Brinker International Inc.

10/29/2025 | Press release | Distributed by Public on 10/29/2025 14:43

Quarterly Report for Quarter Ending September 24, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help you understand our Company, our operations and our current operating environment. For an understanding of the significant factors that influenced our performance during the thirteen week periods ended September 24, 2025 and September 25, 2024. The MD&A should be read in conjunction with the Consolidated Financial Statements (Unaudited) and related Notes to Consolidated Financial Statements (Unaudited) included in this quarterly report. All amounts within the MD&A are presented in millions unless otherwise specified.
Overview
We own, develop, operate and franchise the Chili's®Grill & Bar ("Chili's") and Maggiano's Little Italy®("Maggiano's") restaurant brands. As of September 24, 2025, we owned, operated or franchised 1,630 restaurants, consisting of 1,161 Company-owned restaurants and 469 franchised restaurants, located in the United States, 28 other countries and two United States territories. Our operating segments are Chili's and Maggiano's.
Operating Environment
Geopolitical and other macroeconomic events have led, and in the future may lead to, wage inflation, staffing challenges, product cost inflation (inclusive of tariffs) and/or disruptions in the supply chain that impact our restaurants' ability to obtain the products needed to support their operation. Such events could also negatively affect consumer spending potentially reducing guest traffic and/or reducing the average amount guests spend in our restaurants.
Operations Strategy
We are committed to strategies and a Company culture that we believe will grow sales, increase profits, bring back guests and engage team members. Our strategies and culture are intended to strengthen our position in casual dining and grow our core business over time. Our primary brand strategy is to make our guests feel special through great food and quality service so that they return to our restaurants.
Chili's -Our strategy is to make everyone feel special through a fun atmosphere, delicious food and drinks and Chilihead hospitality. We are making work at Chili's easier, more fun and more rewarding for our team members so that they are more engaged and provide a better experience for our guests. One way we have done this is by eliminating tasks that were unnecessary and did not add value to our guests. We have also simplified our menu to focus on core equities we believe can help grow sales-burgers, fajitas, Chicken Crispers®, margaritas, and the Triple Dipper®. Our team members can make our core menu items better and more consistently because we have fewer menu items that need to be perfected.
We have a flexible platform of value offerings at both lunch and dinner that we believe is compelling to our guests. Our "3 for Me"®platform allows guests to enjoy a non-alcoholic drink, an appetizer and certain entrées starting at just $10.99. We believe our value offerings will continue to be an important traffic driver in the current economic circumstances and we will continue to highlight this value in our marketing efforts. We have increased menu pricing in other areas in light of the inflationary challenges and we have also improved menu offerings and merchandising to incentivize our guests to purchase higher priced items.
In addition, Chili's has focused on a seamless digital experience as our guests' preferences and expectations around dining convenience have evolved in recent years. Investments in our technology and off-premise options have enabled us to provide a faster, more convenient dine-in experience and to offer more To-Go and delivery options for our guests. Our To-Go menu is available through the Chili's mobile app, chilis.com, our delivery partners DoorDash, Uber Eats and Grubhub, Google Food Ordering or by calling the restaurant directly.
In dining rooms, we use tabletop devices with functionality for guests to pay at the table, provide guest feedback and interact with our My Chili's rewards program. Our My Chili's rewards program offers free chips and salsa or a non-alcoholic beverage to members any time they visit our restaurants and allows us to communicate and advertise to our guests through email and text. Our servers use handheld tablets to place orders for our guests, increasing the efficiency of our team members and allowing orders to reach our kitchen quicker for better service to our guests.
Maggiano's -At Maggiano's, we are focused on making our guests feel special. This warm and generous hospitality creates an environment where guests come together to celebrate birthdays, weddings and many more special occasions. While our dining rooms support the majority of our business, we also offer carry-out and delivery options through partnerships with delivery service providers that have made our restaurants more accessible to guests. Our restaurants also have banquet rooms, a profitable revenue channel, to host large special events, particularly during the holiday season in the second and third quarters of the fiscal year.
Franchise Partnerships - During the thirteen week period ended September 24, 2025, there were 5 new franchise restaurant openings and one new development agreement. We plan to strategically pursue expansion of Chili's internationally through development agreements with new and existing franchise partners.
Company Development - The following table details the number of restaurant openings during the thirteen week periods ended September 24, 2025 and September 25, 2024, respectively, total full year projected openings in fiscal 2026 and the total restaurants open at each period end:
Openings During the Full Year Projected Openings
Thirteen Week Periods Ended Total Open Restaurants at
September 24, 2025 September 25, 2024 Fiscal 2026 September 24, 2025 September 25, 2024
Company-owned restaurants
Chili's domestic 2 1 6 1,109 1,116
Chili's international - - - 4 4
Maggiano's domestic - - - 48 50
Total Company-owned 2 1 6 1,161 1,170
Franchise restaurants
Chili's domestic - 2 2-4 99 99
Chili's international 5 12 24-28 367 354
Maggiano's domestic - - - 3 2
Total franchise 5 14 26-32 469 455
Total restaurants
Chili's domestic 2 3 8-10 1,208 1,215
Chili's international 5 12 24-28 371 358
Maggiano's domestic - - - 51 52
Total 7 15 32-38 1,630 1,625
Additionally, the Company is relocating one Maggiano's restaurant with an expected opening in the current year.
As of September 24, 2025, we own property for 54 of the 1,161 Company-owned restaurants and one closed restaurant. The net book values associated with these restaurants included land of $44.8 million and buildings of $18.6 million.
Revenues
Thirteen Week Period Ended September 24, 2025 compared to September 25, 2024
Revenues are presented in two separate captions in the Consolidated Statements of Comprehensive Income (Unaudited) to provide more clarity around Company-owned restaurant revenues and operating expenses trends:
•Company sales include revenues generated by the operation of Company-owned restaurants including food and beverage sales, net of discounts, Maggiano's banquet service charge income, delivery, gift card breakage, digital entertainment revenues, merchandise income and are net of gift card discount costs from third-party gift card sales.
•Franchise revenues include royalties, franchise advertising fees, franchise and development fees, and other service fees.
The following is a summary of the change in Total revenues:
Total Revenues
Chili's Maggiano's Total Revenues
Thirteen Week Period Ended September 25, 2024 $ 1,030.4 $ 108.6 $ 1,139.0
Change from:
Comparable restaurant sales 214.2 (6.3) 207.9
Restaurant openings 6.9 - 6.9
Digital entertainment revenues 0.2 - 0.2
Delivery service fee income 0.2 - 0.2
Gift card discounts (0.1) - (0.1)
Maggiano's banquet income - (1.0) (1.0)
Restaurant closures (4.1) (1.9) (6.0)
Company sales 217.3 (9.2) 208.1
Franchise revenues(1)
2.0 0.1 2.1
Thirteen Week Period Ended September 24, 2025 $ 1,249.7 $ 99.5 $ 1,349.2
(1)Franchise revenues increased in the thirteen week period ended September 24, 2025 compared to September 25, 2024 primarily because of higher royalties. Our Chili's and Maggiano's franchisees generated sales of approximately $269.5 million and $4.6 million respectively for the thirteen week period ended September 24, 2025 compared to $225.7 million and $3.2 million respectively for the thirteen week period ended September 25, 2024.
The table below presents the percentage change in comparable restaurant sales and restaurant capacity for the thirteen week period ended September 24, 2025 compared to September 25, 2024:
Percentage Change in the Thirteen Week Period Ended September 24, 2025 versus September 25, 2024
Comparable Restaurant Sales(1)
Price Impact
Mix-Shift Impact(2)
Traffic Impact
Restaurant Capacity(3)
Company-owned 18.8 % 4.1 % 4.1 % 10.6 % (0.7) %
Chili's 21.4 % 4.0 % 4.3 % 13.1 % (0.6) %
Maggiano's (6.4) % 5.9 % 0.5 % (12.8) % (2.0) %
Franchise(4)
19.0 %
U.S. 23.1 %
International 16.5 %
Chili's domestic(5)
21.6 %
System-wide(6)
18.9 %
(1)Comparable Restaurant Sales include all restaurants that have been in operation for more than 18 full months. Restaurants temporarily closed 14 days or more are excluded from Comparable Restaurant Sales. Percentage amounts are calculated based on the comparable periods year-over-year.
(2)Mix-Shift is calculated as the year-over-year percentage change in Company sales resulting from the change in menu items ordered by guests.
(3)Restaurant Capacity is measured by sales weeks and is calculated based on comparable periods year-over-year. No adjustments have been made to capacity for temporary closures.
(4)Franchise sales generated by franchisees are not included in Total revenues in the Consolidated Statements of Comprehensive Income (Unaudited); however, we generate royalty revenues and advertising fees based on franchisee revenues, where applicable. We believe presenting Franchise Comparable Restaurant Sales provides investors relevant information regarding total brand performance.
(5)Chili's domestic Comparable Restaurant Sales percentages are derived from sales generated by Company-owned and franchise-operated Chili's restaurants in the United States.
(6)System-wide Comparable Restaurant Sales are derived from sales generated by Chili's and Maggiano's Company-owned and franchise-operated restaurants.
Costs and Expenses
Thirteen Week Period Ended September 24, 2025 compared to September 25, 2024
The following is a summary of the changes in Costs and Expenses:
Thirteen Week Periods Ended Favorable (Unfavorable) Variance
September 24, 2025 September 25, 2024
Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales
Food and beverage costs $ 344.6 25.8 % $ 284.3 25.2 % $ (60.3) (0.6) %
Restaurant labor 431.0 32.3 % 377.4 33.5 % (53.6) 1.2 %
Restaurant expenses 344.0 25.7 % 313.9 27.8 % (30.1) 2.1 %
Depreciation and amortization 53.6 46.3 (7.3)
General and administrative 57.2 51.8 (5.4)
Other (gains) and charges 0.9 8.9 8.0
Interest expenses 10.5 14.3 3.8
Other income, net (0.2) (0.2) -
As a percentage of Company sales:
•Food and beverage costs were unfavorable 0.6%, due to 1.2% of unfavorable menu item mix and 0.4% of unfavorable commodity costs primarily driven by meat and seafood, partially offset by 1.0% from menu pricing.
•Restaurant laborwas favorable 1.2%, due to 3.4% of sales leverage partially offset by 1.5% of higher hourly labor driven by increased staffing levels and wage rates, 0.6% of higher manager salaries, and 0.1% of higher other labor expenses.
•Restaurant expenseswere favorable 2.1%, due to 3.1% of sales leverage and 0.3% of lower repairs and maintenance, partially offset by 0.4% of higher advertising, 0.3% of higher rent, 0.2% of higher workers' compensation and general liability insurance, 0.2% of higher delivery fees and to-go supplies, and 0.2% of higher supervision.
Depreciation and amortization increased $7.3 million as follows:
Depreciation and Amortization
Thirteen Week Period Ended September 25, 2024 $ 46.3
Change from:
Additions for new and existing restaurant assets 12.7
Finance leases
0.9
Corporate assets 0.8
Retirements and fully depreciated restaurant assets (7.0)
Other (0.1)
Thirteen Week Period Ended September 24, 2025 $ 53.6
General and administrative expenses increased $5.4 million as follows:
General and Administrative
Thirteen Week Period Ended September 25, 2024 $ 51.8
Change from:
Payroll expenses 4.1
Corporate technology initiatives
2.8
Defined contribution plan employer expenses and other benefits 1.2
Stock-based compensation
0.9
Professional fees (0.9)
Performance-based compensation (3.5)
Other 0.8
Thirteen Week Period Ended September 24, 2025 $ 57.2
Other (gains) and charges consisted of the following (for further details, refer to Note 11 - Other Gains and Charges):
Thirteen Week Periods Ended
September 24,
2025 		September 25,
2024
Severance and other benefit charges $ 1.5 $ 0.3
Litigation & claims, net 0.7 2.5
Restaurant closure asset write-offs and charges 0.6 0.7
Enterprise system implementation costs - 4.4
Loss from natural disasters, net (of insurance recoveries) (2.3) -
Other 0.4 1.0
$ 0.9 $ 8.9
Interest expenses decreased $3.8 million primarily due to the lower average outstanding debt balances.
Income Taxes
Thirteen Week Periods Ended
September 24,
2025 		September 25,
2024
Effective income tax rate 7.5 % 9.0 %
The federal statutory tax rate was 21.0% for the thirteen week periods ended September 24, 2025 and September 25, 2024.
The change in the effective income tax rate in the thirteen week period ended September 24, 2025 to the thirteen week period ended September 25, 2024 is primarily due to excess tax benefits from stock based compensation of $11.7 million in fiscal 2026, which were significantly higher in the current year.
H.R. 1., also known as the One Big Beautiful Bill Act (OBBBA), was enacted on July 4, 2025. The legislation included several provisions that impact the timing and magnitude of certain tax deductions, including restoring 100% bonus depreciation for qualifying property. We have applied the key provisions impacting our financial position for the thirteen week period ended September 24, 2025, and will continue to assess the potential impacts on our financial position, results of operations and cash flows as additional guidance from the OBBBA is issued.
Segment Results
Chili's Segment
Thirteen Week Period Ended September 24, 2025 compared to September 25, 2024
Thirteen Week Periods Ended Favorable (Unfavorable) Variance Variance as percentage
September 24,
2025 		September 25,
2024
Company sales $ 1,236.2 $ 1,018.9 $ 217.3 21.3 %
Franchise revenues 13.5 11.5 2.0 17.4 %
Total revenues $ 1,249.7 $ 1,030.4 $ 219.3 21.3 %
Chili's Total revenues increased by 21.3% primarily due to favorable comparable restaurant sales driven by higher traffic, favorable menu item mix, and menu pricing. Refer to "Revenues" section above for further details about Chili's revenues changes.
The following is a summary of the changes in Chili's operating costs and expenses:
Thirteen Week Periods Ended Favorable (Unfavorable) Variance
September 24, 2025 September 25, 2024
Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales
Food and beverage costs $ 319.7 25.8 % $ 259.1 25.4 % $ (60.6) (0.4) %
Restaurant labor 395.3 32.0 % 341.6 33.5 % (53.7) 1.5 %
Restaurant expenses 307.6 24.9 % 280.6 27.6 % (27.0) 2.7 %
Depreciation and amortization 46.7 40.5 (6.2)
General and administrative 12.7 11.8 (0.9)
Other (gains) and charges (1.3) 2.9 4.2
As a percentage of Company sales:
•Chili's Food and beverage costs were unfavorable 0.4%, due to 1.0% of unfavorable menu item mix and 0.4% of unfavorable commodity costs primarily driven by meat and seafood, partially offset by 1.0% from menu pricing.
•Chili's Restaurant labor was favorable 1.5%, due to 3.9% of sales leverage, partially offset by 1.7% of higher hourly labor driven by increased staffing levels and wage rates, 0.6% of higher manager salaries, and 0.1% of higher other labor expenses.
•Chili's Restaurant expenses were favorable 2.7%, due to 3.6% of sales leverage and 0.4% of lower repairs and maintenance, partially offset by 0.3% of higher advertising, 0.3% of higher rent, 0.3% of higher supervision, 0.2% of higher workers' compensation and general liability insurance, and 0.2% of higher delivery fees and to-go supplies.
Chili's Depreciation and amortization increased $6.2 million as follows:
Depreciation and Amortization
Thirteen Week Period Ended September 25, 2024 $ 40.5
Change from:
Additions for new and existing restaurant assets 11.4
Finance leases
0.8
Retirements and fully depreciated restaurant assets (5.9)
Other (0.1)
Thirteen Week Period Ended September 24, 2025 $ 46.7
Chili's General and administrative increased $0.9 million as follows:
General and Administrative
Thirteen Week Period Ended September 25, 2024 $ 11.8
Change from:
Defined contribution plan employer expenses and other benefits 0.5
Payroll expenses 0.4
Stock-based compensation 0.2
Performance-based compensation (0.8)
Other 0.6
Thirteen Week Period Ended September 24, 2025 $ 12.7
Chili's Other (gains) and charges consisted of the following (for further details, refer to Note 11 - Other Gains and Charges):
Thirteen Week Periods Ended
September 24,
2025 		September 25,
2024
Litigation & claims, net $ 0.7 $ 1.2
Restaurant closure asset write-offs and charges 0.3 0.7
Loss from natural disasters, net (of insurance recoveries) (2.2) -
Other (0.1) 1.0
$ (1.3) $ 2.9
Maggiano's Segment
Thirteen Week Period Ended September 24, 2025 compared to September 25, 2024
Thirteen Week Periods Ended Favorable (Unfavorable) Variance Variance as a percentage
September 24,
2025 		September 25,
2024
Company sales $ 99.2 $ 108.4 $ (9.2) (8.5) %
Franchise revenues 0.3 0.2 0.1 50.0 %
Total revenues $ 99.5 $ 108.6 $ (9.1) (8.4) %
Maggiano's Total revenues decreased 8.4% primarily due to unfavorable comparable restaurant sales driven by lower traffic partially offset by menu pricing, and the unfavorable impact of restaurant closures. Refer to "Revenues" section above for further details about Maggiano's revenues changes.
The following is a summary of the changes in Maggiano's operating costs and expenses:
Thirteen Week Periods Ended Favorable (Unfavorable) Variance
September 24, 2025 September 25, 2024
Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales
Food and beverage costs $ 24.9 25.1 % $ 25.2 23.3 % $ 0.3 (1.8) %
Restaurant labor 35.7 36.0 % 35.8 33.0 % 0.1 (3.0) %
Restaurant expenses 36.2 36.5 % 33.0 30.4 % (3.2) (6.1) %
Depreciation and amortization 4.2 3.4 (0.8)
General and administrative 1.6 3.0 1.4
Other (gains) and charges 1.0 0.4 (0.6)
As a percentage of Company sales:
•Maggiano's Food and beverage costs were unfavorable 1.8%, due to 2.3% unfavorable menu item mix and 0.4% of unfavorable commodity costs primarily driven by meat and seafood, partially offset by 0.9% from menu pricing.
•Maggiano's Restaurant labor was unfavorable 3.0%, due to 1.8% of sales deleverage, 0.5% of higher manager salaries, 0.3% of higher hourly labor, and 0.4% of higher other labor expenses.
•Maggiano's Restaurant expenses were unfavorable 6.1%, due to 2.2% of sales deleverage, 1.3% of higher advertising, 1.0% of higher delivery fees and to-go supplies, 0.4% of higher repairs and maintenance, 0.4% of higher workers' compensation and general liability insurance, 0.3% of higher reimage related asset retirement loss, 0.2% of higher rent, and 0.3% of higher other restaurant expenses.
Liquidity and Capital Resources
Cash Flows
Cash Flows from Operating Activities
Thirteen Week Periods Ended Favorable (Unfavorable) Variance
September 24,
2025 		September 25,
2024
Net cash provided by operating activities $ 120.8 $ 62.8 $ 58.0
Net cash provided by operating activities increased due to an increase in operating income partially offset by an increase in payments of performance-based compensation and the timing of other operational receipts and payments.
Cash Flows from Investing Activities
Thirteen Week Periods Ended Favorable (Unfavorable) Variance
September 24,
2025 		September 25,
2024
Net cash used in investing activities $ (57.9) $ (56.5) $ (1.4)
Net cash used in investing activities increased compared to the prior year primarily due to increased spend on construction of new restaurants and spend related to Maggiano's reimages, partially offset by decreased spend on capital maintenance and equipment.
Cash Flows from Financing Activities
Thirteen Week Periods Ended Favorable (Unfavorable) Variance
September 24,
2025 		September 25,
2024
Net cash used in financing activities $ (48.2) $ (54.7) $ 6.5
Net cash used in financing activities decreased primarily due to an increase in net borrowings of long-term debt, partially offset by an increase in share repurchase activity in fiscal 2026 compared to fiscal 2025.
Debt
During the thirteen week period ended September 24, 2025, net borrowings of $90.0 million were drawn on the revolving credit facility. As of September 24, 2025, $910.0 million of credit was available under the revolving credit facility.
Our $1.0 billion revolving credit facility, as amended, matures on May 1, 2030 and bears interest at a rate of SOFR plus an applicable margin of 1.25% to 2.00% and an undrawn commitment fee of 0.20% to 0.30%, both based on a function of our debt-to-cash-flow ratio. As of September 24, 2025, our interest rate was 5.41% consisting of SOFR of 4.16% plus the applicable margin of 1.25%.
As of September 24, 2025, we were in compliance with our covenants pursuant to the $1.0 billion revolving credit facility and under the terms of the indentures governing our 8.25% notes. We expect to remain in compliance with our covenants during the remainder of fiscal 2026.
Share Repurchase Program
Our Board of Directors approved a $400.0 million increase in our share repurchase program in August 2025 allowing for a total available authority of $507.0 million. Our share repurchase program is used to return capital to shareholders and to minimize the dilution to our shares outstanding that results from equity compensation grants. We evaluate potential share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, proceeds from divestitures, borrowings and planned investment and financing needs. Repurchased shares are reflected as an increase in Treasury stock within Shareholder's equity in the Consolidated Balance Sheets (Unaudited).
In the thirteen week period ended September 24, 2025, we repurchased 0.9 million shares of our common stock for $134.5 million, including 0.6 million shares purchased for $92.0 million as part of our share repurchase program and 0.3 million shares purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares. These withheld shares of common stock are not considered common stock repurchases under our authorized common stock repurchase plan. As of September 24, 2025, approximately $415.0 million of share repurchase authorization remains under the current share repurchase program.
Cash Flow Outlook
In light of an unpredictable macroeconomy, including commodity and labor inflation and supply chain disruption, we continue to focus on cash flow generation and maintaining a solid and flexible financial position to execute our long-term strategy of investing in our business. We continue to assess the macro environment and will adjust our overall approach to capital allocation, including share repurchases, based on market conditions and trends.
Based on the current level of operations, we believe that our current cash and cash equivalents, coupled with cash generated from operations and availability under our existing revolving credit facility will be adequate to meet our capital expenditure and working capital needs for at least the next twelve months.
Future Commitments and Contractual Obligations
In the thirteen week period ended September 24, 2025, we entered into long-term purchase obligations for various marketing programs, primarily media purchases. Payments under these contracts are $18.0 million in fiscal 2026, $21.2 million in fiscal 2027, $21.1 million in fiscal 2028, and $4.4 million in fiscal 2029.
Critical Accounting Estimates
The preparation of the financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates. Our critical accounting estimates have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year ended June 25, 2025.
Recent Accounting Pronouncements
The impact of recent accounting pronouncements can be found at Note 1 - Basis of Presentation in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I, Item 1 of this Form 10-Q report.
Brinker International Inc. published this content on October 29, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 29, 2025 at 20:44 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]