have a temperature, we have a thermometer in the restaurant that they can go take their temperature and verify for us that they are not feeling bad. So we're doing everything we can on that side. And then from a consumer standpoint, we really rely on whatever the restrictions are in the county or in the state. So if the state mandates everyone wears masks, then we expect everyone to be wearing a mask. And if they don't, then we're not going to be enforcing standard above and beyond. We know social distancing is the right thing to do. And we have social distancing setup within our restaurants while we work through this next phase. That's how we're dealing with it. In terms of how do we deal with future lawsuits, we're not focused on that. We're doing the right thing. We know that if we just do the right thing, we should be okay relative to everything that you can expect in this crazy world of COVID.

It's comforting to hear one. And as we look at - one other question on the sales mix of at the beginning of April to the most recent trend, can you give us some color on how that mix has varied? I know that a number of states have allowed delivery of alcohol per se. How have your alcohol trends changed over that time, is that one of the key contributors? And will that be there available after the dining rooms reopened?

Well, so first that, again, back to the quality of this team. Judah [ph] told us two months ago that we'd be selling mixed drinks to people in cars, it just was not on anyone's radar screen. And as soon as those became viable options, some states being able to sell the mixed drink in the seal container and in some cases being able to sell packaged goods, with margarita kits. We got all over it and our supply chain really supported us in ways that were pretty amazing. And we've grown that piece of the business. It represents over $1 million a week now in sales and has grown nicely and we feel very good about it. Now, what the future holds, again, most of these things are temporary acts that were put in place by the governments. And so we'll see how they hold and how long they hold. But as long as they hold, we're comfortable now. We've got a great product. And guests really enjoy it. And we're having a good success selling margaritas to people in cars.

Our President say on the ride home with a straw. That's a great way to do it.

No, no. Not with a straw, nobody is drinking them. You got to get - well not till you get home.

Thank you.

Your next question is coming from Jon Tower. Your line is live.

Great. Thanks. Just a question on the balance sheet, specifically, curious to know how long the covenant waivers lasts that you received? And then in terms of thinking this out along the lines of how your business progresses, when you return to the negotiating table with some of the lenders, how can we think about your total shareholder return potentially changing given that your dividends and your repurchases have been a significant piece of the TSR over the past several years? Thank you.

Hey, Jon. I think as we indicated in the press release relating to the amendment that we received waivers for the two quarters at that point. So basically would be this quarter and the fourth quarter re-established a covenant mark on the leverage side of the equation, 4.75 for the first quarter of fiscal '21. So that's the dynamic as it relates to that. And as I indicated, obviously ongoing conversations with the banks and particularly as you start to move now into these next phases, understand what that looks like, understand what some of the go forward dynamics. And that includes how you structure a covenant package in this new environment going forward after those timeframes. So a lot of good conversations going out there. As it relates to the other part of the question, I think that's a discussion for down the road, some of the dynamics you've mentioned were suspensions. We'll talk about capital allocation on a go forward basis at a future time and how that impacts the TSR equation.

Okay. Then just, it's great to hear that the majority of your stores are still open, but in terms of thinking about your asset base, is this giving you an opportunity to potentially, I don't want to put it too crassly, but in terms of pruning the portfolio of stores where you felt like they were marginal with respect to operating relative to the rest of the system, is this giving you an opportunity to essentially say this is time to get rid of them?

Well, Jon. We do those looks on an ongoing basis. I think we talked to you about twice a year, in-depth reviews on performance. Frankly, we've done a good job of incrementally pruning over time. So again this is a new data set and it'll create a new environment that will play into those decisions. But we are sitting with a lot of restaurants that you think as you described and teetering on the edge. I think again, the actions we've taken on an ongoing basis. And the fact that, we've kept really all the restaurants open except some that might've been in a physical location that couldn't have opened because of that location, speaks well to the condition of the fleet.

Great. Thanks and good luck with everything.

Thanks, Jon.

Your next question is coming from John Glass. Your line is live.

Thanks very much. Just a couple of follow-ups, first, I know that franchising isn't as big a piece of your businesses at once was, but can you comment on the health of your domestic franchisees as well as maybe some of your international franchisees as they've probably gotten through the same issues that whole industry has faced. And can talk about on delivery. Is there any capacity constraints or are you noting that third party is having difficulty getting the capacity drivers to fulfill your demand as others are also seeing that or has that been a pretty smooth transition to a greater delivery percentage from their perspective?

Hi, John, good to hear from you. Yes, our franchisees are performing, consistent with us, with company owned restaurants. Obviously, we have a couple of franchisees that are unique, like our airport franchisee who is having, their own situation, relative to the airport environment. But those that are, the majority of ours are, similar to us with regard to their locations in their markets and they're seeing similar kinds of results. So feel good about how the bulk of the franchise base is weathering the crisis. The international market is a much more, it's just a much more dynamic situation, a lot of closures and then re-openings. Again, as you've tracked the global markets, how the pandemic has moved through different parts of the world. And our restaurants and franchisees have had to deal with that. So we've seen more closures in the international markets than we have as a percentage, in the US. But again, overall I think they're fearing, as well as can be expected or consistent with how retail and restaurants are doing in those markets. And they're working their way through and in some cases they're further along in the process of moving out of the COVID crisis. And we are in the US. So continue to monitor it not a huge part of our business. So that's important to note on the international side and it's more volatile, but again, it's just doesn't impact our overall earnings performance that much.

And then delivery?

Yes. We've got no problems. I mean, the biggest challenge we're seeing, the online world is just, the demand has been tremendous. And they're setting new records every weekend with regard to, number of users on the systems. And so just getting all of that to work smoothly and making sure that everything is working under the pressure that it's being put under has been probably their biggest challenge. But we haven't had a problem with getting drivers to pick up orders. That's not been our issue. And we've had really good - in our partners with DoorDash, we're just pleased with it. We think they're a great partner. And the work we've done over the last year to grow the business and to understand their business and our business we couldn't be happier with that relationship.

Thank you.

Yes.

Your next question is coming from Eric Gonzalez. Your line is live.

Thanks for the question and glad everyone here sounds like they're doing well. Just wondering maybe discuss how consumer behaviors have changed with regards to off premise. So in other words, like how much is check size increase? And other specific items or deals that you're seeing a higher menu preference as people experience cooking fatigue? Thanks.

Eric. It's interesting, right. So first the check size increases have been there. I think as we've seen more families move into this category than probably were there before, the biggest challenge and one of the things that we talk a lot about our comp sales. When you look at the difference between comp sales and comp traffic, our comp traffic numbers are five to six points better because the to go check and the delivery checks tend to run a little lower primarily because they don't have alcohol sales. And while we were pleased with the million dollars a week, we're selling in margaritas to go, that's a fraction of what we used to sell when we have these dining room and a bar. And so that's been probably the biggest difference between the mix of what we were seeing inside the restaurant and outside. Beyond that the value propositions that we had. So interestingly, when we went into the crisis, we thought we were going to have to simplify our menu, like many have done. And then we actually challenged ourselves to say hey, listen, that creates a lot of problems for our guests who love their favorites and for our supply chain. Because there is a lot of product out there that if we simplify the menu what's going to happen to that product. So we challenge ourselves to run the full menu and we've done that. And we've been able to pull that off and still deliver the P&L performance that we needed to and the operational side of the equation. And that's probably because our dining rooms are just to experiences is complicated. But our kitchens aren't as busy as they have normally been. So they are able to pull this off and our operators did a great job, our supply partners and our distributors adjust and we made all these changes to the system to make that work for us. And so overall, our mix is leaning a little heavier into the value proposition that we've always had. And that was also really, I think the strength of ours. So we didn't have to innovate or create a whole lot of packages or new deals or family bundles that we've seen a lot of other folks do. We've just ran our menu. And our menu has inherent strength in it. And that's Chili's. Maggiano's had to make a few more modifications just because of the nature of their sitdown dining experience. But for Chili's we just ran what we ran. And for the most part with the exception of alcoholic sales checks line up.

Thanks guys. Appreciate the color.

Everyone as we're coming up against the hour. We will go over for short period of time, probably five or 10 minutes. I will get through as many of the questions as we can. We know there is a lot of folks. Obviously, we will have a chance to talk individually after the call. But we will keep going and comment. But I just want to let you know we are probably down about the next 10 minutes or so.

We are cognizant of your time too. And if we miss you those who you have to check out, we appreciate you joining us.

Your next question is coming from Katherine Fogarty. Your line is live.

Great. Thank you. So just one point of clarification here, when you reopen the dining room. You've mentioned having a one or two page menu. Is that going to be bridged menu or have you figured out a way to condense all the prior menu items onto that page? How are you thinking about menu in the dining when you reopen? And I have a follow up?

Well, again, it's going to take us a couple of days to get menus out in an abridged format. But it will not be the full menu. It will just be in a different layout. So yeah, we don't need to change pictures.

And we're going to encourage guests to - listen, they can always - if guests are nervous about menus, they can pull up their phone and pull up our app and scan our menu from their phone. And that's an easy way to order as well again. So if anyone's nervous or at all not comfortable with a menu, there's touchless systems that are be there. There is pretty much a touchless system that we have, that they can take advantage of if that's at all important to them.

And then on apologies if you gave this figure explicitly. But do you have an update on My Chili's Rewards members? And any findings you're seeing about new additions to the platform, given your digital strength as of late?

The platforms that are holding its own, we signed up a lot of people into My Chili's Rewards through our dining room. And so when we lost our dining room, we did lose a source of acquisition. But obviously, that's been traded off with online acquisitions. So net-net it is actually a little bit down, but it's still robust and doing well for us working as hard as it's ever worked.

Yeah, the active database is still over 8 million folks. So it has the capability to do what it needs to do.

And as we open dining rooms again, we will start to grow that - we will get that acquisition vehicle back up and running.

That's great. Best of luck. Thank you.

Your next question is coming from Dennis Geiger. Your line is live.

Great. Thanks, guys. Wondering if you could talk a bit more about new guests, and if you have any sense that you could share as it relates to the relative magnitude of newer guests using the brand? Maybe just on top of that any sense on sort of customer perceptions and perception scores over the last several weeks. And as we think about marrying those two, how you think about the stickiness of new guests that you've seen over the last several weeks? Thanks.

Well, every channel is a little different, right. So I think on the delivery side where the businesses again both are takeout and delivery business have more than doubled, almost tripled. The delivery side of the business, we're getting a lot of new users, a lot of people that are experiencing delivery for the first time and then finding the Chili's delivery experience for the first time. So that bodes well all of our metrics through that system, confirm that we do a good job and that our guests are happy. And that we have a good, conversion rate. With regard to new guests with takeout, it's probably not as many. Here's where the loyal guests at Chili's are coming to find that experience that they can trust and count on in these uncertain times. And we see a lot of our loyalty. This is where leveraging our loyalty database really comes in handy and is working hard for us. So we are getting new people into the brand every day, but it's different by category or by column. And we have seen - our experience - so we have guest metrics and our guest metrics on delivery and takeout have significantly improved through this process. Really, we've improved them to a magnitude of 30% better than they were, in that channel prior to delivery takeout only model.

Great. Thank you.

Thanks Dennis.

Your next question is coming from Andrew Strelzik. Your line is live.

Hey, good morning. I guess - just two questions for me. And I apologize if you mentioned this and I missed it. As we're seeing a lot of the new delivery customers come into the brand, has your mix changed between the two channels? Is it still primarily coming through a third party would be the first question? The second one, just as we think, in a post-recovery environment about sanitation and cleaning measures or anything like that, would you anticipate any structural margin implications as we move past the recovery phase?

So on the first one, Andrew, I'm not sure I understand your question. All of our delivery comes through a DoorDash. So you're asking about the to-go delivery mix? How that is supposed to… They've both grown significantly. They've almost more than doubled their pushing on triple. The relationship has been, the growth has been a little better. Both absolutely presented with to-go. But the delivery business has also grown very nicely. And then Joe on sanitation, the costs associated.

Again, we would anticipate some incremental costs associated to do those. Again, sanitation and safety are already embedded in the business model. There's probably some incremental level. We'll go for some period of time. But it's incorporated and thinking it's going to be very manageable in that regard.

Okay. Thank you very much.

Thanks Andrew.

Your next question is coming from Peter Saleh. Your line is live.

Great. Thank you. And I appreciate all the color you guys provided today. I just want to come back to the comment on supply chain. I think you said, you're not seeing any real impacts on the supply chain. With that said, do you expect or do you anticipate any sort of either deflation or inflation in any particular commodity? Anything that may be different than what you guys were anticipating a few quarters ago?

I think, Peter overall we're seeing a little more - a little less inflation I have to say. So the expectations on inflation level are down probably about a percent or so now. Again, remembering that our contracting is designed to try and mitigate as much volatility as possible. So it gives us a little bit more of a steady state there. We do expect commodity markets. We'll probably have in some areas, some higher level of volatility as you move through an economic cycle like this. We're protected on one side and frankly have the ability in some cases to take advantage of some volatility when we see it in particular in some of the proteins. And how we structure and extend contracts if we choose to do that. But again supply chain is all over it. And I think as we look farther down the line, probably a little bit better environment overall than what we might have been expecting a couple months ago.

I think the other one that's probably hasn't played out yet is just, if gas prices continue to stay at these extremely low levels that will roll through commodity pricing, as well as distribution, obviously. So we'll see how that plays. But again, more upside to the P&L than a downside.

Great. Thank you very much.

Your next question is coming from [indiscernible]. Your line is live.

Hi, good morning and thanks for taking the question. So it was noted in the release that online ordering accounted for 70% of off premise orders in the most recent month of data provided. So how did that trend since March and where is that currently running? And can you talk a little bit more about how you plan to leverage those digital relationships over the long term? Thanks.

Well the trend obviously is tripled with the business. So we went from a business that was running 18% to 20% to a 100% takeout and delivery. And the mix within that is pretty much stayed the same. We get - a percentage of our guests prefer to call in. And as much as we would rather them get online, they're just going to call us and we're happy to answer their phones and take their order that way. So that's just the difference. And I'm sorry, Chris, what was the second part of the question?

Yeah, just asking about, how you just plan to leverage any more these digital relationships the new ones over the long-term?

We're always trying to, both within our formats and even with our DoorDash partner working to create a more what I'll call sticky relationship, a more direct relationship, share information for a reason. We offer benefits through our loyalty programs or always whenever we have an opportunity to make a connection through one of these vehicles, we look to cement that through a more permanent relationship through our loyalty program. So that's what we're doing. And as I mentioned earlier, we're growing the database through our digital very nicely. It's just being offset a little bit because we don't have that same relationship building opportunity in dining room. So we look forward to getting that back and the two of those will help us continue to grow our database nicely.

So everybody, we've actually hit that time period that we're going to in the call. Our apologies to the queue that continues to remain. Mika is available. I'll be available. We'll obviously welcome the continued conversation as we go forward. Thank you for participating this morning and I'm sure we will be talking soon. Everybody please stay safe.

Thank you.

Thanks everybody.

Thank you. Ladies and gentlemen, this does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.