Brinker International, Inc (NYSE: EAT) Q2 2026 Earnings Call dated Jan. 28, 2026
Corporate Participants:
Kim Sanders — Vice President of Investor & Government Relations
Kevin Hochman — Chief Executive Officer and President
Mika Ware — Executive Vice President and Chief Financial Officer
Analysts:
Dennis Geiger — Analyst
David Palmer — Analyst
Christopher O’Cull — Analyst
John Ivankoe — Analyst
Jeffrey Farmer — Analyst
Jon Tower — Analyst
Brian Harbour — Analyst
Brian Vaccaro — Analyst
Eric Gonzalez — Analyst
Christine Cho — Analyst
Sara Senatore — Analyst
Jeffrey Bernstein — Analyst
Andrew Strelzik — Analyst
Presentation:
operator
Good day and welcome to the Brinker International’s Q2 F26 earnings call. this time, all participants have been placed on a listen only mode. The floor will be open for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Kim Sanders, Vice President of Investor Relations. Ma’, am, the floor is yours.
Kim Sanders — Vice President of Investor & Government Relations
Thank you Holly and good morning everyone and thank you for joining us on today’s call. Here with me today are Kevin Hockman, Chief Executive Officer and President of Brinker International and President of Chile’s and Micah Ware, Chief Financial Officer. Results for our second quarter were released earlier this morning and are available on our website@brinker.com as usual, Kevin and Micah will first make prepared comments related to our strategic initiatives and operating performance. Then we will open the call for your questions. Before beginning our comments, I would like to 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 and such. 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 materially from those anticipated. Such risks and uncertainties include factors more completely described in this morning’s press release and the company’s filings with the sec. And of course, on the call, we may refer to certain non GAAP financial measures that management uses in its review of the business and believes will provide insight into the company’s ongoing operations.
And with that said, I will turn the call over to Kevin.
Kevin Hochman — Chief Executive Officer and President
Thank you Kim and good morning everyone. Thank you for joining us as we discuss our financial and operating performance for the second quarter as well as our outlook on the remainder of fiscal 26. Q2 Chili same store sales were plus 8.6%, outpacing the casual dining industry by 680 basis points. This strong result was rolling at plus 31% from last year for a two year cumulative comp of 43%. This was our 19th consecutive quarter of same store sales growth with a three year cumulative comp of 50% and a four year comp of 62%. The Chili’s turnaround is real, it is sustaining and we have no intentions of taking our foot off the gas, which means we will continue to be focused on improving our food service and atmosphere as well as continue making Chili’s more fun, easier and more rewarding for our team members.
Q2 results were driven by our world class marketing and brand building that brought guests in and continued improvements in food service and atmosphere that brought guests back. Now I’ll give some updates on the Chili’s business. We talked last quarter about the need to bring back our skillet Queso. Based on guest feedback that reintroduction has been successful. We are now selling 20% more Southwestern Queso and the original skillet Queso versus the prior two Queso lineup. In addition, our relaunched nachos featuring our signature chicken, bacon and house made ranch is now 170% bigger business than the previous nachos.
With guests loving our new nachos. We have also completed our bacon upgrade to thicker bacon strips and our bacon cheeseburger upgrade which now features triple the bacon in the prior burger. That bacon burger Upgrade is doing 43% more sales than the prior bacon burger. What’s important to take away from these examples is as we upgrade the menu offerings while attracting a new generation of guests, we continue to build bigger sustainable sales layers in the business. Over the past three years we have had success with these menu renovations, crispers, margaritas, burgers, ribs, frozen margs and now queso and nachos.
With more segments still ahead of us to upgrade. Next on our list is our super premium chicken sandwich lineup which will launch chain wide in April with a substantial advertising campaign. Chicken sandwiches is a very large market with over 80% of people buying them at least once last year and is by far the biggest segment of all restaurant chicken servings. It has the potential to drive customer traffic both with new and existing guests. We believe our new chicken sandwich lineup is superior, distinctly on brand and highly differentiated than what is in the market today. Bold signature flavors unique to Chili’s terrific value with abundance and a traffic driving opening price point within a three tier lineup.
We’ll also be advertising in a big way, leveraging that sharp price point to drive awareness and traffic. The sandwich lineup has done exceptionally well from a mixed standpoint in merchandising only test in 200 restaurants and we expect even bigger numbers when we launch nationally in April with advertising and earned media attention. From an operations perspective, we’ve also made great progress in Q2. We successfully eliminated a net total of 6 menu items which will continue to make it easier for our teams to serve hot delicious food more consistently. One of the keys to our success has been staying disciplined on food innovation which means avoiding launching food limited time offerings.
This allows us to focus our efforts to improve our core offerings, simplify operations and keep field leader attention on ops fundamentals like hospitality and great food avoiding limited time offer distractions to maintain efforts on the core business has continued to drive Guest scores Daily Metric we measure Guests with a problem or GWAP improved at 2.1% versus 2.9% for Q2 last year. For perspective, when we started the Turnaround journey over three years ago, we were at about 5% and it’s been consistently getting better every quarter as we keep hitting on different fundamentals in the business. We are also now seeing real movement in syndicated external guest perception metrics which allow us to track not just progress against ourselves, but even more importantly how we are improving versus our competitive set.
When we started this turnaround, third party syndicated data placed us at the bottom or near the bottom of our competitive set in all seven of their key metrics that correlate to future sales growth. In the last quarterly snapshot of these metrics, Chili’s is now in the top three of all those metrics Quality, value, service, atmosphere, Taste, Cleanliness and overall experience. Yes, there’s still room for meaningful gains, but our guests experience progress through our operational improvements is very encouraging. The other important takeaway from this data is where we have repositioned ourselves on value, which allows us a long Runway for growth.
In the past three years we have captured value leadership in casual dining and the broader restaurant industry. And while we earned that leadership value position, we were also able to improve restaurant operating margins from 11 to 18% while baking in hundreds of millions of dollars of guest experience investments into the going four wall economic the brand repositioning and operational improvements have delivered big results. Chili’s was the number one traffic brand in casual dining for the entire 2025 year. And what’s even more encouraging is black box data is telling us our per person check average is still more than $3 less than our direct casual dining competitors and more than $4 less than casual dining as a whole.
Simply put, Chili’s has been repositioned to win for the long term and that’s exactly what this team is going to do. On the Maggiano’s business, we are making progress on the turnaround pillars of food, service and atmosphere I talked about last quarter. Based on guest feedback, we brought back Gigi’s butter Cake, eggplant Parmesan, baked ziti and Classic Meat Sauce. On the value front, we’ve also increased pasta portions by 20% and have up portions on select other dishes that had opportunities, including our meatball dishes, salads, stuffed shells and crispy mozzarella. As a result of bigger portions, value scores have improved in the past few months.
We did see substantial improvement in the business during the quarter and sales beat our internal expectations for the first time in a while. Still lots of work ahead of us on service, atmosphere and team culture, but these are encouraging green shoots and small wins. Magiana’s is now only 8% of our company sales and 3% of our profit contribution, but it can be a source of growth in the future given the white space opportunities. This is why improving foil economics of the brand and getting momentum back into the business is important. Q2 marked another exceptionally strong quarter for Chili’s with continued progress in food, service and atmosphere, guest experience improvements, world class marketing, a repositioned, relevant and distinctive Chili’s brand and our value leadership sets us up for a continued market share gains and a long run of profitable growth.
We rolled big results from Q2 last year with more big results this year and that’s proof that the strategy is working and that it’s sustainable. Lastly, I want to recognize our restaurant teams and our home office teams for quickly responding to Winter Storm Fern. I know many of us on this call view the storm through a lens of what we’ll do to sales or earnings, but on the ground it’s a whole lot more than that. Our restaurant teams have done an excellent job overcoming the challenges of the storm to reopen safely and quickly. Our field facilities teams are working tirelessly on restaurant repairs that are needed and our Reference support center has been incredibly responsive getting restaurants what they need.
Hats off to our VPOs, our directors of operations, our managers, our team members and our Restaurant Support center for all that you do to overcome challenges like these. Now I’ll hand the call over to Micah to walk you through fiscal 26 second quarter numbers. Go ahead Micah.
Mika Ware — Executive Vice President and Chief Financial Officer
Thank you Kevin and good morning. Brinker successfully comped the computer delivering another quarter of positive same store sales growth led by 8.6% growth at Chili’s, lapping a 31.4% increase from the prior year. With fiscal 26 more than halfway complete, we expect to achieve our fifth consecutive year of same store sales growth and second consecutive year of traffic gains. Demonstrating our continued momentum and sustained growth. We have grown our customer base by leaning into our everyday industry leading value core menu improvements and marketing initiatives to position us well in a competitive and challenging environment. And by focusing on the fundamentals of food service and atmosphere, we continue to improve operations, bring guests back and deliver consistent positive growth.
For the second quarter, Brinker reported total revenue of $1.45 billion, an increase of 7% over the prior year with consolidated comp sales of positive 7.5%. Our adjusted diluted EPS for the quarter was $2.87, up from $2.80 last year. Chili’s top line sales growth was driven by price of 4.4%, positive traffic of 2.7% and positive mix of 1.5%. These results were bolstered by the continued success of our Margarita of the Month program which performed well during all months of the quarter. Notably, we exceeded our expectations in November with what guests in the media coined the Wicked Margaritas, which sold approximately 1.5 million more drinks than a typical Margarita of the Month.
Another call out for the quarter Christmas Day traded out of the second quarter into the third quarter resulting in a favorable comp sales impact of 1.2%. Turning to Maggiano’s, the brand reported comp sales for the quarter of -2.4%. As Kevin mentioned, we saw some encouraging progress as the team executes on its back to Magiano strategy which is designed to improve our value proposition, optimize our service model and ensure our atmosphere is clean and well maintained. At the brinker level, restaurant operating margin was 18.8% compared to 19.1% in the prior year, a 30 basis points decrease year over year mainly due to Maggiano’s sales deleverage and the additional investments needed to help improve that business.
However, at Chili’s we saw a 40 basis point increase in restaurant operating margin year over year mainly due to sales leverage partially offset by incremental investments in labor and advertising and higher health and workers compensation insurance cost due to increased restaurant headcount. Food and beverage for the quarter were unfavorable by 20 basis points year over year due to unfavorable menu mix with 0.8% commodity inflation offset by price labor for the quarter was favorable 30 basis points year over year. Top line sales growth offset additional investments in labor, higher health insurance costs and wage rate inflation of approximately 3.3%.
Advertising expenses for the quarter were 2.9% of sales and increased 40 basis points year over year due to additional weeks on TV. GNA for the quarter came in at 4.1% of total revenues, 20 basis points higher than prior year due to increased restaurant support. Restaurant center support resources partially offset by sales leverage. Depreciation and amortization for the quarter came in at 3.8% of total revenues and increased 30 basis points year over year due to an increase in our asset base from equipment purchases partially offset by sales leverage. Second quarter adjusted EBITDA was approximately $223.5 million, a 3.6% increase from prior year.
The adjusted tax rate for the quarter increased to 18.8%, mainly driven by higher profits which increased at a greater rate than the offset generated by the FICA tax tip. Credit Capital expenditures for the quarter were approximately $63.7 million driven by capital maintenance spend as discussed in 2026 we started our reimage program for Chili’s. We just completed our first four reimages and will use the learnings to inform our long term reimage and new unit growth. We expect to complete another 8 to 10 reimages during the balance of this fiscal year before ramping up to 60 to 80 reimages in fiscal 2027.
We expect to fully roll out both our reimage and new unit growth programs during fiscal 2028 at Maggiano’s. Our main focus areas will be guest facing repairs and maintenance and a smaller scope reimage program. Our strong free cash flow provides sufficient liquidity to maintain our disciplined capital allocation strategy, allowing us to invest in our restaurants and return excess cash to shareholders in the second quarter. We also repurchased an additional 100 million of common stock under our share repurchase program to support our ongoing commitment to returning capital to shareholders in terms of our expectations for the balance of the year.
As noted in this morning’s press release, we’re raising our fiscal 2026 guidance which includes annual revenues in the range of 5.76 billion to $5.83 billion, adjusted diluted EPS in the range of $10.45 to $10.85, capital expenditures in the range of $250 million to $260 million, and weighted average shares in the range of 44.7 million to 45.2 million. This guidance also includes the negative impact from closures caused by winter storm fern through Tuesday, January 27th, which includes approximately 20 million in reduced revenues and a decrease of $0.15 in adjusted diluted EPS. Prior to the storm, Chili’s comps, including the negative holiday slip were running solidly in the mid single digit range, giving us a good glimpse into the health of the base business.
Once we get through the negative impacts of the weather, we expect Chili’s same store sales to return to the mid single digit range. Additional assumptions underlying our guidance largely remain unchanged. We still anticipate wage inflation in the low single digits and our tax rate to be approximately 19%. Our commodity inflation is now anticipated to be in the low single digits for the fiscal year due to the removal of Brazil based ground beef tariffs this past quarter and better than expected poultry and dairy commodity prices. However, due to rising beef prices, we still expect mid single digit inflation for the back half of the year.
We remain confident our plans will enable us to lap the upcoming quarters and continue to significantly outperform the industry on sales and traffic at Chili’s. In summary, our second quarter results reflect the continued strength of our strategy. Chili’s industry leading Everyday Value continues to deliver for the guest not only on overall price but also on overall experience. As we look ahead, we remain focused on delivering sustainable long term growth. Our continued momentum and plans for the remainder of this fiscal year give me confidence in our ability to deliver on expectations and our strong financial position will allow us to continue to invest in the business and return cash to shareholders, unlocking future growth potential.
With our comments now complete, I will turn the call back over to Holly to moderate questions. Holly.
Questions and Answers:
operator
Certainly the floor is now open for questions. If you have any questions or comments, please press Star one on your phone at this time. We ask that while posing your question. You please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Your first question for today is from Dennis Geiger with ubs.
Dennis Geiger
Great. Thanks guys and congrats on the strong results. First, I just wanted to ask a little bit more on contributors to the strong traffic and sales growth in the quarter. You gave a lot of color beyond the margarita campaign. Just curious of any other notable shifts in contributors as we think about three for me and where that was, mixing triple dipper mix, et cetera. Anything to call out there.
Mika Ware
You know, I’ll start.
Kim Sanders
Oh, go ahead, go ahead, go ahead, Micah. Sorry we’re in different, we’re in different locations because of the ice storm. But go ahead, Micah.
Mika Ware
I’ll start with some of the things and Kevin, you can fill in some colors. So you know, as we talked and we’ve got it all year, you know, our pricing has been very stable, kind of right in the middle of that 3 to 5% range. What I will say on mix is yes, we were very, very happy with the performance of the margarita the month, but overall, you know, our mix was still positive. That was driven not only by the margaritas but you know, continued success in triple dippers. They were up still year over year, even lapping the big numbers from prior year and some appetizer sales, you know, with the new quesos out.
So we’re not seeing any huge changes. You know, we’re still really happy with how our menu is performing, how our sales are going and again our traffic, we were very pleased with the traffic throughout the quarter. We had positive traffic, you know, that before the storm was continuing on. So, you know, nothing huge. Dennis, that changed. Kevin, if you want to add in some color to that.
Kevin Hochman
Yeah, I was going to say the same thing with a little bit different angle of the. It’s just more of the same. So we continue to, you know, streamline the menu. We continue to improve operations and make the needed investments to improve the overall guest experience. And then we see that in the internal metrics and then that allows us to both attract new guests with things like the three for me and, and you know, the margarita of the month program that we, that did really well in November and December but then also allow us to retain existing guests.
So we don’t see any frequency changes. So we don’t see frequency changes in existing guests and we keep bringing new guests in and they start looking like existing guests pretty quickly in terms of frequency. That’s how you sustainably grow over time. So like, you know, I shared the gwap metric guests with a problem, you know, continue to hit record lows. You know, our food grade scores went from 68% last last year in Q2 to 74% this year. We also saw quarter on quarter improvements in food grade and same thing with intent to return was 72% last year.
It’s almost 78% this year. So you just look across the board. The interim metrics continue to get better. And this is what I keep saying. As long as we keep focusing on the fundamentals of casual dining and we are honestly looking in the mirror saying are we going to be better this year than last year and we continue to have this world class marketing. There’s no reason why the comp will continue to grow. So we’re just going to. It’s going to be kind of a boring quarter. We say that our new drivers and it’s like, well, they’re not new drivers but there are new things we’re doing to drive those drivers and I couldn’t be more proud of the team.
Dennis Geiger
Great. Appreciate it guys. And just one more, you guys both gave good color on sort of back half of the year revenue and comp expectations and I think talked about a strong quarter to date even with a calendar shift pressure, I believe. Anything else on kind of the back half of the year as it relates to top line expectations? Anything embedded from a stimulus tax rebate perspective or Kevin, anything else to share on some of those big levers which sound exc. Exciting for the back half of the year. Thank you.
Mika Ware
Yeah, Dennis, so let me kind of talk about that. So we, like Kevin said, expect more of the same. So we’re forecasting for Chili’s, you know, solid mid single digit comps for the back half of the year. We’ve talked about pricing. I think again, you know, mix may moderate a little bit in the back half of the year just as we continue to lap those really big triple dipper numbers and then traffic. What I would say is, you know, prior to the storm, we would have expected traffic positive in both Q3 and Q4. You know, we may have a little pressure with the storm and the holiday flip on, you know, traffic just because of those two events.
It could be flat to slightly negative traffic in Q3, but we expect, you know, positive traffic in Q4. So really it’s more of the same. But that’s some of the, you know, detailed color into what we expect the same store sales to do over time.
Dennis Geiger
Great, Helpful. Thank you, guys.
Mika Ware
Thanks, Dennis.
operator
Your next question is from Chris Okol with Stifel.
Christopher O’Cull
Yeah, thanks. Good morning, guys. Mike, I just want to follow up on that last question. Can you just maybe elaborate on or level set as on the comp cadence that’s embedded into the back half of the year guidance?
Mika Ware
Yeah, no, it’s going to be pretty steady as we go. So, you know, January will have the storm and the holiday flip, but after that I expect it to be very steady, mid single digits. There’s not a lot of flips in and out and the quarters will be very, very similar to each other is what we expect.
Christopher O’Cull
Okay, perfect. And then Kevin, you guys have successfully used the 1099 Anchor to drive, you know, the 43% two year comp. But the barbell strategy relies on guests eventually I would think trading up the premium items like the triple dipper and then maybe the new ribs. But as you, as you lap these massive traffic gains, how do you prevent the 1099 price point from becoming a structural ceiling on the pricing power? Is there any long term risk that you’re training your most loyal new guest or your new guest, I guess, to never leave that price point?
Kevin Hochman
Yeah, well, it’s something we’ve talked about for several years now. It’s very important for our team to have offerings for all guests because if too much mix gets into the 1099 price point, obviously the math doesn’t continue to math. So one of the first thing that we do is we have what we call the barbell Strategy which we talked about, which is we have good, better, best price tiers because not every guest wants the cheapest thing on the menu, some somewhat different benefits or different features in the things that they buy. So like when we, when we launched the chicken sandwich, the relaunch of the chicken sandwich, it’s not just going to be a hot opening price point that we advertise on tv.
We’re going to have chicken sandwich with benefits, we’re going to have more premium chicken sandwiches that can take you all the way up to the, to the highest tiers and then we’re going to see the manage that. So the outcome when you do this is that you keep the 1099 sales mix constant. You don’t let it grow too much because that’s when the margins can get out of whack. So as long as we continue to bring innovation not just at the 1099 price point, but at other price points that we keep other parts of the menu interesting and we hold the mix on all those parts of the menu, we shouldn’t have any issue continuing to advertise 1099.
Now know, five years from now I know we might be in a different position, it’s hard to predict how what will happen with cog inflation etc but because we have such a varied menu and we’ve done a really good job merchandising and we continue to innovate on higher tiers like ribs and margaritas etc, we’re continuing to drive people into that mix. You know, we don’t see, we don’t have like specific detail, we don’t see in general a lot of trading up and down the menu. So people kind of gravitate to what they want to gravitate to and they stick with it.
So like the three for me consumer tends to come more often. They actually spend more over the course of a year because they come more often versus higher priced guests. They don’t come as often but they’re worth a lot to us because they spend more when they’re there. So but like you know, like I get asked a lot of questions about our people. People bounce all over the menu and you know, you just don’t see that much of that.
Christopher O’Cull
Makes sense. Congrats on a great quarter guys.
operator
Your next question for today is from David Palmer with Evercore isi.
David Palmer
Thanks. Good morning. Had a question on the reimaging. Is there any one of the prototypes that you’re testing that is emerging as the most exciting? Perhaps the one that you feel like has very good odds of being the. Go to market option. And that can be rolled out quickly. And with significant sales lifts. And if so, what can you tell us about the learnings from the reimaging?
Kevin Hochman
Yeah. Good morning, David. Thanks for the question. So there’s two reasons why we’re doing these first four. One is to understand the levels of investment and which ones make the most sense. And then the second is to get operational learning so that we don’t make this. If there’s any mistakes in the first four, we don’t make them as we roll them out to the balance of system. And obviously we’ll continue to learn beyond just these first four. The first thing I would tell you is the guests and the team members absolutely love all four of the reimage units.
And there’s a lot of clearing in our system to get that across the system, so that’s good. It’s too early to, you know, declare victory on sales lists. The initial results look pretty, pretty good. We’re pretty excited about that. But it’s nothing that we would publish and that you could take to the bank. You know, obviously want to understand more and look at test versus control and all that good stuff. Stuff. So overall, the first thing is they look like completely different restaurants. And when all you guys are here for our investor day later in the year, you’ll be able to tour them.
So we’ll make sure we spend time where you can see them firsthand, those first four and get it, you know, get your eyes on them. See, that’s a market difference. I mean, the. Basically the comment I typically hear from the managers is like, we have a new restaurant, which is really cool to hear because these are really old restaurants that haven’t been touched a while. The second thing that we’ve learned is that. So each of the four have different elements to them. And the good news is the one that has actually the lowest cost is the one that everybody’s gravitating towards is the best.
So some of the ones that cost a little bit more, they had a little too much done on the inside and they’re a little too busy. So we’re learning like, hey, less is more in some of the interior units. But things like the bar part of the reimage has been phenomenal. I mean, it literally just makes the. The whole building feel different, not just the bar area. That creates an energy and a vibe. And it is distinctly Chili’s. I mean, you go in and you’re like, wow, it feels like I’m back in Chili’s when it first started, but in a modern way.
So. So that’s the second thing we’re learning, is that we probably don’t need all the bells and whistles. Like, for example, a couple of the restaurants have these oversized margarita shakers that we actually pulled from the old, old Chili’s. And it’s something that just feels like it’s clutter. It’s not really adding versus some of the tile tables that we’ve added and some of the cheaper frills actually make a bigger impact. So we’re going to be obviously focused on the things that make the biggest impact for the lowest cost. So that’s a good learning. And then lastly, we’re learning a lot about the operational opportunities with rolling them out.
So, for example, we’re learning there’s just a lot of extra dust and a lot of extra work that’s coming in that construction, so we got to do a better job of like, masking and taping and tarping. And those are important things to know. As we roll out further, we’re learning about some of the tile work that we’re putting by the bar is actually not needed and it adds additional expense that’s not needed. So just using the tiles on the tabletops on the exterior and on the sides of the bar, but not the floor of the bar is making the maximum impact.
And then we’re also learning about some of the operational opportunities. So, like, for example, we’re bringing back tile tables, but we’re doing it in a smart way where they’re much easier to clean. So, like, the old tile tables that were so cool are really difficult to clean the grout in between the tiles. And so we’re basically doing is a. Is a printed tile table that looks three dimensional but then has an acrylic top on top of it. We’re finding that those are a little hard to clean. Not the tile, but because that’s a printed unit, but the actual plastic is starting to buckle under the heat of skillets.
So. So that’s an example. We’re just going to spend a little bit more time getting the right tabletop on that. So that’s what we’re learning from it is both operationally, how do we make sure that it’s sound, and then two, what is the right investments. But I will tell you, we are extremely bullish about this and we can’t wait for you guys to see what we’ve done.
David Palmer
Great, thank you.
operator
Your next question is from john ivanko with jp morgan.
John Ivankoe
Oh, hi. Thank you so much. It’s actually A follow up on the. Previous question in terms of remodels, which, you know, obviously you’re planning to accelerate into 27. I think you said 60 to 80, but correct me on that, you know, with potential further acceleration.
Mika Ware
John, you’re cutting out.
operator
Looks like his line dropped. We’ll take our next question from Jeff Farmer.
Jeffrey Farmer
Yeah, thank you guys. Just cutting through the weather and all the calendar shifts that the industry is facing. What is your read on casual dining segment trends in December and January? So ultimately I’m trying to ask you guys if you think the demand backdrop is stable, Is it softening, is it improving? Any color there would be helpful.
Kevin Hochman
Well, it’s just like what you guys are seeing, it’s mixed, right? Like, you know, December was tougher for the industry, but then January looked really good and then the weather hit, so it’s kind of stopped that trend. So I mean, candidly, it’s a lot of mixed signals. You know, what I’ve told our team is just continuing to focus on the things that we can control, which is food, service and atmosphere, whether the economy gets better and the consumer gets better or worse. Having a better experience is going to win trips, which is what’s happened in the last couple of years for our business.
So. So, you know, if the macro gets better, that’ll be more tailwind for us. If the macro doesn’t get better, we’re going to continue to steal market share from those that aren’t improving their food service and atmosphere. So but to answer your question directly, we, you know, December didn’t look great, January looked better, weather stopped everything. We’ll see what happens when, when, you know, we get out of the fully out of the weather, whether the strength that we saw in January restarts. So but it’s similar to what you’re seeing.
Jeffrey Farmer
Okay. And then Micah, with the updated guidance, can you just sort of level set us on the restaurant level margin and G and a as a percent of revenue expectation for fiscal 26?
Mika Ware
Sure. So, you know, looking out into the back half of the year, what I would say is, you know, our restaurant level margin will probably decrease a little bit in the back half versus what we posted in P2. And really it’s the line I think everyone should look at is, you know, make sure the cost of sales line is it’s going to be pretty similar to what you saw in Q2, maybe a little bit higher. I talked about the, you know, kind of influx in commodity pricing in the back half that also that mid single digit includes some of those investments We’ve made in things like bacon and ribs and some, you know, better cut chicken, you know.
But with that being said, they’re going to be phenomenal margins in the back half very steady, you know, similar to what you saw in Q. Maybe just, you know, a little bit less as some of kind of washed through some of those laps year over year.
Jeffrey Farmer
And then G and A real quick.
Mika Ware
Oh, G and A is going to be very similar to, you know, what you saw. We are 4.1% of total revenues in Q2. I expect similar numbers as you move through the fiscal year.
Jeffrey Farmer
All right, thank you.
Mika Ware
Very similar to what you saw in Q2.
Jeffrey Farmer
Thank you.
operator
Your next question is from John Ivanko with JP Morgan.
John Ivankoe
Hi. Thank you so much. Can you hear me?
Mika Ware
We can now.
John Ivankoe
All right, super. You talk about travel disruptions. I’m doing this from the airport and ask this big long question and was literally just talking to myself. So thank you for the patience on this. So the question is actually a follow up to the remodel question. You know, obviously remodel is an important part of the Chili’s business. And I think I heard you say, and correct me if I’m wrong, that you’re planning 60 to 80 remodels in 27 with a further.
operator
Looks like he left his line again. We’ll move on to John Tower with Citi.
Jon Tower
Hey, good morning. Thanks for taking the questions. I appreciate it. Just a couple if I maybe starting off I know obviously you’re long the chicken in April with advertising. I believe there’s a soft launch now or soon in stores. But curious if you’re attacking the marketing side of the equation any bit differently than what you’ve done with the previous two product launches on three. For me, the two burgers, you know, I know it’s you don’t want to if it’s not broke, you might not want but is there a different tack you might be taking this go around?
Kevin Hochman
Well, we think that the that high prices are more relevant than ever. So you know, every time we think we’re gonna the consumer is going to get bored of our messaging like this just keeps coming back up in social media and in the zeitgeist. So and I think you guys see it all the time that consumers are really frustrated with high pricing, you know, in lots of different areas, not just restaurants. And so the idea of continuing to attack that head on with unbeatable value and abundance continues to win for us. So there’s no reason why we would change that.
Jon Tower
Got it. And then just maybe to the store level employees. And specifically thinking about incentives over time, obviously you have a fairly ambitious goal to get to roughly $6 million EUVs across the Chili store base over time. I’m just curious how you’re thinking about store level incentives for the managers and where they sit today versus where you might, might optimally see them going over time.
Kevin Hochman
Yeah, it’s something we talk about a lot. You know, we look at like the best in class competitor and they are masters of ownership at the general manager level. And part of that is their incentive structure. They do other things too that we’re obviously studying. And you know, right now we’re in the camp of let’s get our managers trained so they can be true owners of the business. For years we started pulling things off of their P and L an effort to make their bonuses more and more fair and control more of what happens in the restaurant.
And we’ve got to unravel some of that so that they actually understand the P and L understand the areas that they can improve their, their bottom line and their top line and then start rewarding for them that once they’re trained and have the tools to do that. So the first step has been number one, what? We’re launching a new P and L tool as part of our overall Oracle upgrade. That’s done and they’ve been trained on that. Secondly, we’re teaching the principles of extreme ownership to our managers. We started with our directors of operation and above and now we’ve been rolling that out over to the general managers and the management team inside the restaurants.
We’re going to do that for at least a year, maybe even a little bit longer before we actually change the incentive structure. I do anticipate that we will change the some of the long term or I’m sorry, some of the bonus structure for the directors and above before that. So we’ll try to roll that out to the directors first and make sure that we got their buy in and their understanding before we would ever go to the manager level. But we’re at least one to two years out from actually changing the incentive structure of the managers.
Jon Tower
Got it. Thanks for taking the question.
operator
Your next question is from John Ivanko. Your line is live.
John Ivankoe
Okay guys, thank you so much for the patience. We’re blaming this on the ice storm. So I’m in the airport and this one’s not going to drop. So the question was on remodels. You know, remodel is obviously a very important part of your story in 2728. I think I heard you say 60 to 80 remodels in 27, followed by a greater increase. Increase in 28. So just confirm that. And secondly, you know, as we think about new unit development, you know, into 28 and beyond, I mean, that is something that you’re planning to accelerate in the chili’s business in 28.
And I’m not going to ask you for TAM at this point on this conference call, but what are we thinking in terms of percent unit growth that’s kind of right for the Chili’s brand at this part of the brand’s life cycle in 28 that maybe can be established for a long term. And you know, Micah, you know where I’m getting with this question is how we should just think about broad capital intensity in the business in 27 and 28, as this is such an important part of our model. And thank you guys so much for the patience.
Mika Ware
Yep. So, John, let me start that. A lot of pieces to your question first. Yes, I’ll confirm. We want to ramp up in 27, fiscal 27 with the 60 to 80 is our current plan. And then the goal in 28 is to get to about 10% of the system, which would get us a little bit over 100. So. So you did hear that. Right. And we’re very excited about it. Okay. On the new unit growth. And so what I would say is next year, well, you know, this year has been pretty flat with what we’ve opened versus what we, you know, some of the leases expiring, et cetera, what we’ve closed. Next year, you’re not going to see that much of a bump because, remember, it’s an 18 to 24 month cycle. So that’s from two years ago when we weren’t really leaning into new units. But what I can tell you, with all the progress we’ve made on building the team and all of the sites that we have at the front end of the funnel that we’re putting in, I do feel like you’re going to see a significant difference in F28 and the new units that we’re able to post for that year.
So. That is correct. You know, we haven’t communicated an exact target of new unit growth, you know, but, you know, it will be in the low single digits, I would say is something that could be in the realm of expectations for what we can do. So again, that’ll be something that we go into more detail on when we get to that investor day and talk about what we think the universe of Chili’s could Be, you know, what we think that new unit growth cadence will be over time. But we do know that we can build more Chili’s, and we’re really excited about it, especially with the change in the business.
The areas of opportunities have opened up for us because our business is so much stronger on where we can build in different areas, different locations. We’ve learned a ton. So we’re really excited about it as we move forward. So I hope that’s helpful.
John Ivankoe
It is. And I guess as we’re thinking this point, I mean, do we think that there might be an opportunity long, long term to maybe double the Chili’s brand relative to what it is? Or, you know, am I maybe getting ahead of myself? You know, kind of the question of just thinking about what this brand can be now that it has the returns, the permission, the capital to once again start to expand this footprint again?
Mika Ware
Yeah, again, no, I don’t. I don’t know that we’re ready to say the numbers. I think double is quite aggressive. But yes, we think we can build, you know, more Chili’s, and again, more to come. The great news is the company has plenty of capital available to do it, too. So, you know, that’s not a constraint for us to continue to invest in the business and return to the shareholders. So we feel really good about our capital allocation strategy over time and our ability to invest back in the new unit growth and grow some profitable Chili’s.
John Ivankoe
All right, well, I’m really looking forward to the event for you guys to highlight all of your opportunities, so look forward to that. Thanks again for the patience.
Mika Ware
Thanks, John.
operator
Your next question is from Brian harbor with Morgan Stanley.
Brian Harbour
Yeah, thanks. Morning, guys. Micah, just so I’m clear on the food cost comments, are you saying sort of, you know, tariffs is helpful, but look, there’s some other things that sort of, you know, offset that. So you’re not really changing your outlook for commodities?
Mika Ware
Yes, no, my outlook for commodities, you know, we did have favorability in the tariffs, so it is more favorable than it was last quarter. But what I’m saying is I’m reiterating that the back half of the year is going to be in that mid single digits. That does include some of the investments we’ve made in things such as ribs and bacon. We’ve made some investments in poultry, and so we’re just. I’m just trying to level set everybody on, you know, commodities have looked pretty favorable in the front half. In the back half, it will be that mid single digit.
And then to help guide people on what does that mean? I was just trying to say, hey, that you’ve seen our food and beverage cost in quarter two. I think we’ll have a similar number in quarter three as we move forward. So just trying to help people kind of understand, you know, what would that turn into? Within, you know, 10 to 20 basis points.
Brian Harbour
Okay, got it. Thanks. And with sort of the chicken sandwich revamp, did you change any of the timing at all on sort of the soft launches that still as expected, are you, is it fair to say you’re not kind of giving yourselves credit for that in your revenue comments or, you know, you sort of just view it as one of the drivers that have been ongoing.
Kevin Hochman
Oh, go ahead, Micah.
Mika Ware
I would say the chicken sandwich, what’s in the guidance is we have it in over 200 restaurants now where we’re getting all the learnings. The real launch will be late in April and that’s when we’ll go on tv. And that’s really critical for the chicken sandwich because this is about driving traffic with a very appealing product that we have. And so that’s the timing that’s built into the guidance that we gave Kevin. You can give more color on that.
Kevin Hochman
Yeah. I mean, the thing to understand is in the 200 restaurants, when you don’t advertise it, you’re just basically going to be moving mix. You might get a little bit of repeat, but if it’s only a three or four month period, it’s not going to be a ton of repeat that you get. So you’re really just trying to test for, you know, what are consumers saying about the sandwich? Can we execute it with excellence, given it’s going to drive a lot of mix the way you merchandise it? What is the feedback that we’re getting on the sandwich? But you’re really, you’re really not going to see a major change in the business other than some mixed shifts until you launch the TV advertising and start bringing people in with the sandwich.
So I wouldn’t read too much in the restaurants that we put in other than it’s encouraging. When you see something mix significantly more and the feedback’s really good, that’s always a good sign that it’s going to do even better when you go on tv.
Brian Harbour
Thank you.
operator
Your next question for today is from Brian Vaccaro with Raymond James.
Brian Vaccaro
Hi. Thanks. Good morning, Kevin. Just back to chicken sandwich. Could you remind us just the changes that you’ve made to quality and the flavor profile and maybe level set us on where your existing chicken sandwich mix is and Just kind of how you frame that potential opportunity. And then more broadly, just what’s your latest thinking on the timing for other menu upgrades? Are you still thinking about steaks and salads maybe moving into fiscal 27? Just curious there.
Kevin Hochman
Yeah. So I’ll let Micah answer the exact mixed question while I give you the update on the platform. So the first thing is the base sandwich.
And we had fixed the recipe on that about a year ago where we went to a very focused build that you see in kind of the most popular or the biggest innovation in I, I would say in fast food history or modern history, which is the Popeyes chicken sandwich is a very basic build and we wanted to look at that and learn from that. And so that’s what we did about a year ago. You basically have, you know, a brioche bun, a semi cured pickle, mayonnaise, and a very large hand breaded chicken breast that we think is incredibly abundant in the category.
I don’t have the exact data to say it’s the biggest, but when you eat it, you might think it’s the biggest. And so that was done. And then we’re going to start bringing in some flavor updates to it, which I can’t go into the details of, but there’ll be a variety of sandwiches in different benefit spaces based on some of the signature flavors that we have, as well as a new flavor that we don’t have in the, in the restaurants today that mixed really well when Popeyes launched the sandwich. And then, and then we’re going to have a good, better, best tiering of those sandwiches.
So we’ll have a base sandwich at a hot price point, we’ll have a sandwich with benefits at a medium price point. And then we’ll have a super premium that will have, you know, like bacon and produce and things that you expect in a super premium sandwich at the super premium tier. And then we’re also going to bring some additional sides innovation and dip cup innovation to that lineup to make it even more exciting and more distinctly chili. So it really will look like a completely new lineup to the guests. And it’s in areas that we know that consumers are excited about chicken sandwiches, but done in a very unique chili’s way, not just in the flavor profiles, but the abundance and value that we think that you’re going to get.
Mika Ware
And so I’ll talk about that mix. Right now the mix is very low, Brian, because we aren’t merchandising it on the menu. It’s not on tv. So it’s just one item on the menu in our handheld section. So very low. But there are big plans for how we merchandise it, how it’s going to be on tv. So we do know that there is, you know, big room for mix to grow there. And we do think again that the chicken duck sandwich is designed to be a traffic driver.
Brian Vaccaro
All right, that’s, that’s very helpful. I was going to ask one on the balance sheet as well. Micah, you only have 20 million left on the revolver, I think, and you’ve got the 350 million notes at eight and a quarter. Just how are you thinking about the refi opportunity on the notes through calendar 26? And is there an opportunity to maybe move those notes onto the revolver, second half of calendar 26 and maybe shave off a few hundred bips on the interest rate?
Mika Ware
You know, Brian, right now we don’t have that in the works, but we are watching it closely. So if the opportunity arises where we can take out the bonds early and it makes sense for the revolver and save us some money, we’d absolutely do that. Remember, it’s just different aspects of when you do it and the fees you have to pay up front. But it is something we’re watching. So right now I would say we don’t have that planned, but we’re going to continue to watch it.
Brian Vaccaro
All right, thank you very much. Pleasure.
operator
Your next question is from Eric Gonzalez with KeyBank.
Eric Gonzalez
Hi, thanks for taking the question and congrats on the strong results. I’m just curious about the timing of marketing investments this year. I know there was an uptick in spend in the second quarter, so if you could just confirm that you stayed in that range of 9 to 10 million. Incremental advertising. And then how did that look as you get into 3Q and 4Q particularly around the chicken sandwich launch?
Mika Ware
Yeah, no, we did stay in that, Eric. So we had the biggest increase year over year in Q2. So that that did happen. And we said that was about 2.9% of sales. I think the percent of sales will stay, you know, fairly stable as we move forward. The year over year increase isn’t as much in 3 and 4, but exactly what we said, you know, did happen in Q2.
Eric Gonzalez
Okay. And then just quickly, just regarding, regarding the winter storm, I mean, how quickly do you expect a bounce back there and you know, what are your expectations in terms of how long the effects could linger?
Mika Ware
Yeah, no, that is the big question. So it was quite a challenge to be. We had to quantify the impact of the storm while the storm is still happening and unfolding. And so that is why I was pretty purposeful in saying, you know, this is what we know as of Tuesday, you know, and what the impacts are. So that is what we have built into that guidance. You know, we’ll see there. Historically we have had some bounce back, you know, when people get a little bit of cabin fever. Now, you know, on the flip side, I will caution we lost a Friday, Saturday, Sunday, you know, we’re in a Monday, Tuesday, Wednesday when it bounces back.
So there could be some upside. But what I will say is we don’t have a ton of upside built in that we just kind of have all systems go from Wednesday on. So upside or downside on the storm could still be kind of playing out a little bit, but we think we got the bulk of the impact captured with what I communicated earlier in the 20 million decrease in revenue and the 15 cents to EPS.
Eric Gonzalez
Yeah, fair enough. Thank you so much.
operator
Your next question is from Christine Cho with Goldman Sachs.
Christine Cho
Congrats on the quarter and thanks for taking my question. In the last call you mentioned that. The under 60k income cohort was your. Fastest growing group contrary to kind of the broader industry trends. Have these trends continued into this quarter and are there any other observations on spending across various consumer cohorts? And additionally, are you concerned at all that the QSR pricing growth continues to track below the category casual dining average and how that would impact the overall category value perception? Thank you.
Kevin Hochman
Yes. So from an income cohort standpoint we didn’t see much shifting in the quarter. Like the low income cohort is no longer the fastest growing. So there was a little bit of shift down and a little bit of shift to the higher income cohorts but it wasn’t anything like that was so obvious that would be willing we should proactively highlight to you guys on the call. So but just a little bit. We haven’t seen any kind of trade down like mix has been pretty healthy. So you know I would say not really made any major shifts or changes versus last quarter.
I know that’s a little bit bucking the trend from what you see in the industry. But I also think that we do have industry leading value which is helping insulate us to some extent. You know, as far as the QSR question that you the second part of your question, you know I’d say we still have industry leading value on tv. You know we still have. When you look at casual dining is having a renaissance. I mean you look at our I mentioned on my prepared comments when you look at the PPA or per person average versus our casual dining competitive set, direct competitive set, where $3 under them or $4 under the broader casual dining.
So we don’t really, we feel like we’re really positioned to win regardless of what happens with the macro, between the operational improvements that we’ve made, where we positioned ourselves, and then our everyday value, which looks pretty darn good. So, you know, I’m not particularly concerned. You know, I think we get asked that every time, you know, a competitor from Chicago decides to put a $5 meal out there and we just keep chugging along. And I think it’s because when you look at the overall value for what you pay, for what you get, it does feel superior to what’s out there.
And we’re going to continue to deliver that.
operator
Your next question for today is from Sarah, Senator with Bank of America.
Sara Senatore
Thank you. Just I guess maybe a couple of clarifications. One, Micah, you pointed out that you had positive mix in terms of the check impact, but I think negative in terms of margins. You just talk about that. I mean, it didn’t sound like there was a lot of shift in terms of consumption or guest kind of choice, but I don’t know if that was maybe a little bit more on the value side. And then also, sorry if I missed it, but you lowered the Capex guide.
I don’t think that’s because of the lower kind of cost of remodels. It sounds like those are still in test, but just wanted to maybe understand that too.
Mika Ware
Okay. Yeah. Great, Sarah. So, you know, the first of all, we’ll start with the mix. Yes, mix was positive, A little less positive. One reason that margins went down year over year was, if you remember last year is really about the lapping of last year when we accelerated our business took a huge step change in the business. We weren’t able to staff our labor as quickly as we needed to, you know, a year ago October. So we kind of over earned in quarter two, which I caution people about as we were lapping that even coming into this year.
So I think that’s probably what’s in play with the margins more than just the overall health of the margins and the health of the business and the flow through. So again, that’s kind of the what kind of was built in the run rate. The same with the restaurant expense. As our restaurants got busier, it took us a little bit to ramp up and get those expenses caught up with kind of the new traffic levels. And you know, we’ve continued to invest in the business and now we’re lapping some of that. So I feel really good about the flow through and the margin profile overall.
So, you know, it’s really strong and really healthy. And if I take a step back and just look at the full year, you know, I guided that. I think we can improve restaurant level margins 30 to 40 basis points. Even with the impacts of this storm, that could put a little pressure on us. I still feel very confident in that number on growing the margins over time. So I feel like if there’s any variability in the quarter to quarter it’s, you know, really back to some timing of expenses or investments and a little bit of seasonality.
But I feel really good about margins overall. Great question about Capex. You know, really just taking a look at it at the midpoint of the year. You know, we realize it’s not necessarily because reimages are less expensive. We’re still finalizing the scope of that. We are doing a few less than we originally planned. I think the bigger nugget in is there is we had a placeholder for maybe a potential new equipment rollout that now, you know, after the teams have moved down a little bit further on that, we realize we aren’t going to have a new big equipment rollout.
So we went ahead and updated that in our forecast and just tightened it up a little bit. So, you know, plenty of capital out there. We’re just tightening up the forecast.
Sara Senatore
Okay, thank you, that’s helpful. And then just on the margin, I guess I was referring to COG specifically you had said it was I think. 20 basis points unfavorable because of menu. Thank you.
Mika Ware
Okay, so that is really, you know, what we’re saying is there’s a lot of investments into the quality of the food that we’re lapping. So ribs is very material investment. We talked about, you know, we were serving one third ribs and two third. We did the big shift from, you know, imported ribs to domestic ribs. So that’s just an example of, you know, we put a lot more of quantity and quality into the cost of sales line. And so that’s where I’m just saying, hey, you see kind of a new run rate in cost of sales.
It’s a combination of we have, you know, we do have some more. We still have commodity inflation in there, but then the investments we’re making into that cogs line and so that’s kind of what’s hitting there. And if you do mix into some more expensive items, which is fine, that puts a little Pressure there. You always have higher penny profit, but if you’re selling more, the more expensive one, there’s some more cost of sales associated with that too.
Sara Senatore
Great. Thank you so much.
Mika Ware
Thank you, Sarah.
operator
Your next question is from Jeff Bernstein with Barclays.
Jeffrey Bernstein
Great, thank you, Kevin. I was intrigued by your prior comments on the restaurant level leadership model. I think you mentioned that you have a peer that successfully operates with a market partner, more of a market partner ownership model, more akin to maybe a franchise model, which you know well from past days. I’m wondering if you could just any more color conceptually about the pros and cons versus the more traditional company operated manager model that most of the industry uses. It does sound like maybe you’re considering a shift. I know others have talked about the potential to benefit retention, engagement, compensation.
Just wondering if there’s any more color in terms of how you would implement it. It would seem like that would be a material change to your economic model, but presumably more of an ownership structure for long term further improvements. So any incremental core would be great. Thank you.
Kevin Hochman
Thank you. Yeah. Hey, good morning, Jeff. So I think conceptually all of the stakeholders are aligned that we want to do something here. Like we believe that when we hear from the managers, they want to have more of a stake and ownership in the company, especially when they see how the company’s performed. We believe that it would be a good thing for them to have more ownership over the results both in terms of their personal compensation as well as just how they run the run the restaurants. So I don’t think anybody’s really debating like should we do it? It’s really the how.
And the challenge for us is when you, when you benchmark the model that you were talking about earlier, they tend to pay lower base salaries and then they put more into the variable comp. And that puts us in a difficult position because we’re not going to lower base salaries and put it in the variable comp that’s not going to be received very well. So, so we really got to figure out what’s the how to do this in a way that is going to work for everybody and not just, you know, hope that in the year that we make the change that people aren’t upset about it because they would be because they’re moving, you know, comp that you can be confident into something that’s more variable.
So we’ve got to figure out a way that wins for everybody and not just on one or two items. So that’s what we’re going to have to work through at the same time. We still got a couple of years where we just got to continue to build skills and capability in the ability to own the restaurant. So that means building the best team, holding people accountable, making sure that you really are owning your restaurant and the facility. These are new muscles that frankly you haven’t asked these guys to do in a while that we’ve got to build up over time before we change any incentive structure.
So, and I wish it was more simple and we could just flip a switch and, and kind of replicate the models that we see. That works, but starting from a different place.
Jeffrey Bernstein
Thank you.
operator
Your next question is from Andrew Strelczyk with bmo.
Andrew Strelzik
Hey, good morning. Thanks for taking the questions. I was wondering if you’re seeing the mix of traffic growth shift between new customers and increasing frequency. And I guess what I’m trying to think through is, you know, as you’ve brought back all these new customers over. The last couple years, as you kind. Of work through the brand repositioning, you know, is the opportunity mix between those two buckets evolving and kind of how. You potentially evolve the strategy to address the two buckets as you, as you move forward.
Kevin Hochman
Yeah. Hey, Andrew, it’s Kevin. You know, we don’t see really a change in how we’re doing this. It’s pretty simple. It’s like number one, continue to have a great experience so that you don’t leak out guests. And so that’s what we see on the frequency of existing guests that’s not changing. And then, and then use our world class marketing and great value offer and great new positioning to drive new guests in. And so if you’re not leaking guests and you’re bringing new guests in and then they quickly are starting to look like existing guests in terms of their frequency pattern, that’s a recipe for sustainable growth.
So, you know, what I lean on my team is don’t change that strategy. But you better have ideas every quarter to get better and better on the experience, because that’s the flywheel. We know the marketing guys can do it. They’re doing it right now. They’re continuing to just, you know, really, really reinvent the industry and what can be done with advertising and marketing and hats off to them. So as long as we continue to improve our experience over time, there’s no reason why this road won’t stop. So I don’t anticipate changing the strategy. It’s just making sure that we continue to execute it quarter after quarter.
So we continue that because the key to this whole thing is having a great experience because that’s going to both retain existing guests and stop the leak and be able to attract new guests because of the things that people are saying about our brand. And we’re just going to continue to do that.
Andrew Strelzik
Okay, that. That’s helpful. And one clarification. Last quarter you talked about the earnings drag from Maggiano’s. Can you share what that looks like. Through the back half of the year?
Mika Ware
Andrew? That’s me. So really just what I would say is in the guidance that I gave, we haven’t changed the expectations for Maggiano’s very much. And so what we’re expecting is their same store sales will probably be in the negative mid single digit range for the back half of the year. So probably just, you know, more of the same on that. So if we get some more green shoots out of Maggiano’s and I think we can start, you know, improving that, but they’re still going to have a drag year over year in their margins.
Andrew Strelzik
Okay, thank you very much.
Mika Ware
Okay, thank you.
operator
We have reached the end of the question and answer session and I will now turn the floor back over to Kim Sanders for closing comments.
Kevin Hochman
And that concludes our call for today. We appreciate everyone joining us and look forward to updating you on our third quarter fiscal 2020 results in April. Have a wonderful day. Thank you.
Mika Ware
Bye, everyone.
operator
Thank you. This concludes today’s conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.