Brinker Q4 Earnings Meet Estimates, Revenues Beat on Chili's Growth

Following the results, EAT stock gained 11.1% during after-hours yesterday.

EAT's Chili's Momentum Extends in Q4

Chili’s total revenues increased 6.2% year over year to $1.423 billion. Company sales rose 6.2% to $1.409 billion, while franchise revenues advanced 12.5% to $14.4 million. The brand continued to benefit from its value platform and menu innovation.

Comparable restaurant sales for Chili's increased 5.6% year over year, reflecting 4.3% pricing and 1.5% traffic growth, partly offset by a 0.2% negative mix impact. Management said the Big Crispy chicken sandwich helped sustain momentum, with sales rising to 55 sandwiches per restaurant per day by quarter-end from 20 before the launch.

Brinker's Maggiano's Trends Remain Challenged

Maggiano’s total revenues declined 7.8% year over year to $112.8 million. Company sales also fell 7.8% to $112.6 million, reflecting lower traffic and restaurant closures, partly offset by menu pricing.

Comparable restaurant sales decreased 2.5%. Traffic dropped 5.3% and mix was down 0.1%, while price contributed 2.9%. The brand’s non-GAAP restaurant operating margin contracted to 10.3% from 13.3%. Management said the turnaround is progressing more slowly than planned and modeled flat revenues and profits for fiscal 2027.

EAT's Q4 Margins Expand Despite Food Inflation

Operating income increased 17% year over year to $167 million, while operating income margin expanded 110 basis points to 10.9%. Non-GAAP restaurant operating margin improved 20 basis points to 18% of company sales. Net income rose 22.5% to $131.1 million, and GAAP earnings advanced to $2.99 from $2.30. Adjusted EBITDA increased 7.2% to $227.6 million.

Food and beverage costs rose to 26.3% of company sales from 25.5%, pressured by 4.4% commodity inflation, mainly higher beef costs and a temporary spike in tomato prices. Restaurant labor improved 90 basis points to 31.3%, as sales leverage offset 3.1% wage inflation and other investments. Restaurant expenses edged down 10 basis points to 24.4%. Advertising expense was 3% of sales, up 20 basis points, supporting the Big Crispy campaign.

Brinker's Cash Flow Supports Capital Returns

For fiscal 2026, net cash provided by operating activities rose 16.3% year over year to $789.4 million. Cash and cash equivalents ended the year at $110 million compared with $18.9 million a year earlier. Payments for property and equipment totaled $231.9 million.

Brinker used operating cash flow to repurchase $400 million of common stock during fiscal 2026. The board subsequently authorized total repurchase capacity of $750 million. After year-end, the company redeemed $350 million of 8.25% notes using its revolving credit facility, which management expects to generate interest savings in fiscal 2027. Brinker also plans to acquire 12 Chili’s franchise restaurants in Alabama and Mississippi.

EAT's FY27 Outlook Targets Continued Growth

For fiscal 2027, EAT expects total revenues of $6.15-$6.27 billion and adjusted earnings of $12.60-$13.40 per share. Capital expenditures are projected at $265-$285 million, with diluted weighted average shares of 42-43 million. The company plans 60-80 Chili’s reimages after completing 11 in fiscal 2026.

The outlook includes a 53rd operating week, which is expected to add about 2% to revenues and $0.70 to adjusted earnings per share. Management assumes low-single-digit commodity and wage inflation and three net new company-owned restaurant openings. For Chili’s, the plan assumes mid-single-digit same-store sales growth and positive traffic for the remainder of the year, along with 20-40 basis points of restaurant-level margin improvement on a 52-week basis.

EAT’s Zacks Rank & Key Picks

Brinker currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Retail-Wholesale sector have been discussed below.

BJ's Restaurants, Inc. BJRI currently sports a Zacks Rank #1 (Strong Buy). The company delivered a trailing four-quarter earnings surprise of 127.9%, on average. BJRI stock has surged 76.2% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for BJ's Restaurants’ 2026 sales and EPS indicates year-over-year growth of 4% each.

Five Below, Inc. FIVE presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 70.1%, on average. FIVE stock has gained 29.6% year to date.

The Zacks Consensus Estimate for Five Below’s 2027 sales and EPS indicates growth of 15.1% and 36.1%, respectively, from the year-ago period’s levels.

FIGS, Inc. FIGS has a Zacks Rank #2 at present. The company delivered a trailing four-quarter earnings surprise of 201.8%, on average. FIGS stock has risen 26.8% year to date.

The Zacks Consensus Estimate for FIGS’ 2026 sales and EPS indicates growth of 18.2% and 57.9%, respectively, from the prior-year levels.

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