Brinker International, Inc. EAT reported third-quarter fiscal 2025 results, with earnings and revenues beating the Zacks Consensus Estimate. Both top and bottom lines increased from the prior-year figures.
The company's quarterly performance benefited from strong fundamentals, leading to better guest experience and steady business growth. The ongoing increase in traffic continues to drive the company’s performance.
Despite reporting robust results, the company’s shares declined 14.8% yesterday. This decline can be primarily attributed to economic uncertainty. Although more than 80% of Brinker's supply chain is domestic, any escalation in tariffs, particularly on imported items like tequila and avocados, could increase food costs. Management believes these impacts are manageable within current pricing strategies, but unexpected spikes could hurt margins.
EAT’s Q3 Earnings & Revenues
In the quarter under review, Brinker reported adjusted earnings per share (EPS) of $2.66, which beat the Zacks Consensus Estimate of $2.48. The company reported an EPS of $1.24 in the prior-year quarter. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
In the fiscal third quarter, total revenues of $1,425.1 million outpaced the consensus mark of $1,379 million. The top line increased 27.2% on a year-over-year basis. EAT gained from the solid performance of Chili's.
Brinker International, Inc. Price, Consensus and EPS Surprise
Brinker International, Inc. price-consensus-eps-surprise-chart | Brinker International, Inc. Quote
EAT’s Segmental Performance Details
Chili's
In the fiscal third quarter, revenues in the Chili’s segment rose 30.5% year over year to $1.30 billion. This upside was backed by favorable comparable restaurant sales, driven by menu pricing, higher traffic and a favorable menu item mix. Our model predicted segmental revenues to be $1.21 billion.
Chili's restaurant expenses (as a percentage of company sales) in the fiscal third quarter were 80.6%, down from 85.9% in the prior-year quarter. This downside was caused by sales leverage, partially overshadowed by an increase in hourly labor, repairs and maintenance expenses, higher manager salaries and bonuses, and unfavorable menu item mix.
Chili's company-owned traffic rose 20.9% year over year in the quarter under discussion. The metric fell 1.8% in the prior-year quarter.
The segment’s company-owned comps rose 31.6% in the fiscal third quarter from the year-ago quarter’s levels. Our model predicted the metric to increase 25.1%.
At Chili’s, domestic comps (including company-owned and franchised) gained 31.1% compared with a 3.6% rise reported in the prior-year period.
Maggiano’s
Maggiano’s sales in the fiscal third quarter increased 0.2% year over year to $121 million. Our model predicted segmental revenues to be $125.3 million. Favorable comparable restaurant sales, courtesy of increased menu pricing, drove this year-over-year upside. However, this was partially offset by lower traffic. Comps in the segment rose 0.4% year over year. Our prediction was 4%.
Traffic in the quarter under discussion fell 8.2% year over year. The metric was down 7.5% in the prior-year quarter.
Maggiano's company restaurant expenses (as a percentage of company sales) in the fiscal third quarter were 85.7%, marginally up from 85% a year ago. This increase was mainly caused by higher commodity costs, elevated advertising, and repair and maintenance expenses, partially offset by favorable menu pricing and reduced labor costs.
EAT’s Operating Results
In the quarter under review, total operating costs and expenses were $1.27 billion, up from $1.05 billion reported in the year-ago quarter. Adjusted restaurant operating margin, as a percentage of company sales, was 18.9%, up from 14.2% reported in the prior-year quarter.
Adjusted EBITDA in the fiscal third quarter was $220.6 million. The figure was up from $122.4 million reported in the prior-year quarter.
Balance Sheet of EAT
As of March 26, 2025, cash and cash equivalents amounted to $17.5 million compared with $15.5 million as of March 27, 2024. Long-term debt (less current installments) was $518.3 million as of March 26, 2025, compared with $786.3 million as of June 26, 2024.
EAT’s FY25 Guidance Raised
In fiscal 2025, management anticipates total revenues to be $5.33-$5.35 billion compared with the previous expectation of $5.15-$5.25 billion. Capital expenditure is expected to be $265-$275 million, up from the prior expectation of $240-$260 million. EAT anticipates fiscal 2025 EPS of $8.5-$8.75, up from the prior estimate of $7.5-$8.
Brinker currently sports a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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