David Palmer — Analyst, Evercore ISI
Thanks. Good morning. Two questions, if I could. I know you said some stats on the chicken sandwich and, you know. If you wouldn't mind, forgive me if I'm making you repeat yourself, but, you know, any stats on that would be helpful. The mix of the product, the perceived lift to same store sales when you exclude any of the noise that might be out there, new guests, repeat, customer stat scores associated with it, you know? Then is your experience that the lift from that, a product like that, will rise over time with the TV campaign consumer trial for a product like that? Then just a big picture question.
You know, as Chili's approaches $5 million AUV, you know, and I'm not asking to front run your analyst day out in September, but how are you thinking about the big levers from here and how they'll be different to get the next $1 million or $2 million? You know, how should we be thinking about, you know, your big, hairy goals here from here and how you get there? Thanks very much.
Kevin Hochman — CEO and President, Brinker International
Two big pack questions. I'll start with the chicken sandwich first, and then I'll address the second one about sustainable growth in a second. From a chicken sandwich standpoint, you know, we don't have really much more to share because it's only been two weeks of launch. We've had one week of merchandising only and then one week of TV. We're seeing a, you know, 161% more chicken sandwiches today than we did pre the launch, which is significantly higher than what we saw in the merchandising-only test market. In fact, that first week where we were merchandising only, we did see higher lifts than we saw in the test market. That's all good.
As far as, like, what's the feedback been, you know, anecdotally, we've heard mostly very, very positive, both in the reviews that we see online as well as in talking to our team members. You know, the first thing that people tend to say when they see it is, "Oh my goodness, this is a really big sandwich," which is exactly what we're going for. We went through the fact patterns with industry inflation is how we position the sandwich and the price point and the size, especially when we compare to our fast food foe. That's all working. You know, over time, we're gonna see whether it continues to maintain. We'll be able to answer your questions about, you know, repeat rates, and we have all that tokenized data, but that's gonna take, you know, a few quarters to really understand that.
Right now, we feel very bullish about it. You know, typically, when things mix a lot, they tend to be generally overall more incremental from a magnitude standpoint. You know, the fact that we're beating the test market is very encouraging. Then we obviously saw some acceleration in traffic driven by the sandwich over the past two weeks, which feels good too. You know, it's too early to declare, "Hey, this thing's successful." So far, we're really encouraged by the data that we're seeing. On the second question, David, on what are the next drivers of sales over the next three years. You know, we're kind of a repeat record on this. There'll be new initiatives behind this, it's still gonna be focused on food service and atmosphere.
From a food standpoint, we talk about the other menu categories that still need renovation. Plus, we'll have some innovations on the core categories that we've already renovated. That will continue. From a service standpoint, you know, I think the big unlock of North of Six that we're understanding over the past.
Three months is this idea of cycle time. The idea of how do we take the throughput that we're seeing in the North of Six restaurants and expand that throughout the system? They do a lot of things differently to get higher throughput. Like the example I gave in the prepared script was at the host stand, right? Typically in a North of Six restaurant, they either have more staffing at the host stand than what the labor card says, and/or they have more senior level of staffing, either paying a more senior host or sometimes having a manager man the door during busy peak times, right? In addition to that, there's software behind that when we use the seating system that we need to make sure the teams are trained on.
They're using consistently so that when we quote wait times, they're more accurate because we need to use that all the time. There's a bunch of work that we need to do for the host rollout that we're learning from the North of Six restaurants. That will go in Q2 of next fiscal, that's like one example of reducing cycle time, which I think is gonna improve throughput, not just for North of Six restaurants, but more importantly, the entire system. Then on atmosphere, the big thing is the reimage, and you're gonna be able to see that when you're here for the Investor Day. We're gonna take you out to the restaurant so you can see them for yourselves of what we're doing.
The next eight to 10 that we're doing in these three months is really gonna be finalizing what are the things that we want to invest in and what are the things that we don't want to invest in, so that when we start with 60 to 80 next fiscal and obviously get to the 10% run rate in fiscal 2028, you know, we're off and running with the best possible package with the best possible payback. We're very bullish about the growth levers in front of us. Obviously, I haven't even talked about our world-class marketing, which continues to get stronger and stronger and bring new guests in. We're very, very bullish about the continued sustained growth of this business.
David Palmer — Analyst, Evercore ISI
Thank you very much.
Chris O'Cull — Analyst, Stifel
Thanks. Good morning, guys. Kevin, just given the recent volatility in consumer sentiment, have you observed any canary in the coal mine type behaviors such as check management or softness in lower income spending?
Kevin Hochman — CEO and President, Brinker International
The answer is we're seeing a little bit of check management. As we've seen traffic accelerate behind Chicken Sando launch, we've seen a little bit of check management in desserts and in alcohol. You know, our alcohol sales are still way up with the growth that we've had with the business, we are seeing some incidents start to slow. You know, here's what I would tell the team is let's control what we can control. You know, we can continue to win market share with the best food service and atmosphere in the industry with industry-leading value, we need to stay focused on that. You know, whatever happens to gas prices and the macro, that's out of our control. What we can control is staffing our restaurants for peak.
We can control serving great food and with wonderful service, in a clean, inviting environment. If we continue to do that, we'll continue to grow market share. We'll be able to, you know, hang on to our business, and then obviously, if the macro gets any better, we'll be able to grow even faster behind that. You know, I'm kinda like a broken record on it. It doesn't matter what happens with the macro. It doesn't matter what happens with external factors. Our indicated action for this team is improve food service and atmosphere and good things will happen, and we're just gonna stay focused on that.
Chris O'Cull — Analyst, Stifel
Makes sense. Mika, I know margin flow-through was impacted, I think, by R&M expense this quarter. Can you help us walk us through how to think about flow-through in the fourth quarter? Were there any significant headwinds on any line items that we should be aware of? Maybe whether the new sandwiches to the platform are margin accretive or margin neutral, any color would be helpful.
Mika Ware — CFO, Brinker International
Okay, great. Yes. You know, I know the flow-through, you know, we continue to invest back in the business with this invest to grow strategy. You know, that's part of it, is that we don't flow it all through, and we put it back in. You know, we saw that food and beverage was up a little bit year-over-year. We continue to invest in labor. Then our restaurant expense, like I said, the R&M, you know, we caught up with a lot of the deferred maintenance. Now we're shifting to preventative maintenance, which takes a little bit of time for that to start really coming through, that you can see some opportunities or some reduction in future expenses. We, we are seeing, you know, a lot of give and take in there.
If you look at our R&M, just over the first three quarters, you can really see that we've kind of established a run rate. It's pretty steady. I think some of the volatility is really lapping the prior year, and we'll continue to look at that and get more efficient in our spend. That's kind of one of, one of the drivers there. Looking forward on margins, I think in the fourth quarter, you're gonna see probably similar margins. Maybe food and beverage are gonna creep up a little bit. We have a beef contract that came due, a state contract that's gonna be a little bit more. I think we'll continue to leverage the labor. That'll probably offset any of that increase. Then you'll see very similar, I think, to restaurant expense this quarter as a percent of company sales.
I think you'll see something there. I expect margins to be similar from Q3 to Q4, and I expect margin growth to happen, you know, return to margin growth in Q4. I'm very confident in what I stated at the beginning of the year, is that, you know, taking a step back, we're gonna grow our margins year-over-year, that 30 basis points-40 basis points. I'm very confident about that moving forward.
Chris O'Cull — Analyst, Stifel
Okay, great. Thanks, guys.
Dennis Geiger — Analyst, UBS
Great. Thanks, guys. With all the focus on the chicken sandwich, all six varieties of which are delicious, as you know, you put up great results in April, even with just a couple weeks of the sandwich seemingly, even as you talk about that acceleration in traffic with the sandwich. I'm curious if you could talk a little more about sort of ex the sandwich, some of the key drivers of that momentum that you've been seeing, especially as we kind of go into 2027. Said differently, you know, even if, let's say, the sandwich incrementality is not a significant step change in trend, you know, do you think that sort of the mid-single-digit type of comp trajectory is still within view? Thank you.
Kevin Hochman — CEO and President, Brinker International
Well, the answer to your last part of the question is yes.
Dennis Geiger — Analyst, UBS
Absolutely.
Kevin Hochman — CEO and President, Brinker International
We still think that mid-single comp is still within purview. The, you know, the recipe for success for us is just to continue to improve the fundamentals, so food service and atmosphere. That's why every earnings call I talk about the improvement on Guest With A Problem and GWAP and food grade and intents to return because, you know, what I tell my team is if it's not better than the previous year, what belief do we have that we're going to continue to grow? We have to continue to improve those things because we're not going to like LTO our way to growth that we see others do. If we believe in that, those metrics have to continue to improve.
That's why when we budget the year, you know, we have some food news that has to do with upgrading the permanent menu. Most of our initiatives have to do with improving food service and atmosphere on the kind of the core thing. Like the thing, Q2, you know, host stand, what we're gonna launch for next fiscal. That's all about throughput and driving traffic. That's not a new piece of food that's, you know, definitely gonna drive traffic. It's gonna drive traffic through taking the demand that we're already having come to the restaurant to making sure they don't leave, right? You know, the recipe for success right now is continue to improve food service and atmosphere, continue to improve the fundamental metrics, right?
Let the world-class marketing team create excitement so that people come into the restaurant and try us for the first time. That's why we also share the token data because the idea is, hey, we are putting new guests into the funnel every quarter. When we look back over the next, you know, six to 12 months, they start looking like existing guests. That's the key. If the fundamentals continue to improve, the new guests that come in will start looking like existing guests, and we've just got to keep that flywheel going. That traffic growth obviously drives sales growth. Sales growth drives profit growth. We're able to reinvest some of that back into the business to continue the flywheel and drive traffic growth, right?
That's the recipe that's worked the last couple of years, and that's the plan for the next three years.
Dennis Geiger — Analyst, UBS
Great. Thanks very much.
Jeff Farmer — Analyst, Gordon Haskett
Thank you, Mika. I think you just said that there's an expectation that you can grow margins by 30 basis points-40 basis points, sort of on a go-forward basis, or at least in 2027. Beyond continued same-store sales momentum, what dynamics do you see contributing to that level of margin expansion? Hopefully I got that 30%-40% or 30 basis points-40 basis point number correct in the question.
Mika Ware — CFO, Brinker International
Yes. Well, the 30 basis points-40 basis points was referencing this fiscal year, what we guided, very confident in that. I do think that we will be able to grow margins over time, and it will primarily be from sales leverage because that's our strategy, is to grow the top line. We do think there can be opportunities, you know, now that we have gotten through the turnaround. You know, we've stabilized the teams, we've attracted better talent. This does give you an opportunity to just be more efficient in your spend, and I think we'll look for ways, you know, as we move forward to do that as well. Even with the sales growth, I do think that we can continue to leverage margins.
Jeff Farmer — Analyst, Gordon Haskett
Okay. Just one quick follow-up. As it relates to menu pricing, moving into FY 2027, I think you guys have been back-to-back mid 4%, 2025 and 2026. How are you thinking about menu pricing as you move into FY 2027?
Mika Ware — CFO, Brinker International
Yep. you know, the very first thing, most important thing for us is to protect our value proposition. We're gonna protect that $10.99 industry-leading value, have it there for those that need it. We also wanna make sure we have value across the entire menu, for everyone. With that being said, moving forward, I do think that we'll continue to invest in food service and atmosphere, but we will probably be on the lower end of our stated pricing range. Moving forward, you know, We're always gonna make sure that we can price for inflation, but we're gonna make sure we balance that with making sure value is there for our guests.
Jeff Farmer — Analyst, Gordon Haskett
Okay. Thank you.
Andrew Strelzik — Analyst, BMO
Hey, good morning. Thanks for taking the questions. I know there's a lot of focus on the food initiatives and the menu initiatives that you guys have planned, but I was hoping you could talk a little bit more about the operational and service improvements, you know, and those kind of legs of the stool there. How much more room for improvement is there? What are kinda some of the bigger opportunities that you see kind of going forward to drive that?
Kevin Hochman — CEO and President, Brinker International
It's, you know, it's frustrating, but it's also really exciting how much more opportunity we have. Like, we didn't even touch on the technology initiatives that are happening from an operational standpoint. You know, we continue to improve our KDS system. We're just kicking off now an entire back office redo, basically taking all these antiquated systems and getting to, it's not an ERP system, but the idea that all the back office systems could be connected. It's gonna be way more usable for the team members, hopefully help for throughput as well as retention. That's the big one. You know, we still are working on, we're rolling out right now our team member handheld initiative, which is a complete upgrade to the interface.
That's gone a little slower as we rolled it out, just as we've seen some glitches. We paused it to get it fixed, and it's rolling back out now, which should be done by next quarter, which is a huge one. That's all the technology initiatives, and there's a lot more than that. We have what we call Supermarket Simple. That's gonna be rolling out in the next quarter, which is all about removing the friction that happens at the end payment with the Ziosk, where either a discount didn't come off that the guest expected or they accidentally left a different type of tip, and we need to get that reversed. These are all things that hold up tables, you know. I give one example.
Just one simple example that happens about 7x a day where we've got to reverse something out on the Ziosk. We added it up, it was like over 20 years where the table's tied up for the guests waiting for that to get reversed by a manager. That's an example where we can fix that very quickly with an update from Ziosk. There's a huge amount of technology initiatives. From an operational standpoint, really the big push now has been the North of Six. We're moving from kind of defense of just removing a bunch of stuff and making it much easier for our team members to operate. We're now moving to offense on accelerating cycle time. Whether that's the host stand, whether that's ticket times.
You know, a great example we'll see in very busy restaurants is their ticket times will be a little bit inflated. We'll go to the labor card to understand are they scheduling enough cooks? The answer is no. It's like, that's a clear indicated action that we can continue to take on more traffic and get those ticket times down. Ticket times, even the checkout time that we talked about earlier, there's a ton of initiatives that are coming. We'll be giving a lot more detail at Investor Day on the new things that we haven't talked about before. I remain very, very bullish about our ability to improve the operations, continue to get GWAP and intent to return scores better and better, as well as the most important thing right now is to get throughput going.
Andrew Strelzik — Analyst, BMO
Great. Okay. Then, wanted to ask also on the remodels, and I know it's very early days, but can you just remind us kind of spend levels? How should we think about the types of lifts that we might be able to expect there as that continues to build? Or maybe, you know, kind of are there different levels that you're testing? How should we think about that? Thank you.
Mika Ware — CFO, Brinker International
Hi, Andrew. Yes. It's really early with only four restaurants that we've done so far. We are optimizing the spend. The good news is we did four different levels of spend, and the lowest level of spend is getting the same sales lift. We are getting a sales lift in these restaurants. We are optimizing the spend. We'll have more of that to share once we have a bigger test group with the eight to 10 and then the 60-80. You know, more of that, again, will come in September when we just have a little bit more time to read the test. Very encouraged, you know, with the spend and the sales lift that we're getting in the early four.
Andrew Strelzik — Analyst, BMO
Great. Thank you.
Mika Ware — CFO, Brinker International
Thank you.
Jeffrey Bernstein — Analyst, Barclays
Great. Thank you very much. The first question is just on the new unit opportunity. Clearly, new unit growth is more of a stable driver of top line than comps. Can you talk maybe a little about the changes in the new units you anticipate versus existing, maybe the cost to build and return requirements? I know the Investor Day will offer more color, just how you think about the U.S.'s, you know, total adjustable market for a brand that most people view as fairly mature. I had one follow-up.
Mika Ware — CFO, Brinker International
Okay. Thank you, Jeff. Yes. We're really excited about our new unit growth strategy. Our first step was to really build up the team. We have a great leader with Richard Ingram. We have a lot more insights, a lot more analytics. Just the whole team is phenomenal. We've really started gearing that up. You know, primarily in the past, we've really stuck to some of the states, our biggest states that we always have done a great job in, California, Texas, Florida. We continue to build there. We've been very successful, we'll still build there. There's a lot more opportunity, you know, across the United States for us to build in different markets. It seems like Chili's is everywhere, Chili's is not everywhere.
Again, we'll kind of spell that out and give more detail on how and why we think we have a much larger addressable market. We are gonna be able to ramp up our unit growth. You won't see it next year just because there's usually about a 18 month-24-month cycle. We can already see the teams are ramping up for F 2028, and we expect to get to our new growth rate, run rate in F 2029. As far as the units go, we're making sure, you know, we're using a lot of the fun elements from the reimage.
We're working with the operators and all the insights we have, again, with the North of Six restaurants, just to make sure that we have these restaurants exactly how we want them, especially with the new unit volumes that we're experiencing, to make sure that they are designed for optimal throughput. A lot of exciting things to come. We have a very strong team. We're ramping up the growth, and that's gonna be, you know, a great lever for us as we move forward.
Jeffrey Bernstein — Analyst, Barclays
Understood. The follow-up, Kevin, I think you noted that Maggiano's was, I think it was high single-digit percent of sales, low single-digit percent of operating profits. I know the turnaround's on track, seemingly take time. Just wondering whether there's any incremental interest in adding a second brand of greater scale, maybe something more meaningful in terms of sales and profit contribution. Clearly, you have the credibility, you have the playbook to strengthen maybe more of a national brand now that Chili's is seemingly in a much more stable and consistent growth position. Just wondering whether there's any incremental interest or what it would take to maybe get you to think about a potential brand of more scale to add to the portfolio. Thank you.
Kevin Hochman — CEO and President, Brinker International
Good morning, Jeff. We get asked that question a lot. You know, what I tell my team is we need to be able to turn around a smaller brand first before we take on more risk of a bigger brand. You know, it's just because we have the playbook on Chili's doesn't necessarily mean that the same leadership team can do the same thing on other brands. I'd rather prove it on a pretty risk-free opportunity like Maggiano's versus take the big swing, you know, for the first time on something a lot bigger that could, you know, put undue risk on the business that we don't really need to do right now. We're very bullish in continuing to be able to grow Chili's and do that profitably.
We can get and prove out our beliefs about our ability to turn around other brands with Maggiano's. Right now, part of the Maggiano's turnaround is also just unifying the system so that we could be ready for a third brand should we be able to turn around Maggiano's. For example, one of the big issues in Maggiano's is kitchen throughput. It has a very antiquated kitchen display system. We're now in process of putting them on the Chili's kitchen display system. If we're able to do that successfully, which we should be, it's pretty easy, then as we do updates, as we learn more about the Maggiano's, but it's much easier because we can use the same team. It's much easier than having them to have to learn a completely different system, right?
Part of the Maggiano's turnaround is not just the financial improvements of Maggiano's, which is we all want, right? It's also proving to ourselves that we could have a model like some of our, you know, our biggest competitor in casual dining does an exceptional job being structured to be able to plug in new brands. That's a big part of the Maggiano's turnaround, not just the financials, but actually structuring the company to be able to do that. You know, I will tell you, until we are able to do that, you know, I would caution us from trying to get a third brand. You know, we have no business doing that until we can prove that we can handle our second brand.
Jeffrey Bernstein — Analyst, Barclays
Understood. Thank you.
Jon Tower — Analyst, Citi
Great. Thanks for taking the question. You know, on this, the North of Six initiative that you're going after, I'm just curious. It sounds like there's a need to invest in some labor, I'm curious if you could speak to where you see and think labor needs to go over time across the system. I've got a follow-up.
Kevin Hochman — CEO and President, Brinker International
Right now, when we look at the North of Six restaurants, they don't all invest labor in the same places. I mean, generally a trend for the high volume restaurants, they do invest more labor than what the model tells them. The typical positions are either in busser or server assistant. Sometimes it's servers, sometimes it's host. Once in a while, it's cooks too, to get throughput there. It really depends on the restaurant and what they need and the types of experience of people that are in the restaurant. It's not a one-size-fits-all.
You know, as we think about, you know, the budgets that we're setting for our fiscal 2027, there are some North of Six investments baked into the numbers that we'll be sharing as part of our guidance when we come out with that a quarter from now. just to be very clear, there will be some investments that they will be baked into the guidance that we provide. beyond that, there's a lot of other things that we're working on. Some of them don't really have to do with investors, just deploying different types of labor deployment or construction. we'll make sure that all of that is clear for you guys and that nothing is surprising.
Mika Ware — CFO, Brinker International
I'd like to add on to that. Also remember, with our labor model and especially the North of Six, as we have more guests in the restaurant, it naturally scales up. I don't know that it's a true, you know, It's not gonna be like I'm not anticipating it to be a really big investment. Also, when Kevin talks about some people are, you know, already spending more than our labor card, that's not just the North of Six. We have scaled that back to, you know, a lot of the restaurants were saying, "Staff for the traffic you want." A lot of that is built in our current run rate. We're gonna formalize it next year. It will be an investment.
There will be some investment, but it's not gonna be as material as it has been the last few years when we really had to staff up to just get that base model right. I feel now it's more of a lot of fine-tuning on the investment side.
Jon Tower — Analyst, Citi
Got it. Thank you. I appreciate all that color. Maybe just flip into the remodels. I know it's early in the process, but I'm just curious. As you're going through with the first four stores and now the plan to, I believe, eight to 10 more coming, are you seeing opportunity to maybe do anything different in the back of the house as well with respect to either equipment or any of the processes that you've got or the build, hence the processes get better in the back of the house?
Mika Ware — CFO, Brinker International
Yes. It may not necessarily be tied directly to the reimage program, but we're always looking at the Heart of House. We have a whole cross-functional team that is dedicated to looking at the equipment. Again, North of Six, part of that is to optimize the Heart of House equipment packages. You know, do we need to add an extra fryer? Where do we need? You know, at what levels do we add a separate combi oven? We're looking at all that. We're also thinking about that as we design the new prototypes on making sure that we have the space laid out just right and that we have, you know, the model built for those higher volumes and the equipment that we'll need moving forward.
It's absolutely a focus that we continue to look at different pieces of equipment, how we improve either the quality of the food or the speed of our service. We have a whole team just working on that at all times, you know, that we could deploy.
Jon Tower — Analyst, Citi
Great. Thanks for taking the questions.
Mika Ware — CFO, Brinker International
Thanks, Jon.
Brian Harbour — Analyst, Morgan Stanley
Yeah, thanks. Good morning, guys. With the reimages, are there elements of that that sort of help with throughput, or is that more of, you know, just like an aesthetic thing? Could you talk about that a little bit?
Mika Ware — CFO, Brinker International
Right now, it's more of, you know, the exterior. The inside is paint and just the look and the feel of the restaurant. We're always looking at our tables where, for example, in one of the previous reimages, we put in some big community tables in the bar. We realized a lot of people don't like sitting at the community table. As we go through, we make sure that those community tables are gone. Those are separate tables. Any time we have the opportunity to update the tables or optimize the tables, we're doing that. We're making sure we look at that really not necessarily in the reimages but in the new units as well, that we have the optimized tables, and we have, you know, the most tables to help with throughput.
Kevin Hochman — CEO and President, Brinker International
Yeah. You know, other than the tables, it's mostly cosmetic.
Mika Ware — CFO, Brinker International
Yeah
Kevin Hochman — CEO and President, Brinker International
... it would help the throughput. The, you know, our 2030 Heart of House restaurant team is focused on, you know, what's the equipment that can improve throughput. Like, you know, an example that we're looking at right now is a new type of grill.
Flat top that, all the spaces usable. It's really consistent in terms of heat across the grill, so you can put more burgers and they cook more evenly. That's an example that would have improved throughput. In addition, they have a manual clamshell attachment that would be able to cook on both sides. We tested computer clamshells a few years ago and thought they were not as reliable as they need to be, but this one likely would be more reliable. That's an example where the equipment would give us more throughput and lower ticket times on burgers, which is obviously a huge part of our business. I would consider that kind of separate from the reimage program.
Mika Ware — CFO, Brinker International
Yeah.
Brian Harbour — Analyst, Morgan Stanley
Okay. Got it. Makes sense. Mika, how are you feeling about food inflation? This I guess more as we think about like fiscal 2027, do you expect that to sort of reset higher? You know, is it something you'll sort of address with price when the time comes? Could you talk about that?
Mika Ware — CFO, Brinker International
Yeah. I mean, we'll probably give you more details in next quarter when we set guidance for next year. You know, there's always puts and takes, but there is gonna be pressure with beef. I mean, that's clearly out there. Luckily, that's, you know, not the total basket for us. We're a varied menu, we have different opportunities. You know, obviously we sell a lot of chicken as well. Yeah, we're gonna continue to see pressure in commodities as we move forward. It'll probably be similar levels that you've seen us in the past or, you know, this last half of the year we've had that mid-single digit inflation. I'm anticipating that will be something similar as we move forward into F 2027.
Brian Harbour — Analyst, Morgan Stanley
Okay, thanks.
Brian Vaccaro — Analyst, Raymond James
Hi. Thanks and good morning, and congrats on the continued strong momentum. Mika, just following up on that last question on commodity inflation. Did I hear correctly that you do expect low single digit inflation in the fourth quarter? And maybe just any clarity on what's breaking a little bit more favorably for you even in the near term compared to the mid-fours you did in the last quarter?
Mika Ware — CFO, Brinker International
No. It's mid-single digits in the fourth quarter, and that's what I expect to continue into next year, Brian. You know, beef will continue to be a pressure for us. You know, I was just saying there could be some gives and takes out there on different contracts. But in general.
Brian Vaccaro — Analyst, Raymond James
Okay
Mika Ware — CFO, Brinker International
we're gonna have inflation, it'll probably be in the mid-single digits next year as well, is what I'm anticipating now. More specific details to come as I give guidance next year. I'm just kinda giving a, you know, a guideline now. We'll give more information on that next quarter.
Brian Vaccaro — Analyst, Raymond James
Okay. Sorry, I thought I misheard the lows, so that's helpful clarity.
Mika Ware — CFO, Brinker International
No.
Brian Vaccaro — Analyst, Raymond James
Advertising. Yeah, that's great. On the advertising front, I think you said it was flattish year-on-year as a percent of sales in Q3. Just ballpark, how much do you expect ad spend to be up year-on-year in the fourth quarter?
Mika Ware — CFO, Brinker International
In the fourth quarter, it'll probably be in the, you know, $5 million-$6 million range for the fourth quarter.
Brian Vaccaro — Analyst, Raymond James
Okay. All right. That's, that's helpful. Just a bookkeeping one for me. Can you share the sales mix of 3 for Me? Kinda how that splits between $10.99 and the higher tiers, and also on Triple Dipper. Thanks again.
Mika Ware — CFO, Brinker International
Absolutely. We continue to have about 20% of our guests eat on the 3 for Me platform. You know, approximately 40% or a little bit less are eating on the $10.99. You know, that converts to, you know, total 3 for Me is about 12% or almost 13% of our guests. On the $10.99 version, you know, less than 5% are actually eating, of our total sales, is $10.99. That's been pretty steady for us, I would say, as we move through. What was the second piece of your question, Brian?
Brian Vaccaro — Analyst, Raymond James
Triple Dipper.
Mika Ware — CFO, Brinker International
Oh, Triple Dipper.
Brian Vaccaro — Analyst, Raymond James
Triple Dipper.
Mika Ware — CFO, Brinker International
Triple sales. Yep, they're hanging in there. Last quarter it was right at 16%, and that's where it is now. Hanging in there with the Triple Dipper.
Brian Vaccaro — Analyst, Raymond James
Excellent. Thank you.
Mika Ware — CFO, Brinker International
Thank you.
Nick Setyan — Analyst, Mizuho Securities
Thank you. I think I heard you guys say ad spending went a little bit into Q4 from Q3. Can you just remind us what the year-over-year growth was in Q3, what it will be in Q4? How are you thinking about, you know, ad spend in fiscal 2027? Can that grow as a percentage of sales? Is it going to be flattish? In terms of just spending, you know, by quarter, that would be great, or at least directionally. Any, any color there, that would be very helpful.
Mika Ware — CFO, Brinker International
All right. Sure. Advertising in the third quarter ended up being fairly flat year-over-year on a dollar basis and a percent of sales basis. It will pop up a little bit. We had to move some things into the fourth quarter, just some timing of some things, how they happened. In the fourth quarter, you know, I expect that to be a little bit higher as a percent of sales and probably, like I said, $5 million-$6 million up year-over-year. Next year, again, more color when I give guidance for next year, but I would expect it to be as similar as a percent of sales, a similar amount there.
There's always inflation on ad spend, you know, we will be spending some more dollars, but probably a similar percent of sales as we move forward. I don't have the cadence yet, Nick, to share on quarter to quarter in FY 2027. Again, we'll get into more of that at the end of this fiscal year as we kind of guide for next fiscal year.
Nick Setyan — Analyst, Mizuho Securities
Thank you very much.
Mika Ware — CFO, Brinker International
You're welcome.
Andrew Charles — Analyst, TD Cowen
Great
Mika, you talked about the likely mid-single digit inflation in 2027 led by beef and, you know, plans to roll off price as you're prioritizing value. I know we're gonna get the specific guidance, you know, next quarter, but I'm just thinking qualitatively, what are the opportunities to drive margins just beyond sales leverage while you've studied that you're not immune from the industry's contracting alcohol mix as well?
Mika Ware — CFO, Brinker International
Right. You know, moving forward, again, we feel like our strategy is a top line strategy. We will get margin leverage from that. We will look into ways, I think, as the, as the brand, if we've kind of been in this turnaround mode. We're getting more into the stabilized mode where we have, again, a lot more talent, stabilized teams. What we've seen over time is as turnover goes down, you have better talent. You always get more efficient in whatever you do. That could be labor, that could be how we spend the dollars. For example, you know, R&M is one that we spent a ton of money in over time. We do think, like I said, we had a lot of deferred maintenance. Now we're moving into preventative maintenance.
We also think there's gonna be opportunity now to just find ways to have more efficient spend as we move forward. We have a lot of initiatives kind of behind the scenes working on that. There'll be just different areas of the business. Again, labor. I think labor is one that as the teams continue, turnover goes down, productivity goes up. Like we said, we may have to invest in some pockets, but at the same time, we're having teams that just get better and better at what they do, and you have some natural opportunities there. We'll continue to look across the whole brand. We've had a lot of growth the last three years. There's probably a lot of opportunity to optimize some of those expenses as we move forward.
That'll again, will be more things that we look at in the future, but I think there could be opportunity there. Even excluding any margin initiative, I still think we can expand margins and grow the top line. We feel really great about our, you know, mid-single digit same store sales and mid-single digit growth, you know, over time as we move forward.
Andrew Charles — Analyst, TD Cowen
That's helpful. You know, as you think about the ramp in new stores, you know, and you talked about how, you know, 2029 more of a steady rate, and again, we'll hear more about this at Investor Day on the specifics. Kind of curious, I mean, are you piloting opportunities to lower the cost of the box, you know, as we get ahead of this to better understand kind of what the, you know, Chili's of the future really looks like?
Mika Ware — CFO, Brinker International
Yes. I mean, absolutely, we always look at, you know, how can we optimize costs in the box. I mean, I will say just over time, especially post COVID, there has been inflation in how you build the restaurants. You know, the great news is we took our AUVs from around $3 million to we talked about approaching $5 million. That gives us a lot more opportunity. You know, with our improving AUVs, that doesn't give us a lot of opportunity to necessarily shrink the box because we're trying to accommodate more guests, but we are always looking at that. What I will tell you is the returns we've seen even on the restaurants we've been growing over the last few years have been great.
We feel really confident in that, and we're really set up, you know, to build some restaurants with some great returns as we move forward. We're always looking to see if there's opportunities, you know, to optimize the box and our spend.
Andrew Charles — Analyst, TD Cowen
That's great. Thank you. Very helpful.
Mika Ware — CFO, Brinker International
Thank you.
Chris Carril — Analyst, KeyBanc Capital Markets
Hi. Good morning. Thanks for the question. I guess just following up on earlier questions about the check, can you update us more specifically on how you're thinking about the mix component of check moving forward here over the near to medium term? Kevin, I believe you mentioned the $3-$4 check gap to the competition. Any additional thoughts on the long term check opportunity would be helpful.
Mika Ware — CFO, Brinker International
Chris, do you mean on the check? We're always looking for opportunities to grow mix, you know. Right now, like Kevin said, just recently, we've seen some softness at mix. Though it was very interesting that as soon as we saw softness in mix, we saw our traffic start to accelerate. Again, that's why we feel very confident about mid-single digits and positive traffic, you know, as we finish up this fiscal year. Now moving forward, we're always looking for opportunities to grow check. We've done a great job of it over the last three years. We'll look to continue to optimize. But you know, if I'm thinking longer term, you know, we know what that pricing strategy is with the same store sales, and we talked about that range.
I think we're, you know, we're really gonna be focused on growing traffic on top of that.
Kevin Hochman — CEO and President, Brinker International
Yeah. As far as like the, you know, what guidance we give the teams on $3-$4 below category, but we don't think about it that way. That's more of an output that we report out to everybody about, you know, it's a very foyerized demo that, you know, we're lower priced than our competitors. The way we think about value is, and we need this across the entire menu, is how do we create abundant value everywhere in our menu so that when people leave Chili's, they're like, "Wow, that was an incredible value." You know, we've been slowly renovating our menu to get to that value across the entire menu. You know, we started with, you know, burgers and fries and fajitas and, you know, we have it in margaritas.
Now we're, you know, we did obviously did it in Chicken Crispers. Now we're doing chicken sandwiches. You know, the next to go will be salads and steaks. We did it with ribs actually last year, where it's a much more abundant value. Even if the price is a little higher, you get 50% more ribs and they're meatier and it's a bigger plate. That's the way we think about it. It's like when we're in the test kitchen with our operators, we're like, "Hey, is this something that's gonna be wow value? And if it's not, we gotta continue to work on it." The outcome is, you know, the things that we report to you on price and how we're lower than the competitor.
The important thing is when I get a plate of Chili's, do I feel like that was wow value that I wanna come back for?
Chris Carril — Analyst, KeyBanc Capital Markets
Got it. Thank you. That's helpful. Then just, turning to Maggiano's, now that George is overseeing marketing for Maggiano's in addition to Chili's, can you maybe speak to how you're thinking about marketing for the brand and what that could look like, you know, when you do begin to see signs of traffic stability and growth?
Kevin Hochman — CEO and President, Brinker International
Yeah, you know, it's, you know, we're less than 50 restaurants, so it's never gonna be this, you know, big national TV thing that like Chili's has. You know, but George, the lens that George is bringing to the business right now is empathy for the guest experience. Because at the end of the day, we've got to improve food service and atmosphere at Maggiano's if we wanna grow traffic over time. You know, he's looking at things like menu presentation, family style, the entire guest experience from the time you get into the lobby to when you sit down to when you check out. These are all things that we need to bring a guest empathy lens to, and that's primarily what he's focused on right now. You know, should we get that into a place that we're really excited about?
You know, will we do some demand creation? Probably. Given that it's, you know, we're not a national brand, we don't have Maggiano's everywhere, it's never gonna be like what you see at Chili's.
Chris Carril — Analyst, KeyBanc Capital Markets
Got it. Thank you.
Christine Cho — Analyst, Goldman Sachs
Thank you for taking the question. Could you give us a quick update on the off-premise trends and whether that channel has proven more resilient, in the increased kind of check management standpoint? I know there has been a clearly, a stronger emphasis on elevating the in-restaurant experience, but do you see an opportunity to lean further into the off-premise channel going forward? Thank you.
Mika Ware — CFO, Brinker International
Yeah. Our off-premise, you know, it's been hanging in there. It's usually been about, what, 23%, 24%-
Kevin Hochman — CEO and President, Brinker International
23.
Mika Ware — CFO, Brinker International
23%, 24% of, you know, total sales. It's been pretty steady. You know, it did have the same negative traffic that the dine-in did or the overall brand did this last period. With that being said, we do think there's opportunity. We've really been focused on the dine-in experience, and we think there is opportunity to, again, take friction out of that whole guest experience with off-premise. You know, we think that we can improve that experience, get better throughput. It will be a focus as we move forward.
Kevin Hochman — CEO and President, Brinker International
Yeah. I mean, the big opportunity is just the overall experience of picking up. It's not, you know, the improvement that we've made from the dine-in, we still have opportunity to do on-to-go. You know, our quote time calculator hasn't been updated in a while. Since our ticket times are so much faster, a lot of times we quote times that are way longer than when the food is actually made. We've gotta get that thing updated. We've gotta make the experience to pick up a lot more seamless, you know, ideally with some order boards so you would know, you know, whether where your order is and whether it's ready to be picked up.
We just made some investments in packaging that are already in all the numbers that you guys have to make the actual experience getting the food home a whole lot better. To me, you know, the important thing is let's get the fundamentals right before we go try to put any kind of gas on it, and we've got some work to do there.
Christine Cho — Analyst, Goldman Sachs
Thank you.
Kim Sanders — VP of Investor Relations, Brinker International
Thank you, Holly. That concludes our call for today. We appreciate everyone joining us and look forward to updating you on our fourth quarter and fiscal year 2026 results in August. Have a wonderful day.
Kevin Hochman — CEO and President, Brinker International
Thank you.
Mika Ware — CFO, Brinker International
Thanks, everyone.