Greetings, welcome to Bloomin' Brands' fiscal fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow management's prepared remarks. It is now my pleasure to introduce your host, Mr. Mark Graff, Group Vice President of Investor Relations. Thank you, Mr. Graff. You may begin. The floor is yours. Thank you. Good morning, everyone. With me on today's call are David Deno, our Chief Executive Officer, and Chris Meyer, Executive Vice President and Chief Financial Officer. By now, you should have access to our fiscal fourth quarter 2020 earnings release. It can also be found on our website at bloominbrands.com in the Investor section. Throughout this conference call, we will be presenting results on an adjusted basis. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our earnings release on our website, as previously described. Before we begin formal remarks, I'd like to remind everyone that part of our discussion today will include forward-looking statements, including a discussion of recent trends. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from our forward-looking statements. Some of these risks are mentioned in our earnings release. Others are discussed in our SEC filings, which are available at sec.gov. During today's call, we'll provide a brief recap of our financial performance for the fiscal fourth quarter 2020, a discussion regarding current trends, and select 2021 guidance metrics. Once we've completed these remarks, we'll open up the call for questions. With that, I'd now like to turn the call over to David Deno. Well, thank you, Mark, and welcome to everyone listening today. Since the beginning of the pandemic, our priorities have remained unchanged. We are focused on taking care of our people and serving great food in an environment that protects both team members and customers. Maintaining a motivated, well-trained, and engaged employee base that is committed to providing a safe dining experience is critical to our long-term success. The fourth quarter once again showed our resilience in navigating through an ever-changing landscape. Our teams had to adapt to rapidly evolving rules, regulations, and in-restaurant dining restrictions at the state and local level. I would like to thank everyone in the restaurants and the restaurant support center for doing such a great job managing through this crisis. Your dedication to providing hospitality, service, and experience every day is what makes our restaurants so successful. The strategic and financial plans we laid out in our February 2020 fourth quarter earnings call remain. In fact, the learnings developed through the pandemic have put us in even better position to capture these opportunities to drive total shareholder return. Over the past year, we have seen robust performance in our off-premises business. Convenience continues to play an important role with consumers, and we are leveraging the strength of our to-go and delivery capabilities to meet this growing demand. During the fourth quarter, off-premises represented 37% of U.S. sales. Importantly, this momentum continues into the first quarter. We are maintaining high off-premises volumes even as dining rooms reopen. Carrabba's in particular has capitalized on this sales channel with its Family Bundles platform that provides convenience at an attractive price point. This offering provides a fully prepared meal for five people, starting at $34.99, with eight different options to choose from. We believe off-premises will be an important growth catalyst for Carrabba's and all of our brands moving forward. 2021 has started off stronger than expected. We experienced an acceleration in sales trends due to an easing of in-restaurant dining restrictions, pent-up consumer demand, and continued strength in our off-premises sales. As a result, U.S. comparable sales were down 12.9% through the first seven weeks of the fiscal year. We continue to outperform the industry and take share. It is clear customers want to come back to restaurants and are confident in our ability to provide a safe and welcoming dining experience. The new menu at Outback, launched in September 2020, is performing even better than the test markets. This includes an increase in guest satisfaction and improvement in positive sentiment across all key factors such as price value, service and portion size, as well as food and beverage. We designed the menu to reinforce our steak leadership through more accessible premium cuts and larger portions while also lowering menu prices. We are seeing strong customer preference as guests are trading up to larger cuts of steak, enjoying larger portions, and increasing their attachment rate on appetizers. In addition, the efficient menu design reduces complexity, which improves execution and consistency. This results in an improved customer experience. Chris will speak to more of this in a bit, but our focus on margin improvement continues. Last year, we outlined actions to simplify our overhead structure. This is resulting in $40 million in an estimated savings over a two-year period. We are making great progress against these initiatives and are ahead of schedule in realizing these benefits. In addition, the pandemic provided an opportunity to look at this business differently and reassess the operating model. This review has identified efficiencies to further optimize how to run and support restaurants. For example, simplified menus have resulted in record low levels of waste over the back half of the year. We will continue to look for ways to reduce complexity, improve consistency, and increase profitability across revenue channels. Our performance improvement resulting opportunities are not limited to the United States. The Brazil business experienced significant improvement in sales and profit trends in the fourth quarter. During Q4, we saw an easing of in-restaurant dining restrictions that helped drive effective capacity to approximately 50% in most cities. This contributed to a steady sequential increase in comp sales performance, where they ended the quarter down 14.8%. Delivery remains a strong contributor to sales, and we are retaining a large portion of this business. The team has also been actively managing costs while leveraging learnings from the pandemic to drive additional efficiencies. Outback remains a highly regarded brand with strong consumer appeal. We are well-positioned in this important market. Turning back to the U.S., sales growth will also help drive profitability and margins. We are confident in our ability to continue to take market share over the long term. We will accomplish this by leveraging existing opportunities to grow healthy organic traffic, including the new menu at Outback that enhances price value, as previously mentioned. Sustaining the off-premises volume we achieved amid the pandemic while building in-restaurant traffic. Expanding the pipeline of the successful relocation program at Outback, where we believe we still have lots of opportunity. Accelerating digital capabilities to attract and retain guests in a more targeted and personalized manner with improved ROIs. Leveraging our Dine Rewards loyalty platform, which is driving strong engagement across the portfolio. We are using the rich data we have collected over the years to attract, convert, and retain customers. Pursuing the virtual brand opportunity with a concept like Tender Shack. Tender Shack provides incremental sales with attractive margins and requires zero capital investment. Finally, investing in new store development in the U.S. with Outback, Fleming's, and Aussie Grill, and internationally in Brazil, given our brand regard with high consumer demand and attractive margin profile. As we move into 2021, we are prepared to adapt to the changing landscape to deliver an exceptional experience for our guests, whether in restaurant or the convenience of their own homes. To fully capture the off-premises opportunity, today we are announcing the national rollout of our virtual chicken brand, Tender Shack. This is yet another lever in our very successful off-premises business. As I mentioned earlier, 37% of our revenue is currently off- premises. Our goal is to maintain and improve service levels so we can continue to grow this channel. We recently introduced Tender Shack across the country in 725 locations, primarily in Outback and Carrabba's restaurants. We have terrific geographic coverage given our national footprint. As a reminder, this virtual brand leverages the kitchens of our existing restaurants for cooking and delivery. It offers a high-quality, very limited menu featuring chicken tenders, fries, cookies, and drinks. As we rolled out Tender Shack in test markets, it was clear we had a winner. The brand exceeded all of our sales, profit, guests, and operating metrics. Our goal is to achieve $75 million in incremental sales on an annualized basis. The chicken segment is a large and rapidly growing category, and we look forward to expanding this opportunity for years to come. We expect our off-premises business to continue to be strong as in-restaurant dining trends improve. We are making significant progress against key initiatives to enhance the customer experience, simplify operations, and optimize our cost structure, all in a safe environment. We are confident we will emerge a better, stronger, operations-focused company. Bloomin' Brands has the right people, assets, and capability to meet the needs of today's consumer and capture the opportunities in front of us and beyond. With that, I'll turn the call over to Chris. Thanks, Dave. Good morning, everyone. I would like to start by providing a recap of our financial performance for the fiscal fourth quarter of 2020. Q4 U.S. comp sales finished down 17.7%. This was down sequentially from the third quarter, driven primarily by additional capacity restrictions that went into effect in late November. These restrictions necessitated switching back to an off-premises-only business model in approximately 15% of our company-owned portfolio. As a result of these dining room closures, we did not see the typical improvement in average unit volumes that we would seasonally expect in December. Importantly, many of the closed dining rooms have reopened in January. We have seen significant improvement in both volumes and U.S. comp sales thus far in Q1. I will touch more on that in a moment. As it relates to brand performance, Outback comp sales were down 15% in Q4, and Carrabba's comp sales were down 11%. The sales results at both brands were ahead of the major competitive benchmarks. As has been the case since the onset of the pandemic, these brands relied heavily on our strong off-premises business. Total Q4 off-premises sales were 40% and 46% of revenue at Outback and Carrabba's, respectively. At Bonefish Grill, comp sales were down 27% in Q4. The in-restaurant experience and bar-centric culture of Bonefish has been impacted more by capacity restrictions than our other casual dining brands. Despite this, we have built an impressive off-premises business at Bonefish, and it represented 27% of their sales in Q4. Fleming's Q4 comp sales were down 30%. Given their large California presence, 28% of Fleming's locations were closed for in-restaurant dining since mid-November. Turning now to other aspects of our Q4 financial performance. Total revenues decreased 21% versus last year to $813 million. GAAP diluted loss per share for the quarter was $0.16 versus $0.32 of diluted earnings per share in 2019. Adjusted diluted earnings per share was $0.02 versus $0.32 of adjusted diluted earnings per share last year. Adjusted operating income margin was 1.3% in Q4 versus 4.2% in 2019. This result was a 260 basis point improvement from Q3. The sequential improvement was driven by a few factors. First, the international segment increased its adjusted operating income by $13 million from Q3 to Q4, driven by improved operating results in Brazil. Brazil comps were down 15% in Q4 versus being down 55% in Q3. In the first quarter, quarter- to- date Brazil comps are down 20% as São Paulo imposed additional dining restrictions through the month of January. Given the strength of this business, we expect sales to rebound as restrictions are lifted. Second, domestic adjusted operating margins improved 70 basis points from Q3 to Q4 on relatively flat sales between the two quarters. This improvement was driven by our ongoing efforts to drive efficiency into our business through simplification. We will continue to benefit from this efficiency in 2021 as our country emerges from the pandemic. In terms of our Q4 adjusted performance by cost category, COGS was 60 basis points favorable year-over-year, driven by waste reduction. This favorability came despite some commodity unfavorability, driven by higher than expected produce prices. The labor line was 55 basis points unfavorable year-over-year, driven by sales deleveraging. Similar to COGS, however, we also benefited from simplification efforts. This showed up in a reduction in food prep hours. We are also finding efficiencies in off-premises labor as that business continues to grow. Operating expenses were 150 basis points unfavorable due to sales deleveraging and increases in to-go supplies. These increases were offset by a $22 million reduction in domestic marketing expense year-over-year. Despite the significant sales deleveraging I mentioned, our focus on managing our expenses allowed us to generate a 12.4% adjusted restaurant margin in Q4. On the G&A front, Q4 was down $11.6 million from last year, net of adjustments. This included a $5 million benefit related to cost savings initiatives that we discussed in our February earnings call. We had another $5 million benefit from reduced travel and training expenses related to COVID. For the year, we finished 2020 with $219 million of G&A net of adjustments. For perspective, in 2018, we spent $276 million on G&A. Even though we do expect some of the pre-COVID travel and training expenses to return to our cost structure, we have made significant progress to reduce our spending on overhead. Turning to 2021, throughout January, we have seen many of our closed dining rooms reopen. As of today, we currently have 99% of our U.S. portfolio open for some level of in-restaurant dining. Thus far in Q1, we have seen a meaningful increase in U.S. comp sales. Through the first seven weeks of the quarter, we are down 12.9% with significantly higher volumes than December. There are several factors likely contributing to this momentum, including the reopening of dining rooms, the benefits from government stimulus, and most importantly, momentum behind our growth initiatives. These initiatives include the new Outback menu, the national rollout of Tender Shack, and maintaining our off-premises volumes as in-restaurant dining sales have improved. Before I get into our 2021 guidance expectations, there are a couple other items I wanted to discuss. On the liquidity front, as of today, our total domestic liquidity position is $675 million. Our total debt is just over $1 billion, which is effectively in line with our total debt levels at the start of the pandemic. For the foreseeable future, we will use excess free cash flow to pay down debt as we make progress towards a 3x lease adjusted net debt- to- EBITDA target. As you may recall, we amended our credit agreement given the significant impact the pandemic had on our financial results. Among the important terms, our total net leverage covenant was waived over the last three quarters of 2020. This total net leverage test returns in Q1 with a modified formula. Based on our quarter-to-date results, we expect to be comfortably in compliance with this covenant. Also of note, we recently entered into an agreement with one of our franchise partners that operates 93 Outback locations, primarily in California. This agreement allows for certain concessions to support this franchisee in this particularly hard-hit area of the country. Among the key items in this agreement, we will reduce our marketing fees and defer certain royalties until such time as the business recovers. As we discussed last quarter, we will only record revenue for amounts owed for these locations when the cash is received. In 2021, we do expect to begin collection of future and past-due amounts as sales recover and excess cash is available. More information on this agreement will be available in our 10-K. Our non-California franchise locations, both domestically and internationally, continue to perform well, and we expect to collect revenue from these locations in 2021 based on the sales they generate. In terms of overall 2021 guidance, given the ongoing nature of the pandemic, we are not going to provide comp sales guidance or EPS guidance at this time. However, there are some key areas of our performance that we are prepared to discuss. We expect 2021 commodity inflation to be flat. We expect favorability in beef and seafood costs, which will be offset by higher freight, poultry, and produce expenses. Labor inflation is expected to be 3%-3.5%. This inflation estimate only contemplates wage legislation impacts that have already been passed into law. G&A expense is expected to be between $225 million and $230 million in 2021. This is a modest increase from 2020. This is primarily due to higher travel and training costs. In addition, we will also face higher compensation expense to our area operating partners as performance improves. These will be offset by additional transformational savings in 2021. Depreciation expense is expected to be approximately $165 million-$175 million. The decreased level of capital spending over the last several years has contributed to the decline in depreciation expense. For perspective, in 2019, depreciation expense was $194 million. Capital expenditures are expected to be between $170 million and $185 million. This includes $48 million of spend from projects deferred in 2020, as we managed through covenant restrictions on our overall capital spending. Finally, we expect to open between 20-25 system-wide locations. Most of the new locations will be in Brazil. We also expect four new restaurants and six relocations at Outback. There will also be four new Aussie Grill units as we expand that test within the Florida market. Before I complete my prepared remarks, I wanted to provide some perspective on our margin improvement opportunity. In 2019, our adjusted operating margins were 4.8% on $4.1 billion of total revenues. Our learnings during this pandemic, combined with $40 million of previously identified cost savings, give us confidence we can achieve 150 basis points to 200 basis points of operating margin expansion at 2019 sales levels. These improvements will come from a number of areas within our cost structure. First, as it relates to the $40 million of transformational savings I mentioned, we realized approximately $25 million of these savings in 2020, with most of that benefit impacting the G&A line. In 2021, we will realize another $15 million of savings. This cumulative total represents approximately 100 basis points of operating margin improvement from 2019. Second, in 2019, our food and beverage cost was 31.4%. Since that time, simplified operations and optimized menu offerings have resulted in increased efficiency and record low waste. Going forward, we expect sustained benefits from these efforts. Similar to food and beverage costs, our learnings can be applied to the labor line as well. We have seen a reduction in prep hours in the kitchen and better throughput in service labor. This gives us confidence that we can more than offset near-term inflationary headwinds. In restaurant operating expense, we will continue to see higher expenditures in to-go supplies and third-party fees, given our growth in the important off-premises channel. These increases will be partially offset by a reduction in marketing expense. Marketing expense will be significantly lower than 2019, given our pivot to digital channels that deliver higher ROIs. Lower depreciation will also play a role in our operating margin improvement going forward, as our current level of expense represents upside from 2019 levels. These collective actions would allow us to achieve an adjusted operating margin of between 6.3% and 6.8% once sales fully return to 2019 levels. This represents significant progress towards achieving the 7.5% operating margin goal that we outlined at our last Investor Day. We expect to close the remaining gap by improving average unit volumes and realizing further efficiencies at both the restaurant level and in G&A. Margin improvement is a key pillar in our strategy to maximize total shareholder return. In closing, even though it has been a challenging year, we are proud of the progress we have made. Moving forward, our focus is on emerging as a stronger, more efficient restaurant operating company. With that, we will open up the call for questions. At this time, we will be conducting a question- and- answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star key. Please limit yourself to one question and one follow-up. Thank you. One moment while we poll for questions. Our first question comes to the line of Jeffrey Bernstein with Barclays. You may proceed with your question. Great. Thank you very much. One question, one follow-up. The question relates to the to-go business. Yourselves and your peers are seemingly very excited about the opportunity to retain the to-go sales when your dining rooms reopen. I think you said 37% of your sales were to-go this past quarter. Just wondering how you measure, the opportunity to achieve that, whether how you look at incrementality versus cannibalization. It would seem difficult to imagine that much of the industry would be able to retain that level without having a serious change in the dynamic of the industry. Just your thoughts in terms of the retention of that, and maybe if you can compare your average check-in margins for the to-go versus in-restaurant. Then I have one follow-up. Sure. Good morning. We have built over a number of years a very strong off-premises business well before the pandemic, both carryout and delivery, and we see it as a largely incremental business, and we track that very carefully. Jeff, the measure for us is mix is important, but total revenue per channel is really important. Our goal, which we are seeing in the first quarter, by the way, as restaurants reopen, our goal is to keep that revenue, profitable revenue, and grow it from there. We think about these channels entirely differently. You've got in-restaurant experience and you have a carryout experience and delivery experience. We talked today about Tender Shack. These all come together to provide the customer experience, and because it's a largely incremental business, it's a profitable business that flows through to us, and we are very mindful of the consumer measures also that drive success, like delivery times, customer satisfaction, accuracy. I'll turn over to Chris now to talk about margins. Good morning, Jeff. Yeah, look, the healthiest flow through in our business is always going to be that traditional in-restaurant consumer, but it certainly is. When you think about the off-premises channels, curbside is nearly as good as in-restaurant in terms of margin profile. Given that we don't have service labor, nor do we have to pay a delivery driver or a fee to the third- party to offset the lower check average. When you think about the delivery opportunity, it's going to be a little lower than curbside in terms of overall margin on flow-through. For competitive reasons, I'm not going to give specificity to those numbers, but importantly, the flow-through on our to-go or our delivery business is still very healthy. The incremental nature of the third-party transaction, it makes it a really important channel for us moving forward. I think the one thing I would say, just to follow up to that too, is that we're constantly working to further improve the economics of all of these channels to make sure that we can have a margin profile that makes it really difficult for us to trade out that business for in-restaurant. We're constantly working on that. Jeff, just one more thing. You asked how we're going to grow the business. Obviously, our job is to take share from competitors. I think people are seeing that casual dining can be a very viable part of our business, and also we're making significant investments in the digital business to make it easier for people to order through third- parties and in our restaurants. Understood. Then the follow-up, just as you mentioned, the incremental sales, and you talk about the virtual brand, exciting to hear, I guess officially today, you're launching Tender Shack nationwide. I think you said $75 million in annual sales, which if I think about your roughly $3 billion for the system for the year. Maybe you're talking about a 2%-3% sales or comp lift. Just wondering if you could offer any color in terms of whether that's what you've seen in tests or whether you're assuming an uptick with presumably more advertising. Same question, how you measure the incremental sales and what the margins might be. Thank you. Yeah. This business is very incremental. We can tell that by the customer base we have and everything else. It's a different ordering pattern, different time of day. We just rolled it out. We're seeing restaurants achieving those levels of sales. We're also seeing restaurants doing over $1,500 a week. We're just with DoorDash. We haven't gone to any extra channels. We haven't done much advertising. Our operators love it. Customers love it. These numbers do not include our franchise partners or Brazil. We have very good line of sight, Jeff, to the $75 million in volume and a very incremental flow-through of 35%-40% for the brand. Great. Thank you very much. Our next question comes from the line of Brian Mullan with Deutsche Bank. You may proceed with your question. Okay. Thank you. Chris, thanks for the color on the operating margins being better than 2019 by up to 150 basis points-200 basis points in normalized year. That's a function of in-restaurant and out-of-restaurant efficiencies as you lay out. If we could just zero in on the labor expense piece. You only experienced about 50 basis points of deleverage in the quarter, pretty notable in the comps you reported. You spoke to this a bit in the prepared remarks, could you just discuss any specific initiatives that were put in place that are driving this? Could you clarify, did some of those only go in place more recently, like in the back half of 2020, whether it's menu reduction initiatives or otherwise? Yeah. Thanks for the question. A lot of this are things that we've put in place over the back half of 2020, largely in response to COVID. At the same time, we've taken those learnings, and we're now applying those to our business moving forward. Look, there's a ton of examples. I'll give you one example in terms of labor, in terms of simplification of the overall model. We used to have six menus on the table at Outback Steakhouse. Things like a drink menu, an LTO menu, a core menu, a happy hour menu. The list goes on and on. The amount of time that it took a server to articulate all these menus was inefficient. Simple things like that, honestly, Brian, they add up in a redefined service model that we think can be far more efficient moving forward than it was coming into this. That's just the front of the house. Again, there are savings in the back of the house in terms of the simplified menus that we intend to carry on with moving forward to a large degree that will allow us to reduce prep hours in the kitchen in the back. Look, I think that labor, like I said, if you had asked me coming into the pandemic, is labor a line, given the persistent headwinds that you would anticipate being able to leverage, I would have said, eh, maybe not. Now I feel like that's absolutely a line that we can grow going forward. Thank you. Then just quick clarification, does your operating margin framework that you provided, does that require $75 million in sales from Tender Shack, or is that independent? No. The whole thing is, like I said, it is a framework, and the whole idea behind that, honestly, is that it's just getting back to 2019 sales levels however they come. You would expect that where we are now and wherever we're going to come, if we're getting incremental traffic, it's going to flow through at normal levels, right? It's really just a framework. The reason why we did that is so that we could really simplify the conversation, and focus in on the efficiencies, not just the things we've learned during the pandemic, but the $40 million of cost saves, so that we can give you a real perspective on what we have learned and what we're committing to above and beyond any leverage conversation. We wanted to take leverage just out of this completely. It's not a Tender Shack comment. It's really just back to 2019 sales levels. Okay, thank you. Our next question comes from the line of Alex Slagle with Jefferies. You may proceed with your question. Thanks. Good morning. Wanted to follow up on that previous question, if you could provide some more color on the current run- rate restaurant level margins at where current sales are. I'm not sure if I missed it or if you have any visibility or color for how we model the first half. Yeah, look, I think that anything that's within the first half is tricky. This is what I would tell you. If you think about that 150 basis points-200 basis point opportunity that we talked about, the short answer is that if you take out the sales deleveraging, we're seeing restaurant margin levels that are approaching that today. If you look at Q4 as an example, we were 150 basis points unfavorable in restaurant margins year-over-year, and we probably had close to 300 basis points of deleveraging in that number. Now, as you think about going forward, as you exit the pandemic, you're probably going to give some of that back in marketing. Our off-premises mix, as we talked about, may change a little bit. Think about 2021. You're still going to have a year's worth of transformational savings that are going to build into our numbers over the course of the year. There's a lot of moving pieces. That's why we framed it the way that we did, because shorter term, there's just a lot of volatility. It's much easier for us to look into the future at a time when we'll have a more normalized environment and determine what are you going to look like from a margin perspective when the dust settles. For us, it really remains to be seen, but we're thinking that normalized use probably more of a 2022 thought. Got it. Then just a question on debt and leverage, and historically, you talked about comfort with the 3x adjusted debt- to- EBITDA leverage. Yeah. Look, Where is your opportunity? I think we still feel like the 3 x leverage on a lease-adjusted basis is a good balanced level of debt. Right now, that implies $200 million-$400 million of debt paydown from current levels, depending on what you believe about EBITDA moving forward. In 2021, we're going to use all of our excess cash flow to pay down debt. At the end of the year, we're going to see where we are, we'll make a call then about reintroducing things like the dividend and when that might make sense. We do believe that a healthy dividend is a key pillar in our TSR strategy, it's going to take a back seat to debt paydown for a while. Great. Thank you. Our next question comes from the line of John Ivankoe with JP Morgan. You may proceed with your question. Hi, thank you. Two unrelated questions. I guess I'll just ask the first one first. What type of disparity in markets are you seeing? I think the last call, you guys were pretty helpful at talking about certain markets in Florida, Texas, Tennessee, what have you. Maybe Georgia we'll throw in. What's the experience in some of these earlier markets and specifically, if possible, talk about how those markets have performed so far quarter- to- date, obviously contrasting those relative to the California experience. Sure. So far we continue to see some variability. In markets like Georgia, Tennessee, Texas, and Alabama, we've had positive comparable sales, and those markets have been open. We're doing really well. Florida is a tale of two states in a sense. Orlando, we have some weakness in the tourist areas, and then in Tampa and Jacksonville especially, we're positive. Offsetting that is Michigan, Illinois, Minnesota, California, where we have had some weakness because of the restrictions. I will say one thing about California, though. Fleming's has a huge footprint there, as you know. Last week, for Fleming's overall, if you had put that in a 2019 context, even with only outdoor dining in California, Fleming's would have had its third-best week of 2019. You can see the consumer coming back, John, and it varies by market, what the restrictions look like. We're seeing positive same-store sales in some of those markets I mentioned. All right. That's cool. Excuse me for that. Thank you for that color. Secondly, as you guys have previously talked about Brazil, I actually forget where we are in terms of the strategic review process that I think kind of been discussed, either formally or informally, for that market. What's your current thinking? Especially as debt pay down is obviously an important part of the story. I understand you would lose the EBITDA from it, but is that a market as you kind of look at business values in that country specifically, to where something could make sense in the relatively near or medium term? Sure, John. First and foremost, as you know, and you have an appreciation for that business because you've been down there, it's a fabulous business. They've had some variation in their sales level because they've had decrees come out of their government, São Paulo and other places, that have said, you got to close down some dining. That's why you see some variability in their sales. Their market share positions, their growth, their profitability, the cash flow, all is very strong. You have to sit back and say, all right, now what do we do with this business? It's a tremendous management team. It could potentially be attractive to another buyer. We'll see, John. We'll always take a look at to see what's best to go- to market down there. We're under no rush, but we will certainly examine all of our options, and we have a great business down there. That's what I would leave you with, and we'll examine all alternatives as we have in the past. Thank you. Our next question comes from the line of John Glass with Morgan Stanley. You may proceed with your question. Thanks. Good morning. First, Chris, I appreciate the incremental color on the margin targets, both kind of the nearer term and the long term. On the 7.5% margin target, can you just remind us, what are the conditions necessary to get there? I presume it's volume driven, but is there a contemplation that volumes are some percentage higher than they are today that gets you there? Does that include a full reload of marketing, or do you think that marketing is just sort of structurally maybe lower in the future? I think at your Investor Day, you talked about 200 basis points - 250 basis points, and so this would be the high end of that. Are you just more confident now on the high end, or is that 200 basis point- 250 basis points still in play and you're just talking about the higher end? No, I think it's a sign of confidence that what we've learned in the pandemic has given us more optimism on our margin journey than we had coming into it. To back up before I talk a little bit about the 7.5% and the march to the 7.5%, to give you perspective on marketing. We spent in 2019, for perspective, 3.5% of sales on marketing expense. Now, obviously right now, it's in the low 2%s. Some quarters, depending on volumes, even high 1%, 1.5%-2% range. That's not sustainable for us moving forward. There's going to be marketing expense that comes back into it. It's not going to come back to that 3.5% number. As we talk about it internally, our thinking could change. We're thinking in that 3% range or approaching that 3% range is a more realistic number for us on a long-term basis than going back up to that 3.5% of sales range. As it relates to this march towards the 7.5%, I think this is the way I would frame it. We're hopeful that 2022 is that first clean year that we don't have sales pressures. If that's how it plays out, it would be reasonable to expect that our operating margin would be in that 6.5% range by the end of 2022. On top of that, the path to the 7.5%, it's going to be driven by a couple things. There are further efficiencies in labor. There are further efficiencies in G&A that we can pursue. The cost opportunities, there are still things that we believe, in the future, can be identified to drive additional efficiencies. There is a piece, though, that on top of that is driven by higher average unit volumes. To go from 6.5% to 7.5%, you're talking, I think what we would think is 50 basis points a year, which would get you to the end of 2024 when you're at that 7.5% number. The sales, what you have to believe from an AUV growth perspective to go from that 6.5% to 7.5%, coupled with some of the cost savings opportunities that we still think could be ahead of us, it's not a Herculean ask. It's 1% a year kind of thought process. Obviously, as we're thinking longer term, we'd like to do better than that. The other piece, too, is that when we think about this, we're going to approach this from a pricing perspective of taking as little pricing as we possibly can within these numbers on a go- forward basis to address some of the price value things that we've been talking about in terms of being more approachable for our guests. That's how I would frame the 7.5% opportunity, what the role sales would play and the margin aspect to that. Just a couple things I'd like to add about on the confidence side, John. Number one, we've learned a lot about digital and our return on marketing spend, et cetera. It's very flexible, and we can really get a great understanding of what our marketing spend gets us, and we'll flex up and down depending on those returns. Chris' overall framework certainly works. Number two, it's kind of been hidden in the sales changes during the pandemic, but we've done a lot of this cost takeout work already. As volumes return, you will see that flow through our P&L. A lot of that work's been done. That's what gives us the confidence, John. That's super helpful, both of you. Thank you. Dave, can I just ask you about branding and virtual brands? How do you think about marketing this brand? Is it only going to live in DoorDash, or have you thought about or learned from others that you need to co-brand it with your brand, that you could tag it in your own advertising? I'm thinking about how one creates a brand out of ether, if you will, right now, and if there's an opportunity to leverage your own marketing spend rather than just using DoorDash's channels. Yes. I think one of the things that we're learning is marketing these type of brands, this kind of guerrilla marketing, using the experience that we have and the channels that we have, is really, really important. We don't expect to do any co-branding, John, saying tagging Outback commercials with DoorDash. This can live on its own. In this digital environment, there is all kinds of great things that we can do. I think the other thing too is we've got a really, really strong partnership with DoorDash, and they're very helpful to us and they have been during this journey. That coupled with the improving operations and everything, and as you know, John, there's no greater marketing in great operations and great product, but we will be a very strong guerrilla marketer on this as we go forward. Got it. Thank you. Our next question comes from the line of Jeff Farmer with Gordon Haskett. You may proceed with your question. Great. Thank you. You guys currently have restaurants operating at really the full spectrum of indoor capacity, so 100%, 75%, 50% capacities. The question is, what do the off-premise sales volumes look like for those group of restaurants that are at a full 100% capacity versus those that are only at 50%? They're still good, Jeff, our goal is to keep them at that revenue level as we go forward. They still are moving forward in a good way and it's an opportunity for us to keep that revenue going forward. The only thing I would add to that is that if you just look at the month of January and this idea of preserving off-premises volumes, our average unit weekly sales volumes, if you take out kind of the first week and then the Valentine's Day week because they were holiday driven and they were higher volumes, we're in that $23,000 a week sales range for off- premises across our portfolio, which is actually a step up from where it was in Q4 when we had more of our restaurants that had more capacity restrictions. We are seeing volume growth in off premises in January, which is really encouraging. All right. That's helpful. Just one other follow-up. Any color you guys can provide on the deferred royalties, whether or not we'll see some of that begin to roll back onto the revenue line in 2021, and if so, sort of what timing across the year? Yeah. Our goal certainly is to see that happen, Jeff. It depends on the revenue curve and how the marketplace acts out in California. I got to tell you, one of the things that's come out of this is we really have a strong partnership with this franchise group and their board, and we're working very closely together to bring back that California marketplace. I don't mean to be dodgy on that. I think, Jeff, it depends on the revenue curve coming out of California. The revenue curve we see will be collecting some deferred royalties this year. How much and how fast? It'll be mainly the back half of the year, but how much and how fast will depend on what the revenue looks like in California. All right. Thank you. Our next question comes from the line of Brian Vaccaro with Raymond James. Sorry, still getting used to the mute button after all these years. Good morning. Sorry about that. Good morning. I wanted to zero in on the quarter- to- date sales improvement that you're seeing, I know you said Outback was down around 11%, but can you help level set sort of the average weekly sales volumes that you're seeing at Outback specifically? It's a little difficult given historical seasonality with the bigger Q1, et cetera. Just wanted to make sure I'm on the same page there. Yeah, I'll give you some perspective on that, Brian. I'll talk in terms of the total portfolio, then I'll narrow it in on Outback just because I have the total portfolio more on top of head. If you go back to early December, sort of the pre-Christmas, our average unit volumes for the portfolio were in that $55,000 a week range. That's when we had 15% of our U.S. portfolio closed for in-restaurant dining. In mid-January, we talked about seeing the easing of the restrictions, and now we have 99%, as we talked about, of our portfolio open with some level of in-restaurant dining, with really the only exception being Fleming's locations in California. In terms of year-to-date volumes, you got to remember we had two holidays, two big holidays. The first week contained the week between Christmas and New Year's, and the most recent week contained Valentine's Day. Traditionally, these are going to be two of your busiest weeks of the year. If you exclude those to try to get a sense of that run- rate on the non-holiday weeks, our average weekly sales volumes are in that $60,000-$62,000 a week range across the portfolio. Okay. That's much higher than it was in December, but it does show that our volumes continue to be pretty resilient. The blended comps on that are in that down 9% range outside of those big holiday weeks, and we obviously are a little worse in comps on those big holiday weeks given what we're lapping from the previous year. Outback volumes in that same time period, they're going to be a little higher, just because the Bonefish is a little lower just given they're more impacted by the pandemic. Outback's average weekly volumes are going to be a little higher than the system average. All right. That's super helpful, and I appreciate all the color on Tender Shack. I was wondering if you could also give a quick update on Aussie Grill. I know it's still very early, but we've seen that offered, I think, as a virtual brand in a couple of markets and maybe even an opening in Hong Kong. Just maybe an update on the latest thinking on the opportunity there. Brian, I congratulate you. You do your homework. Yes. Aussie Grill is a virtual brand in Brazil, in Hong Kong, and it is being tested in New York to see if that broader menu is more interesting than Tender Shack, because we always like to test in different markets. Then we're opening up new Aussie Grills in Hong Kong, Saudi Arabia, then we'll be opening up four more here in the Tampa Bay area, maybe one a little south of here. Obviously, we're opening it because we like the volumes and profitability we see out of that business. Right now, we have 19 Aussie Grill virtual businesses in Brazil. Our hope is to have 50, and it's very similar in thinking and marketing and style as Tender Shack. All right, that's helpful. I'll pass it along. Thank you. Thank you. Our next question comes from the line of Brett Levy with MKM Partners. You may proceed with your question. Great, thanks. Appreciate taking the call. Well, it's snowing up here in New York, but you guys have spring training down in Florida. I guess going through the baseball analogy, if you could give us a rundown of where you think you are across some of the areas and what kind of opportunities still exist, if you think about it at the unit level, when we think about the puts and takes on G&A, and just how should we think about the layering on of each of these initiatives in terms of your prioritization and the timing? I know you've obviously given us the virtual, thinking across operations, virtual, expansion, digital. I'll let you digest that. Thanks. Sure. I'll try and answer it as best I can in a relatively brief amount of time, because that's a broad question. First of all, we talked about the sale of different parts of this country with the states. I think you can realize that in some of these states, we're back to where we have been. Some states still have capacity to open back up. From an operations standpoint in restaurant, our first priority has always been to offer great service and product in a safe environment. That continues, as restaurants reopen, we are able to do that quite importantly and flawlessly. The other thing that's really helped us is our retention levels are really high and our turnover rates are really low as we do this. That's a big part of it. That's kind of the sales side of things. From a digital standpoint, I talked earlier about the journey that we're on. We have continued to have record online ordering performance in our restaurants. That's really helped drive some of our off-premises sales, and we continue to make large investments in digital. We have more to do. We're not as far along there probably as in the operations and sales side in our restaurants, but I'm very enthusiastic about the opportunities we have here, and we're studying other companies and working with other companies to improve our own performance as we look across the landscape. From a development standpoint, we believe that Outback Steakhouse, in particular, has an opportunity to expand its footprint greatly. We are testing a smaller footprint building. We've done it in Brazil with great success. We've done it a little bit here in the U.S., we think a delivery-enabled smaller box at Outback makes a lot of sense. It can help enable growth. We think we have opportunities with Fleming's Prime Steakhouse in our stronghold markets of California, Arizona, Nevada, and Florida. That's on the development side. On the margin side, I'll turn it over to Chris to just walk through anything else on his mind. I think we've talked about most of it. What I would say is that the margin mindset and the things that we've put in place, a lot of that is already in place. Again, when we talk about the transformational savings, for example, impacting G&A, that's something that we'll layer in throughout the course of 2021. That's why I really wanted to make sure that everyone had a perspective that once we get back to 2019 sales, which again, could be in 2022, we're in position to have that 6.5% operating margin in place that we can build off of towards our long-term goal. Thank you. Our next question comes from the line of Greg Francfort with Bank of America. You may proceed with your question. Hey. Yeah, thanks. A quick question. Just Chris, I think you made a comment in an earlier answer about keeping pricing pretty low the next couple of years. I guess I'm surprised because I would think with capacity coming out of the industry and competitors maybe closing up shop, there might be an opportunity for that to be higher. Can you just maybe expand on that a little bit on your pricing thoughts? Thanks. Yeah, Dave, I'll take it first. I'll turn it over to Chris. We want to take share. We want to continue to offer great service and convenience to our customers. We think we have the cost structure to enable us to do this. Any pricing we would take would be very competitive based, and we would try and pursue our opportunities other ways. Chris, on the profit side or on the pricing? Yeah, I would say we've always talked about this idea of pricing plus productivity offsetting your inflation. Obviously, we're outlining a strategy here where we have a lot of productivity and cost opportunities that we've identified that allow us to not have to take as much pricing to offset the inflationary headwinds. Look, we're going to continue to monitor this as we go, but that's our mindset. If we can improve the price value equation at our brands, it gives us that opportunity to take share. That's our mindset. Yeah. Thank you. Appreciate it. Our next question comes from the line of Lauren Silberman with Credit Suisse. You may proceed with your question. Thanks, good morning. Just a follow-up on Tender Shack, building off of John's question, how are consumers using Tender Shack relative to delivery of your other brands? How does demand differ based on time of day or even the overall customer demographic? Given the low barriers to entry to launch a virtual brand, can you share your thoughts on the medium to long-term strategy? Will this brand exist solely on marketplaces? Do you plan to supplement this with its own direct digital channel and just leverage the marketplace to fulfill the delivery? Is there a world where Tender Shack can be added to Dine Rewards? Yes to all those. We will take a look at how it fits within our company. We don't know if, for instance, with Dine Rewards, we would do that or not, but that'd be something we'd look at. Interestingly, 80% of the Tender Shack customer has never ordered from our brands. That's a really fascinating statistic, and you can see it in who's ordering it, what time of day, et cetera. We believe that this business can certainly stand on its own, and we can grow it from there. Chicken is a very large category. It's growing rapidly. We have a great product, and our goal is to maximize this virtual brand. That's what we're thinking about totally here. Great. That's really helpful. Then just on labor, a lot of discussion around labor reform and the elimination of the tip credit. Can you give some color on your staffing levels and what portion of your hourly employees are tipped versus non-tipped? Then in markets where there's no tip minimum wage, like California, how does the margin structure differ relative to markets that allow for tip credit? I'll handle the first part, I'll turn it over to Dave for any additional color. If you think about it, there's a difference, obviously, between the hours in the restaurant and the pay and the total pay and what that represents, and it's kind of inverted in both situations. If you look at the average hours in our restaurant, it's 67%, or call it two-thirds tipped, one-third non-tipped. If you look at the pay, it's more of a 35% tipped to 65% non-tipped kind of dynamic when you think about the composition of those restaurants. I'll turn it over to Dave for any additional color. Yeah, I think if you look at the markets that have a higher minimum wage, California, Minnesota, other places, you'll see more technology in the restaurant with the servers to expand their coverage. That's basically how we do it. Fantastic. Thank you so much. Sure. Our next question.[audio distortion] Hey, good morning, guys. This is actually Dan on for Andrew today. Thanks for taking the questions. David, I think last quarter you mentioned you guys hadn't seen a whole lot of competitive closures yet, but I'm wondering whether that's started to play out more in some of your markets since we last spoke, if you're starting to see maybe any sort of uptick in real estate availability that could be attractive as either new builds or relocations, what have you, or if that level of closures has stayed relatively muted over the last few months. Yeah, it's still a little early, but I think everybody's seen the 5%- 10% closures. A lot of them are independents. There have been some smaller chains that have closed. We're seeing 5%-10% supply come out of the business. Obviously, hopefully, the PPP helps some of our independent operators. I think all of us are seeing independent operative closures. Last night, for instance, one of my favorite restaurants in Minneapolis, a really great steakhouse, is closing. You're going to see some of that stuff come out, right? Right now, we could see something to the tune of somewhere between 5%-15% of restaurants close. We're obviously monitoring that very carefully. We don't wish any ill will on any restaurant operator, but I think you can imagine this has enabled real estate opportunities for us for relocations at Outback, new restaurants, et cetera. We have the muscle to go in and do that. Thanks. That's helpful. Appreciate the color there. Just one quick follow-up. We've seen commodities sort of broadly ticking higher over the past several weeks in spot markets, and I know you guys are forecasting flat commodity inflation for the year, and you talked about some of the puts and takes there in the prepared remarks, but can you just talk about maybe how locked you are in the basket for this year and where there might be exposure, if there is any? Yeah. We're about 80% locked, if you think about it, and that's very consistent with how we would typically be at this period of time. The good news is that on the beef side, we're pretty much done. There's very little beef exposure for 2021. The areas that are unlocked at this point are the same ones as they typically would be, seafood, produce, areas like that. That's where you're going to see the volatility in our basket. Being 80% locked is something we feel pretty good about that gives us a little more price certainty as the year progresses. Great. Thanks for taking the questions. Our next question comes to the line of Sharon Zackfia with William Blair. You may proceed with your question. Hi. Good morning. I think I've heard you talk about multi-brand delivery in the past, and I guess Tender Shack and the 80% new customers makes me wonder about that again and the opportunity you might have to deliver Tender Shack with Outback product or Outback with Carrabba's. I know you had some, I think, delivery-only locations and tests at one point. I mean, is that an opportunity that makes sense, or do you find that customers really just want to silo their orders rather than order from multiple brands at once? Yeah, we typically find because of the 80% unique order I talked about with Tender Shack, we typically find it's siloed. We are, I think Sharon, we are always looking at different asset types to deliver product to our customers. We will continue to examine delivery-only restaurants or different asset configurations in our sit-down restaurants or the virtual brand opportunity with Tender Shack. All those things are part of our overall asset portfolio. Thanks. Just one follow-up, I may have missed this, but could you break out quarter- to- date comps for locations that have had dine-in versus those that haven't? Yeah. If you look at it, quarter- to- date with everybody, people that had in-restaurant dining, it's down 7.5% at Outback, down 4.5% at Carrabba's, down 18.6% at Bonefish, and down 11% at Fleming's. Thank you. Our next question comes from the line of Jared Garber with Goldman Sachs. You may proceed with your question. Good morning. Thanks for taking the question. Can you just walk us through the unit growth guidance for a moment? Just want to make sure I'm understanding correctly. 20-25, you said primarily in Brazil, outside of four Outback opens in the U.S. and four Aussie Grill opens. We assume that the balance of that, 20-25, is Brazil. Then can you also talk about how you're thinking about the Outback relocation program restarting here and what your outlook is? How many restaurants you have in that group that you think can be relocated? Yeah, there'll be a Fleming's, but you've got it largely correct. The bulk of that'll be in Brazil, then Outback and Aussie Grill, four each, and then there'll be a Fleming's in that mix as well. I'll turn it over to Dave for the balance. Yeah, I think we've done, what, 50-ish Outback relos? They're really strong performers. Over $5 million in revenue with good profitability and cash flow. We said at the outset we have opportunity for up to 100. That number's expanded, especially with the smaller footprint building we're looking at. This is something that we will aggressively pursue because of the sales and returns we're getting. When you have restaurants doing well over $5 million, it's clear that the brand is very highly regarded, and we were just real estate disadvantaged in certain cases, and we're trying to correct that. Thanks. Just one follow-up on that. Those smaller footprint stores, if you're thinking about that as part of the relocation program, should we be still thinking about those at that $5 million level, even though they're smaller footprint, given the off-premise acceleration? How are you thinking about that opportunity? Yes, we are, and the reason why we have confidence is because we tested it in Brazil, where volumes are incredibly high. Yeah. You're not sacrificing a ton of seats either in that configuration. It's more kitchen design and things of that nature. Thank you. Ladies and gentlemen, we have reached the end of today's question- and- answer session. I would like to turn this call back over to Dave for closing remarks. Well, thank you, everybody. We appreciate your interest in our company, and we look forward to talking to you more about it and look forward to the earnings call in April. Have a great day. Thank you for joining us today. This concludes today's conference. You may disconnect your lines at this time.