Brinker International Q3 Earnings Call Highlights

Key Points

• Chili’s momentum: Chili’s posted its 20th consecutive quarter of same‑store sales growth, with comps up 4% (two‑year cumulative comps +37%) and outperforming the casual dining industry by 420 basis points.
• Chicken sandwich launch gaining traction: The new chicken sandwich platform (launched April 14) drove early results—platform sales are running 161% higher than pre‑launch, April comps are tracking in the mid‑single digits with positive traffic, and a test found the Big Crispy filet to be over 80% larger than a leading fast‑food competitor.
• Results, capital moves and guidance: Q3 revenue was $1.47 billion with adjusted diluted EPS of $2.90, Brinker repurchased $108 million of stock, plans to call its $350 million 8.25% bonds early, and updated fiscal 2026 guidance to $5.78–$5.82 billion in revenues and $10.60–$10.85 adjusted diluted EPS.

Brinker International NYSE: EAT executives pointed to continued sales momentum at Chili’s Grill & Bar and early signs of traction from a new chicken sandwich platform as the company reported fiscal 2026 third-quarter results and updated its outlook for the year.

Chili’s posts 20th straight quarter of same-store sales growth

Chief Executive Officer Kevin Hochman said Chili’s delivered same-store sales of up 4% in the quarter, marking its 20th consecutive quarter of comparable sales growth and outperforming the casual dining industry by 420 basis points. Hochman said the result lapped a 31% comp from the prior year for a two-year cumulative comparable sales increase of 37%.

Hochman attributed the brand’s momentum to “quarterly improvements in food service and atmosphere,” alongside everyday value that he said results in an average guest check $3 to $4 below competitors. He framed that as part of a “flywheel” in which traffic and sales growth support margin expansion and reinvestment into operations.

On operations, Hochman said Chili’s continued to focus on fundamentals during the quarter, including efforts to improve execution around chicken breading and cooking in preparation for the chicken sandwich launch. He also cited improvements in guest experience metrics, including guests with a problem (GWAP) at 1.9%, a food grade of 75%, and intent to return at 79%, which he said were record highs.

Chicken sandwich platform launches with “Better Than Fast Food” campaign

Chili’s launched its chicken sandwich platform on April 14 with a menu drop featuring multiple sandwiches, including the Big Crispy and Spicy Big Crispy as part of the $10.99 “3 for Me” value platform. Hochman said the campaign is designed to address consumer frustration with “shrinkflation,” emphasizing portion size and value compared with fast food.

Hochman said a test in the Dallas-Fort Worth area found the Big Crispy filet was “over 80% bigger” than a leading fast food chain’s premium chicken sandwich filet, based on weighing a “large sample size” of sandwiches.

While noting the launch had been in market for only two weeks at the time of the call, Hochman said initial results were “encouraging,” including:

• Chicken sandwich platform sales running 161% higher than pre-launch levels
• April comparable sales tracking in the mid-single digits with positive traffic (as described by management)
• Chili’s outperformance versus the industry accelerating to 560 basis points month-to-date through April

In response to an analyst question about longer-term performance, Hochman said it was too early to assess repeat rates and detailed cohort behavior, noting it would take “a few quarters” to evaluate tokenized data on repeat patterns.

North of Six initiative centers on throughput and cycle time

Hochman also highlighted what he called the “North of Six” initiative—focused on restaurants with significantly higher traffic—and said the company sees capacity for additional guest volume. He said average traffic is back to 2013 levels but remains about 20% below peak traffic from 2000 to 2005, and that North of Six restaurants can serve 20% to 80% more guests than the current average unit.

One key learning, Hochman said, is the need for further “dramatic business simplification,” along with a new push to reduce “cycle time” across the guest experience, including host stand processes, order taking, kitchen ticket times, checkout using Ziosk, and table reset. He said Chief Operating Officer Aaron White and cross-functional teams are working on these efforts, with more initiatives to be shared on future calls.

Hochman also discussed technology as an operational lever, including upgrades to the kitchen display system, a broader back-office systems overhaul, a team member handheld initiative that he said had been paused to address glitches and was rolling out again, and a “Supermarket Simple” initiative aimed at reducing payment friction at the end of the meal.

Maggiano’s sees sequential progress amid turnaround efforts

At Maggiano’s, Hochman said the brand continues to make progress in its turnaround. He noted sequential improvement in traffic and comp sales when adjusting for Christmas Day timing and January weather, and said guests are responding to “more abundant portions,” “more generous family style,” and the return of classic dishes such as eggplant parm and Gigi’s Butter Cake. He added that the company still sees opportunity to improve service and remove non-value-added processes to shorten dining times.

Hochman said Maggiano’s represents about 8% of company sales and a “low single-digit” percentage of profit contribution.

Financial results, capital allocation, and updated fiscal 2026 guidance

Chief Financial Officer Mika Ware reported third-quarter total revenues of $1.47 billion, up 3.2% year over year, with consolidated comp sales of up 3.3%. Adjusted diluted EPS was $2.90, up from $2.66 a year earlier. Ware said Winter Storm Blair impacted January sales at Chili’s, with comparable sales returning to mid-single-digit growth after weather improved.

Ware said Chili’s sales growth reflected 4.6% pricing and 0.6% positive mix, offset by 1.2% negative traffic, and that weather and a holiday shift reduced Chili’s sales and traffic by approximately 2.1% in the quarter. Maggiano’s comp sales were down 4.6% with traffic down 10.4%, partially offset by 5.2% pricing and 0.6% positive mix; the same weather and holiday impact estimate of 2.1% was cited for Maggiano’s.

Restaurant operating margin was 18.4% versus 18.9% a year earlier, which Ware attributed to higher food and beverage costs and higher restaurant expenses, partially offset by sales leverage. Ware said food and beverage costs were unfavorable by 60 basis points year over year, driven by menu mix and 4.6% commodity inflation “mainly due to beef.” Labor was favorable by 60 basis points, while restaurant expenses were unfavorable by 50 basis points due to repair and maintenance and broader inflation in items such as utilities, rent, to-go supplies, and delivery fees.

Advertising was 2.9% of sales and flat year over year, which Ware said reflected timing that shifted some spend from the third quarter into the fourth quarter. G&A was 4.0% of total revenues, and adjusted EBITDA was $223.7 million, up 1.4% from the prior year. Capital expenditures were $51.2 million in the quarter, driven by maintenance spending.

Ware said the company repurchased $108 million of common stock during the quarter. She also said Brinker plans to call its $350 million 8.25% bonds early in fiscal 2027 using liquidity from its $1 billion revolver, which she said would provide interest expense savings and flexibility to reduce leverage.

Brinker updated its fiscal 2026 guidance to:

• Revenues: $5.78 billion to $5.82 billion
• Adjusted diluted EPS: $10.60 to $10.85
• Capital expenditures: $240 million to $250 million
• Weighted average shares: 44.7 million to 45.0 million

Ware said guidance assumes wage and commodity inflation in the low single digits and a tax rate of about 19%. She added that April began “on a strong note” with mid-single-digit sales growth and positive traffic, and that the company expects to lap the fiscal fourth quarter with mid-single-digit sales and positive traffic at Chili’s.

Brinker said it plans to provide more detail on reimaging, new unit growth, and longer-term strategy at its Investor Day in Dallas on Thursday, September 17.

About Brinker International NYSE: EAT

Brinker International, Inc NYSE: EAT is a leading global operator of casual dining restaurants. The company's portfolio is anchored by its flagship Chili's® Grill & Bar concept and Maggiano's® Little Italy full‐service restaurants, offering a range of American‐style menu items, handcrafted cocktails and family‐friendly dining experiences. Through dine‐in, takeout, delivery and catering services, Brinker seeks to meet consumer preferences across multiple channels.

The Chili's brand features signature items such as baby back ribs, burgers and fajitas alongside a rotating selection of limited‐time offerings and seasonal beverages.

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