EAT — Brinker International, Inc.

Summary of Brinker International, Inc. Q2 2026 Earnings Call

1. Key Financial Results and Metrics:

• Total Revenues: $1.45 billion, up 7% year-over-year.
• Consolidated Same-Store Sales: +7.5%, with Chili's achieving +8.6%, lapping a 31.4% increase from the prior year.
• Adjusted Diluted EPS: $2.87, compared to $2.80 in the previous year.
• Restaurant Operating Margin: 18.8%, down from 19.1% year-over-year, primarily due to Maggiano's performance.
• Adjusted EBITDA: Approximately $223.5 million, a 3.6% increase from the prior year.
• Capital Expenditures: Approximately $63.7 million, with a revised full-year guidance of $250 million to $260 million.

2. Strategic Updates and Business Highlights:

• Chili's Performance: Marked the 19th consecutive quarter of same-store sales growth, driven by successful marketing initiatives, menu upgrades, and improved guest experiences.
• Menu Innovations: Successful reintroduction of popular items like skillet queso and nachos, alongside upcoming launches of a new chicken sandwich lineup in April.
• Operational Improvements: Focus on eliminating menu items to streamline operations and enhance food quality, resulting in improved guest satisfaction metrics.
• Maggiano's Progress: Although still facing challenges, there were signs of improvement with a focus on enhancing food quality and guest experience.

3. Forward Guidance and Outlook:

• Fiscal 2026 Guidance:
  • Revenue expected between $5.76 billion to $5.83 billion.
  • Adjusted diluted EPS projected between $10.45 to $10.85.
  • Anticipation of mid-single-digit same-store sales growth for Chili's in the back half of the year.
• Capital Expenditure Plans: Plans to accelerate remodels with 60 to 80 expected in fiscal 2027 and a focus on new unit growth in fiscal 2028.

4. Bad News, Challenges, or Points of Concern:

• Maggiano's Performance: Reported a same-store sales decline of -2.4% and is expected to continue to drag on overall margins.
• Impact of Winter Storm: Estimated $20 million in reduced revenues and a 15¢ decrease in adjusted EPS due to closures caused by the storm.
• Commodity Inflation: Anticipated mid-single-digit inflation in the back half of the year, particularly in beef prices, which could pressure margins.
• Competitive Pressures: Concerns about QSR pricing growth tracking below casual dining averages, potentially impacting overall category value perception.

5. Notable Q&A Insights:

• Traffic Growth: Management noted that traffic growth is being driven by both new customers and increased frequency among existing guests, with a focus on maintaining a great guest experience.
• Marketing Strategy: Emphasis on the importance of value messaging in marketing, particularly with the upcoming chicken sandwich launch.
• Remodel Strategy: Initial remodels have shown positive reception, and the company is learning from these to optimize future investments.
• Incentive Structure: Discussion on potential changes to the management incentive structure to foster ownership and accountability, with a focus on training before implementing changes.

Overall, Brinker International reported strong financial results, particularly from Chili's, while facing challenges with Maggiano's and the impact of external factors like weather and inflation. The company remains optimistic about its strategic initiatives and future growth potential.