Good morning, ladies and gentlemen, and welcome to the Brinker International Q1 Earnings Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Joe Taylor. Sir, the floor is yours.

Thank you, Kate. Good morning, everyone, and welcome to the quarterly earnings call for Brinker International's first quarter fiscal 2017. I'm Joe Taylor, Vice President of Investor Relations. And joining me this morning here in Dallas are Wyman Roberts, our Chief Executive Officer; and Tom Edwards, our Chief Financial Officer. Wyman will begin the comments portion of the call with an overview of the first quarter and will provide an update on the implementation of several strategic initiatives. Tom will provide further Q1 insights, update on our recently completed financings and share insights as to our outlook for the rest of the fiscal year. Before beginning our comments, please let me 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. 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, I will turn the call over to Wyman.

Thanks, Joe. Good morning, everyone, and thanks for joining us on the call today. I'll spend most of our time updating you on the strategic initiatives we introduced during our Investor Day back in June. We'll focus primarily on our efforts to drive relevance, value and convenience at Chili's. We're pleased with the progress we're making as our initiatives continue to gain momentum and give us the confidence we'll deliver on our guidance for the fiscal year. First, let's take a quick look at the quarter. Who'd have thought the last time we talked with you that we were heading into the toughest quarter casual dining has seen in five years? We started off strong, we had positive comps, we were taking share. We had a new value platform and momentum on our side and then August hit, and sales got real challenging, not just for us but for the industry. And since August is already one of our lower volume months, it added pressure to our margins, so we didn't deliver the level of margins we were anticipating during the quarter. But as the quarter continued and we made progress on our initiatives, our results started to improve. We continue to see sequential improvement and we're back to improving, performing better than the category, so we feel good about how our initiatives have set us up for growth for the balance of the fiscal year and beyond. Tom will provide more first quarter detail, but let's talk about our initiatives. First, Chili's Bar. A big relevance play for the brand's future growth and we continue to see positive results from our efforts here. Alcohol mix is up 30 basis points year-over-year due to Happy Hour promotions like our $5 Margarita Thursdays, the introduction of our bar menu, and even…

Thanks, Wyman, and good morning, everyone. Today I'd like to walk through our first quarter performance, provide an update on the recapitalization announced in August and finally, share our outlook for Q2 and full-year fiscal 2017. Our first quarter adjusted earnings per share before special items was $0.49, a 13% decrease compared to prior year. Q1 results were below our expectations as lower sales in August resulted in P&L deleverage in our seasonally lowest volume quarter. However, we remain on track for full-year adjusted EPS guidance of $3.40 to $3.50, reflecting favorable results from our recapitalization as well as the smaller relative impact of Q1 on the full year. First quarter revenues were $758 million, a decrease of 0.5% over prior-year. This reflects lower reported comp sales of 1.3% partially offset by increased restaurant capacity of about 0.7%. Q1 comp sales were choppy. We exited July with solid momentum, but compared to our expectations, saw sharp slowdown in August before performance improved in September. Starting with Maggiano's, the brand's comp sales were down 0.6%, reflecting lower category sales and negative mix due to large party dining room performance. Mix improved through the quarter and ended running positive behind our new Bruschetta program. Maggiano's delivery and To-Go business, which makes up over 10% of total sales, grew comp sales 640 basis points and remains a bright spot. Chili's comp restaurant sales declined 1.4%, reflecting a 4.1% decline in traffic partially offset by a 1.5% improvement in mix and a 1.2% increase in price. One thing I'd like to note before heading into the drivers of Chili's comp sales is the difference between reported and calendar comp sales for fiscal 2017. As a result of comparing against the 53-week year in fiscal 2016, our reported weeks are not aligned on a calendar…

Kate, we'll take questions now. Kate?

Thank you. Ladies and gentlemen, the floor is now open for questions. Please hold a moment while we poll for questions. And our first question today is coming from Jeff Farmer. Please announce your affiliation then pose your question.

Okay. Wells Fargo. So over the last few years, Chili's has seen a platform push into both Fresh Mex and Fresh Tex among several other things. But now it looks like you guys are – a bigger piece of your Chili's positioning is focused on Chili's (sic) [Chilin'] (16:03) Since '75, I believe, and a lot of product focus on grass-fed beef burgers and craft beers. I guess I'm just curious, with all those changes, do you believe it's clear to consumers what the concept stands for? Or for which consumers it is appealing to?

Hey, Jeff. Wyman. Yeah, I don't think there's a lot of confusion out there. Again, the Chilin' Since '75 is really a campaign that's more about the authenticity and the history of the brand which resonates very well with a broad base of consumers as all our testing has shown. Our food positioning around Fresh Tex and Fresh Mex doesn't change and aspects of that are highlighted through various food innovation aspects. And obviously beer positioning around Fresh Tex and Fresh Mex we don't think is very – is complementary. So beer, margaritas, Fresh Tex, Fresh Mex is a platform, a concept that is consistent and congruent with each other. And all the work that we've done says it's not only not confusing for consumers, it aligns with what their expectations are for Chili's, and it's got a basis in history as the Chilin' Since '75 campaign really kind of points out. So I don't think we're confusing consumers as to exactly what Chili's stands for. I think we are, if anything, dialing in (17:40) on what differentiates it from others in the Bar & Grill category. And then just kind of upping our game on how we deliver those products; quality, freshness, transparency, those all kind of line up with those fundamental platforms. So that I don't think is an issue for us.

Thank you.

Thanks, Jeff.

Thank you. Our next question today is coming from Will Slabaugh. Please announce your affiliation then pose your question.

Thanks. Stephens. Can you talk a little bit more about what you saw worked well in the quarter? And what that means for your promotional activity on the value and premium side as well, and if that sort of how that might coincide with your advertising platforms?

Yeah, Will, I think what worked well was the 3 FOR ME value platform, we feel really good about that value proposition and we're going to continue to lean into value as a kind of a mainstay for our marketing going forward. In this environment, we think consumers are looking for value. There's obviously an opportunity there and we think this offer gives us breadth as well as some uniqueness to deliver. So that worked well. We think the advertising is working well for us. We know that where we have implemented the beer program with the expanded taps for craft beer that that's working well for us. So several of the initiatives are working fairly well for us and we feel confident that as we continue to expand them, get smarter about how to market those things to the consumers on a national and on a local level, that we'll continue to see momentum and be able to take share and move the brand forward. So those are a couple of the big things.

Got it. And if I could follow up on the grass-fed beef comment, I'm curious on how that success looks versus your expectations initially and what that tells you about your ability to sort of push further into the all-natural food categories?

Well, it really was kind of our first kind of adventure into being more overt about transparency of product and bringing in a grass-fed antibiotic, hormone-free alternative patty. And the acceptance was good. We learned quite a bit from it and we are excited about modifying how we bring that to our guests. We've already changed how we market it and merchandise in the restaurant, and it significantly increased the number of guests that are now eating it this quarter versus last quarter. So we're continuing to evolve that aspect of the business. It's going to be a journey with regard to understanding what consumers' expectations are around transparency and how we can fulfill those needs and still be true to the brand. And so we're happy with kind of our first kind of marketing effort around that, and we're going to continue to learn and get smarter about how to do that.

Thank you.

Thank you.

Thank you. Our next question today is coming from Karen Holthouse. Please announce your affiliation and then pose your question. Karen Holthouse - Goldman Sachs & Co.: Hi, Goldman Sachs. So there is a comment about on the To-Go platform now that the transition to Olo has been made and you can go and start advertising this, that part of that push is going to be product platforms that are conducive to a To-Go business. So I guess, what do you really mean by that? Is there a focus on food that travels better? Is it coming up with an option that can better target sort of a B2B lunch day part? What sort of needs do you think the current menu isn't necessarily filling? Thanks.

Hi, Karen. Well again, just to reiterate, until we had the Olo platform we were hard-pressed. Our old platform was pretty much at its limitations and so pushing higher volumes through it wasn't really an option for us, especially on peak days. So now that we've got excess capacity and confidence in the system, we can push it a lot – several different ways. And I don't want to get too specific because obviously those are proprietary ideas and some of them are based around some product ideas, like you mentioned. Some of them could be based around more consumer friendly operational approaches to the To-Go business and really addressing convenience in another way. And using this platform and our online and mobile technology now to make the online experience even more convenient and sticky, if you will, for consumers. So until we had the infrastructure right where we needed it, we were kind of limited. And now we don't have that limitation, so we will be much more aggressively looking to push this business which is, again, growing organically. Karen Holthouse - Goldman Sachs & Co.: And then as a quick follow up. With the growth that was over 5% in the quarter and the transition or the platform transition occurring inter-quarter, would it be safe to say that number improved throughout the quarter?

Karen, it's Tom here. I think we've been running fairly strong To-Go in this mid-single-digits area over the course of the last couple of quarters. So it didn't – I wouldn't say it improved significantly within the quarter but I would say, as Wyman noted, that we now have the platform and some other operational and product ideas to help build it even beyond that. Karen Holthouse - Goldman Sachs & Co.: Great. Thank you.

Thanks.

Thank you. Our next question today is coming from Sarah Senatore. Please announce your affiliation then pose your question. Sara Harkavy Senatore - Sanford C. Bernstein & Co. LLC: Great. Thank you. Well, I'm with Bernstein. I had a couple of follow-ups on the comp and advertising in particular. I know you had talked about stepping advertising up this year. It looked like that happened in the first quarter but the same-store sales, granted a tough industry, but maybe were a little bit softer than expected. So I guess the two questions I had are one, is that the kind of thing where we would expect to see the impact on more of a lagged basis of this step-up in advertising? And two is, I guess, what do we need to assume to sort of assume a continuous acceleration in comps? Does the industry have to get better? Is it more of your own initiatives? Just trying to understand the underpinnings of accelerating comps through the year. Thank you.

Sure, Sara. I think with regard to the advertising, we're relatively responsive kind of immediately to increases in traditional media ways and we saw that early in the quarter. Again, the challenge for the Chili's business specifically was mid-to-late August and it was fairly focused in that time period where things got soft. And again, back to – we're not exactly sure what the impact of the Olympics were on us and we don't really want to go there for a major cause because we know the Olympic viewership was down. But there were a couple of weeks in that month where things just got softer for us relative to our performance in general and relative to the category that's inconsistent with what we have been seeing and inconsistent with what we're seeing now and experiencing now. So there was this definite opportunity within the marketing and media world at that point in time in the quarter. We anticipate being able to continue to increase the marketing spend and getting smarter with how it works for us and expect to see the impact of that again rather directly in the quarters that we spend in. With regard to our expectations for the industry, we don't know exactly but we're not counting on a significant turnaround, some strengthening in the back half of our fiscal year but nothing dramatic. And with regard to our performance, we know we have opportunities in our back half that are less challenging than the first half, and we also have our initiatives kind of peaking more towards the back half. So that's what's giving us confidence that, again, we'll continue to see positive momentum. As Tom mentioned, our expectation is to see positive comp sales this quarter and then continue to move out through the year. Sara Harkavy Senatore - Sanford C. Bernstein & Co. LLC: Thank you.

Thanks, Sara.

Thank you. Our next question today is coming from Robert Derrington. Please announce your affiliation then pose your question.

Yeah, hi, Telsey Advisory. Wyman, one thing I'm especially curious about is the Happy Hour program, the new beer taps, that as well as the margaritas. How do you best take advantage of that and market it to a crowd who historically really hasn't found your restaurants to be real cool? Is that possible? What's the recipe that you expect to be able to use to do that?

Hey, Bob. It's a great question. And I think there's a fundamental maybe flaw in that assumption in that I assume you're talking about millennials and younger demographics and Chili's...

Sure.

And there actually is a – there's a pretty wide acceptance of millennials in our brand. I think it's not that – again, there are parts of the country maybe in some urban markets where the Chili's brand doesn't carry quite the cache (27:41), but in a lot of the markets we're in, we are a viable bar and a good bar. We've got to do some things both operationally and as from a concept to become more viable and to address some of those issues, but with the last reimage we put in, our video component, for example, and our music component is much more compelling. We just now are offering better products with regard to craft beers and stepping up the service aspect, and we're also looking at other alternatives that we need to consider to take it to that next level. So I don't think there's a fundamental broad – again, and we're talking across the country – issue with acceptance of Chili's as a place to come and drink and hang out with your friends and enjoy some bar food. That's really kind of the essence of what the brand started with and getting it to work for millennials isn't as big a stretch as I think some might think, especially in the markets where we're in. Again, I think you have to almost look at it market-by-market and trade area by trade area. But we're excited about the opportunity.

Given the – I'm sorry. Go ahead.

Oh, we're just excited about that opportunity of doing that.

Well, given the transformation that I had seen at that location down in Dallas recently, it certainly looks exciting. So, good luck. We hope it works well.

Yeah, thanks, Bob. We are too.

Thank you. Our next question today is coming from Peter Saleh. Please announce your affiliation then pose your question.

Yeah, BTIG. I just wanted to ask about two things really, on the pricing side. How are you guys thinking about pricing? I mean your pricing seems to be I guess towards the low end of what we're seeing in the industry. You guys think you're taking enough price? What are you thinking about price going forward? You think you'll take some more or will you let more pricing roll off?

Peter, it's Tom here. We've stated before pricing targets, menu pricing is in the 1.5% to 2% range, and we're still comfortable with that and that is the pricing that we are actually taking for items on the menu. What we've seen this quarter is being worked through and rolled out some successful activity around alcohol for both Happy Hour and in other activities that we still have a little discounting there that has reduced the headline of pricing to the 1.2% as opposed to the actual menu pricing for other items on the menu. So our plan is to continue in that 1.5% to 2% range and very comfortable with that to understand how that works and the impact it has on our guests. And then we'll also work to build traffic with some of these initiatives that we've just been talking about around Happy Hour, craft beer, other things happening in the restaurant around the bar and other activities that warrant that investment.

So just so we're clear, so should we expect the net pricing to mirror what we're seeing in 1Q for the rest of the year, given the discounts?

I would think you should expect to see the net pricing slightly higher than what we're seeing in Q1, so take it in the 1.5% to 2%, maybe a little higher in that menu range and then a discount off of that for some of the activity in the bar.

All right. And then I just wanted to ask on the loyalty program, we've been hearing a lot about Plenti for several quarters now. Can you give us an update on the Plenti program and what your expectations are for that going forward over the next couple of quarters?

Yeah, Peter, so we're on track. Again, you have been hearing a lot about it because we've been working really hard to put the infrastructure in place to create kind of a unique situation in our restaurants. So we have, in several restaurants today, kind of finalizing the technology solution that allow our guests to convert the My Chili's Rewards currency over to Plenti. Also it allows our guests to sign up for Plenti if they haven't signed up for Plenti in the past and become Plenti members. So it's the integration between all these systems to take place at the tabletop has been no small endeavor. And we've invested in that work and now we're kind of testing it right now and expect it to be competed in the second quarter. And we'll start the transition and really starting to leverage and market against My Chili's Rewards program and the Plenti coalition here in the second half. We're excited about that opportunity.

All right. Thank you very much.

Thanks, Peter.

Thank you. Our next question today is coming from Stephen Anderson. Please announce your affiliation then pose your question.

Yes. Good morning. I'm from Maxim Group. Just kind of taking a look at some of the line items, I saw there's a fairly decent jump in the non-labor restaurant expenses. And I saw that in the release that you attribute that to advertising as well as repair and maintenance. Should we expect to see that kind of a big jump in subsequent quarters? And how much of that is attributed to advertising versus the repair and maintenance line? Thanks.

Sure, Steve. This is Tom here. With regard to advertising, that will be up across the year and that's consistent with our increased, approximately 17% increase on the dollar basis of advertising year-over-year. And as I mentioned in the remarks, it's about 80 basis points for this quarter. So I think you should expect to see that as we move through the year. The other piece was repair and maintenance and that was approximately 30 basis points in the quarter, that we shouldn't expect to see going forward. We had some equipment timing-wise coming off of warranty at the same time and resulted in some higher maintenance and repair cost in the quarter. We don't expect that that will continue through the year at this level.

All right. Thank you.

Thank you. Our next question today is coming from Jeff Bernstein. Please announce your affiliation then pose your question.

Great. Thank you. Barclays, and I have two questions for you. One just on the comps, just to make sure I understand. I mean if we look at the press release without your commentary, it looked like in the start of the quarter, taking share as you commented on I guess through early August, and then it would seem like all of a sudden you were losing share the rest of the quarter. So I'm just wondering whether that's fair. Or whether you really just think it was August because I know you then said something about the calendar basis, so maybe I misinterpreted and you're saying you actually took share each month of the quarter when you adjust for the calendar? Maybe that's why you're more confident in the positive in the second quarter than we were expecting?

Yeah, Jeff, Wyman. So if you adjust for the quarter, and there's a couple of different trackers as you know out there, and one adjusts, one doesn't. You look at the adjusted numbers, we took share throughout the quarter by month. But we did have a more challenging August so we saw some deceleration there. But, yeah, it was monthly fairly consistent when you adjust for the calendar. If you don't adjust for the calendar, then August was a little bit of a give back.

Got it. But then the confidence on the second quarter being positive, just because I know we started last quarter with good confidence and...

Yeah.

...then it seems like industry challenges prevailed. So what gives you that confidence? Maybe the calendar shift reverses? Or the school shift reverses?

No, there's no calendar shift. We actually still have a little bit of headwind again in the second quarter with this first 53-week adjustment. But we are confident in kind of how we start the quarter. Again, first quarter we started off fairly well to say it's not a guarantee. But we are confident in how we started. We're confident in the plans we've got going forward, and we think a lot of the industry work is starting to (35:55) a lot of the industry headwinds are at least kind of stabilizing. So we don't see it getting worse.

Got it. And then, Tom, just because of the confusion regarding the share count and the ASR, I just want to make sure I understand. I think you announced at the low end of $53 million for full-year. Perhaps you can give us your expectations for where you think the second quarter will play out? Because it sounds like really all of the ASR, a good portion of it is coming in the second quarter.

Sure. We bought back those shares at the very end of Q1. So they'll come out 100% in Q2. And just to give you some idea, we ended the quarter on an absolute diluted share count basis of about 50.8 million shares end of Q1. So that's our starting point for Q2.

So that reflects the full reduction even though it happened very late. So that's a reasonable number.

That reflects the 80% that we received upfront from the accelerated share repurchase and then there's this – another portion we'll get later in the year. But that'll be obviously a little bit more weighted towards the end of that share repurchase.

Got it. Thank you.

You're welcome.

Thanks, Jeff.

Thank you. Our next question today is coming from Brian Vaccaro. Please announce your affiliation then pose your question. Brian M. Vaccaro - Raymond James & Associates, Inc.: Raymond James. Thank you. Just wanted to circle back to the comp trends. I understand they improved in September and October. But I'm trying to sort through the impact you might be seeing due to easier comparisons. Can you comment on the two-year stacked trends? Are you seeing improvement there as well in those two months? And then I also wanted to go back to that calendar versus fiscal year mismatch on the 53rd week. Would you be able to quantify sort of the headwind we should be expecting in second quarter and any other changes or differences in the back half of the year that we should be thinking about? Thanks.

Brian, this is Tom here. I can talk a little bit about the last item first, the calendar shift. So it's a little more pronounced in the first quarter because of the back-to-school shift. When you look at the 52 versus 53 weeks, interestingly, getting that back more towards the end of the year as things normalize. So there's not as much of a shift within Q2 related to that. Q2, we do have a change in when Christmas will now fall in Q2 versus Q3 and Veterans Day is on a tougher day sales-wise, so there will be a little headwind related to that. And then on a comp sales basis, on the two years, August looks on a calendar basis, August and September, September is probably a little worse than August just based on last year's numbers. But we would expect when we look at our Q2 numbers or Q1 overall on this basis that it's probably our lowest quarter in terms of the two-year, it gets sequentially a little bit better as we look ahead. Brian M. Vaccaro - Raymond James & Associates, Inc.: Okay. Thank you.

Thanks, Brian.

Thank you. Our next question today is coming from Chris O'Cull [KeyBanc Capital Markets]. Please announce your affiliation then pose your question.

Thanks. Good morning, guys.

Hey, Chris.

I may have missed this, and I apologize if I did. But, Tom, did you say that in the second quarter to-date the comps are positive?

We said they're stronger but for Chili's, they were positive.

For Chili's they were positive?

Yes.

Okay. I guess the second question would be what comp do you need to keep margin, restaurant margin that is, flat year-over-year at Chili's?

The comp we would need would be – well, it's in our range of 1.5% to 2%. It's probably a little bit right in the middle that range, a little over 1%.

So if the comp – if you're guiding towards the lower end of the comp range for the year, is it safe to assume that we'll probably be towards the lower end of that range, or probably towards the lower – I guess your restaurant margin guidance for the full year is down 50 basis points. So is that still a reasonable assumption?

It's still a reasonable assumption. And we just gave around 50 basis points so Q1, to be clear, was lower than our expectations on the margin side. For Q3 through Q4, we don't anticipate that carrying through so you could adjust from there a little bit.

Okay. And then my last one, has the Texas locations received the new craft beer program?

We're rolling it out kind of on a market-by-market basis so some restaurants in Texas have, some haven't in the quarter. So it's not-we didn't necessarily go state-by-state. We've got it kind of – just again, based on the folks we have around the country that are regionally implementing this program. It's kind of in more – less state and more market. So the answer is yes and no. So half – it's like the rest of the country, it's half the state let's assume got it in the first quarter. But everyone, everywhere by the end of the second quarter will be fully loaded.

Could the reason the Texas stores have shown sequential improvement be because of the new craft beer program? Or is it, do you think, more related to the economy in Texas? Or is spending in Texas at restaurants improving?

Craft beer could certainly be helping, and we know that Happy Hour, when we rolled it out last year, was a help to traffic in Texas. The other piece is the oil markets are sequentially improving and a good portion of those are in Texas. A matter of fact, the majority are in Texas and some in Louisiana and Oklahoma. So I think it's a combination of those items.

Okay, great. Thanks, guys.

Thank you. Our next question today is coming from Joseph Buckley. Please announce your affiliation then pose your question.

Hi. I'm with Bank of America Merrill Lynch. Thank you. Curious on the stores getting your craft beer and comping better, is it strictly the alcohol mix? Or are there related food sales to that move that lift the overall business?

Yeah, Joe. I think it's a combination. When we put the taps in, we obviously do local marketing around that, leveraging our database and digital to let people know. And with that comes the bar menu and some happy hour initiatives as well. So it's more than just the one aspect. We're really focused on the overall bar experience. And so taps, the menu, the happy hour program, and then we're also, as we said, evaluating other aspects of our bar experience that'll, we think, take it to the next level.

And I know you shared the oil market spread, and that narrowed. If you view Texas as a whole, is Texas still relatively weak but presumably better than – maybe not with the same spread that of oil markets in total have? Is that fair?

It really is marked by market, Joe. And again, if you – for example, Houston, which is now – when we talk oil markets, the early impact that oil markets have in the markets where the fields were, right. So those smaller South Texas, Louisiana, where they're actually drilling for oil, that got the immediate impact. And we've seen a little bit of a lag effect as you would expect in some of the more urban markets like Houston where oil industry sits and kind of the impact, the lag impact of the lower price oil hits them. And so we're seeing that. But there are other markets, San Antonio, Austin, Dallas, that really are not as oil impacted, and they've performed fairly well throughout this whole time period. So it really is – you can't look at Texas. It's just too big a state to make a broad statement about it. You almost look market by market, and those are – we've got a lot of restaurants in the state as well and in all of those markets. So they're all kind of unique stories.

Okay. Thank you.

Thanks, Joe.

Thank you. Our next question today is coming from John Ivankoe. Please announce your affiliation, then pose your question.

Hi. Thank you. I'm with JPMorgan. Two questions, if I may. First, on G&A, obviously, you guys really controlled G&A in the first quarter and that the first quarter is pretty out of sync with the guidance that you gave in fiscal 2017. So I mean is it like normal reduction in incentive comp? Or are there other projects that are being delayed? Or is G&A one of the levers that you're planning on pulling to making your earnings guidance for the year?

Sure, John. It's Tom here. There's nothing out of the ordinary in G&A in Q1. And it's normal management of expenses and no real major changes and no changes in incentive comp that are material. What you'll see in Q3 through Q4 is where we'll have the re-accrual versus prior year of incentive comps. So that will be a change in delta versus prior year that is larger in those quarters. We did not have that adjustment last year in Q1, so you don't see that change coming through. So that's why the guidance that we gave back in August was that material increase in G&A, and you'll begin to see that in Q2 and beyond.

Okay. Fair enough. Obviously, a lot of conversations around alcohol, a lot of conversations around the bar. I think you've just finished or are in the process of finishing, taking up the number of taps. But is there anything else in terms of the bar, capital-wise, that you're considering being more attractive to millennials or just people in the bar in general? And if so, like how much might those projects cost to really take the Chili's bar to the next generation, if you will?

Yeah, John. We absolutely are looking at other aspects of the bar, and we've – all the way from enhanced atmosphere elements to different offerings. So obviously, operationally, looking at what we can do to be more relevant and to be more compelling. So right now, it's too early kind of to give you any color on that because we're in the process of trying to determine what's the most impactful thing we can do to continue down this journey of making the Chili's bar experience more compelling and more relevant. So but we aren't done with this, with the roll-out of taps. That's just really kind of the start, if you will, of kind of continuing to move this thing forward.

And are you testing in a number of different platforms in fiscal 2017? I mean of different levels of spend? I mean, is it, (47:57)?

Yes, we are. And we're fairly far along on several of those. So we hope to have some more color and things to share with you in the not too distant future. As we kind of work through the implications of the spend and the impact to guests, and all of the other aspects of it on the business. But we're definitely excited about some of the things we're evaluating.

John, it's Tom. Look we would definitely need to get a return on this, and that's part of the test as we move forward with it and we'll look to see how it then fits into both CapEx and implications, the free cash flow but with the history of having spent some dollars on reimage in the past we're still generating a strong solid free cash flow, definitely a consideration as we manage across what would – if it has returned will be a multiyear effort.

Thank you.

Thanks, John.

Thank you. Our next question today is coming from John Glass. Please announce your affiliation then pose your question. John Glass - Morgan Stanley & Co. LLC: Thanks very much. It's Morgan Stanley. Just first another dumb comp question and then on the industry. On the comps, my data would say that or the data I've seen says September was worse than August. And you're sort of saying you got better, so maybe it was just your share gain. Maybe confirm that. And then, is your improvement in October helped by the industry? Now is the industry also getting better in October or is this just you outperforming and the industry is staying where it is?

Yeah, John, we did get better in September, and I think what we're seeing in October is more unique to us. I don't think the industry is showing a whole lot of improvement over its first quarter trend, especially delayed first quarter trend. So we're not seeing that in the metrics. We're looking at – it really is more unique to us. And again, just like the first quarter showed, it's been choppy. So we're encouraged by the things that we're doing but we're also aware that that's been a pretty volatile summer, and we'll see how fall plays out. John Glass - Morgan Stanley & Co. LLC: And you mentioned industry capacity in your comments, and weaker players shaking out. So the narrative recently has been there's too much capacity, lots still coming in to that industry, maybe it's not casual dining but just broader industry capacity. But you're also saying that there's some exiting the category. And I don't know if that's to come or you've actually seen it. Can you talk about maybe specific to your casual dining competitors? Are you beginning to see closures that might benefit you? Is it too small to really add up to anything yet? Or what's your thoughts on that?

Well, I mean, I think as we look at it, it is a little bit – it's hard to measure. We don't have great metrics around capital spending in the category. But there are some examples of concepts that are shrinking. And in some numbers that are reasonable, we're talking now in tens and hundreds. So that does make a difference. We're also hearing from some competitors a dial back, which I think is again encouraging that people are starting to say, hey, listen let's address the overcapacity and slow things down a little bit. And I heard something recently from a competitor that the expectation was that would also maybe take some of the steam off some of the real estate market, which has not really come back in our opinion kind of represented the softer overall economic situations out there. Still paying a pretty good premium in this environment we think for real estate. So all of those things I think bode well for getting the economics right and getting the supply and demand situation more in line. So there's always going to be smaller up-and-coming concepts, whether they're direct or indirect that push in but it's when the big guys are to continue to build big restaurants in the same neighborhoods that I think we start to put a lot of pressure on the comps and the overall viability. So good to see some people starting to dial that back down.

And, John, as you look at independence and just looking at some data, the NPD CREST data, we do see there are a number of restaurants pulling back over the last couple of years and they'll be challenged with any number of items going forward. So we believe that could be a trend as well that could help the overall competitive situation. John Glass - Morgan Stanley & Co. LLC: Okay. Thank you.

All right. Thanks, John.

Thank you. Our next question today is coming from Andrew Strelzik. Please announce your affiliation then pose your question.

Hi. BMO. Thank you. I'm still struggling a little bit with the restaurant level margin guidance. Obviously, the first quarter was a little weaker. And I think the fourth quarter was supposed to be a headwind with the absence of the 53rd week. Could you just kind of help understand a little bit how you expect to achieve that? Is it, I think you said more pricing coming a little bit? You said labor less of a headwind in the second half. Is the fourth quarter, maybe with the progression of comps, going to be less of a headwind? Or just if you could help us understand how you're going to achieve that? I think the math actually implies you need to be – show margin gains in the middle two quarters of the year? So if you could just help bridge that, it would be great.

Sure. I'd be happy to. So in the fourth quarter, we do lap the 53rd week. So that'll come out. That was worth about 25 basis points on the full year when you look at it across the year. What we expect to see is continued capability on the cost of sales line. So we are seeing deflation this year. It's gotten a little better than what we expected coming into the year. We do expect across the year some deleverage on the labor line, but that's going to be, like you said, more moderate in the second half. Right now, we're running above 3%. It'll run below 3% just simply from lapping minimum wage increases that happened this past January. And on the restaurant expense line, we will see higher advertising across the whole year. But some of the other things that impacted us in Q1 are not expected to continue, certainly weren't in the plan and we don't expect those to continue going forward. So those are the basic building blocks of the margin as we look from Q1 to rest of year. We had always anticipated Q1 was going to be a down quarter for margin just from advertising alone and the fact that it's seasonally the lowest margin quarter. So it's just exacerbated a little by the lower sales.

So with the first quarter, the way it played out, and then the fourth quarter with the absence of the 53rd week, do you need your flat to up margins to hit that guidance, number one? And number two, with step-up in the ad spending, the one – a little more than 1% comp to maintain restaurant level margins, is that inclusive of – with the step-up in ad spending? Or is that just on a normal ad spend basis?

It doesn't have to be up in the fourth quarter, ex-the 53rd week, nor frankly, in the other quarters. Just, it will be – I expect to be a negative, and the ad spend is included in that overall statement.

Okay. If I could just squeeze one more in here? At the Investor Day, you were talking about being able to leverage some server data to either improve margins or comps or just general in-store operations. Where are we on that? When can we expect to see that maybe start to contribute or see you leverage that a little bit greater?

Andrew, this is Wyman. We're using that information as we speak. And we are seeing our internal metrics around guest satisfaction improve throughout this year, really month-to-month. And we anticipate that that's going to continue to help us become a stronger competitor in the market. It's one of those things, it's not a – you don't flip the switch. it's going to be a gradual movement through a better experience that gets guests back more frequently, but it's a long-term play, but we anticipate leaning into that and starting to see that impact really this year. And the first thing we have to do is see guests telling us that their experiences are better, and that's happened. So that's kind of how we look at that.

Great. Thank you very much.

Yep. Thank you.

Thank you. Our final question today is coming from David Palmer. Please announce your affiliation then pose your question.

Good morning. Thanks. RBC. I know, and you talked about this today that you believe that there will be an improvement sequentially in sales trends through the year. You've mentioned a few different initiatives, with shift to Plenti, craft beer, new burgers, and higher ad spend. If you had to hang your hat on one or two of these things that are going to really drive the sequential improvement, what would that be and how would you rank them? And is that thing really already kicking in, in October? And I have a follow-up.

Hey, David. I think ...

Hey, Wyman.

... the more immediate and – are the media and the value propositions that go along with that. Right? So that's – we've experienced that in the first quarter to some degree. Again, we lost a little bit of traction there in the middle of the quarter, but we think that's a critical part of the plan this year, and we're confident that we'll get that dialed in. The bar initiatives, again, it will be finished this quarter and fully leverageable in the back half, so that becomes more impactful in the back half. And those are the two. If I were to just prioritize two things, those are probably the two big opportunities that we're counting on, I'll say. I think the one that is kind of an unknown and we're not seeing a lot of pressure on it to deliver is the conversion of Loyalty to Plenti. That is kind of an unknown entity. Nobody has done what we're doing, so we don't know what the upside potential is. We don't think there's a lot of downside risk, and so that could be a marketing vehicle for us that opens up quite a bit of opportunity as we get smarter about how to use it and give people engaged in it, and that's a back half initiative as well. So those are three big things we're focused on and we are trying to stay focused on the big things. So I'd say those are the three big things that we're focused on really through this fiscal year.

Yeah, and thank you for that. And one question about the types of users that are going to Chili's. I don't know if you've seen sort of the cohort usage between family parties and individual. You have the bar initiative would clearly be going after a certain type of user or need state and then obviously there is the family users. And it feels like the bar on family occasions is getting higher with entertainment options at home being greater, food quality of fast casual also higher. So it would stand to reason that family occasions which, and of course, casual dining chains over index families would be under pressure. Are you seeing that in the data that you look at and is that something you're addressing directly? Or perhaps you're kind of attacking the other way, go after the bar to sort of offset that drag? Thanks.

Well, it is – the family visit is important to casual dining, and it's important to us. It is a kind of a core equity for us. We have not seen a softening, if you will, in that part of the business that's any more pronounced than any other of the challenges that the casual dining has seen. So we don't think that's the issue. We think, we actually see more people kind of going after that piece of the business competitively, but we've got a strong base in the family business and with millennial families we think that's an opportunity to continue to leverage that. Our business has the uniqueness, if you will, that not everyone has, to be able to say, hey, listen, there's an aspect of our restaurant that's more bar focused and got a little bit of a different energy to it. And then there's this other part of the restaurant that's really more family focused and focuses more on what's happening at your table and around the table, and more of the food aspect and the menu aspect of it with alcohol playing a secondary role. And it works great for us. I think it works for our guests, and that again is one of the things that allows Chili's to be in a little bit of unique position to be able to really work both fairly comfortably.

Thank you.

Yep. Thanks, Dave.

Thank you. We have no further questions in the queue.

Well, thank you, Kate, and thanks to everyone for participating on the call this morning. I would like to note that our second quarter fiscal 2017 earnings call is scheduled for the morning of January 25, 2017. With that, everybody, have a great rest of your day. Thank you.

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.