Brinker International Inc (EAT) Q4 2025 Earnings Call Highlights: Record Revenue and Strong ...

Chili's Same-Store Sales Growth: +24% in Q4, outperforming the casual dining industry by 1,890 basis points. Chili's Average Unit Volumes (AUVs): Increased to $4.5 million. Chili's Restaurant Operating Margin: Improved from 11.9% in fiscal '22 to 17.6% in fiscal '25. Total Revenue Growth: 21.9% for the year, surpassing $5 billion for the first time. Adjusted EPS Growth: 117.1% for the year. Q4 Total Revenues: $1,462 million with consolidated comp sales of +21.3%. Q4 Adjusted Diluted EPS: $2.49, up from $1.61 last year. Chili's Q4 Comp Sales: +23.7%, driven by positive traffic of 16.3%, mix of 4.7%, and price of 2.7%. Brinker Restaurant Operating Margin: 17.8% in Q4, a 260 basis points improvement year over year. Q4 Adjusted EBITDA: Approximately $212 million, a 50% increase from prior year. Debt Repayment: Over $350 million repaid year-to-date, reducing lease adjusted leverage to 1.7 times. Fiscal 2026 Revenue Guidance: Expected in the range of $5.6 billion to $5.7 billion. Fiscal 2026 Adjusted Diluted EPS Guidance: Expected in the range of $9.90 to $10.50.

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Release Date: August 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Chili's same-store sales increased by 24%, outperforming the casual dining industry by 1,890 basis points. Chili's has achieved 17 consecutive quarters of positive same-store sales growth. Restaurant operating margins at Chili's expanded from 11.9% in fiscal '22 to 17.6% in fiscal '25. Brinker International Inc (NYSE:EAT) reported total revenue growth of 21.9%, surpassing $5 billion in revenues for the first time. The company has significantly reduced its debt, paying down over $570 million in the past three years, resulting in a strong 1.7% lease adjusted leverage ratio.

Negative Points

Maggiano's reported a slight decline in comp sales for the quarter, at negative 0.4%. Food and beverage costs were unfavorable by 60 basis points year over year due to unfavorable menu mix and commodity inflation. The company anticipates only moderate gains in same-store sales in subsequent quarters due to high comparison bases from the previous year. There is concern about food inflation impacting restaurant margins. The company is still in the early stages of its store reimage plans, with uncertainty around the timeline and scope of required investments.

Q & A Highlights

Q: Can you provide details on the expected restaurant margin expansion for next year and how it compares to street expectations? Also, how does the Maggiano's turnaround differ from Chili's? A: Mika Ware, CFO: We anticipate a margin expansion of 30 to 40 basis points, not 100 as some might expect. This aligns with our revenue guidance. We plan to invest in cost of sales and labor, which will help leverage margins. Kevin Hochman, CEO: The Maggiano's turnaround is similar to Chili's. The focus is on core guest preferences like scratch-made Italian favorites and abundant portions. We aim to align operations with guest expectations, similar to our approach with Chili's.

Story Continues

Q: With fiscal '26 being the final year of the three-year growth outlook, do you see a need to update growth targets? A: Kevin Hochman, CEO: The biggest change is our ability to build new restaurants faster. We're in a better position now to allocate capital for new builds, given improved restaurant conditions and contributions. Mika Ware, CFO: Our long-term growth targets remain relevant, but as we ramp up new unit growth, we'll ensure our growth algorithm reflects our expectations.

Q: How are you thinking about marketing investments and the value innovation pipeline? A: Mika Ware, CFO: We're maintaining our marketing spend at about 3% of total revenues, allowing for incremental investments. Kevin Hochman, CEO: We'll continue with successful strategies like the Big QP and introduce new value messages. We're also exploring new advertising ideas that emphasize value without focusing solely on price points.

Q: Can you provide insights into the same-store sales components and expectations for Chili's in FY26? A: Mika Ware, CFO: We plan for 3% to 5% pricing, with a focus on maintaining value. Mix is expected to be flat, with any positive mix being upside. We aim for positive traffic growth, despite tougher comparisons in the latter half of the year.

Q: What are the plans for store reimaging, particularly for the 200 priority assets? A: Mika Ware, CFO: We're in the early stages, planning to reimage four restaurants in Dallas with varying scopes. We'll evaluate results before scaling. The goal is to refresh 10% of the fleet annually, ensuring restaurants remain updated and relevant.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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