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Bloomin' Brands (NASDAQ:BLMN)
Q3 2020 Earnings Call
Oct 23, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Greetings, and welcome to the Bloomin' Brands fiscal third-quarter 2020 earnings conference call. [Operator instructions] It's now my pleasure to introduce your host, Mark Graff, group vice president of investor relations. Mr. Graff, you may begin.

Mark Graff -- Group Vice President of Investor Relations

Thank you, and 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 third-quarter 2020 earnings release. It can also be found on our website at bloominbrands.com in the investors 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 third-quarter 2020 and a discussion regarding current trends. 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.

David Deno -- Chief Executive Officer

Well, thank you, Mark, and welcome to everyone listening today. Since the beginning of the pandemic, our priorities remain unchanged. We are focused on taking care of our people and serving 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, which is critical to our long-term success. The decision not to furlough any employees during the pandemic reinforces principle and it enabled us to retain a very engaged workforce.

This is paying off and has been a big part of our success in driving results ahead of the restaurant industry throughout the pandemic. It is clear that customers want to come back to restaurants and they are confident in our ability to provide a safe and welcoming dining experience. Our dining rooms across the country continue to maintain elevated safety measures, including additional sanitation and disinfecting practices, as well as, contactless payments options for consumers. This hard work has been recognized by our customers and in several reports.

In August, Black Box released the Restaurant Guest Satisfaction Snapshot, where Fleming's Prime Steakhouse was ranked No. 1 in food and No. 1 in service. In addition, three of our restaurant concepts are ranked in the top 5 in intent to return.

And a recent Newsweek magazine survey recognized the best customer service in casual dining. Bonefish Grill was ranked first and Outback was ranked fifth in the same survey. We do not take this recognition for granted and I appreciate the hard work our operators through each and every day to earn it. I would also like to thank everyone in the restaurant support center.

Each of you do a great job supporting our award-winning restaurants. Across the U.S. portfolio, we experienced consistent weekly sales momentum throughout the third quarter. In-restaurant sales continue to improve each week, as consumers become more comfortable dining in restaurants.

In addition, our off-premises business remains robust and we are retaining approximately 50% of the incremental volume achieved while dining rooms were closed. As a result, U.S. comp sales outperformed the industry by over 850 basis points in the third quarter. Importantly, we continue to outperform the industry in the fourth quarter.

A large part of the success is due to the progress made behind our investments over the past several years to enhance the customer experience and pursue the rapidly emerging off-premises business. These strong sales trends results, combined with disciplined cost management, enabled us to significantly outperform margin and profit expectations in the quarter. The pandemic provided an opportunity to look at our business differently and reassess the operating model. This holistic review has identified efficiencies to further optimize how we run and support our restaurants.

For example, we've simplified our menus and reduced limited time offer discounts. Importantly, these efforts have contributed to reduced complexity, improved consistency and increased profitability across revenue channels. We are leveraging these learnings to drive more efficiencies going forward. We made great progress across the following key priorities during the quarter that will enable us to become a stronger and more efficient restaurant company.

Let me now spend a few minutes discussing how we are doing versus each of our objectives. First, we are retaining a large share of our industry-leading off-premises business even as dining rooms reopen. The pandemic has proved the importance of this channel and the role convenience it plays for consumers. Over the past few years, we made the investments in operations, channels, and culture to build and grow a strong off-premises business.

We will leverage our strong capabilities to capitalize on this growing opportunity. Of particular interest, Carrabba's is especially seeing a lot of success. We believe delivery and carryout will be an important growth catalyst for Carrabba's moving forward. Second, we continue to make progress on managing expenses and improving margins.

Our efforts to reduce costs were in place well before the pandemic. This past year, we learned even more about the business and made additional improvements to how we manage expenses, including labor, advertising, and overhead. These learned efficiencies provide optimism about the ability to grow margins once we exit the pandemic. Third, our improved sales trends, coupled with disciplined cost management, enabled us to generate positive cash flow in the quarter while paying down debt.

We currently have over $550 million of available liquidity, providing us with increased stability and significant financial flexibility to capitalize on future opportunities. Fourth, the Brazil business has seen significant improvement in sales and profit trends. All of the Outback restaurants in Brazil have safely reopened with limited in-restaurant dining. In September, Brazil Outback comp sales were down 23%, and over the last couple of weeks, sales in Brazil have been down 5% to 10%.

This is a major improvement versus prior trends and is an indication of the strength of the Outback brand in Brazil. The country continues to ease capacity restrictions and effective capacity is approximately 50% in most cities. Delivery remains a strong contributor to sales and we are retaining a large portion of this business. The team has been actively managing costs, while leveraging learnings from the pandemic to drive additional efficiencies.

As a result of this great work, Brazil generated positive cash flow for the quarter. Outback remains resilient and one of the highest regarded brands by consumers in Brazil. And finally, we've been able to accomplish these results, while strengthening the value proposition and customer experience at Outback Steakhouse. In early September, we launched a new menu at Outback designed to reinforce our steak leadership through more accessible premium cuts and larger portions, while also lowering menu prices.

The menu is performing even better than what we saw in test. We are seeing strong customer feedback on value, and guests are trading up to larger and better cut of steak. Our attachment rate on appetizers is growing and alcohol mix is improving as well. All of this helps grow sales and profitability while improving guest satisfaction.

In addition, this efficient menu design reduces complexity, which improves execution and consistency that results in an improved customer experience. Before I turn the call over to Chris for a deeper look at our third-quarter financial results, I want to elaborate on two growth channels we are testing that complement our dine-in and off-premises business. The first test is a fast casual brand called Aussie Grill. For those of you who may not be familiar with the concept, Aussie Grill was originally created for international franchisees who want to expand more aggressively with a smaller footprint.

After we saw our success internationally, we quickly brought this brand to the U.S. The differentiator for Aussie Grill is a menu of bold flavors. They serve steak, burgers, chicken, ribs, and salad with fast casual convenience. Their first few locations in the U.S.

have been promising and we opened the first freestanding Aussie Grill in Tampa in May. Consumers can eat in, carry out, use the drive-thru or have their order delivered. The financial returns from Aussie Grill are very promising, and initial sales and profits are above expectations. As a result, we are expanding the concept and plan to open more Aussie Grills in 2021.

The second growth channel is a virtual brand called Tender Shack. This virtual brand leverages the kitchens of our existing restaurants for cooking and delivery. Last month, we launched the brand in the Tampa Bay Area. Like Aussie Grill, consumer response has been strong and sales are ahead of expectations.

As a result, we have now expanded the test to Texas, Oklahoma, Kansas, and Missouri. Tender Shack offers a high-quality, very limited menu featuring chicken tenders, fries, cookies, and drinks. The brand promises and delivers on casual dining quality at a fast food price. The chicken segment is a large and rapidly growing category.

We have the assets and talent to take advantage of the significant opportunities. It's clear the consumer wants great food in a convenient format. With Aussie Grill and Tender Shack, we believe we have an opportunity to create incremental growth channels that consumers will love, are perfect for today's environment, offers attractive economics, and will remain relevant as dining habits have changed. Bloomin' Brands has the right people, assets, and capabilities to meet the needs of today's consumer to capture the opportunity in front of us and beyond.

In summary, we were very pleased with our third-quarter performance. We exceeded our objectives, rolled out key growth initiatives, and gain market share. Finally, as a result of our current momentum, we are in even stronger position to take advantage of the opportunities ahead of us in this evolving landscape. And with that, I will now turn the call over to Chris.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Thanks, Dave, and good morning, everyone. Before I discuss our Q3 results, I want to provide some perspective on recent sales trends and how we are successfully navigating the current environment. We began the process of reopening our dining rooms in early May in accordance with state and local guidelines. As of yesterday, 99% of our company-operated restaurants have dining rooms opened, some with a level of reduced seating capacity.

This is up from 92% at the time of our last earnings call in July. As Dave mentioned earlier, we are continuing to employ elevated safety measures in the restaurants to ensure our consumers feel welcome and safe. Restaurant capacity continued to increase during the third quarter and we have seen varying results across the country. For example, in Florida, restaurant capacity was recently increased to 100%.

And as of this time, we have not seen a commensurate increase in sales in certain parts of the state. Tampa and Jacksonville are responding well and seeing weekly volume increases, while more tourist-centric areas, like Orlando and South Florida are relatively soft. Conversely, we are seeing good sales gains in states such as Georgia, Tennessee, and Texas, where we have a large presence. We will continue to closely monitor these key markets as the year progresses.

In terms of overall sales performance, U.S. comp sales were down 12.8% and have improved steadily over the past several months. For perspective, U.S. comp sales in September were down 7.9% versus down 24.3% in June.

This positive momentum was driven by in-restaurant sales growth while maintaining strong retention of our off-premises business. At Outback, comparable restaurant sales were down 10.4% in the third quarter and experienced sequential sales improvement every month, with comparable restaurant sales down 7% in September. Our other U.S. concepts saw similar monthly progress in sales results.

We are pleased with the continued momentum in overall sales trends. One thing I wanted to point out about our sales moving forward, although comp sales remain a key measure for performance, we are increasingly more focused on building absolute sales volumes week to week and gaining market share. Comp sales comparisons have the potential to become less informative as we enter the holiday season, especially if there are still significant restrictions on capacity that limit our ability to grow in-restaurant volumes. It is difficult to predict where capacity constraints and the consumer mindset will be in December.

As a result, it may be challenging to dramatically increase our in-restaurant volumes during December if we maintain the current capacity levels. However, we are extremely confident that between our rigorous safety protocols in restaurant and our strong off-premises business, we will be well-positioned to maximize our sales in these critical weeks and months ahead. Turning now to other aspects of our Q3 financial performance. Total revenues decreased 20% to $771 million.

GAAP diluted loss per share for the quarter was $0.20 versus $0.11 of diluted earnings per share in 2019. Adjusted diluted loss per share was $0.12 versus $0.10 of adjusted diluted earnings per share last year. As it relates to our operating expenses, there are a few areas worth calling out. Since the onset of this pandemic, we have been focused on simplification efforts to improve efficiency and lower costs.

This has had a positive impact on several areas on our P&L. In Q3, food and beverage costs were 150 basis points favorable to last year driven by record low waste, as our streamline menus continue to demonstrate the benefits of our simplification efforts. Even with the introduction of the new Outback menu, we continue to see waste favorable to pre-COVID levels. We are also seeing benefits from reduced discounting, which is showing up in higher overall check averages.

The labor line was 190 basis points unfavorable as we had significant deleveraging on this line from sales being down year over year. Similar to COGS, however, we also benefited from simplification efforts. This showed up in a reduction in food prep hours. We are also continuing to find efficiencies in off-premises labor as that business continues to grow.

Operating expenses were 170 basis points unfavorable due to sales deleveraging, increases in to-go supplies, and menu printing costs for the Outback new menu. These increases were offset by a $20 million reduction in marketing expense within the quarter. Despite the deleveraging in our P&L from lower sales, our focus on expense controls allowed us to generate a 10.7% restaurant margin in Q3. More impressively, our U.S.

restaurant margins were positive 11.4% in Q3, which was only 10 basis points below last year, despite significantly lower sales volumes. Moving forward, we will be very thoughtful about how we introduce expenses back into our business. And as we emerge from the pandemic, we remain committed to achieving the margin improvement goals we've shared with investors back in February. On the G&A front, Q3 was down $11 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. In addition, we had another $4 million benefit from reduced travel and training expenses related to COVID. Our adjusted tax rate for the quarter was 58.6%. This is a product of our negative pre-tax income, as well as, additional tax credits, such as our FICA tip credit.

One other P&L item worth noting is our franchise and other revenues category. This was down $11 million year over year due to lower royalties and marketing contributions from franchisees. This decline was driven in part by deferred royalties and lower sales on our West Coast restaurants. These locations have been more impacted by the pandemic than our company-owned footprint.

As sales and profit trends improve, we would expect an increase in royalty and marketing contributions, as well as, the planned collection of our deferred royalties. Turning to our balance sheet. Since our last update on July 24th, we have improved our total domestic liquidity position to $551 million, which includes $103 million of domestic cash and $448 million of availability on our revolving credit facility. Our strengthening sales performance, combined with disciplined cost management, has enabled us to tightly manage cash, enhance liquidity, and allow for continued financial flexibility.

In closing, although this situation has been challenging, our performance throughout this pandemic has enabled us to continue to improve our operating model and deliver strong results. And with that, we will open up the call for questions.

Questions & Answers:


Operator

[Operator instructions] Our first question comes from the line of Jeffrey Bernstein with Barclays. Please proceed with your question.

Jeffrey Bernstein -- Barclays -- Analyst

Great. Thank you cery much. My question is on more recent trends. I think you mentioned, Dave, that you're still outpacing the industry thus far in October after what was, I think you said, 850 basis points in the third quarter.

It just sounds like, as peers talk about the industry as well, maybe there's concern about the onset of colder weather and the recent spike of COVID infections and just unease around the elections. I'm just wondering if you can give any kind of color. I was a little thrown. I wasn't sure exactly what you meant when you talked about your comments around the December period, but just wondering whether you see further opportunity to improve sales from here prior to a vaccine.

And then I had one follow-up.

David Deno -- Chief Executive Officer

Sure. Yeah. Good morning. Yes, we do see the opportunity to improve sales, the balance of the quarter.

And as I mentioned, our sales so far in Q4 have outpaced the industry and our revenues are building each week. Why is that? More people are coming in the dining room and we're holding on to our off-premises sales, which have been very, very helpful. So we're going to continue to try -- obviously, it's our objective to do that as we move forward. And then when we get to the really, really high Christmas holiday season, we would like to fill the box up as well within a proper, safety, and regulation environments, right? But we've got different day parts, different days of the week, and we've got a really great off-premises business and catering business that we hope to use as well, Jeff, to build our sales week to week to week.

The only thing that I think Chris mentioned was, this last couple of weeks, when you have a really high holiday season, you've got the comp lap there. But again, our job and our goal is to continue to build revenues week to week.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah, Jeff. And I would just add to that. In a typical year, weekly volumes really step up the last three weeks of the quarter, in particularly, in December. And our restaurants get pretty full.

But it's important to keep in mind, we still have fewer seats in our restaurants now than we did pre-pandemic, so that just creates some sort of artificial limit to in-restaurant volumes. And so we just think it's much more constructive to pay attention to absolute volume changes because comp sales results can -- and the percentage change can get a little bit different -- difficult to assess. The other thing I would add, you mentioned the winter season and the winter weather. It is important when you talk about things like outdoor dining, it is not a material driver of our overall comp story.

And the majority of our outdoor seating is located in the Southern part of the United States and the cooler weather actually helps outdoor seating in the majority of our restaurants. So I think that we feel good about the levers we have in place heading into the holiday season. We just want to make sure people were aware of just some of the inherent constraints that we have.

Jeffrey Bernstein -- Barclays -- Analyst

Understood. And then my follow-up was just as you talked about the challenges of the broader industry during this pandemic. I think a lot of people have been talking about independent closures as maybe a net positive for the larger chains like yourself, allowing for market share gains. So with that said, I was wondering if you're seeing any of that yet.

Maybe you can offer any kind of color of magnitude in terms of those closures. One of your peers talked about how they expected big real estate opportunity to play out with grade A sites becoming available and yet they mentioned not really seeing that yet, not seeing the favorable lease terms yet. So just wondering if you can comment on the independent closures and the real estate and rental markets most recently. Thank you.

David Deno -- Chief Executive Officer

Yeah. Sure. So first of all, let me say by -- we're a really big supporter of the restaurant industry. We don't want to wish any ill will on any independent or any chain.

But, yes, there have been independents that have struggled. And, yes, there have been some chains that have struggled. And we are very well-positioned to gain share, to pick up sites. We haven't seen a whole lot of that yet, but we are well prepared on a market-by-market basis to move forward.

And we would intend to take share and come out in even stronger position. And when you look at it, you look at our off-premises business and our dine-in business, both are very well-positioned for the future.

Jeffrey Bernstein -- Barclays -- Analyst

Great. Thank you.

Operator

Thank you. Our next question comes from the line of Brett Levy with MKM Partners. Please proceed with your question.

Brett Levy -- MKM Partners -- Analyst

Great. Thank you. Thanks for taking the call. If you could just -- last quarter, you gave us a little bit of color in terms of how well your portfolio was doing in terms of number of units that are generating positive comps.

If you wouldn't mind going a little bit further into how you're doing, the variances by state, those that have higher capacity versus those that are still challenged. And do you have any sense as to where you are right now in terms of total capacity and where you think you could be, whether based on the states where they are, just the efficiencies you can do with partitioning and moving tables around? Thanks.

David Deno -- Chief Executive Officer

Yeah. Sure. First of all, we've captured a lot of the efficiencies through outdoor, some of the outdoor dining work we've done, which Chris talked about, the partitions we've built, etc. And Chris can get in some of the capacity and things if we need to follow up on that.

But it varies a little bit by state. I mean, clearly, Georgia, Texas, Tennessee, etc., are doing really well and we're seeing good results out of those markets. And then -- like I mentioned before, our off-premises business is continuing to do really well. We're holding on to the incrementality.

So we are prepared to operate in a very safe environment and take advantage of capacity as things expand.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. And just a couple of stats, Brett. So in Q3, we had 159 of our locations that posted positive same-store sales results. In September, that number jumped up to 271 locations with positive comps and that actually included 42% of our Carrabba's locations posted positive comps in September.

So very strong performance.

Brett Levy -- MKM Partners -- Analyst

Great. Thank you. And I know you -- I know Jeff had asked this. Can you give an order of magnitude, at least, in terms of what kind of market share you've taken? Because obviously, 850 basis points in the third quarter is a solid number, but there's a lot of room between positive and taking share in 850 basis points.

Thanks.

David Deno -- Chief Executive Officer

Yeah. Brett, we don't have particular share data. I mean, I think 850 basis points is a very good number and we're very proud of it. And we are continuing to outperform the market in Q4.

So we don't have share data, but I can tell you we are very well-positioned to capitalize on current trends and trends going forward as a company.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. And even though we didn't provide direct context as it relates to our performance, it is worth reiterating that our weekly volumes have posted increases from where they were in September.

Brett Levy -- MKM Partners -- Analyst

Thank you very much.

Operator

Thank you. Our next question comes from the line of John Ivankoe with JP Morgan. Please proceed with your question.

John Ivankoe -- J.P. Morgan -- Analyst

Hey, guys. First, I'm going to ask this question very directly. Maybe you can give a direct yes, no or answer or just tell us what the number is. Can you quote in October, U.S.

company system number for us? I mean, every -- we're -- you guys have obviously kind of had to start this because of COVID and I do understand kind of the sequential increases in average weekly sales. Should we -- is it a number better than September? Or can you provide a hard number before I ask the next question?

David Deno -- Chief Executive Officer

John, we'll stay with giving our practice of not getting too much details, especially as we move forward as a company. We'll stay with the fact that we're outperforming the industry as we have been during the third quarter.

John Ivankoe -- J.P. Morgan -- Analyst

OK. All right. And do you want to quote whichever industry number that -- because these numbers aren't actually publicly reported, the industry numbers? Can you tell us what that industry number is that you're benchmarking against?

David Deno -- Chief Executive Officer

It's the well-known industry numbers in Black Box, etc.

John Ivankoe -- J.P. Morgan -- Analyst

Well, that's I'm asking you that. One, there's two different data sets. And secondly, you have more updated numbers than we do, so that's why I just wanted to make sure that we're all on the same page there as we set these critical fourth-quarter expectations.

David Deno -- Chief Executive Officer

Yeah. We're on the same page and we're ahead of both.

John Ivankoe -- J.P. Morgan -- Analyst

OK. All right. And that's fine. And then, Dave, obviously, we -- and I apologize for wasting my words on that question.

We've obviously talked a lot about kind of cost over time and how the overall organization is kind of evolving. But from an overhead perspective, from a data, from your technology, various types of support, can you kind of give us, you know, not necessarily quantitative, but your kind of qualitative view of how that's going and specifically talk about how you might be able to make better decisions faster going forward?

David Deno -- Chief Executive Officer

Yeah. Sure. We started this journey well ahead of the pandemic. If you recall, if you have been following our story, we were addressing our cost structure in the restaurant and in overhead for quite some time and made some moves in the organization earlier this year.

And we've become a leaner, faster-moving company. I mean, take a look at what we're doing with Aussie Grill and Tender Shack. I mean, boom, the Outback menu. And we've also learned a lot about our data and digital business.

And so those kind of things, we are moving very, very quickly. We're moving within weeks of these decisions, like Tender Shack, etc. So that has helped us a lot, John. And as we go forward, as Chris mentioned, at the restaurant level, clearly, we had a good -- we've done a very good job managing various line items and we see that opportunity moving forward because we've learned a lot.

And we've also learned a lot about our organization as we've managed it and you can see it in our numbers how our overhead costs, some G&A costs have come down sequentially year on year. So we think we have a leaner organization, a more rapidly moving organization, a more efficient organization, and a more effective organization as we've gone through this year.

John Ivankoe -- J.P. Morgan -- Analyst

And at this point, have all those changes been made? Or might we be looking for more as we get into '21? In other words, where are we on that journey in terms of what's been put in place?

David Deno -- Chief Executive Officer

I think we've done a fantastic job putting virtually everything in place and we get to enjoy that for the balance of this year and into next year.

John Ivankoe -- J.P. Morgan -- Analyst

OK, enjoy. Thanks, guys.

David Deno -- Chief Executive Officer

Thank you, John.

Operator

Thank you. Our next question comes from the line of John Glass with Morgan Stanley. Please proceed with your question.

John Glass -- Morgan Stanley -- Analyst

Thanks and good morning, everyone. I wanted to follow up on that. One way I think investors and maybe other companies are trying to frame this is to think about when sales do return to normalized levels, what, either the restaurant-level margin, or maybe more importantly, just the enterprise level margin could be, right? You said those cost savings were in place. And so now sales are going to come back.

Can you quantify what you think the retention of those cost saves could be, and therefore, what the enterprise margin could be given that you laid out some cost savings in February? I think you've probably learned more since then. Can you quantify that for us?

David Deno -- Chief Executive Officer

I'll speak to it broadly, then I'll turn it over to Chris. Again, for those of you who followed our company, we talked about a 200- to 250-basis point opportunity in our company before the pandemic and we made a lot of moves prior to the pandemic to set ourselves up. And I think, John, you're familiar with some of those. And we also believe that certain line items on our P&L, and I'll turn it over to Chris to provide some more examples, that provides some opportunity for us as we grow this business.

But this journey started well before the pandemic and we've learned a fair amount during the pandemic.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. And not to overly repeat Dave, what Dave said, but to give you a little more quantification and specificity. You know, we felt good about our ability to grow margins coming into this year pre-COVID not only because of what we learn -- this isn't just because of what we learned during the pandemic. We had talked about the $20 million of identified cost savings heading into 2020 and we called out with that an 80-basis point improvement in operating margins in our original 2020 guidance.

And then we called out another $20 million of cost savings for 2021 that have been identified. So obviously, the original plan for 2020 was put on hold due to the pandemic, but that $40 million of cost savings is still intact. Now on top of that, as Dave said, we've learned how to be more efficient in our operating model. And so if you kind of go line by line, I'll give you a little bit of perspective on how to think about some of those things.

It's all going to start with sales for us. We are generating our sales with less discounts. That's showing up in check average. We've not needed this discounts in this environment to drive traffic and it is improving the margins and the flow-through.

I think there's learnings there for us moving forward. Cost of goods sold, clearly, is the biggest area where we've seen improvement in terms of our margin structure at the restaurant level and a lot of that is driven by waste reduction. Waste was a major priority pre-pandemic, but due to the simplification efforts that we're seeing and the better execution, the less recooks, all that, we are absolutely confident that level of that is going to continue. Labor is the biggest area of reduction in terms of -- the biggest area of reduction in labor is in terms of prep hours, which is again, a product of a simplified menu.

Now hours are going to come back into the restaurant as we see increases in sales, but we feel good about our ability to hold on to some level of this benefit. And then we have a large opportunity in marketing. During the pandemic, a reduction in marketing expenses has made sense given the capacity constraints. But once we get past the pandemic, we have tools that will allow us to deploy the most efficient marketing programs and that gives us an opportunity to reduce marketing spending without losing effectiveness in terms of driving traffic.

And then Dave has talked about the G&A savings. Now we've seen some -- not some, we've seen quite a bit of incremental G&A savings in travel and training as a result of the pandemic. We do expect a lot of that to come back into the P&L. After all, we're in the hospitality business and that personal connection is going to be important.

However, we've learned to be more efficient in our use of online communication. And we're hopeful we can leverage some of this to save some additional G&A dollars moving forward. So look, not an exact quantification, but the sum of it is, is that entering the year, we felt good about closing the margin gap to our peers. After the learnings from the pandemic, we feel even better about that ability.

John Glass -- Morgan Stanley -- Analyst

That's very helpful. Just one follow-up on the international margins. So U.S. was essentially flat year over year.

Your comps were down low double digits. Does that relationship hold for international? That is to say, as Brazil is improving to, I think, down high singles or whatever the number you quoted, could you see the same kind of order of magnitude that you could get close to last year's margin on the current sales in Brazil?

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. As they improve that -- there's no reason why they couldn't do that, absolutely. In fact, their volumes are even a bigger -- their overall average unit volumes of the restaurants are an even bigger advantage in that respect.

David Deno -- Chief Executive Officer

And I just want to call out the Brazil team. I mean, the bounce back we've seen, they've done a fantastic job, and they generate positive cash flow in the quarter. So really pleased with what's going on down there.

John Glass -- Morgan Stanley -- Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of Alex Slagle with Jefferies. Please proceed with your question.

Alex Slagle -- Jefferies -- Analyst

Thanks. Good morning. A question on the margins. First, on cost of goods, if you could guide a little deeper on the leverage seen there.

I mean, I've never seen it that low. Just thoughts on how much of that is sustainable or if this should be viewed as the low point. And then just any context on the current run rate, restaurant level margins at current sales levels, and how we should think about that heading into the fourth quarter.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. So it's funny you mentioned that. So the 30.1% cost of goods sold that we posted this quarter, we were trying to go back into our history books. This, we think, is the lowest cost of goods sales number that we have ever posted in the history of our company in a quarter.

And it has a lot to do with the fact that between the -- first of all, the efforts that I talked about, the things that we were doing pre-pandemic in terms of reduction of waste and then the additional learning from the simplification efforts in the menu, that's driving a significant amount of favorability. And then the other thing that I did briefly mention is that we are seeing higher check averages and a lot of that is reduction in discounting. We're just -- I know we've been on this journey for discounting for a while, but the reality is, is that we still had some level of discounts in our system. And right now, we're just not doing discounting, aside from just the discounts that you'd see through our Dine Rewards program.

So on top of that, those two big positive variables, the only downside really is just a slight unfavorability from commodity inflation, but it's been pretty mitigated as well. We've been pretty -- we've been running more favorable in commodities in the last couple of quarters than we thought we were going to coming into the year. So just that perfect storm of great execution by our teams in the field, as well as, discipline here in the restaurant support center has driven that number to that level. And you had another question, Alex, was it on -- just overall --

Alex Slagle -- Jefferies -- Analyst

Yeah, just on the current run rate.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. I think the way to think about that is that as -- if -- should volumes continue to improve, obviously, there's a pickup there when you get to restaurant margins, but it is entirely dependent on the level of volumes and volumes continuing to increase throughout the quarter.

Alex Slagle -- Jefferies -- Analyst

Got it. Thank you.

Operator

Thank you. Our next question comes from the line of Brian Vaccaro with Raymond James. Please proceed with your question.

Brian Vaccaro -- Raymond James -- Analyst

Well, thanks. Good morning. Just a couple of questions on store margins. Starting with the U.S., could you give us a sense of how margins trended through the period? Maybe some color on September versus July.

And with comps continuing to improve, would you expect U.S. store margins to be up year on year in the fourth quarter?

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. We're probably not going to give that direct level of guidance as it relates to our expectations for Q4 margins. There's just too much uncertainty in terms of the environment to make that kind of declarative statement. But I guess, what I can tell you is if you think about June margins versus September, they were actually fairly flat.

And what I would tell you about June versus September restaurant margin is we did roll out the new Outback menu in September. And there were one-time costs associated with that as it relates to extra training hours that we rolled in, menu printing costs. We've done a lot of work to simplify the menu, take off some of that excess collateral. So we had to reprint new menus.

So those costs fell into September. And if you took those out, then we would have shown pretty solid improvement in our restaurant margin level from June. Now obviously, as the quarter progressed, restaurant margins continue to improve. But because September was a five-week period versus a four-week period in July and August, there's a little bit of a disconnect there in terms of how you think about the progression.

David Deno -- Chief Executive Officer

And June was a five-week period.

Chris Meyer -- Executive Vice President and Chief Financial Officer

And June was a -- yeah, that's why I'm comparing it to June because June was a five-week period as well.

Brian Vaccaro -- Raymond James -- Analyst

Yeah. And you had said June, five-week period. I'm trying to remember, I think you said it was in the mid-13s, if memory serves, store margins in June.

Chris Meyer -- Executive Vice President and Chief Financial Officer

That's right. That's right, Brian, 13.5%.

Brian Vaccaro -- Raymond James -- Analyst

OK, OK. And on Brazil, could you provide some more context just sort of on what you're seeing in terms of the environment down there? What are some of the primary factors that have allowed sales to improve to the degree they have? And I guess, with comps, I think you said comps were down 5% to 10% in October. Could you give us a sense of where store-level EBITDA is more recently?

David Deno -- Chief Executive Officer

So we won't get into restaurant-level EBITDA by month. I mean, that's probably a little too granular for that type of guidance. But let me just say, Brian, it's a clear indication of how strong the brand is down there. It's the leading casual dining business by far and it's one of the best brands in the country.

So as things open up, people miss Outback. The second thing is, much like the U.S. and some of our businesses, we really didn't have much of an off-premise business in Brazil. And they introduced it and we're hanging on to it as the dining rooms reopened, and that's also been extremely helpful.

We generated positive cash flow in Q3. There's no reason to think why we can get them generate positive cash flow in Q4. So we're just really pleased with what the team is doing down there.

Brian Vaccaro -- Raymond James -- Analyst

OK. And then last one for me. Back to sales, I understand it's all about absolute sales volumes in a COVID world. But I guess, thinking about the seasonality that you mentioned moving through the fourth quarter, just to make sure we're all on the same page from a comp perspective, since a lot of investors are focused on that metric.

If you held October AWS at Outback through the quarter, could you give us a sense, what would that sort of translate into in terms of December comps? Or maybe how much higher last year is December average weekly sales volumes compared to October, just to frame the seasonality?

David Deno -- Chief Executive Officer

Sure. What we're going to -- what we can say is our goal and as we have seen is our -- we don't want our volumes to hold on a weekly basis. We want them to absolutely, absolutely build. And as Chris mentioned, the last two or three weeks from a seasonality standpoint, that's the holiday season and we want to take advantage of catering and off-premise and things like that to build the restaurant volumes up.

Chris, is there anything else you want to add?

Chris Meyer -- Executive Vice President and Chief Financial Officer

Well, I would just give you some perspective on last year volumes. So if you look at the beginning of the quarter, last year, the U.S. portfolio was running $65 million of sales or so a week. And then you get to the last couple of weeks and that bumps up to, call it, $75 million of sales.

So I think that that's the kind of progression you're looking at from a last year, a year ago base. And again, look, we hope that we can continue to progress and that there is ability to grow volumes in the box in the last few weeks of December. But we just wanted to make sure that everyone understood kind of how that played out last year.

David Deno -- Chief Executive Officer

Whether it's various day parts, whether it's different times of the week, whether it's off-premise, whether it's catering, whether it's dine-in, we will be prepared to grow those volumes.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. And just to reiterate again, I mean, we have seen volumes increase in October from where they were in September, which is progress.

Brian Vaccaro -- Raymond James -- Analyst

Yeah, yeah. All right. And then just last one on Tender Shack. Obviously, encouraging to see the test expanded and you said sales -- the consumer response and the sales have been strong.

Could you give us a sense, just ballpark kind of average orders a day? Or any context on the contribution that you're seeing?

David Deno -- Chief Executive Officer

It's early, Brian. I really don't want to get into that kind of detail quite yet, just that we expanded to the new markets. But I think you know us pretty well. We had expectations for the brand.

We're beating those expectations from a customer, sales, margin, operations standpoint. And we would not be expanding the test, unless we felt that we had something there that we're pretty excited about. Same thing with Aussie Grill. Freestanding location in Tampa, where our plan is to build out the pipeline here in Florida and begin to do that.

So I think what you're hearing from our company is multichannel, convenience, great food, and we're going to capture as much of that as we possibly can.

Brian Vaccaro -- Raymond James -- Analyst

Fair enough. Thank you.

Operator

Thank you. Our next question comes from the line of Jeffrey Farmer with Gordon Haskett. Please proceed with your question.

Jeffrey Farmer -- Gordon Haskett Research Advisors -- Analyst

Hi, good morning, and thank you. Two questions for you guys. So when we heard from you in late July and then again today, you did highlight sort of a handful of initiatives that were meant to increase capacity. You talked about plexiglass, increasing table turnover, outdoor dining space, reintroducing lunch.

The question I have for you is if we look across all of those initiatives, which do you feel have proved most effective in delivering capacity gains? And as we look forward, which would you expect to be most effective in delivering future capacity gains?

David Deno -- Chief Executive Officer

Yeah. Well, stepping back, Jeff, again, we've tried to get this volume gains through every single channel, outdoor dining, off-premises, which we feel very good about, in-restaurant dining, all those things have come together for us. But let me just step back for a minute and talk about the things that you can expect from our company over the next few quarters as we drive traffic and sales. We talked in the script about the new menu at Outback Steakhouse.

If you haven't been yet, I really would encourage you to go. We've captured the value opportunity. We've captured the abundance opportunity. We've got combos and we're very, very pleased with that.

So that's a big catalyst for in-restaurant dining. Second, we -- our goal is to achieve at least 50% of the gains where we started in March to where we are today in off-premises and we think we have a best-in-class off-premises and casual dining. And we want to be able to serve our consumers at home or in the restaurant, and off-premises has enabled us to do that. We talked earlier about opportunities to relocate and build sites.

We're going to be capturing that as the world changes. Then we look at Brazil. We talked about Brazil and the gains that they're making. That's a big part of our growth as well and I'm really pleased with what they're doing there.

Then there are a couple of new ideas that can be a part of our growth equation and that's Tender Shack and Aussie Grill, and we've got that going within our company. And then finally, we talked earlier on the call, Jeff, about capacity coming out of the restaurant business. It's too early to tell exactly how that's going to look, but it's not too early to tell that we are going to be very well-positioned to capture those opportunities as we go forward. So each of those multichannel, multiconcept opportunities for us are a big opportunity.

And I'd just want to say one more thing and then I'll turn it back. I've been really pleased with what Carrabba's is doing in off-premises. That could be a piece of business for us that will be permanent and structural in carryout and delivery that customer has really responded to that offering. So it's really great to see.

Jeffrey Farmer -- Gordon Haskett Research Advisors -- Analyst

All right. Thank you for that, Dave. And just one other follow-up. So this is really another crack at an earlier question on the cost side of this business.

So in February, you guys did point out an opportunity to deliver an additional $20 million in cost savings in '21. Obviously, a lot of moving pieces in terms of the COVID backdrop. You've accelerated some of those efforts. But when the dust settles and we're looking at the opportunity for cost savings in 2021, Chris, you highlighted this a little bit.

But in terms of thinking about sort of the net cost savings benefit in 2021 that remains relative to everything that you've done in 2020, can you put a number on that for us?

Chris Meyer -- Executive Vice President and Chief Financial Officer

In terms of -- I'm trying to understand the question. So we had the $20 million this year. We have another $20 million next year. You're talking -- we feel -- I guess, I would just say we feel really good about our ability to deliver on both of those numbers.

Jeffrey Farmer -- Gordon Haskett Research Advisors -- Analyst

OK. I was just clarifying that. I wasn't sure if you had pulled forward some of those potential cost saves or maybe uncovered some additional cost saves, so you answered the question. $20 million is still a good number to use as we move forward to 2021?

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yes. And I would say it's not -- I'd say the -- just one thing to keep in mind as you're thinking about modeling and things like that. This year, a lot of that was G&A. In fact, the vast majority of that was G&A.

Next year, it might be a little more split between restaurants and the G&A structure.

David Deno -- Chief Executive Officer

And Jeff, a nonfinancial comment to that is, I think you know about us. We're just never going to stop and we've learned a lot about digital, marketing, and how we can grow the business more efficiently. There's all kinds of different things, and Chris has talked about a few of those already that we can use going forward. And we're just never going to stop.

So we feel great about what we've done already and what we can do in '20 and '21, and we're just going to keep moving.

Jeffery Farmer -- Gordon Haskett Research Advisors -- Analyst

All right. Thank you.

Operator

Thank you. Our next question comes from the line of Lauren Silberman with Credit Suisse. Please proceed with your question.

Lauren Silberman -- Credit Suisse -- Analyst

You've talked about better managing costs, some of the changes you've made to the business pre-pandemic in recent months, plus discount, simplification, marketing, labor. So can you talk about your confidence that these cost saving initiatives won't impact execution negatively or that some of these costs or discounts won't have to come back if the market gets more competitive?

David Deno -- Chief Executive Officer

Sure. You know one of the things we've tried to do during this pandemic is serve food and provide great service to our customers, and we think we've reached a level of cost and service that we're quite proud of. Newsweek just came out with the best customer service in 2020 and Bonefish and Outback are in the top 5. You know Black Box came out with their surveys.

Fleming's is No. 1 in two key measures and Bonefish and Fleming's are in the top 5 in intent to return. If we look at the measures -- the consumer measures that we're looking at in the pandemic, after the costs have come out, we are making significant progress and that's because our operators are focused on our two key priorities: serving great food and taking care of our customers and our people in a safe environment. So we are really trying to make sure that these things stick going forward.

As far as costs, Chris talked about costs, we're going to be very careful about what we add back because we've learned a lot. And as we look at marketing spending or overhead spending or what we spend on labor, I think we've got a really seasoned management team that knows what the return on investments look like and what we're going to be adding back and when while taking care of the customer and our employees.

Lauren Silberman -- Credit Suisse -- Analyst

Great. Thanks. And just to clarify on further sales improvement from here. It sounds like the lifting of capacity restrictions isn't going to be more meaningful than season demand.

Is that fair? Is there a combination that's subject to for further sales improvement? And then trends across regions, you called out the different in Florida and strength in markets that reopened earlier. But have you seen sales stall or any volatility in trends in markets that have seen resurgence of cases?

David Deno -- Chief Executive Officer

We have need -- we have seen no impact from this -- any cases of resurgence in markets. Our goal is to safely serve customers as dining capacity expands in markets. And we talked earlier about achieving our daypart opportunity, our channel opportunity, delivery, carryout and dine-in, and our day of the week opportunity. So we're going to pursue all that.

So it's capacity expansion, but we also can control and learn and grow from different channels as well.

Lauren Silberman -- Credit Suisse -- Analyst

Great. Thanks so much.

David Deno -- Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Jon Tower with Wells Fargo. Please proceed with your question.

Jon Tower -- Wells Fargo Securities -- Analyst

Great. Thanks for taking them. Just a few follow-ups. On the Tender Shack opportunity, can you just talk about the strategy so far with respect to roll out in terms of where the virtual brand is being homed? Is it sticking in the Carrabba's brand across the country to date and perhaps, how we should think about that going forward? Is it going to be multibranded, even though it's going to obviously stay as the Tender Shack online? And then another question after that.

David Deno -- Chief Executive Officer

Sure. The most important thing for us are the markets and we anticipate all of our restaurants to participate in the Tender Shack rollout, should we go that far. The Carrabba's team, as I mentioned earlier, has been doing a fantastic job on off-premises. The Outback team was rolling out a new menu.

And therefore, we felt that the Carrabba's team was the best place to start. And we wanted to pick markets that we're very well represented and get a good read going forward, but we're -- like I said earlier, we're very pleased with the results.

Jon Tower -- Wells Fargo Securities -- Analyst

OK. And just going back to kind of the discounting question earlier and some of the margin questions as well. How much does the new menu at Outback help solve for some of the lower discounting that you're doing? I mean, it sounds like it's constructed in such a way that you're going to see some cost and labor savings. However, at the same time, you've lowered some prices on some key items.

So maybe if you could talk through that a little bit, I'd appreciate it.

David Deno -- Chief Executive Officer

Yeah. The team did a great job. We basically want to address the value equation at Outback Steakhouse through permanent menu changes, so let me just talk about a few of those. If you love the Bloomin' Onion, it's $2 less expensive.

If you love Aussie cheese fries, it's less expensive and you get more. If you love our ribs, you get more. If you want to trade up to our bigger steaks, sirloin, and also higher cuts of meat, you get the gap between the base and the higher cuts is closed more. How did we do this? And why are we so optimistic about everything? One, it addresses consumer need, the value equation, outback food at a great price.

That's number one. Number two, is the team did a great job identifying costs to take out of the business because of simplification that will enable us to pay for these changes without a large, if any, traffic increase. But what's happening is we also added combos to the menu. What's happening? Attachment rate of appetizers is going up.

Beer and liquor wine mix is going up. The number of steaks that are being ordered at the higher end of the menu is going up. Our PPA is -- looks really great. A per person -- guest check is looking really great.

So when we combine the cost savings with the sales opportunity, with the simplification and what the customer gets out of this, we feel very good, Jon, about what that addresses from a value equation standpoint. We don't have to rely on discounting all the time, but also it's good economically for us. That's the purpose of the menu.

Jon Tower -- Wells Fargo Securities -- Analyst

And -- and thank you for that. I appreciate it. And then just quickly turning to the balance sheet and uses of cash. Obviously, it sounds like reinvestment back in the business is going to be a top priority.

But I am curious, your debt levels are obviously higher than they were pre-pandemic. And I'm curious to hear how quickly you think you can start paying down debt or perhaps your priorities in terms of debt paydown relative to reintroducing the dividend at some point in time and/or reintroducing a buyback.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. So what I would tell you is that every tenet of the strategy that we laid out in February as it relates to our long-term thinking about how to drive total shareholder return is still in place in my mind. It's just been delayed by the pandemic and it just really comes down to a question of when we can get back on that journey, which, to your point, included a heavier dose of debt paydown to get our credit metrics where we were comfortable with them. It involved increasing the dividend.

There were a lot of tenets to that that we felt really strongly about. And obviously, investors agree with that as well, the way that the shares performed after we announced that. So look, it's about getting back to that. Now to your point, there's a pacing and sequencing to get to that.

We are in a situation now where we are going to focus on debt paydown in the short-term and get the debt levels to an area at a comfortable level before we turn back on a dividend. Don't know the timing of that. I mean, again, that is largely dependent on the length and duration of the pandemic. And -- but our focus -- and again, we've been generating positive cash.

We have been paying down debt as we've been getting cash flow coming into the business. So that has been the priority thus far. Now -- and we also -- keep in mind, we do have -- because of the revisions to our credit agreement, we have capital expenditure restriction through Q1 of next year. At that point in time, I would expect us to reinvest a little more in capex.

But not -- look, we're not going to go back to spending capital like we were three or four years ago, where it was like $250 million to $300 million. That -- those days are behind us. So what I can tell you, though, is we're going to be opportunistic. If there are opportunities with real estate or what have you, we're going to be armed and ready to take advantage of those opportunities.

But I think that going back to the large levels of capital spending are behind us, the focus will be on debt paydown. Ultimately, we will -- we will -- we would love to get that dividend back in place as well.

Jon Tower -- Wells Fargo Securities -- Analyst

Awesome. Thank you.

Operator

Thank you. Our next question comes from the line of Greg Francfort with Bank of America. Please proceed with your question.

Greg Francfort -- Bank of America Merrill Lynch -- Analyst

Hey, thanks for the question. Maybe just one quick follow-up to that last one. I think it's probably -- it's very difficult to figure out the timing of when you can get your leverage down, but is there a number or target that you have in mind for where that would go to? And then the other question I had was, can you talk a little bit about the off-premise mix? I may have missed it, but just any quantification for where you stand recently in terms of off-premise mix or delivery mix and how that business is going. Thanks.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. I'll start with the first one. So we've always talked about a 3 times lease adjusted leverage ratio being our target that we think it makes a lot of sense for the company. Obviously, we're not at that right now, but over time, that's kind of where we would sort of shoot for to get for the long-term.

And then I'll let Dave answer the other question.

David Deno -- Chief Executive Officer

Yeah. If you look at our off-premise mix, which is carryout and delivery, it's 39% of the business with the -- in Q3 with Outback and Carrabba's being a bit higher than that and Bonefish and Fleming's being lower. And like I've mentioned many times, we're very pleased with what we see, both within our own delivery channel and our third-party partnership.

Greg Francfort -- Bank of America Merrill Lynch -- Analyst

Got it. And maybe one last follow-up. I -- you talked a little bit about some of the food efficiency that you guys have been doing. Any quantification on how much the food waste has come down? Or how much sort of gains or efficiencies you found there? I'm just trying to think of how much of this has been inflation or deflation in commodities versus efficiencies you guys have taken out on the food waste.

Thanks.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. It's a big number. I think just to give you perspective on waste. We always talk about waste in -- as a percentage of sales, historically in the 3%, 2.5%, 3%, sometimes higher or lower depending on the concept.

We've got that down below 2% and they're at record low levels which is fantastic. I would tell you that if you translate that to the P&L improvement that we saw in Q3 in cost of goods sold, it's probably worth 80 basis points, the waste factor alone.

Greg Francfort -- Bank of America Merrill Lynch -- Analyst

Thank you. I appreciate it.

Operator

Thank you. Our next question comes from the line of Andrew Strelzik with BMO Capital Markets. Please proceed with your question.

Andrew Strelzik -- BMO Capital Markets -- Analyst

Great. Thank you and good morning. My first question is on Tender Shack and Aussie Grill. I'm just curious how you're thinking about resourcing that at the corporate level.

Is that really a reallocation? Or is there maybe some incremental spend there, obviously, within the context of the broader margin improvement opportunity and kind of how that trends over time if and when these brands scale? And if you could share at all, I know you don't want to talk about the sales and margin side, but if you could just share kind of how the customer for those brands compares to some of the legacy brands.

David Deno -- Chief Executive Officer

So on the organization front, we've always had our best success when we have people dedicated to that effort, both at Aussie Grill and we've got a team dedicated to it at Tender Shack. We've got two terrific leaders in our company. They're leading the way on it for us that own it and are working closely with the Tender Shack case, especially working closely with the brand. So we -- and it's all within the context of the numbers you've seen.

So, you know, we've done -- we've got our G&A and we've been able to introduce these two new opportunities and it's been really good to see, and it's an opportunity for us over the long-term. As far as the customer goes, we think it will be a younger crowd and somebody that we've seen people order single. And we've seen people -- we offer to large groups. We've seen both.

So early days, but we see a large attractive customer base to it and different types of occasions.

Andrew Strelzik -- BMO Capital Markets -- Analyst

Great. That's helpful. And then my other question is just on the labor environment. Can you talk a little bit about what you're seeing in terms of retention and turnover? And in the event that we get an increase in minimum wage, kind of what the implications and levers to offset some of that would be?

David Deno -- Chief Executive Officer

Sure. Our retention and turnover levels have -- are really, really good and we have a very experienced and engaged employee base. And I think the decision that this management team made to not furlough or let people go has really paid off. As the in-restaurant dining came back, we were prepared and ready to go, and our team has been very grateful for what we've done.

And you can see it in our turnover levels, at all levels of the company, managing partner, managers, team members, etc. On minimum wage, I think there's one thing. We don't know where the policy is going to go. There's one thing that I think we've demonstrated during this time and we're a very fluid, flexible organization.

We'll be ready for whatever comes to fruition. A very large majority of our employees make about $15 an hour. So we'll be ready and we'll be ready to address it and move forward.

Andrew Strelzik -- BMO Capital Markets -- Analyst

OK. Thank you very much.

Operator

Thank you. Our next question comes from the line of Sharon Zackfia with William Blair. Please proceed with your question.

Sharon Zackfia -- William Blair and Company -- Analyst

Hi, good morning. Just two questions. On international, what would be the break-even comp for that business to inflect back into profitability? And then secondarily, just curious on Dine Rewards. How has that been trending during the pandemic? And have you seen any kind of uptick on Dine Rewards members as a percent of the transactions or sales?

David Deno -- Chief Executive Officer

Yeah. I'll turn it over to Chris in a minute on the international piece and maybe that's more of a Brazil question than anything else, but -- because that's where we have our operations. But it -- Dine Rewards is up to 11.5 million members. It's extremely valuable entity for us.

Our customers -- our Dine Rewards customers are doing -- are coming in. They're loyal. We are marketing to them. They're a great source of information.

And like I said before, we've learned a lot on our digital marketing and Dine Rewards as part of that, and that's something we're going to continue to work with as we go forward, especially as we source more revenues. It's been a really terrific program we introduced a few years ago and it's been very helpful during this time.

Chris Meyer -- Executive Vice President and Chief Financial Officer

Yeah. And I -- just on the Brazil question, I would say, look, we talked about the U.S. business a couple of quarters ago in terms of breakeven, where we needed to be, and it was like in that 20% sales range -- 20% down sales range. I can't imagine it'd be too much different than that in Brazil, maybe even a little better than that.

They could do a little better than that number in Brazil just given their volumes. And again, they're already generating positive cash flow, which is fantastic.

Operator

Thank you. Our next question comes from the line of Jared Garber with Goldman Sachs. Please proceed with your question.

Jared Garber -- Goldman Sachs -- Analyst

Good morning. Thanks for taking the question. Just two quick ones for me. I wanted to get a sense of what you guys are seeing in the Carrabba's business and why that -- why the results maybe have been so strong there.

And what makes it sort of more applicable with the off-premise side of the business? And then a follow-up on potentially Fleming's and Bonefish. Is that somewhere where we could see maybe some -- either similar pressure or potentially less acceleration as we move into the fourth quarter just given the sort of the dynamics of the business related to potentially more business travel or holiday gatherings? Thanks.

David Deno -- Chief Executive Officer

Sure. I'll -- I'll take both of those. On Carrabba's, hats off to the team. I mean, they've done a great job on off-premise.

Obviously, they have a food form in pasta and other things that travel well. But having been in the pizza delivery business myself for many years, it's also a mindset and a culture that they've built, and they've done a great job with that. And we think that this brand is going to benefit more than any other one as far as the off-premise opportunity. So it's -- that's the reason why.

I mean, I think it's got affordable price points on off-premise. It's got the food forms, etc. On Bonefish and Fleming's, like the other brands, we're seeing growth in in-restaurant dining. The Fleming's team, especially, is doing a great job and we see the consumer coming back into the restaurants at Fleming's.

Now obviously, we don't have some of the private dining and some of the business travel that we had before. But if you look at some of our sales trends during the week, there are days that, in a safe environment, are just doing really, really, really well. And we have high hopes during the holiday season. We can provide Bonefish and Fleming's to the customer in their home or at the restaurant in a really great way.

So that's part of our sales revenue build that we've seen so far this quarter and we expect those two brands to continue to grow that business. And then when the customer -- the business traveler comes back, that will be a layer of business that Fleming's doesn't have today that they're going to be able to add back on. But Fleming's has done a great job during this time, providing customers real service and great food, and we're seeing it in the numbers.

Jared Garber -- Goldman Sachs -- Analyst

Thanks so much.

Operator

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Mr. Deno for any final comments.

David Deno -- Chief Executive Officer

Well, thank you, everybody. We appreciate you for joining us today, and we look forward to updating you in February with our Q4 results. Take care.

Operator

[Operator signoff]

Duration: 67 minutes

Call participants:

Mark Graff -- Group Vice President of Investor Relations

David Deno -- Chief Executive Officer

Chris Meyer -- Executive Vice President and Chief Financial Officer

Jeffrey Bernstein -- Barclays -- Analyst

Brett Levy -- MKM Partners -- Analyst

John Ivankoe -- J.P. Morgan -- Analyst

John Glass -- Morgan Stanley -- Analyst

Alex Slagle -- Jefferies -- Analyst

Alex Sagle -- Jefferies -- Analyst

Brian Vaccaro -- Raymond James -- Analyst

Jeffrey Farmer -- Gordon Haskett Research Advisors -- Analyst

Jeffery Farmer -- Gordon Haskett Research Advisors -- Analyst

Lauren Silberman -- Credit Suisse -- Analyst

Jon Tower -- Wells Fargo Securities -- Analyst

Greg Francfort -- Bank of America Merrill Lynch -- Analyst

Andrew Strelzik -- BMO Capital Markets -- Analyst

Sharon Zackfia -- William Blair and Company -- Analyst

Jared Garber -- Goldman Sachs -- Analyst

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