Brinker International ((EAT)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Brinker International’s latest earnings call exuded a strong positive sentiment, driven by Chili’s impressive same-store sales growth, margin expansion, successful product launches, and significant debt reduction. Despite Maggiano’s slightly lagging performance, the overall financial health and strategic investments position the company well for continued growth.
Chili’s Same-Store Sales Growth
Chili’s reported a remarkable 24% increase in same-store sales, significantly outperforming the casual dining industry by 1,890 basis points. This achievement marks the 17th consecutive quarter of positive same-store sales growth, underscoring the brand’s consistent market strength.
Restaurant Operating Margin Expansion
Chili’s restaurant operating margins expanded from 11.9% in fiscal ’22 to 17.6% in fiscal ’25. This growth was driven by simplification and operational improvements, highlighting the company’s effective cost management strategies.
New Product Launch Success
The new frozen margarita program and ribs platform were well-received, with sales exceeding expectations. Notably, frozen margarita sales doubled despite a higher price point, showcasing the successful execution of product innovation.
Debt Reduction and Financial Strength
Brinker International has paid down over $570 million in debt over the past three years, achieving a lease-adjusted leverage ratio of 1.7. This significant debt reduction enhances the company’s financial flexibility and strength.
Strong Fiscal 2025 Financial Performance
Brinker reported total revenue growth of 21.9%, surpassing $5 billion in revenue for the first time. Additionally, there was a 420 basis point improvement in restaurant operating margins, reflecting robust financial performance.
Marketing and Brand Recognition
Chili’s marketing efforts were recognized as Ad Age’s 2025 Brand of the Year, enhancing brand visibility and customer engagement. This accolade underscores the effectiveness of the company’s marketing strategies.
Maggiano’s Performance Challenges
Maggiano’s reported a slight decline in comp sales of 0.4%, indicating ongoing challenges in the brand’s turnaround efforts. This performance highlights areas needing strategic focus and improvement.
Unfavorable Food and Beverage Costs
Fourth-quarter food and beverage costs were unfavorable by 60 basis points year-over-year due to an unfavorable menu mix and commodity inflation, presenting a challenge to maintaining cost efficiency.
Continued Investment Needs
Brinker plans significant capital expenditures for fiscal ’26, ranging from $270 million to $290 million, to support reimagining and new unit growth. This investment is crucial for sustaining long-term growth and competitiveness.
Forward-Looking Guidance
During the earnings call, Brinker International shared its guidance for fiscal 2026, anticipating annual revenues between $5.6 billion and $5.7 billion, with an adjusted diluted EPS ranging from $9.90 to $10.50. The company plans to maintain a pricing strategy within the 3% to 5% range, focusing on balancing value and premium offerings. Additionally, Chili’s is projected to achieve positive same-store sales each quarter, driven by menu simplification, improved food quality, and continued investment in labor and marketing. Capital expenditures are projected to support remodeling efforts and long-term unit growth strategies.
In summary, Brinker International’s earnings call reflected a strong positive sentiment, driven by Chili’s impressive performance and strategic financial management. The company’s forward-looking guidance suggests continued growth and investment in key areas, positioning it well for future success.