Brinker International’s third quarter saw strong sales growth and margin expansion, yet the market reacted negatively to the results. Management pointed to Chili’s continued momentum, driven by increases in guest traffic and successful menu and marketing initiatives. CEO Kevin Hochman highlighted the effectiveness of value-based promotions and product upgrades, such as the ribs and Margaritas platforms, as key contributors. However, challenges at Maggiano’s and ongoing cost pressures prevented more favorable sentiment among investors.
Is now the time to buy EAT? Find out in our full research report (it’s free for active Edge members).
Brinker International (EAT) Q3 CY2025 Highlights:
- Revenue: $1.35 billion vs analyst estimates of $1.33 billion (18.5% year-on-year growth, 1.3% beat)
- Adjusted EPS: $1.93 vs analyst estimates of $1.77 (8.8% beat)
- Adjusted EBITDA: $172.4 million vs analyst estimates of $167.3 million (12.8% margin, 3% beat)
- The company reconfirmed its revenue guidance for the full year of $5.65 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $10.20 at the midpoint
- Operating Margin: 8.7%, up from 5% in the same quarter last year
- Locations: 1,630 at quarter end, up from 1,625 in the same quarter last year
- Same-Store Sales rose 18.9% year on year (12% in the same quarter last year)
- Market Capitalization: $4.65 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Brinker International’s Q3 Earnings Call
- Christopher O’Cull (Stifel) asked how Brinker plans to use tokenized consumer data for engagement. CEO Kevin Hochman explained the focus is on tracking guest cohorts for retention and understanding the impact of menu and marketing initiatives.
- David Palmer (Evercore ISI) inquired about trends with younger guests and menu renovation plans. Hochman noted Gen Z guest frequency is holding steady, and highlighted upcoming menu updates including the chicken sandwich platform and dual queso offerings.
- Jeffrey Farmer (Gordon Haskett) pressed for clarity on normalized same-store sales and margin outlook. CFO Mika Ware clarified normalization is expected in Q3 and Q4, with margins flat to slightly positive due to Maggiano’s softness and commodity inflation.
- Hyun Jin Cho (Goldman Sachs) probed feedback on the queso launch and the North of 6 initiative. Hochman described a robust feedback system that led to reintroducing the old Skillet Queso, while Ware detailed labor model improvements from learnings in high-volume locations.
- Brian Vaccaro (Raymond James) asked about the impact of Maggiano’s on guidance and maintenance spend. Ware estimated a 6–8% EPS impact in Q2 from Maggiano’s, and projected $10–15 million year-over-year reduction in Chili’s repair and maintenance costs.
Catalysts in Upcoming Quarters
Looking ahead, our team will focus on (1) the rollout and guest response to Chili’s upcoming menu innovations and refreshed value messaging, (2) the pace and effectiveness of the Maggiano’s turnaround efforts, and (3) management’s ability to offset rising commodity and labor costs with pricing strategies and operational efficiencies. Continued progress on digital data utilization and new unit growth plans will also be important signposts.
Brinker International currently trades at $104.45, down from $124.26 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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