Please standby. We're about to begin. Good morning, ladies and gentlemen, and welcome to the Red Robin Gourmet Burgers Incorporated Second Quarter 2016 Earnings Call. Today's call is being recorded. During the course of this conference call, the company may make forward-looking statements about the company's business outlook and expectations. These forward-looking statements and all other statements that are not historical facts, reflect the company's beliefs and predictions as of today and therefore are subject to risks and uncertainties as described in the Safe Harbor discussion found in the company's SEC filings. During the call, the company will also discuss non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with the Generally Accepted Accounted Principals, but are intended to illustrate an alternative measure of the company's operating performance that maybe useful. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in the company's earnings release available on its website. The company has posted its fiscal second quarter 2016 press release and supplemental financial information related to the quarter's results on its website at www.redrobin.com in the Investors' section. Now, I would like to turn the call over to Mr. Steve Carley of Red Robin. Please go ahead, sir. Stephen E. Carley - Former Chief Executive Officer & Director, Red Robin Gourmet Burgers, Inc.: Thank you, Lauren, and thanks everyone for joining us today. We have a unique set up for our call today, based on last night's announcement of my retirement and our President, Denny Post being named as the new CEO of Red Robin. Before turning the call over to our Chairman, Pattye Moore, I would like to thank the board and the entire Red Robin team for six great years at the company. I've had the pleasure…

Thank you, Steve, and good morning. On behalf of the board, I would like to take a moment to thank Steve Carley for his passion and commitment to Red Robin. During his six years as CEO, Steve led brand transformation and market share growth and brought enhanced discipline and accountability to this company. One of his greatest accomplishments, however, has been people development and succession planning. Steve has assembled a strong senior executive team with deep industry leadership experience. The board has also worked closely with Steve over the last couple of years on developing and implementing the succession plan we just announced. Steve, we wish you all the best in your retirement. I also speak for the entire board in expressing how delighted we are in Denny taking over as CEO and joining the board effective yesterday. Denny has proven that she has been innovative and transformative leader and we absolutely believe that she is the right person to guide Red Robin's growth and ensure we are meeting consumers' ever evolving needs. No one knows the Red Robin brand better than Denny, and no one is better suited to innovate in what is a challenging and disruptive climate. We are also pleased to announce the appointment of Kalen Holmes and Steve Lumpkin to the board of directors. Kalen brings us deep experience in people development, having most recently served as an Executive Vice President of Partner Resources at Starbucks, prior to who retirement in February 2013. And Steve brings strong industry strategy and financial expertise, including having served as Executive Vice President, Chief Financial Officer and a Director at Applebee's until his retirement in 2007. We believe their strategic leadership and financial expertise will enhance our corporate governance and reinforce the skill set in our boardroom. We welcome them…

Thanks, Denny, and good morning, everyone. I would like to start by referring you to our earnings release and supplemental package for complete information on our results, as I will only be hitting the highlights, discussing key trends and other business matters in my prepared remarks. Earnings per diluted share in the second quarter were $0.55 on a GAAP basis. After adjusting for a restaurant impairment charge of $3.9 million that was recorded in the second quarter of 2016, earnings per share were $0.75, a decrease of 3.8% from $0.78 in the second quarter a year ago. Adjusted EBITDA for the second quarter of 2016 decreased 1.6% to $34.5 million, compared to $35 million in the prior year. Q2 marked the second consecutive quarter of negative comp sales for the restaurant industry as a whole, which hasn't happened in over two years. Additionally, traffic for the casual dining sector, which has been trending down since the first quarter of 2015, has been negative for six consecutive quarters. Red Robin's comparable restaurant revenues declined 3.2% on a constant-currency basis during the second quarter of 2016 compared to an increase of 2.9% in the prior year. While our traffic performance improved 20 basis points compared to the first quarter, it was still down 3.9% in the second quarter, which was softer than we expected. Relative to our casual dining peers, we underperformed 60 basis points in the second quarter according to Black Box. Although, we continued closing the GAAP with a 30 basis point improvement compared to the first quarter of 2016. Average check increased 0.7% during the second quarter of 2016, compared to 2.4% in the prior year. We did see an impact on average check as we continued to invest in initiatives designed to deliver value for our guests and…

Thank you. Our first question comes from Will Slabaugh with Stephens, Incorporated.

Thank you very much and congrats to Denny and Steve. A question on those changes at the C level, can you talk a little bit more about the progression there? This comes fairly quickly after Stuart's departure, which I know was unrelated, but now we are seeing two additional board members along with the CEO change. So I am curious, if there was anything internal or external that may have contributed to what, at least from the outside, looks like a fairly quick change or if this is something that's been in the works for a while?

This is Pattye Moore and this really is the culmination of a multi-year succession planning effort. So, it has been in the works for a while. The final pieces of that effort were ensuring that Denny had a strong team to support her with the hiring of Jonathan Muhtar as CMO earlier this year, and most recently as Carin Stutz as the Chief Operating Officer, both of who are experienced industry executives, the final pieces of that plan were together, and we felt it made sense to move forward. We have a strong bench in the financial area with Terry as acting CFO, and the timing with the kick-off planning and strategy sessions made a lot of sense, the board believed, to move forward at this time, also makes sense for Denny to take the lead on the CFO search.

Great. Thank you. And as a quick follow-up here on the comment on labor, are you able to quantify the labor investments that you've already made or will be making and what that might look like on an annualized basis?

Yeah. Hey, Will, this is Ted. As far as the labor investments are concerned, we've had a particular emphasis on focusing on investing in the weekend to making sure we're providing the service there. From a dollar standpoint, you're probably looking in the neighborhood of a couple hundred thousand dollars a quarter, give or take.

Great, thank you.

Our next question comes from Joseph Buckley with Bank of America.

Hi, thank you. And Denny, congratulations, and, Steve, I wish you the best. A couple of questions, the plan has a lot of action-oriented parts to it, but one of the tough things, it seems, for you to achieve, given your marketing budget is top-of-mind awareness, so can you talk a little bit about that, like how you're going to call attention to these changes to make it more effective? Denny Marie Post - Chief Executive Officer & Director: Absolutely. Thanks, Joe. First, we're going to be using the same creative that we used in test markets, which was very successful and made a real difference there. So we're sticking with the plan. We also have moved weight as I mentioned to increase our media weight behind the announcement of these post Olympics. So, while the new items are already in restaurants, we will not be promoting them until the Olympics are over and we'll do so at higher levels than we have traditionally used. Then third, we have decided to invest in key markets. As you well know, we have some high-penetration, high-opportunity markets. So, in addition to the national plan, as a company we are investing behind those with local restaurant marketing in Q4. So, the combination will drive up the overall media levels and awareness and we're also going to be using some tactics that we tested successfully earlier this year to draw attention and draw new guests into the restaurant.

Okay. And then going in a different direction, on the capital allocation front you mentioned you think it still makes sense to open restaurants. But as you think about 2017, do you think that opening pace will slow and will you shift more capital to share buyback? Denny Marie Post - Chief Executive Officer & Director: We certainly have that option and we've looked at the possibility depending on what happens with industry trends, et cetera, of taking our foot off the pedal a bit. That said, our new restaurant openings are continuing to perform to our expectations and even in a world where guests are using restaurants as source of food as opposed to destination, getting kitchen closer to guests is pretty important for us. So, there is a lot of white space left out there and as long as we continue to see the returns on the selections we are making with real estate, no reason for us to back down.

Okay. Thank you.

Our next question comes from John Glass with Morgan Stanley. John Glass - Morgan Stanley & Co. LLC: Thanks very much. First, just on the speed-of-service question, one of the core equities of the brand over the years was this notion of the gift of time. What happened to that, has the speed-of-service gotten slower or have the peers gotten better? And if it's gotten slower, is it a source – has the source been sort of menu expansion or how do you identify what's happened with speed-of-service? Denny Marie Post - Chief Executive Officer & Director: Yeah, great question. No, the peers have not gotten better, we've got slower. And this is something that we're keenly aware of. With Carin's arrival, she said, she is to have speed envy when she was a competitor of ours. What we did is we added – not – we had gourmet burgers, if you remember, five years ago, basically that was the center of our menu and everything was a gourmet burger. We in expanding the barbell to things that cooked faster and cooked longer, we put a lot of pressure on the Heart of House to be able to deliver those all at the table in the same period of time and we've suffered for that. We also, as Ted mentioned, have looked at some strategic investments in terms of brining some labor back into the restaurants to make sure that we're able to get those things out to the guests promptly, but the key here is the Kitchen Display System. I can tell you that in pilot, we went from four in 10 of our items being delivered over 16 minutes to zero – 0% over 16 minutes. So Kitchen Display is a key to our – getting our speed…

Our next question comes from Brian Vaccaro with Raymond James. Brian M. Vaccaro - Raymond James & Associates, Inc.: Thanks and good morning. And Steve just echo the congrats on your retirement, wish you all the best for the next chapter, and Denny also congrats on the promotion. A quick just follow-up on the speed-of-service improvement that you've seen in test. Denny, can you give us a sense of sort of the overall improvement you've seen in average table turn and believe can be replicated across the systems? Denny Marie Post - Chief Executive Officer & Director: We – one of the things Carin has observed as she has been in the restaurants is the importance of having a targeted table time for whatever the order for that table. If you have a couple of Tavern Double, you should be able to get your food to the table in less than six minutes or seven minutes. If you're ordering a couple of Finests, it's going to take a bit longer. So, I really appreciate her focus on what's the right table turn for that order at the table. But again, as I mentioned, we've seen a complete takeaway of anything over 16 minutes, which is certainly egregious. And over 75% of our meals in the KDS units are now being delivered in less than 11 minutes. So again, rapid improvement and that's a dramatic improvement versus where we were prior to rolling this out. And again, this will take a little time to build, those were the pilot locations who had the program in for a while. The impact, Steve has shared, I know when we were together at ICR, about the impact of speed and how much upside we would have in terms of our turn and it's significant. If we can bring our table turn time down from an average of 55 minutes to 45 minutes and better utilize the seats we have because this isn't just KDS, it's also table management, we can take that up from 70% to 80% in our peak hours that could be worth upwards of $50 million, as we share in our presentation. So, we're very focused on both seating utilization and speed and table turn. Brian M. Vaccaro - Raymond James & Associates, Inc.: All right. Thank you. Shifting gears to the comps, if we could. Can you talk about day part trends during the second quarter, anything that might shed some light on the competitive or broader consumer backdrop? And Terry, could you also remind us the menu pricing that was in the second quarter and how we should think about pricing in the back half of the year?

Hi, Brian. Our mix really remained pretty constant, about a 50%-50% mix between lunch and dinner. In terms of menu pricing, we took 50 basis points in February, so in Q1, and another 50 basis points in Q2, so 100 basis points so far this year and we have no further planned price increases for the balance of the year. Brian M. Vaccaro - Raymond James & Associates, Inc.: All right. And then just one last one, if I could, appreciate the third-quarter comp guidance, I think you said of down almost 2%. Obviously that's improvement versus the second quarter trend, the question, I guess, is that consistent with what you're currently seeing or does that assume an improvement with the new media spend coming, I think you said in September after the Olympics wrap up? Denny Marie Post - Chief Executive Officer & Director: Brian, we don't have the habit of giving any quarter guidance. So, I think we've given you about as much as we're going to. I will tell you that, we have been tracking Black Box. And if you remember, fourth quarter last year, we were down 150 basis points relative to competition. First quarter, we were down 90 basis points; second quarter, we were down 60 basis points. We watch that carefully and we're intense on going positive again. Brian M. Vaccaro - Raymond James & Associates, Inc.: All right. Fair enough. Thank you. Denny Marie Post - Chief Executive Officer & Director: Thank you.

Our next question comes from Jeff Farmer with Wells Fargo.

Thanks. Again, congratulations to all and yet another question on speed of service, but on this one, I'm just curious. What percent of your sales occur during capacity-constrained periods, and is that the right way to think about it? That, ultimately, in terms of increasing throughput, it is really only going to be an opportunity in those time periods where you have a wait, or am I thinking about that incorrectly? Denny Marie Post - Chief Executive Officer & Director: I understand why you're approaching it that way, and certainly, there is a greater upside when you have guests on wait. And it's hard for me to say what percentage, because it varies tremendously by location, time of year, et cetera. We do know that we skew toward weekends, not surprisingly. Families come out on weekends, which is why, as Ted mentioned, we've been investing against our service and our guest experience, particularly on weekends to make sure it's great. But I guess I would say the bigger opportunity is for us to get, if I would call it, our mojo back and for guests to be able to trust us, particularly at lunch, to be able to get in and out in less than 45 minutes or even shorter, and that will take some time. I don't see us doing any kind of public guarantee, but that's something that guests will come to know us for again as they come in to try the $6.99 new items, and realize that they are able to enter, get fed, close out their check on Robin on the table top and be back out the door in a very prompt period of time.

And then I think Joe asked about slowing unit developments, but I wanted to take a chance to ask about potential re-franchising. So at least to the best of my knowledge, you guys have acquired roughly 50 restaurants over the last two and a half years, haven't actually sold company restaurants in a very long time, if at all, so I'm just curious if that's on the radar for the management team and the board. Is that a conversation that you guys are willing to have?

Hey, Jeff, we don't currently have any plans to refranchise any company restaurants.

Okay. Keep it simple like that. And then just final question on the balance sheet, so I heard you on the, I think it's the increased facility, but I'm curious what your adjusted debt to EBITDA ratio was at the end of Q2, or whatever leverage metric that your facility lender looks at, curious what that ratio was, and how much more room you have on that in terms of borrowing capacity.

Yes. It was 3.8 times at the end of Q2, and our threshold is 4.75 times.

Okay. Thank you very much.

Our next question comes from Peter Saleh with BTIG.

Great. Thanks and congrats, Denny and Steve. I just wanted to ask, given the slowdown that you're seeing, I know there's lots of restaurants have talked about this, but where do you think the customer is going? Are they eating more at home? Or where is the customer going, given that the traffic is down so much? Denny Marie Post - Chief Executive Officer & Director: It's so hard to say. I'm not sure I'm going to have a lot to add to the other restaurant leaders that have commented on this, and spoken to it on their calls. It does seem to us that the consumer has gone home and has pulled the blanket over their heads. You can blame stagnant incomes. You can blame whether they've got some increased big ticket purchase debt, politics, whatever it is. But it's really clear that the economic recovery has been far from even across the population. And particularly the middle income guest, who has traditionally driven casual dining, is disproportionately affected by that. I would say that even the winners in this quarter, they have driven top line more through pricing than traffic, so it's something that we've been trying to avoid so that we can stay a good value. And returning to a strong value news message, we believe, will bring some of those guests back out. That also said, there is a lot of activity going on in on-premise and we are not actively participating in that and that's one of our opportunities for the future and one that we're getting after immediately.

Can you give us a little bit more detail on what you guys are going to do on delivery or take-out in the back end of the year, and what we should expect into 2017? Denny Marie Post - Chief Executive Officer & Director: Well, we're going to have multiple pilots going on. I'd say it's way too early to discuss or commit on delivery. As you all know, there is a number of emerging approaches to this. We're looking at all options. We've got at least three queued up to pilot from a delivery standpoint. Beyond that, we're going to focus on getting our online ordering up and we've taken the time to make sure our online ordering system is completely integrated with Red Robin Royalty. Red Robin Royalty is, again, the little engine that could for our business and if a guest has earned a free burger, they don't want to hear that they can't redeem that online. So it's been important for us to work closely with our provider to get that done. We will have a 32-store pilot up and running no later than November, for our online ordering and carry out. And we're looking at a number of ways to make sure that the guest has the same great experience they have inside our restaurant when they carry out from us.

Great. And then, just last question on labor, how is your labor turnover recently versus historical? Have you seen an increase in labor turnover?

Yeah, Peter, this is Ted, great question. I'm sure you've heard it through others in the industry, but certainly a tight labor market. We have seen turnover tick-up a little bit. And we've talked about labor pressure of being 5%, some of that is due to overtime hours and staffing. So, the short answer is yes.

Great. Thank you very much.

Our next question comes from Chris O'Cull with KeyBanc. Chris, your line is open.

Sorry about that. I was on mute. Good morning, guys. I had a few questions regarding the additional advertising. First, can you help put, Denny, can you help put in the additional media in perspective for us, in terms of just maybe the additional weeks that you're going to be on air versus last year? And then are you concerned at all about launching this campaign in the fall, alongside with the presidential election competing for advertising? Denny Marie Post - Chief Executive Officer & Director: The way that we are going at this, Chris, on the national media again from the – from what I've seen traditionally politics, it's become a state-by-state battle. So, we are actually staying out of local investments up until November. So, the incremental investment you'll see will be post-election. I don't want to disclose exactly which weeks or how many dollars, but I will tell you that it has been proven in test marketing earlier this year that this type of investment, be it in television and other vehicles, will make a difference in terms of bringing new guests in. We're also continuing to invest incrementally in Hispanic marketing, which is beginning to make a difference and we are supporting that with just having rolled out our full Spanish language website. So, it's a variety of tools, but again we will avoid the election in terms of investment in local markets because our high penetration markets often overlap areas where the election will be heavily contested.

Right. That's helpful. And then, how does the push of $6.99 burgers affect profit contribution? Denny Marie Post - Chief Executive Officer & Director: Well, the good news is, all of these burgers have been built with very excellent margins, I guess, I would say from that standpoint. So, we're not discounting down other items to the $6.99 price point. We're offering menu items that we have created to be profitable at $6.99. So, just as we did when we dropped Tavern Double into the market four years ago, I think you'll continue to see that the guest takes the option of enjoying $6.99 and often adds some other things to it. It also supports our beverage marketing and other reference along that way. So, we continue to feature beverages on our promo part as well.

The $6.99, the focus on the $6.99 platform, though, does it have a similar margin percent profile as the other items? Just a lower margin dollar profit contribution? Denny Marie Post - Chief Executive Officer & Director: It has a similar profile. You want to say, Terry? Do you want to go further?

No, no. It does have a similar profile and while we may see some decline in our PPA. Denny Marie Post - Chief Executive Officer & Director: Yeah.

We're expecting an offset in that will drive incremental traffic.

Okay, great. And then lastly, do you expect media spending to be up next year, and will it or will it be more evenly distributed next year than it was this year? Denny Marie Post - Chief Executive Officer & Director: We're still in the process of planning 2017. We'll talk more about details on that when we talk to you in the next call and of course the one going into next year.

Fair enough Thanks guys. Denny Marie Post - Chief Executive Officer & Director: Thank you.

Our next question comes from Stephen Anderson with Maxim Group.

Yes. I've got a quick question on the to-go program, and you've been hearing it a lot in the industry, particularly in casual dining, about some of these participants, ramping up their to-go efforts and what do you see in your program that stands out among the peer group? Denny Marie Post - Chief Executive Officer & Director: Well, first, we are the Burger Authority and some of the third party groups that we're aware of told us that the second most searched item behind pizza is burgers. So, we think we can stand apart there. We also have done research with our guests to tell us that a carried out Red Robin Burger is like as much or even better than one that, that may have chosen to come into the restaurant for because they love the option of enjoying our burgers at home. So, we're confident about our product quality and lots of opportunities there in terms of being the leader in burgers for carry out, catering and delivery.

And have you done any testing with it I mean in terms of keeping the product fresh through delivery? Denny Marie Post - Chief Executive Officer & Director: Yes, we – well, through delivery we actually have – we have restaurant in the Bay Area that's doing $17,000 of pure history door dash, and we haven't done anything with them and I can tell you we've been tracking and our guest is just as happy with that and they are to other things. So, again, guest expectations around something that's delivered to them are a little bit different than what they expect to get at the table in the restaurant, but there is no reason to believe that there is any decrement to the quality of our product.

All right. Thank you. Denny Marie Post - Chief Executive Officer & Director: Thank you.

That concludes today's question and answer session. At this time, I'd like to turn the conference back to Ms. Denny Post for any closing or additional remarks. Denny Marie Post - Chief Executive Officer & Director: Thank you, Lauren and thank you all for joining us today. I also want to thank the entire Red Robin team for your support and for continuing to work so hard to get our mojo back by meeting the needs of our guests, our team members, and our shareholders. Together, we're going to set a new course forward that's optimistic, objective and open. I look forward to sharing more details about decisions and plans, which will drive 2017 on our next call. Have a great day, everyone. And I suggest you go have a $6.99 Buzz Mac 'N' Cheese Tavern Double, I can assure you, you will not go home hungry. Thank you.

This concludes today's conference. Thank you for your participation. You may now disconnect.