DRI - NYSE

Greetings, and welcome to the Darden Restaurants Fiscal Year 2025 Q4 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Courtney Aquilla, Senior Director of Finance and Investor Relations. Courtney, please go ahead.

Thank you, Kevin. Good morning, everyone, and thank you for participating on today's call. Joining me are Rick Cardenas, Darden's President and CEO; and Raj Vennam, CFO. As a reminder, comments made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause the actual results to differ materially from our expectations and projections. Those risks are described in the company's press release, which was distributed this morning, and in its filings with the Securities and Exchange Commission. We are simultaneously broadcasting a presentation during this call, which is posted in the Investor Relations section of our website at darden.com. Today's discussion and presentation include certain non-GAAP measurements, and reconciliations of these measurements are included in the presentation. Looking ahead, we plan to release fiscal 2026 first quarter earnings on Thursday, September 18, before the market opens, followed by a conference call. During today's call, I'll reference to the industry results refer to the Black Box Intelligence, casual dining benchmark excluding Darden. During the fiscal fourth quarter, average same-restaurant sales for the industry grew 3.0% and average same-restaurant guest counts grew 0.9%. This morning, Rick will share some brief remarks on the quarter. Raj will provide details on our fourth quarter and full year financial results as well as share our fiscal 2026 financial outlook. Then Rick will close with some final comments. Now I will turn the call over to Rick.

Thank you, Courtney, and good morning, everyone. We had a strong quarter with same-restaurant sales and earnings growth that exceeded our expectations. I'm proud of the great work by our restaurant teams throughout the quarter, particularly on Mother's Day as several brands achieved sales records for that day. The return of Olive Garden's buy one take one offer for the first time in 5 years, combined with the continued strength of off-premise, drove their impressive sales during the quarter. Olive Garden's marketing strategy to meaningfully communicate strong value, create urgency and introduce food news continue to resonate as guests are motivated by news and compelling price points. Buy one take one with a starting price point of $14.99 allowed guests to choose one entree for their dining experience and then take a second one home. The take-home selections leveraged Olive Garden's existing $6 take-home platform, minimizing operational complexity. During buy one take one, Olive Garden same-restaurant sales gap versus the industry increased to 450 basis points. With delivery available nationwide, the entire quarter, Olive Garden continued to see order volume grow week-to-week while retaining higher-than-average sales per transaction versus curbside pickup orders. This, combined with continued growth in catering and curbside to go, drove overall takeout sales to grow nearly 20% over last year. At the end of the quarter, Olive Garden launched a campaign to promote delivery across multiple channels, including television advertising, with a compelling and memorable offer, 1 million free deliveries, partially funded by Uber. We continue to see strong incrementality with average weekly deliveries per restaurant nearly doubling during the last 2 weeks of the quarter. The Olive Garden team continued to execute at a high level, which led to an all-time high guest satisfaction score for the quarter. I am extremely proud of how Dan Kiernan and his team managed the business throughout the year and the strong momentum they have generated heading into the new fiscal year. At LongHorn Steakhouse, the ongoing commitment to quality, simplicity and culture continues to drive their momentum. Their entire team remains obsessed with serving the highest quality stakes in casual dining. This includes having industry-leading specifications and ensuring they perfectly season and grill every stake they serve. To support this, during the quarter, Olive Garden validated each one of their Grill Master's expertise with the 8th Annual Steak Master series, their internal drilling competition and training program. Congratulations to Tim Crane from the LongHorn Steakhouse Independents Missouri who claim the Championship Trophy. This focus on ongoing training continues to pay off as LongHorn ended the year with an all-time high stakes will correctly score as well as a new all-time high guest satisfaction score for the quarter. Laura Williamson and her team have done a great job of building on the business momentum at LongHorn. For the fiscal year, the same-restaurant sales increased 5.1%, and they reached a major milestone by surpassing $3 billion in total sales. These results reflect the strength of their focused strategy. Last quarter, we announced Cheddar's Scratch Kitchen have begun piloting Uber Direct. It was a successful pilot. And as of last week, delivery is now available in all but 8 Chuy's restaurants. Paid media and e-mail support began earlier this week, partially funded by Uber. The Cheddar's marketing team also continues to build on its use of connected television debuting the first 30-second spot in Cheddar's history during the quarter. The spot was developed at no cost at Darden, thanks to the scale of our CTV media spend across our portfolio. In addition to Olive Garden LongHorn, Cheddar's also received an all-time high guest satisfaction score for the quarter, as did Ruth's Chris Steak House and Eddie V's. We know that engaged well-trained team members helped drive operational success and 2 of our brands were recognized for their people practices during the quarter. Longhorn and the Capital Grille received the Employer of Choice Awards from Black Box Intelligence, for casual dining and fine dining, respectively. The award recognizes exemplary performance in managing turnover rates, fostering an inclusive workplace culture and implementing best-in-class people practices. Overall, I am pleased with our results. Our adherence to our winning strategy anchored in our 4 competitive advantages and being growing with the basics, led to a successful year. Our strategy remains the right one for the company, and we will continue to execute it to drive growth and long-term shareholder value. Now I will turn it over to Raj.

Thank you, Rick, and good morning, everyone. As Rick said, fiscal 2025 was another strong year, driven by disciplined execution of our strategy. In the fourth quarter, same-restaurant sales continued the sequential improvement from prior quarters with our casual brands gaining significant market share. This resulted in sales and earnings exceeding our expectations for the quarter. Furthermore, we finished the year with same-restaurant sales at the top of our initial guidance range and earnings in the upper half of the range despite the slower-than-expected start to the year. Now looking at the fourth quarter. We generated $3.3 billion of total sales, 10.6% higher than prior year. This was driven by same-restaurant sales growth of 4.6% with positive traffic growth, the acquisition of 103 Chuy's restaurants and the addition of 25 net new restaurants, which includes the permanent closure of 22 underperforming restaurants. Same-restaurant sales exceeded the industry benchmark for the quarter and were in the top decile of the industry. Adjusted diluted net earnings per share from continuing operations increased 12.5% to $2.98. We generated $582 million of adjusted EBITDA and returned $215 million to shareholders through $164 million in dividends and $51 million of share repurchases. Turning to the fourth quarter P&L compared to last year. Food and beverage expenses were 60 basis points lower as commodities inflation was better than expected at approximately 1.5%. Restaurant labor was 10 basis points lower as productivity gains more than offset higher performance-based compensation and pricing below total labor inflation of approximately 3.5%. Restaurant expenses were 20 basis points higher driven by brand mix with the addition of Chuy's and the impact of first-party delivery at Olive Garden, partially offset by sales leverage. Marketing expenses were flat at 1.3% of sales consistent with our expectations. This all resulted in rational level EBITDA for the quarter, improving 50 basis points to 21.6%. Preopening costs were 10 basis points higher as we accelerated our new restaurant pipeline opening 19 restaurants during the quarter. Adjusted G&A expenses were 30 basis points higher due to higher incentive compensation accrual compared to the fourth quarter last year and unfavorable mark-to-market expenses on our deferred compensation. Because of the way we hedge mark-to-market expense, this is largely offset in the tax line. Interest expense increased 20 basis points due to the financing expenses related to the Chuy's acquisition. And our adjusted effective tax rate for the quarter was 12.2%, with tax expenses down 20 basis points because of the mark-to-market hedge impact I referenced earlier. In total, our adjusted earnings from continuing operations were $352 million, which was 10.7% of sales. In the fourth quarter, all of our segments grew total sales with 3 of the 4 segments growing same-restaurant sales and segment profit margin. Olive Garden increased total sales for the quarter by 8.1% with strong same-restaurant sales growth of 6.9% and the addition of 15 net new restaurants. Olive Garden same-restaurant sales outperformed the industry benchmark by 390 basis points for the quarter. Uber direct delivery fees positively benefited check mix by about 40 basis points in the quarter. These fees were passed on to Uber with the revenue fully offset in restaurant expenses. Olive Garden continues to have industry-leading segment profit margin, delivering 23.8% for the quarter, which is 100 basis points higher than last year. At LongHorn, total sales increased 9.3%, driven by same-restaurant sales growth of 6.7% and the addition of 16 net new restaurants. LongHorn continues to increase market share with strong and sustained sales growth exceeding the industry same-restaurant sales benchmark by 370 basis points this quarter and 850 basis points on a 2-year basis. Segment profit margin for the quarter was 20.1%, 80 basis points above last year. Total sales for Fine Dining segment increased 2.3%, driven by the addition of 6 net new restaurants, which includes the permanent closure of 2 underperforming restaurants. Same-restaurant sales were negative for the quarter, resulting in segment profit margin lower than last year. While the Fine Dining category as a whole continues to be challenged, we are seeing sequential improvement in guest traffic from households earning $150,000 and above. Total sales for the Other Business segment increased 22.4% with the acquisition of Chuy's and positive same-restaurant sales at Yard House and Cheddar's. This positive growth was partially offset by the permanent closure of 20 restaurants during the quarter, including 15 Bahama Breeze restaurants. Positive sales momentum and continued productivity improvements at Yard House and Cheddar's contributed to a 17.5% segment profit margin for the Other Business segment, 10 basis points higher than last year. The integration of Chuy's is progressing as planned with synergies on track and a neutral impact to EPS for fiscal 2025, which is in line with our expectations. As we look at our annual results for fiscal 2025, we had same-restaurant sales growth of 2%, outperforming the industry by 170 basis points. Total sales increased 6%, surpassing $12 billion for the first time in our history. Adjusted diluted net earnings per share from continuing operations increased 7.5% to $9.55. We delivered $2 billion in adjusted EBITDA from continuing operations driven by strong sales growth, and we returned $1.1 billion to shareholders with $659 million in dividends and $418 million in share repurchases. Looking at our fiscal 2025 full year P&L. Restaurant-level EBITDA grew 40 basis points, driven by disciplined cost management and pricing leverage. This favorability was partially offset by the increased depreciation and amortization expense, resulting in operating income margin that was 10 basis points higher than last year. Financing expenses related to Chuy's acquisition increased adjusted interest expense 20 basis points from last year. This all resulted in adjusted earnings from continuing operations of 9.4%, which was 10 basis points below last year. As I mentioned earlier, we permanently closed 15 underperforming Bahama Breeze restaurants as well as a few restaurants at other brands. These closures will result in a headwind to our fiscal 2026 total sales growth but are expected to be slightly positive to earnings. Fiscal 2026 is a 53-week year and we anticipate a positive impact from the extra week on diluted net earnings per share from continuing operations of approximately $0.20. Now turning to our financial outlook for fiscal 2026. We expect total sales growth of 7% to 8%, including approximately 2% from the additional week; same-restaurant sales growth of 2% to 3.5%, and opening 60 to 65 new restaurants; capital spending between $700 million and $750 million; total inflation of 2.5% to 3% with commodities inflation of approximately 2.5% and total labor inflation of approximately 3.5%; EBITDA of $2.16 billion to $2.19 billion; and an annual effective tax rate of approximately 13% and approximately $117 million diluted average shares outstanding for the year, all resulting in diluted net earnings per share between $10.50 and $10.70. This morning, we also announced that our Board approved a 7% increase to our regular quarterly dividend to $1.50 per share, implying an annual dividend of $6. Now turning to our long-term financial framework, which outlines the strategic priorities and performance expectations that guide our sustained value creation. We remain committed to delivering 10% to 15% total shareholder return as defined by EPS growth plus dividend yield. However, we're updating the framework to reflect a greater emphasis on sales growth with appropriate investments while maintaining our growing margins. As a result, we're increasing new restaurant growth to 3% to 4%, and same restaurant sales growth to 1.5% to 3.5%. Additionally, we're updating how we define margin expansion, shifting from EBIT margin to earnings after tax margin to more accurately reflect how we view and manage our business. There are 3 primary drivers of this change. First, due to the way we hedge mark-to-market expense on our deferred compensation, the impact in G&A is largely offset in the tax line. Second, current lease accounting guidelines result in an ongoing negative impact to interest and depreciation with an offsetting benefit in restaurant expense. And third, to account for any interest expense associated with any future acquisitions. Our updated framework targets [indiscernible] margin growth to be flat to 20 basis points. This all results in [indiscernible] growth contributing 6% to 10% of total shareholder return. Our dividend remains a priority, and the target payout ratio range of 50% to 60% remains unchanged. Share repurchase is being updated from a dollar range to a percentage range of contribution to shareholder return. Return of cash is now targeted to contribute 4% to 5% of total shareholder return. Looking at our performance since 2019 relative to the updated framework, new restaurant growth inclusive of acquisition was within the updated range having grown 3.1%. Same-restaurant sales of 2.9% is in the top half of the target range and [indiscernible] margin expansion was above the midpoint of the updated range, increasing 13 basis points on an annualized basis, resulting in an annualized [indiscernible] growth of 7.6% near the middle of the range. The dividend payout ratio of 58% is near the top end of the range and share repurchase contribution to shareholder return was 1%, culminating in total cash return of 4.1% despite the issuance of 9 million shares of common stock in fiscal 2020. Total shareholder return as defined by EPS growth plus dividend yield was 11.6% and within our targeted range. Additionally, our -- over our 30-year history as a publicly traded company, Darden has achieved an annualized total shareholder return of 10% or greater for any 10 fiscal year period when taking into account Darden's stock appreciation plus dividend yield. Finally, our strong operating model generates significant and durable cash flows. Since fiscal 2019, we've grown EBITDA by about $800 million and are on track to reach nearly $1 billion in EBITDA growth by the end of fiscal 2026. Our balance sheet at the end of fiscal 2025 is well positioned with adjusted debt-to-EBITDA of 2.1x. This is at the low end of our targeted range of 2 to 2.5x despite the additional debt related to the acquisition of Chuy's and Ruth's Chris over the past 2 years. Now I'll turn it back to Rick.

Thanks, Raj. Strategic planning is one of our competitive advantages. And at the Darden level, it ensures that we have the right portfolio of brands, we align strategies and coordinate operations to maximize our portfolio's value and we capture the available synergies across all our brands. For our brands, our strategic planning process allows us to determine the strategic role in the portfolio, identify their distinct advantages and cultivate differentiated positioning, develop a deep understanding of their guests and the competitive landscape, and ensure they adhere to their strategy so they can compete effectively and grow share. During the quarter, we completed our 5-year planning process. Each of our brands has a clear understanding of their role in their portfolio, and they have built a 5-year strategic plan based on that role, focusing on what they need to do to win today and into 2030. They have already begun to put their plans in action and will execute them to drive shareholder value. Additionally, there were some other key outcomes from that process that I would like to share. As Raj mentioned, we made the decision to close 15 Bahama Breeze locations in May, leaving the 28 highest-performing Bahama Breeze restaurants in our portfolio. After further review, we have made the difficult decision that these remaining locations and the Bahama Breeze brand are not a strategic priority for us. We also believe that this brand and these restaurants have the potential to benefit from a new owner. Consequently, we will be considering strategic alternatives for Bahama Breeze, including a potential sale of the brand, or converting restaurants to other Darden brands. Excluding any onetime potential impacts, which are unknown as of today, we do not expect these strategic alternatives including a potential sale to have a material impact on our financial results. We also signed a definitive agreement to sell the 8 Olive Garden locations in Canada to Recipe Unlimited, the largest full-service operator in Canada, and we are on track to close that deal soon. These 8 restaurants will become franchised and upon close, Darden and Recipe Unlimited will enter into an area development agreement to open 30 more Olive Gardens over the next 10 years. Their expertise in the Canadian market will help the Olive Garden better operate locally and accelerate the brand's ability to grow throughout the country. Our international franchising team led by Brad Smith, is focused on growing our global presence. Today, we have 154 franchise locations, which includes 63 in the Continental United States and 91 outside the Continental United States. One of the benefits of the Ruth's Chris acquisition was the scale it added to our franchise business. The increase in revenue from adding 74 Ruth's Chris franchise locations has allowed the team to grow faster. We were able to add the resources and systems to help our franchisees better operate our brands that would have taken us longer if we had not added the Ruth's Chris restaurants. And the team has been busy signing new area development agreements with international partners. In addition to the agreement with Recipe Unlimited, we also have new agreements with partners in India and Spain, each of which calls for the development of 40 Olive Garden locations as well as an agreement with our existing Ruth's Chris franchise partner in Asia for the development of 6 Capital Grill locations. Brad and his team are doing a great job and I'm excited about the growth prospects of our international franchising business. Also, as you may have seen from our 8-K filing this morning, after 33 years with Darden, Dan Kiernan will be retiring as President of Olive Garden on August 31. Dan has worked in the industry since he was 16 and began his career at Olive Garden as a manager in training. For the last 7 years, he has led Olive Garden to new heights and has been a tremendous steward of the brand. As I said earlier, Dan and his team have generated strong business momentum. And following the successful completion of their 5-year business plan, Olive Garden is well positioned for this leadership transition. One of the benefits of our scale is having a deep bench of talent to fill leadership roles. I am pleased that we have another proven operator to lead Olive Garden. John Wilkerson who has led Cheddar's for the past 7 years, will be the next President of Olive Garden, and he will work closely with Dan over the next 10 weeks to ensure a smooth transition. John is a 30-year Darden veteran, who has done an excellent job of rebuilding the fundamentals at Cheddar's and setting the brand up for growth. John will continue reporting to me. John's replacement at Cheddar's is Mark Cooper, currently President of Seasons 52 and Bahama Breeze. Lorie Kessler, who has led operations at Seasons for 52 years -- excuse 52 -- for 11 years -- sorry, didn't want to age you, has been named President of Seasons 52. Mark and Lorie will report to John Martin, Group President. In addition to Cheddar's and Season 52, John Martin will retain responsibility for Yard House, the Capital Grille and Eddie V's. He will also lead Bahama Breeze as we consider strategic alternatives for the brand. Additionally, I am pleased to share that Thomas Hall has been named President of Chuy's. For the past 7 years, Tom has served as Executive Vice President of Operations for LongHorn. Tom will report to Todd Burrows, Group President, who is responsible for Chuy's and Ruth's Chris as well as Darden development and international franchising teams. With these changes, I am confident we have the right leaders in place across all our brands to compete effectively and grow share. Finally, last month, Darden celebrated its 30th year as a publicly traded company. I was delighted to ring the opening bell at the New York Stock Exchange with several team members with 30 or more years of service, including Level Rutledge, our longest tenured team member at 52 years. That moment was a great reminder of an enduring quote from Bill Darden. He said the greatest edge we have on our competition is the quality of our employees reflected each day in the job they do. Our people drive our success, and I want to congratulate our teams on a strong quarter and a successful year. On behalf of our leadership team and the Board of Directors, thank you for your continued dedication and commitment to nourishing and delighting our guests and each other. Now we'll take your questions.

[Operator Instructions] Our first question is coming from Eric Gonzalez from KeyBanc Capital Markets.

Congrats on the really strong same-store sales results. Well, obviously, you're executing at a very high level. It's really hard to deny the fact that the industry seems to be in a strong position, particularly some of the larger chains in full service. So perhaps you can give us your perspective on why casual dining is having a bit of a moment right now. And relatedly, I'm curious what your thoughts on how some of the smaller chains [indiscernible] that you're sharing in this environment? Whether you think the independents are struggling with the same affordability perception issues that you might have in fast food?

Yes, Eric, thanks for the question. Thanks for the comments on our quarter. As we look across what's been going on over the last 5 or 6 years, as you recall, we've been very prudent in keeping our pricing below inflation because we knew that over time, pricing matters, if you take it too much. And what we believe is happening right now in the casual dining space is consumers are figuring out that casual dining is a great value. And so they're coming to casual dining more. And we're starting -- we're seeing that across our brands and some of the industry. And so without commenting on what's happened in other places, we think that's a big part of it. consumers want to go out and spend their hard-earned money. And we think we're taking some wallet share from fast food and fast casual.

Maybe if I could, as a follow-up, ask about the unit growth outlook, the 60 to 65 units this year. Your long-term range in your algorithm is 3% to 4%. So I think the 60 to 65 implies 2.7% to 3%. So I guess I'm curious when we might see a ramp in unit growth and which brands might be the largest contributor?

Yes, Eric, I'd say from -- when you look at 60 to 65, you're right, it could imply 2.7% to 3%. But as you look at actually how we're ramping up growth from where we're starting. We're actually building the pipeline. Our development team has done a great job. We expect to be in the 3-plus range over the next 5 years. And we are actually -- we have a pretty strong pipeline. As you know, these things take time to build up. But I think we have new practices and processes in place. And from a brand mix, as we've said, initially, as you look at next year, I'd say between Olive Garden and LongHorn, we're going to probably have 40 to 45 openings and then Yard House might be in the mid-single digits, and then you have all the other brands contributing probably another 15 or so. But as we look into the future, we expect the other brands to become a bigger part of the mix. But we do think there's a huge opportunity for still Longhorn to be in the 25 to 30 openings a year. And then Olive Garden to be in the 20-ish range for the foreseeable future. But then we're also, as I said, the other brands will start to contribute even more as we move into the next few years.

The next question is coming from Chris O'Cull from Stifel.

Raj, my question was on the updated long-term framework. Does the new margin expansion target reflect a different view on the long-term restaurant margin opportunity or even the rate of reinvestment you expect to make in the business?

Yes, Chris, it does a little bit, right? What we're trying to figure out is, one, let me just start with the -- just by changing the definition, we're getting a more holistic view because there's a lot of contraction between the G&A, D&A and then tax and interest. So that's why we wanted to get to a bottom line number. So that's one. But two, does it imply restaurant level EBITDA maybe not growing at the rate we've targeted in the past? Yes, because we're saying that we are going to make investments with a greater emphasis on sales grade -- sales growth. And if sales growth drives even more margin, that's good, but we're going to try to find ways to reinvest to get for the long term.

The next question is coming from David Palmer from Evercore ISI.

Regarding Uber Direct at Olive Garden, curious about what you can share about mix and same-store sales contribution in the in fiscal 4Q and what you're contemplating for mix and same-store sales contribution from it in fiscal '26? And also is there anything different about the incremental margin from that from the base business?

David, so I think we said on -- for Q4, the mix impact from just the fees was about 40 basis points. Uber [indiscernible] was about 3.5% of total sales at Olive Garden. So -- and I think we talked about in the past what the total contribution would be to incremental sales, and we said it's 40% to 50%. So if you kind of go with that and taking the impact of the fees, it's roughly about 2% incremental sales impact to the quarter. We are not ready to talk about the future in terms of what the impact would be for next year. But when we did the advertise, the exit rate was about 5% of total sales. That included the free delivery offer. And from a margin perspective, we do not expect this to have a meaningful impact of negative -- on margin -- any negative impact or positive impact on margin. Because if you look at how we structured the deal, a lot of the fees are just passed on to Uber but there isn't any margin difference on the base. And the minimal -- the geography impact is pretty minimal. We're talking about maybe 10 basis points at best. But then there's also a positive. People are buying more through that, that helps offset. And you saw that in the fourth quarter. Olive Garden has a pretty strong positive mix. And I think as we signaled a few times, if Uber -- Uber Direct contributes even more than we expect going into this year, we're going to reinvest some of that into the business to drive long-term growth.

And with regard to Uber Direct and other brands, I would assume that this is going as you would have expected for Olive Garden. Are there other [indiscernible] that you think are particular to Longhorn and the other brands that you'll want to figure out before you do Uber Direct at those brands that you think might be an additional hurdle? Or are you kind of seeing probably what you need to see from this as a lever that could apply to your other brands?

Yes, David. As we launched it in Cheddar's, and got pretty similar answers to Olive Garden, we were able to ramp it up faster and get it into most of the restaurants faster. The other brands, we'll continue to look at. We have some thoughts on what brand might go next. But we want to make sure that every brand that adds delivery has a great experience for their to-go. And so we mentioned that there were 8 Cheddar's restaurants that didn't -- that aren't live, that's because they didn't earn the right to have delivery. That doesn't mean that our other brands don't have a great experience. But there are other brands might have a little less on the curbside space and those kind of things, so they might not even be able to have curbside pickup. And as you recall, we don't want the Uber drivers to come into our restaurant. We want that to be just like another curbside experience. So we're looking through our portfolio to see what we can do on some of the brands that might not have as much curbside to see if we want to add. But the last thing I'll say on this is we are not pushing Uber Direct onto any brand. Every brand has their president and their leaders, and they choose if they want to do it. We can veto if they get it, and there are some brands that we would probably veto, but I don't think those brands are thinking about doing it. So without getting into which we're in is next, we do have another brand that we think we're going to work on but it will probably not start until sometime right at the beginning of the next calendar year.

The next question today is coming from Andrew Charles from TD Cowen.

Rick, it's a good segue to my next question. I'm curious, are you prioritizing expanding rolling out Uber Direct across the remaining brands that make sense, recognizing it's not going be all of them? Or is the attitude to see how Olive Garden would perform on the Uber marketplace?

Right now, our priority is to continue to see how Olive Garden and Cheddar's perform in Uber Direct marketplace is something that has challenges for us. And we've said what those challenges are. And that's why we developed this Uber Direct offer with Uber, which was the perfect thing for us and a really great thing for Uber. So we'll continue to see how this goes before we determine whether we want to even be in the marketplace at all.

Okay. That's helpful. And then, Raj, just a follow-up question. With the outlook for 2026 inflation of 2.5% to 3%, can you segue how that's going to look between food and labor?

Yes, Andrew. So the food is -- we're expecting food to be about 2.5% and labor to be about 3.5%.

Your next question is coming from Lauren Silberman from Credit Suisse.

Congrats on the quarter. I wanted to follow up on fiscal '26 guidance for the EPS. If your top line comes in stronger than expected, how are you thinking about flowing through to earnings versus reinvesting back in the business? And I guess that kind of applies a bit to the long term?

Yes, Lauren, I think if you look at our framework, we said we're going to try to get at margin to be flat to positive. So we're not going to do it at the cost of giving up margin, but we're going to -- we're okay if we -- if the incremental sales just flow through at the current restaurant level margins and then reinvest the rest. So there's ways to do that, and that's kind of how we're thinking about it.

Okay. And then on the 2% to 3.5% comp growth, obviously, a very strong momentum in the business. Can you just talk about how you're thinking about the cadence of comp as we move through the year?

Well, maybe I'll just start by saying if you look at -- fourth quarter was obviously pretty strong for us, and some of the momentum from that has carried on into June -- first few weeks of June. But as we look at the 12 months out, there's obviously -- there's a lot of macro uncertainty. And so we thought looking out 12 months, we just -- it's prudent to kind of go with this range where we reflect the uncertainty because we are going to start wrapping on some of this growth as we get into the back half of the year. And so that's incorporated into guidance. I don't want to get too much into the cadence, but I think it's fair to assume that we'll start stronger. And from a year-over-year perspective, should be stronger in the first half than the back half.

The next question today is coming from Brian Harbour from Morgan Stanley.

What -- Raj, what -- roughly what pricing do you expect to run in the coming year? And I guess just how about like longer term? I mean is sort of continuing to restrain that sort of key to all the brands as we think about the long-term plan?

Yes, Brian. For fiscal 2026, I would expect us to be in the mid-2s for pricing. I think first quarter is going to be close to 2, and then we'll probably get into the mid- to high teens as we get through the year. Obviously, it depends on how inflation comes in. But our bias -- but it will still likely be below total inflation. And our bias is, as Rick just mentioned earlier, we've been very disciplined with respect to pricing, and that is not going to change anytime soon. That's just -- that's the philosophy. We try to price as little as possible and still get better returns we could get. And it's worked well for us, and we always play the long game, and we'll continue to do that.

Okay. And your comment about sort of reserving the right to reinvest. I mean it sounds like you're being more top line focused, right, in the current [indiscernible]. So I mean, to some extent, what form would that take? Would it be more on the food side? Or how would that actually show itself in the brands?

Yes, Brian. Yes, you got it right. We are going to focus a little bit more on top line growth and on just grabbing margin. And that will -- that can take place in many ways. Every brand has a different way to do that. Olive Garden is testing some things right now which would bring their mix down a little bit to be more -- have some more affordability. And because of the strength of Uber Direct, they're able to do that. Other brands might make some investments in labor to speed up the process. But it's only as we continue to grow sales, will we make some of these investments. We think these are the right long-term investments to be able to set the company up for the next 5 years. And the investments that we're making, especially on the menu, whether it's in mix or in affordability, will benefit both dine-in and off-premise.

Your next question is coming from Sara Senatore from Bank of America.

I guess -- just wanted to ask about fine dining. You mentioned that the category has been pressured, but I think unlike some of your other larger casual dining, you might be lagging some peers the question is maybe broader about like sort of the approach to the portfolio and your decision to sell some [indiscernible] fine dining. But is there sort of a limit to the span of control that you can have in terms of the number of brands -- is the acquisition of Ruth, would that have played any role in fine dining maybe being a little bit softer just in terms of manage resources? I'm just trying to understand sort of as you think about the portfolio, it feels like there's a little bit more movement now than I've seen in the past. And I'm trying to sort of think through what might be influencing that?

Yes, Sara. I'll start with the end of your question. The movement in the portfolio being -- I think you're being -- you're talking about leadership, we have -- if we look -- if you look back a couple of years ago, we were in a position where we had leaders that are getting closer to retirement age. And so we wanted to set the company up for success over the long term, and we made some changes a year ago. And one of those leaders has retired, so we were ready for it with the changes we're doing this year. So we're really planful of what we do. In regards to the span of control of the people that we have, now you look at how we've structured the company on people, the 2 largest brands report to me, Olive Garden and LongHorn and the other brands report to 2 proven leaders. Todd Burrowes and John Martin. And so we think we've got it set up correctly. The number of brands really doesn't -- isn't a reason that Fine Dining has gone through the challenges they've gone through. Fine Dining has been hit with a consumer that -- during COVID, we had a lot of growth in Fine Dining. I don't know what the other brands had, but we had growth in Fine Dining. And those consumers were not necessarily consumers that we had seen before, and they went back to the normal patterns. And so we don't feel at all that our size and scale has hurt fine dining. In fact, we have even stronger leaders there when we've got -- now we have a President of the 2 Fine Dining brands Capital Grille and Eddie V's, led by John Martin. And one of our Fine Dining brands that we have is Ruth's Chris, which we've said many times, whenever you add a brand, we're going to go through some challenges during integration and that will impact same-restaurant sales, and they're one of those. So we feel really good about where our Fine Dining brands are. And then lastly, on the decision on Bahama Breeze, we have -- when we look at our portfolio and we try to determine what brands we add to our portfolio, we have criteria. And that criteria should be what we look at to keep brands in our portfolio. And we made the decision that Bahama Breeze doesn't meet the criteria anymore. And we think that they have a lot of growth potential with another owner. We were not going to be putting a lot of investment into Bahama Breeze. And so to give those team members and those managers growth opportunities, it's better for them to be under a different ownership.

Got it. Okay. And then just a quick follow-up. You had mentioned 150,000 improvement sequentially at Fine Dining. Is there anything else that you can comment on about the demographics? I mean, one thought is that the other benefit that casual dining might be facing is just having less exposure to low-income consumers. So anything you've been very helpful in sort of parsing out kind of under 50 and sort of some of the dynamics? Any updates there?

Yes, Sara. I think so from a consumer demographic perspective, let me just kind of parse out a little bit. I think when you look at casual dining in general, we're seeing growth across most income cohorts. The only group that is still soft is the below 50k household. And in fact, if you actually look at the 150k-plus, that's actually where we're seeing a little bit more growth on casual dining. And then when you look at Fine Dining, you're actually seeing pullback at -- with households below 150k across. And then only place where we're seeing some growth or stabilization is about 150k households. The other dynamic with the fine dining, specifically is that the urban versus suburban that we had discussed. That suburban traffic is actually still at running at 95% of pre-COVID levels, so holding up pretty well. But urban is still in the low 80s. It's like 82% or something in Q4. So it's not -- clearly a lot less than where it was before COVID. Now I will say one other thing on Finning and then wrap it up is just really, when you look at their retention to pre-COVID, it has stabilized. We're seeing that more stable month-to-month and quarter-to-quarter were last few months. So that's a good sign that things are starting to stabilize there.

The next question today is coming from Peter Saleh from BTIG.

Congrats on a great quarter. I wanted to ask about the incrementality that you're seeing in the Uber Direct business, the 40% to 50% at Olive Garden. Can you just comment a little bit about who these customers are? Are they higher income? I mean I'm assuming are they new to the brand? Or is it just increased frequency? Just trying to understand how the customer is using Olive Garden through Uber Direct?

Yes, Peter. Right now, the delivery customer has very minimal overlap in dining. We are seeing higher guest frequency for delivery versus dine-in guests. And a higher percentage of them are new or lapsed guests versus pickup or dine in. So we've got a lot of consumers that haven't been to Olive Garden over a year that are using the delivery service. And nearly 40% of our pickup consumers have tried delivery. And then last thing on the consumer demographics, they are younger and slightly higher income, which you would expect.

Great. That's very helpful. And then just lastly, on price going forward, I know you're taking less price than inflation. When you talk about reinvestment, is it are you considering maybe even taking less price going forward? Or is it just reinvesting back in quality? Just trying to understand kind of the reinvestment comments again, just if you guys can elaborate a little bit?

Yes, Peter, I think those reinvestments can take many forms. And one of them could be pricing even lower than inflation. But I think we've got some other places that we can invest. And that, as I said, is somewhere in affordability. Do we have enough items under a certain price point. And in labor, are we providing the service experience that our guests expect for the prices they're paying. Now we're not talking about huge, huge, huge dollars, but it could be tens of basis points in investment or maybe even 20s, depending on how much we exceed our sales targets. But one of them could be pricing, but I would say that we've been making that investment for a long time. We'll keep doing that. And we're going to continue to do that but add some other things.

The next question is coming from Jake Bartlett from Truist Securities.

Mine was about the same-store sales guidance in '26. And how it relates the long-term framework. Roughly the same, very similar -- but you are seeing this big contributor from delivery now. You have the easy compares -- looks like you talked about good momentum into the quarter -- into the first quarter here. So what are some of the offsets? It sounds like you're baking in some conservatism due to the macro environment. What are you seeing from [indiscernible] making you maybe a little more cautious there? Any more color on the moving pieces? We can see the -- what's driving some of the strength. But what are you worried about in terms of the headwinds?

Jake, so there's a lot in there. So let me tried to unpack. The big headline would be, we're going to continue to make the investments. And like, look, if you go back to during COVID, we were pushed very hard to take a lot more pricing than everybody else was, and we didn't, and that is paying dividends. And so we've invested in price. Now we're going to invest in other places. Rick talked about different areas where we're going to continue to invest. And we -- like again, we are not trying to achieve a near-term over earnings to hurt us for the long term. We're just playing the long game, and we -- I think we've earned the credibility over time to show that our strategy works. If you look at over time, the fact that we've been able to deliver double-digit TSR consistently is a testament to the way we operate this business and we will not deviate from that. And that's really what's reflected in this guidance.

Great. My follow-up is on G&A. You were a little higher than guided in '25 -- fiscal '25. Can you give us a hand on what we should expect for '26 for G&A?

Yes, Jake, I think just let me start with the first part of why it was a little bit higher in the first -- in this year than what we thought. It was really mark-to-market. So because there was such a big run-up in the market, it was an incremental impact of about $15 million to $20 million, and it was offset in taxes. And that's just -- that's why we're kind of talking about there is some interaction between G&A and tax and you got to look at them together. Now as we look at next year, we expect G&A going in to be around $500 million for the year. That includes the 53rd week. So if you take out roughly $10 million for the 53rd week, you're looking at a $490 million G&A on a 52-week basis. And like I just said, there are several factors that can influence what we'll end up being because especially mark-to-market and then the incentive comp.

The next question is coming from Jim Salera from Stephens.

Can you give the breakout of traffic and ticket of Olive Garden for the quarter? Just trying to size up how much of an impact the buy one take one contributed on transactions? And do you have a sense for if that deal was more of a frequency driver among loyal Olive Garden guests or were kind of entice new households to come to the brand?

Let me start with the first part, and then we'll get to the second part in a second. So from a same restaurant sales breakdown for Olive Garden, their pricing was 2.7%. And catering grew by about 70 basis points. And then they had -- I mentioned already Uber delivery mix was about 40 basis points, and then there was a positive mix of about 1%. And so their underlying traffic was about 2%, a little over 2%. But truly, the traffic would be more close to 3% if you take into consideration the catering mix. From a buy one take one, it's just -- any time we do something like that, we do bring in a few new guest but that also drives frequency. And I think Rick mentioned in the script, we leveraged an existing offer. It actually did not hurt our check at all, if you -- in our margin. So you saw that. I mean, Olive Garden printed year-over-year segment profit growth of 100 basis points. And that's where we talk about how we're not deep discounting to just get traffic. We're doing it in way that's prudent.

Okay. Great. And then thinking about '26, just any comments you can offer on promotional cadence? And you mentioned I believe industry guest count was up just under 100 basis points in the quarter. And so it seems like consumer may be gradually improving. Just thoughts on how much we pull on the promotional lever in '26 to kind of support that gradual recovery?

Yes, Jake, for competitive reasons, I'm not getting into too much detail on the promotional activity. But I can tell you that if you look at a brand like Olive Garden, with this year demonstrated is that Olive Garden can react to whatever environment they compete in. And so if the environment gets a little bit more less challenging, maybe we come off of a little promotion activity and make investments in other places. If it gets more challenging, we keep the promotional activity that we have. But we like the cadence that we have now. Recall that we have never [indiscernible] during the time that's a normal well in casual dining. And we have, buy one take one at the other time that there's normal low in casual dining. But they're not deep discounted and they do drive some traffic. And then you take Olive Garden in the mix, you think about some of the marketing testing we're doing at Cheddar's. John Wilkerson and his team have done a lot of great things to improve and make that brand much more foundationally ready to go. And so we're testing right now connected television, and that's having a good impact and so it will get people to see what Cheddar's has done over this year. So if you call that promotional activity, that's just marketing their brand. It's not necessarily promotional. But we're going to continue to invest in marketing whether it's promotional or not.

Our next question today is coming from Dennis Geiger from UBS.

I wanted to ask [indiscernible] how you're thinking about the strength of the [indiscernible] you kind of gave some color there, Rick, you touched on Uber as well. Just anything at a high level, thinking about the combination of Uber, new [indiscernible] seems like you've had good success [indiscernible] anything else. So just the confidence in that momentum running through '26?

Jake, you broke up a little bit on the beginning. Sorry to say can you just give us that question again? These work phones are great.

Sorry, Rick. Just on Olive Garden [indiscernible], you touched [indiscernible] in thinking about that momentum in the '26, thinking about the viewer, but also the new menu items, the promos, just how you're thinking about the Olive Garden momentum continuing through '26?

Yes, Dennis, I would say Olive Garden has had some strong momentum in the fourth quarter, and that momentum that we have in this quarter is contemplated in our guide. And recall what Raj said earlier, our first half of the year has probably got a little bit more -- a little easier compares. And so our first half of the year should be a little bit better than our second half. That said, we're going to continue to find ways to keep that momentum going. But a brand as big as Olive Garden is going to be pretty similar to Darden and where Darden results are. . What we're going to do with Uber and -- if Uber Direct continues to build as it is, we've got some things that are in test right now in a couple of divisions at Olive Garden, perhaps we added to more divisions. And those are investments. And so that would impact our same-restaurant sales. So if we get more same-restaurant sales from Uber, we may reduce our same-restaurant sales a little bit based on those tests that we have. It wouldn't necessarily mean that we would go negative, but it would reduce the impact of Uber. But for the right reasons for the long term, as Raj said, we've got a 5-year plan and we're focusing on being great today and in 2030.

And just a quick follow-up. As it relates to that acceleration or that increase in the long-term comp or the business overall. Is that largely delivery driven? Is there anything with any other initiatives? I know you've got a focus on ops and speed, that's a long-term focus. Anything else?

No, I would say that if you look at the long-term comp guidance, we're assuming a little bit more inflation over the next 5 years than we saw in the first 5 years. And so will price a little bit below inflation, and that's a big component of that. We have our long-term framework prior to this assumed in the midpoint there was no traffic growth that we would have traffic growth. Our comps would come from check growth. And our new long-term framework has the same general assumption. So we think we have a little bit more on price because of inflation, but we'll also have some growth because of Uber that will help offset some other things that we're implementing to improve -- continue to improve our business for the long term. .

The next question today is coming from Christine Cho from Goldman Sachs.

Congrats on a strong quarter. You've reiterated the ongoing resilience in [indiscernible] in the last few quarters. But I was wondering if there was any notable observation on consumers in various speeds groups. So for example, have you seen better sales trends or higher net purchase intent from younger guests that is driving acceleration across casual dining as well as your major brands?

Christine, really, it all comes down to the household income. I mean what we're seeing is that the higher income is actually doing a little bit more than the lower income in general. So if you look at across our segments, as you move up to incomes in the 100, 150k households. That's where we're seeing more growth than other places. And now it varies from brand to brand. But when you look at an aggregate, every -- pretty much every household income is growing and casual dining, except for the one below 50k where it's kind of flattish. And that's really -- the age is really -- it's more about the correlation to income than age.

Our next question is coming from Gregory Francfort from Guggenheim Securities.

Rick, I guess my question is for you. I guess, in the state category, if I go back 5, 10 years ago, you might have been competing with the #1 player who was more focused on maybe margins and now you're focused -- you're competing with the #1 player that might be a little more focused on top line. How have you positioned Longhorn to compete? I mean, I'm just trying to figure out how you're doing comps at this level 6 and change. And going forward, do you think you need to reinvest in price? Do you think you need to reinvest in portion sizing? I guess I'm trying to figure how you're going to continue to compete there?

Greg, LongHorn, the reason they're performing the way they have been is because of their adherence to the strategy, quality, simplicity and culture. They've made a lot of investments, especially during COVID, significant investments in all of their items they increased the size of all their stakes. They took a lot less pricing than inflation. And they're going to continue to focus on that and improve the service at LongHorn. So quality isn't just about food. It's about the overall experience. And so yes, they'll keep making those investments, but not at the detriment of margin. So we think that LongHorn is well positioned to compete with their category. There's not as much overlap between the biggest player in LongHorn, as you would think on consumer, they go there for different reasons. And so we still feel like we've got a great consumer proposition at LongHorn, and we would anticipate that continuing and that's contemplated in our guide and our 5-year long-term -- our long-term frame [indiscernible] our 5-year framework long term.

Our next question today is coming from Andrew Strelzik from BMO Capital Markets.

Two quick ones from me. The first one is on marketing. Within that long-term framework, and a stronger top line focus. How are you thinking about marketing over the next several years and then '26 as well? And then the other question was on speed of service, which has been a focus for you, what drivers do you see there for '26? And can you give us an update on the progress there?

Yes, Andrew. On the marketing front, over the next 5 years, we anticipate marketing growing faster than our sales. Without getting into the total impact of marketing, but as Raj has said in the past, somewhere 10 to 20 basis points. Raj can get more detail on next fiscal year, and I'll turn it over to him in a second. But again, we're going to continue to invest in marketing and you'll see more of that in Cheddar's. You'll see more of that across some of our brands. But it's not -- and it will grow faster than sales. When you think about speed, we're in the early innings. I know there's a lot of times we got a baseball analogy. We're in the real early innings here. And as I said, when I mentioned speed before, this -- our speed challenges have been a long-time trend in the entire industry. And we will take a good time to reverse that. We've made some progress, it's not as fast as I'd like it to be, but we've made progress. All of our brands are faster. And what we're really trying to do is ensure that the consumer -- we're meeting the pace that the consumer wants and not holding them hostage in a restaurant. So that will take, as I said, take some time. We've got about 100,000 servers or more in our system, and we got to convince all of them that they've got to change a little bit of what they do. and we're working on that.

I think, Rick, you talked about it. Just so for fiscal 2026, specifically, we're still talking maybe in the 10, 20 basis points. I think if you look over the 5-year same thing, Ricardo already mentioned that. And one thing I'll just point out is we don't assume that it's actually a margin drag. The way we look at it is that the investments we're making, we're going to get a return on it, and that keeps the margins flat. So I wouldn't view this as a margin erosion.

The next question is coming from Brian Vaccaro from Raymond James.

Most of mine have been asked, but just one quick one. Raj, can you walk through the traffic and check dynamics at LongHorn as well?

Sure, Brian. LongHorn was basically -- the pricing was 3.3%. Their traffic was 3.4%. Their check was pretty flat to pricing. So I think the total was 6.7%, sir. .

The next question is coming from John Ivankoe from JPMorgan.

According to the government, overall industry growth and units, and this is a broad industry seems to have slowed from around 2.5% to around 1.5%. And so my question is, where do you think that, that growth rate is changing across the industry? And how might that be influencing your ability to access the type of real estate that Darden typically does best with? In other words, you make a comment about the tightening or loosening of the specific sites that you're looking for over the next couple of years.

Yes, John. We have built a strong pipeline of sites for the next few years. We are in a better position to start this fiscal year than we were to start last fiscal year. We feel really good about the work that the team has done, including new prototypes for Cheddar's and Yard House and finding -- increasing the number of potential sites for Cheddar's, Yard House, Olive Garden and LongHorn. I think your comment on the number of units is restaurant growth. And so where that's coming -- where the slowdown is coming from, I think, is smaller independents and smaller chains. The big chains like us, continue to grow. We've got great access to capital. We've got great cost of capital, and we've shown that we deserve to be able to grow.

The next question today is coming from Jeffrey Bernstein from Barclays.

Rick, it sounds like you're more comfortable with the uptick in promotions in recent quarters. I know you guys were previously more hesitant to do any more promotional activity. So -- and I think you mentioned focus more on affordability at Olive Garden going forward to perhaps drive more traffic. I'm just wondering if you could talk a little bit more about that increased confidence in waiting into the more value or more affordability side of things and your ability at the same time to still protect margin? And then I have one follow-up.

Yes, Jeff. If you think about the promotions, it's not like we're promotion crazy here. We added buy one take one, which, as Raj mentioned, wasn't a margin drag, and it was 5 weeks at a long time. So it's not like we're going to go into heavy promotional activity. As you -- as we talk about the investments that we're looking at, we're looking at a couple of things. One is as we -- let's double down on affordability at Olive Garden and at other brands. As you think about what we think has been helping somewhat casual dining and definitely us is the price gap between us and other segments. And so let's keep that moving. Let's get that a little bit stronger. And that would mean adding some items on the menu that may not be the same price points as the ones that are on the menu today. And so that would be a mix impact. Whether we promote that or not, I don't know. We may talk about it, but it's not like we're going to -- we think that we're going to have to have a promotion to do that. We'll talk about it. We'll let our consumers know. And as I said, we've got some of this in test in couple of divisions at Olive Garden, it's doing pretty well for us. And so we feel really good about it. What it's done to our affordability ratings, which were already strong and what it's done for those guests intend to return. So we feel -- we feel good about the investments we're making. We wouldn't be making the investments if we didn't think they pay off in the long run.

Understood. And then just as it relates to your competition on the same front, how do you think the industry is thinking about discounting versus prior, whether or not they're comfortable with the elevated levels or whether you might see some change there?

Yes, Jeff. All I can -- I mean, I don't know what the industry is thinking about other than what I see, and we've got a player that's been doing some good communication on a good value item. And looking at the rest of their menu, they're driving some folks in. I can't say what anybody else is going to do. I can just say that we're ready to react our way to whatever happens. And we showed that at Olive Garden this year and what we did to continue to improve the profitability of Olive Garden and drive traffic and drive same-restaurant sales. .

The next question today is coming from Danilo Gargiulo from Bernstein.

Great. Rick, I was wondering if you can comment on the labor environment in the United States and particularly whether you've seen any increase in turnover in the areas that you're operating, maybe not necessarily in your case, but in general, India in the trade areas that you're most active on, specifically in light of immigration policies seem to be tightening?

Yes. What I would say is I don't -- we don't get turnover data by market for others. We know what ours are, and we're not really seeing a material impact on turnover or people showing up to work from day to day, things fluctuate in our restaurants. But as of now, nothing material on the top line or on labor. I think it's because we've got such a great employment proposition and people want to come to work for us. So if anyone leaves, we're able to fill that job pretty quickly. but we haven't really seen an uptick in turnover. In fact, our brands have been at record turnover levels, record retention levels.

Okay. Great to hear. And then regarding your international aspirations, specifically on the franchising side, what do you think your long-term objective might be from -- in terms of like total number of units that you think over the next 5 to even 10 years, it will be aspiring to get to? And which areas do you think are going to be getting most attention? You mentioned like India, Spain, -- any other areas you think could be particularly interesting to you?

Well, Danilo, we've really started this international push not too long ago, and we're already seeing really great results in signing franchise partners. We want to see them build those restaurants. With India, for example, the 40 restaurants are just in one small part of India. We've got a lot of other areas we can go, but we felt it was prudent to have that partner prove that they can meet those development commitments in that part of India before we give them another part of India. In regards to Spain, they were really high on Olive Garden. And when signing a 40 restaurant deal, we'll want to see how they go. There's no guarantee that all 40 of those restaurants are going to open just like there's no guarantee that the 40 India restaurants are going to open. But we feel really good about our progress and once we get a restaurant in Spain. What generally happens -- let me take that back. What generally happens once we get Olive Garden in a country, those franchise partners realize how good we support them, and they want another brand. And so we'll probably get another brand in those countries if we support them and they see the performance. But I'm not going to give you a number of where we're going to be in 5 years. What I will say is I believe it will be bigger than it is today, and it's already a meaningful business for us on the profit side with really no capital.

Our next question is coming from Jim Sanderson from Northcoast Research.

I wanted to go back to your fiscal '26 guidance, what closure rate is implied for 2026? And just wondering if you're looking more closely at some of the smaller brands like Season 52 or Eddie V's that haven't really grown that much if there's an opportunity to streamline your portfolio going forward?

Jim, I think we basically, as part of the 5-year plan, we went through our portfolio, and we closed more than normal this fiscal year. We're not assuming any significant number of closings next year.

All right. And a quick follow-up question on the Uber Direct. You mentioned the promotion in the last part of May, that generated significant pickup in delivery. Just wondering, did the incrementality, the 40% to 50%, was that consistent? Or did you see more new clients coming to the brand helped by the marketing and promotions for TV -- on TV?

Yes, Jim, it's fair like -- the incrementality is fairly consistent. Recall, when we offer free delivery, we may have seen people that are doing current pickup, getting delivery. So I wouldn't say that the incrementality is going to spike because we may have some trade over from our current pickup tests. But it did increase our sales for delivery when we added the commercial.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

This concludes our call. I want to remind you that we plan to release first quarter results on Thursday, September 18, before the market opens with the conference call to follow. Thank you for participating. Have a great day.