Brinker International, Inc. (EAT) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary indicates strong financial performance with significant EPS growth, improved margins, and a positive EBITDA increase. Despite challenges at Maggiano's, Chili's has strategic plans to boost sales through menu renovations, value promotions, and Gen Z engagement. The Q&A section highlights innovative strategies like tokenized consumer data, although some management responses were vague. Overall, the positive financial metrics and strategic initiatives suggest a positive stock price reaction, with a market cap of $3.3 billion indicating a moderate but not extreme sensitivity to earnings announcements.
Key Financial Performance
Chili's same-store sales 21.4% increase year-over-year, outperforming the casual dining industry by 1,650 basis points. This was driven by traffic increases of 13% and continued improvements in food service and atmosphere.
Ribs sales 35% increase in sales and profitability up 29% year-over-year. This was attributed to the ribs upgrade and positive guest feedback on taste.
Frozen Patrón Margaritas sales Sales doubled compared to the old platform despite a higher price point due to premium ingredients.
Brinker total revenues $1.35 billion, an 18.5% increase year-over-year. This growth was driven by consolidated comp sales of positive 18.8%.
Adjusted diluted EPS $1.93, up from $0.95 last year, reflecting strong financial performance.
Maggiano's comp sales Negative 6.4% year-over-year. The decline was attributed to challenges in stabilizing and improving the business.
Restaurant operating margin 16.2%, a 270 basis points improvement year-over-year. This was primarily driven by sales leverage, partially offset by unfavorable food and beverage costs.
Adjusted EBITDA $172.4 million, a 54.4% increase from prior year, reflecting strong operational performance.
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Operating Highlights
Ribs upgrade: Sales up 35%, profitability up 29%, positive guest feedback on taste.
Frozen Patrón Margaritas: Selling 2x the units of the old platform despite a higher price point.
New food items: Improving food grade scores and growing sales.
Chili's market positioning: Gaining market share with low-income households, particularly those earning under $60,000, due to value-focused campaigns.
Guest experience improvement: Guest problem rate at an all-time low of 2.1% (down from 2.7% last year). Food grade and intensity return scores at all-time highs.
Restaurant operating margin: Improved to 16.2%, a 270 basis points increase year-over-year.
Labor efficiency: Labor costs favorable by 120 basis points year-over-year despite wage inflation.
Maggiano's turnaround plan: Focus on classic recipes, service improvement, guest-facing repairs, and reimagining the brand to stabilize and grow.
Chili's reimage program: Four remodel pilot restaurants to be completed by the end of the quarter, with plans for broader rollout in fiscal 2027.
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Risk or Challenges
Maggiano's performance: Maggiano's reported a comp sales decline of 6.4% for the quarter, indicating challenges in stabilizing and improving the business. The brand is undergoing a turnaround strategy to address issues such as service levels, speed of service, and guest-facing repairs and maintenance.
Commodity inflation and tariffs: The company anticipates mid-single-digit commodity inflation, inclusive of higher tariffs, which could increase costs and pressure margins.
Economic uncertainty: The company acknowledges a weaker macroeconomic environment, which could impact consumer spending and overall performance.
Health insurance and workers' compensation costs: Higher inflation in workers' compensation and health insurance claims is expected, adding to operational costs.
Maggiano's turnaround investments: Investments required to stabilize Maggiano's performance may offset gains from Chili's, impacting overall financial results.
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Guidance & Outlook
Chili's Same-Store Sales Growth: Chili's quarter-to-date sales are in the high single digits, with expectations for same-store sales to normalize on average in the mid-single-digit range for the balance of the fiscal year.
Maggiano's Turnaround Plan: The 'Back to Maggiano's' strategy focuses on improving value proposition, optimizing service models, and ensuring clean and well-maintained atmospheres. The plan includes returning to classic recipes, improving service speed, focusing on guest-facing repairs, and reimagining the estate.
Capital Expenditures and Reimage Program: Chili's plans to complete 4 remodel pilot restaurants by the end of the calendar year for evaluation, with a full rollout of the reimage program and new unit growth strategy expected during fiscal 2027. Maggiano's will focus on guest-facing repairs and a smaller reimage program before shifting to new unit growth.
Commodity Inflation: The company anticipates mid-single-digit commodity inflation, inclusive of tariffs, rather than the previously projected low single digits.
Fiscal 2026 Guidance: Despite headwinds, the company reiterates its fiscal 2026 guidance, expecting Chili's to outperform the industry on sales and traffic. The first quarter is expected to be the strongest year-over-year, with more moderate gains in subsequent quarters due to high comparison bases.
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Shareholder Return Plan
Share Repurchase Program: We supported this approach by repurchasing $92 million of common stock under our share repurchase program.
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Key Q&A
Q:How does Chili's plan to leverage tokenized consumer data to enhance consumer engagement or drive growth?
A:Chili's is starting to use tokenized consumer data to track monthly cohorts separately, understand new guest repetition, and analyze guest metrics like GWAP or food grade. This helps quantify the impact of investments and initiatives, such as menu upgrades, on guest frequency and food grade scores. The focus is on understanding the performance of big investments rather than marketing to guests using CRM.
Q:How is Chili's recent value promotion performing against expectations, and what are the plans for the second half of the year?
A:The $10.99 burger deal continues to perform well and remains relevant. Chili's saw lifts in business from the Triple Dipper advertising but decided to return to value messaging due to stronger overall lifts. For the second half, Chili's plans to refresh the $10.99 platform with a new initiative launching in Q4, targeting a big guest segment.
Q:What is Chili's strategy for engaging younger consumers, particularly Gen Z?
A:Chili's focuses on ensuring younger consumers repeat visits as frequently as other guests and continues to attract new young consumers through TikTok trends, advertising, and social media. The marketing department emphasizes staying relevant with Gen Z by introducing new initiatives quarterly.
Q:What is the status of Chili's menu renovation journey?
A:Chili's is progressing with menu renovations, including a chicken sandwich platform in the back half of the fiscal year and plans for steaks and salads in the following fiscal year. The new queso has performed well, but due to feedback, the old Skillet Queso will be brought back alongside the new queso. This learning will guide future renovations of core items like pasta.
Q:What is the intent of Chili's reimaging program, and are there plans to change kitchen equipment?
A:The reimaging program aims to bring back the original Chili's vibe with a modern twist, including a true margarita bar and emphasizing signature items like ribs and fajitas. Regarding kitchen equipment, Chili's is exploring adding charbroilers to bring flame cooking back, but no tests have been conducted yet.
Q:What are the expectations for Chili's same-store sales and restaurant-level margin expansion for fiscal 2026?
A:Same-store sales are expected to normalize in the mid-single-digit range for Q3 and Q4, with Q2 potentially being higher due to holiday shifts. Restaurant-level margin expansion is now expected to be flat to slightly positive, impacted by softness at Maggiano's and tariffs.
Q:How is Chili's addressing the feedback on the new queso and the North of 6 initiative?
A:Chili's is bringing back the old Skillet Queso alongside the new queso to address feedback from long-time guests. The North of 6 initiative includes replacing community tables with smaller ones and improving water heater reliability in high-volume restaurants. Learnings from high-volume restaurants are being applied to the broader system.
Q:What is the pricing strategy for Chili's, and how does it address tariffs?
A:Chili's uses a multilayered pricing strategy, including tiered pricing across regions and elasticity-based adjustments. To address tariffs, particularly on beef and shrimp, Chili's took 40 basis points of price in October and plans to take up to 1% more in January.
Q:What are the plans for Chili's new unit growth and reimaging programs?
A:Chili's is focusing on its full street-side footprint for new unit growth and reimaging programs. The reimaging program aims to modernize restaurants while retaining the original Chili's vibe. The new unit growth strategy is being developed under new leadership.
Q:How is Chili's addressing labor and ownership at the restaurant level?
A:Chili's is attracting better talent due to its strong brand performance and is investing in training managers for extreme ownership. Future plans include changing incentive structures to provide long-term ownership incentives for managers.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timeline or financial impact of adding charbroilers to the kitchen, the exact pricing adjustments for January, and the specific number of new units planned for Chili's growth strategy.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Avenue place
Chief Officer
Conference Orlando
Financial Instructions
Food grade
Greenville Avenue
Greenville prototype
International Financial
Margaritas platform
North guest
Officer opportunity
Orlando brand
Patrón Margaritas
Relations floor
Relations today
World class
abundance service
addition sale
advertising group
analysis guest
behavior
cohort guest
experience guest
favorite
feedback
guest traffic
hospitality
household income
industry comp
leader
others
positioning
response
sale traffic
scratch
teammate
traffic trend
turnaround plan
understanding
EAT Transcript
Brinker International, Inc. (EAT) Q3 2026 Earnings Call Transcript
Positive4-29
The earnings call reflects a positive outlook with robust growth strategies, including new product launches, restaurant reimages, and operational improvements. Despite some concerns about consumer behavior and inflation, the company is confident in its ability to manage these challenges. The market's response is likely to be positive due to optimistic guidance, strategic initiatives, and a focus on sustainable growth. However, the lack of specific details on certain initiatives and potential risks like inflation could temper the overall enthusiasm, resulting in a moderate positive impact on the stock price.
Brinker International, Inc. (EAT) Q2 2026 Earnings Call Transcript
Unknown1-28
Despite strong sales growth, positive traffic metrics, and a successful product strategy, the outlook is tempered by challenges like commodity inflation, margin pressure, and mixed signals in the casual dining segment. The company's guidance remains steady, but management's reluctance to provide specifics on certain initiatives and the negative outlook for Maggiano's affect the sentiment. The market cap suggests moderate volatility, leading to a neutral prediction.
Brinker International, Inc. (EAT) Q1 2026 Earnings Call Transcript
Positive10-29
The earnings call summary indicates strong financial performance with significant EPS growth, improved margins, and a positive EBITDA increase. Despite challenges at Maggiano's, Chili's has strategic plans to boost sales through menu renovations, value promotions, and Gen Z engagement. The Q&A section highlights innovative strategies like tokenized consumer data, although some management responses were vague. Overall, the positive financial metrics and strategic initiatives suggest a positive stock price reaction, with a market cap of $3.3 billion indicating a moderate but not extreme sensitivity to earnings announcements.
Brinker International, Inc. (EAT) Q4 2025 Earnings Call Transcript
Positive8-13
The earnings call reflects strong financial performance with significant debt reduction and margin improvements. The Q&A session highlights positive sentiment with plans for expansion, marketing innovation, and operational improvements. However, management's lack of specifics on some plans introduces slight uncertainty. Overall, the positive growth outlook, strategic investments, and operational efficiencies indicate a favorable stock price movement in the short term, especially given the company's market cap.
EAT Slides
EAT Report
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