Other Recent Earnings & Portfolio Management Coverage:

Moving down the income statement, restaurant-level margin (RLM) (similar to a gross margin for other business models) was pressured by the ongoing launch of their salmon protein option. This drove 50 bps of food, beverage and packaging deleveraging Y/Y and will keep modestly weighing on profitability until comps normalize next year. Labor and related costs rose by 30 bps as a percent of revenue mainly due to 3% wage boosts. Occupancy expenses enjoyed 50 bps of Y/Y leverage thanks to average unit volume (AUV) growth and associated fixed cost leverage. Next, other operating expense leverage declined by 40 bps Y/Y due to a rising mix of 3rd-party delivery as a portion of total sales as well as ongoing growth investments. The delivery headwind should abate throughout the rest of 2026 as the rise in activity for this channel normalizes. Finally, G&A enjoyed 50 bps of leverage.

When taking this all together, EBITDA rose by 30% Y/Y with roughly stable margins. They’re doing well in balancing aggressive growth investments with effective management of the P&L. Net income rose by 25% Y/Y. The slower rate compared to EBITDA growth was related to lower interest and other income compared to last year's Q2. Modest tax headwinds also weighed on this profit line.