Brinker International Inc.

10/28/2026 | Press release | Distributed by Public on 10/28/2026 14:22

Quarterly Report for Quarter Ending September 23, 2026 (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 23, 2026 and September 24, 2025, 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 23, 2026, we owned, operated or franchised 1,641 restaurants, consisting of 1,174 Company-owned restaurants and 467 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 tensions and broader macroeconomic pressures have led, and in the future may lead, to wage inflation, staffing challenges, product cost inflation (inclusive of tariffs), and/or supply chain disruptions. We may also experience supply chain disruptions resulting from adverse weather conditions, climate change, or other catastrophic events beyond our control. These events may impact our ability to obtain the products needed to support our operation and/or 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®. As management begins to focus on the next phase of menu innovation to drive sustainable growth, Chili's introduced a chicken sandwich platform beginning in the fourth quarter of fiscal 2026. 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. Another priority is having clean and well-maintained restaurants that provide an inviting atmosphere for team members to work and guests to dine.
We are improving our hospitality by scheduling more team members per shift to serve our guests and by improving systems and technology that can help with our order accuracy and guest experience. 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 - Our focus is executing to improve performance and operations through the Company's Back to Maggiano's strategy. This strategy includes ongoing initiatives across food, service and atmosphere with the aim of revitalizing the brand's core, serving Italian American favorites with warm and attentive service. Traditional dining rooms drive most of our business, while carry-out and delivery partnerships expand our guest reach. Additionally, our dedicated banquet rooms host large special events, particularly during peak holiday periods in the second and third fiscal quarters.
Franchise Partnerships - We plan to strategically pursue expansion of Chili's internationally through development agreements with new and existing franchise partners, and we continue to seek new domestic franchise locations on a case-by-case basis. As of September 23, 2026, we have 20 active development arrangements.
Company Development - The following table details the number of restaurant openings during the thirteen week periods ended September 23, 2026 and September 24, 2025, respectively, total full year projected openings in fiscal 2027 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 23, 2026 September 24, 2025 Fiscal 2027 September 23, 2026 September 24, 2025
Company-owned restaurants
Chili's domestic(1)
- 2 4 1,122 1,109
Chili's international - - - 4 4
Maggiano's domestic - - - 48 48
Total Company-owned - 2 4 1,174 1,161
Franchise restaurants
Chili's domestic 1 - 1-2 88 99
Chili's international 9 5 25-30 376 367
Maggiano's domestic - - - 3 3
Total franchise 10 5 26-32 467 469
Total restaurants
Chili's domestic 1 2 5-6 1,210 1,208
Chili's international 9 5 25-30 380 371
Maggiano's domestic - - - 51 51
Total 10 7 30-36 1,641 1,630
(1)During the first quarter of fiscal 2027, we acquired 12 Chili's domestic restaurants previously owned by a former franchisee. The acquisition of these restaurants is not reflected in the First Quarter Openings or Full Year Projected Openings totals as these are existing restaurant locations transitioning ownership. These acquired restaurants are included in the Total Restaurants Open at September 23, 2026.
During the thirteen week period ended September 23, 2026, we purchased real estate for three Chili's restaurants that were previously leased. Additionally, we acquired real estate for six of the 12 Chili's restaurants previously
owned by a former franchisee. The value of the land and buildings was approximately $12.4 million and $17.5 million, respectively. Refer to Note 2 - Chili's Restaurant Acquisition for further information.
Revenues
Thirteen Week Period Ended September 23, 2026 compared to September 24, 2025
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, delivery service fee income, gift card breakage, digital entertainment revenues, merchandise income, Maggiano's banquet service charge 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 24, 2025 $ 1,249.7 $ 99.5 $ 1,349.2
Change from:
Comparable restaurant sales 123.3 (3.1) 120.2
Restaurant acquisitions(1)
2.4 - 2.4
Restaurant openings 6.4 3.1 9.5
Delivery service fee income 0.5 0.1 0.6
Merchandise income 0.1 - 0.1
Gift card discounts (0.1) - (0.1)
Maggiano's banquet income(2)
- (1.6) (1.6)
Restaurant closures (2.3) (3.0) (5.3)
Company sales 130.3 (4.5) 125.8
Franchise revenues(3)
0.7 (0.1) 0.6
Thirteen Week Period Ended September 23, 2026 $ 1,380.7 $ 94.9 $ 1,475.6
(1)During the first quarter of fiscal 2027, we acquired 12 Chili's restaurants from a former franchisee. The revenues generated by these restaurants following the acquisition date are included in Company sales. Refer to Note 2 - Chili's Restaurant Acquisition for further information.
(2)Maggiano's banquet income decreased primarily due to management's decision to substantially eliminate banquet service charges at the end of the first quarter of fiscal 2026.
(3)Franchise revenues increased in the thirteen week period ended September 23, 2026 compared to September 24, 2025 primarily because of higher royalties. The table below presents sales from our franchisees by brand:
Thirteen Week Periods Ended
September 23, 2026 September 24, 2025
Chili's franchisee sales $ 296.7 $ 269.5
Maggiano's franchisee sales 3.7 4.6
The table below presents the percentage change in comparable restaurant sales and restaurant capacity for the thirteen week period ended September 23, 2026 compared to September 24, 2025:
Percentage Change in the Thirteen Week Period Ended September 23, 2026 versus September 24, 2025
Comparable Restaurant Sales(1)
Price Impact
Mix-Shift Impact(2)
Traffic Impact
Restaurant Capacity(3)
Company-owned 9.1 % 3.6 % - % 5.5 % 0.5 %
Chili's 10.1 % 3.7 % - % 6.4 % 0.5 %
Maggiano's (3.4) % 2.0 % (0.3) % (5.1) % (0.9) %
Franchise(4)
7.4 %
U.S. 11.8 %
International 4.8 %
Chili's domestic(5)
10.4 %
System-wide(6)
8.9 %
(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.
(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 23, 2026 compared to September 24, 2025
The following is a summary of the changes in Costs and Expenses:
Thirteen Week Periods Ended Favorable (Unfavorable) Variance
September 23, 2026 September 24, 2025
Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales
Food and beverage costs $ 378.4 25.9 % $ 344.6 25.8 % $ (33.8) (0.1) %
Restaurant labor 458.9 31.4 % 431.0 32.3 % (27.9) 0.9 %
Restaurant expenses 365.9 25.0 % 344.0 25.7 % (21.9) 0.7 %
Depreciation and amortization 55.7 53.6 (2.1)
General and administrative 63.3 57.2 (6.1)
Other (gains) and charges 2.4 0.9 (1.5)
Interest expenses 24.6 10.5 (14.1)
Other income, net (0.6) (0.2) 0.4
As a percentage of Company sales:
•Food and beverage costs were unfavorable 0.1%, due to 0.8% of unfavorable commodity costs primarily driven by higher meat and seafood and 0.2% of unfavorable menu item mix, partially offset by 0.9% from favorable menu pricing.
•Restaurant labor was favorable 0.9%, due to 1.7% of sales leverage, partially offset by 0.5% of higher hourly labor, 0.2% of higher manager salaries, and 0.1% of higher other labor expenses.
•Restaurant expenses were favorable 0.7%, due to 1.6% of sales leverage and 0.2% lower other restaurant expenses, partially offset by 0.3% of higher repairs and maintenance, 0.2% of higher delivery fees and to-go supplies, 0.2% of higher workers' compensation and general liability insurance, 0.2% of higher advertising, and 0.2% higher rent.
Depreciation and amortization increased $2.1 million as follows:
Depreciation and Amortization
Thirteen Week Period Ended September 24, 2025 $ 53.6
Change from:
Additions for new and existing restaurant assets 9.4
Corporate assets 0.6
Finance leases
0.2
Retirements and fully depreciated restaurant assets (8.0)
Other (0.1)
Thirteen Week Period Ended September 23, 2026 $ 55.7
General and administrative expenses increased $6.1 million as follows:
General and Administrative
Thirteen Week Period Ended September 24, 2025 $ 57.2
Change from:
Performance-based compensation 2.6
Payroll expenses 2.0
Professional fees 0.6
Corporate technology initiatives
0.5
Stock-based compensation
0.3
Other 0.1
Thirteen Week Period Ended September 23, 2026 $ 63.3
Other (gains) and charges consisted of the following (for further details, refer to Note 12 - Other Gains and Charges):
Thirteen Week Periods Ended
September 23,
2026 		September 24,
2025
Gift card inventory write-offs $ 1.1 $ -
Severance and other benefit charges 0.6 1.5
Litigation & claims, net 0.5 0.7
Restaurant closure asset write-offs and charges 0.3 0.6
Acquisition-related costs, net 0.3 -
Lease modification gain, net (0.5) -
Casualty losses, net - (2.3)
Other, net 0.1 0.4
$ 2.4 $ 0.9
Interest expenses increased $14.1 million, primarily driven by a $17.6 million loss on extinguishment of debt resulting from the early redemption of our 8.25% notes, partially offset by lower interest expense as the 8.25% fixed-interest notes were refinanced using the revolving credit facility, which currently benefits from a lower variable index rate.
Income Taxes
Thirteen Week Periods Ended
September 23,
2026 		September 24,
2025
Effective income tax rate 10.8 % 7.5 %
The federal statutory tax rate was 21.0% for the thirteen week periods ended September 23, 2026 and September 24, 2025.
The change in the effective income tax rate in the thirteen week period ended September 23, 2026 compared to the thirteen week period ended September 24, 2025 is primarily due to higher Income before income taxes and resulting deleverage of the FICA tip tax credit.
Segment Results
Chili's Segment
Thirteen Week Period Ended September 23, 2026 compared to September 24, 2025
Thirteen Week Periods Ended Favorable (Unfavorable) Variance Variance as percentage
September 23,
2026 		September 24,
2025
Company sales $ 1,366.5 $ 1,236.2 $ 130.3 10.5 %
Franchise revenues 14.2 13.5 0.7 5.2 %
Total revenues $ 1,380.7 $ 1,249.7 $ 131.0 10.5 %
Chili's Total revenues increased by 10.5% primarily due to favorable comparable restaurant sales driven by higher traffic 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 23, 2026 September 24, 2025
Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales
Food and beverage costs $ 354.9 26.0 % $ 319.7 25.8 % $ (35.2) (0.2) %
Restaurant labor 423.4 31.0 % 395.3 32.0 % (28.1) 1.0 %
Restaurant expenses 333.0 24.3 % 307.6 24.9 % (25.4) 0.6 %
Depreciation and amortization 48.1 46.7 (1.4)
General and administrative 14.9 12.7 (2.2)
Other (gains) and charges 1.4 (1.3) (2.7)
As a percentage of Company sales:
•Chili's Food and beverage costs were unfavorable 0.2%, due to 1.0% of unfavorable commodity costs primarily driven by meat and seafood, and 0.2% of unfavorable menu item mix, partially offset by 1.0% from favorable menu pricing.
•Chili's Restaurant labor was favorable 1.0%, due to 1.8% of sales leverage, partially offset by 0.5% of higher hourly labor, 0.2% of higher manager salaries, and 0.1% of higher other labor expenses.
•Chili's Restaurant expenses were favorable 0.6%, due to 1.9% of sales leverage and 0.2% of lower other restaurant expenses, partially offset by 0.4% of higher advertising, 0.3% of higher repairs and maintenance, 0.3% of higher delivery fees and to-go supplies, 0.3% of higher workers' compensation and general liability insurance, and 0.2% of higher rent.
Chili's Depreciation and amortization increased $1.4 million as follows:
Depreciation and Amortization
Thirteen Week Period Ended September 24, 2025 $ 46.7
Change from:
Additions for new and existing restaurant assets 8.5
Finance leases
0.1
Retirements and fully depreciated restaurant assets (7.1)
Other (0.1)
Thirteen Week Period Ended September 23, 2026 $ 48.1
Chili's General and administrative increased $2.2 million as follows:
General and Administrative
Thirteen Week Period Ended September 24, 2025 $ 12.7
Change from:
Payroll expenses 1.1
Performance-based compensation 0.7
Defined contribution plan employer expenses and other benefits 0.3
Other 0.1
Thirteen Week Period Ended September 23, 2026 $ 14.9
Chili's Other (gains) and charges consisted of the following (for further details, refer to Note 12 - Other Gains and Charges):
Thirteen Week Periods Ended
September 23,
2026 		September 24,
2025
Gift Card Inventory Write-offs $ 1.0 $ -
Litigation & claims, net 0.5 0.7
Acquisition of franchise restaurants-related costs 0.3 -
Restaurant closure asset write-offs and charges 0.1 0.3
Lease modification gain, net (0.5) -
Casualty losses, net - (2.2)
Other - (0.1)
$ 1.4 $ (1.3)
Maggiano's Segment
Thirteen Week Period Ended September 23, 2026 compared to September 24, 2025
Thirteen Week Periods Ended Favorable (Unfavorable) Variance Variance as a percentage
September 23,
2026 		September 24,
2025
Company sales $ 94.7 $ 99.2 $ (4.5) (4.5) %
Franchise revenues 0.2 0.3 (0.1) (33.3) %
Total revenues $ 94.9 $ 99.5 $ (4.6) (4.6) %
Maggiano's Total revenues decreased 4.6% primarily due to unfavorable comparable restaurant sales driven by lower traffic, partially offset by menu pricing. 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 23, 2026 September 24, 2025
Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales
Food and beverage costs $ 23.5 24.8 % $ 24.9 25.1 % $ 1.4 0.3 %
Restaurant labor 35.5 37.5 % 35.7 36.0 % 0.2 (1.5) %
Restaurant expenses 32.8 34.6 % 36.2 36.5 % 3.4 1.9 %
Depreciation and amortization 4.7 4.2 (0.5)
General and administrative 1.5 1.6 0.1
Other (gains) and charges 0.5 1.0 0.5
As a percentage of Company sales:
•Maggiano's Food and beverage costs were favorable 0.3%, due to 0.4% from favorable menu pricing and 0.1% favorable menu item mix, partially offset by 0.2% of unfavorable commodity costs primarily driven by meat, seafood and produce, partially offset by lower dairy.
•Maggiano's Restaurant labor was unfavorable 1.5%, due to 0.9% of sales deleverage, 0.3% of higher manager salaries, and 0.3% of higher health insurance.
•Maggiano's Restaurant expenses were favorable 1.9%, due to 2.1% of lower advertising, 0.5% of lower delivery fees and to-go supplies, and 0.7% of lower other restaurant expenses partially offset by 1.0% of sales deleverage and 0.4% of higher rent.
Liquidity and Capital Resources
Cash Flows
Cash Flows from Operating Activities
Thirteen Week Periods Ended Favorable (Unfavorable) Variance
September 23,
2026 		September 24,
2025
Net cash provided by operating activities $ 169.1 $ 120.8 $ 48.3
Net cash provided by operating activities increased due to an increase in operating income and a decrease in payments of performance-based compensation, partially offset by the timing of other operational receipts and payments.
Cash Flows from Investing Activities
Thirteen Week Periods Ended Favorable (Unfavorable) Variance
September 23,
2026 		September 24,
2025
Net cash used in investing activities $ (90.5) $ (57.9) $ (32.6)
Net cash used in investing activities increased compared to the prior year primarily due to the acquisition of 12 Chili's restaurants from a former franchisee for cash consideration of $27.1 million on August 27, 2026 and the purchase of three Chili's restaurants that were previously leased. Refer to Note 2 - Chili's Restaurant Acquisition for further information.
Cash Flows from Financing Activities
Thirteen Week Periods Ended Favorable (Unfavorable) Variance
September 23,
2026 		September 24,
2025
Net cash used in financing activities $ (157.9) $ (48.2) $ (109.7)
Net cash used in financing activities increased due to an increase in repayments of long-term debt primarily due to the payoff of our $350.0 million 8.25% notes and an increase in share repurchase activity in fiscal 2027 compared to fiscal 2026, partially offset by an increase in net borrowings on the revolving credit facility which was used to fund the extinguishment of the 8.25% notes.
Debt
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 23, 2026, our interest rate was 5.15% consisting of SOFR of 3.90% plus the applicable margin of 1.25%. As of September 23, 2026, $593.4 million of credit was available under the revolving credit facility. Availability under the revolving credit facility was reduced by a $31.6 million letter of credit. Refer to Note 8 - Commitments and Contingencies for further information about our letters of credit.
On July 15, 2026, we redeemed all $350.0 million of our 8.25% notes at a redemption price equal to the sum of 104.125% of the principal amount plus accrued and unpaid interest, for a total cash outflow of $378.9 million, funded with borrowings from the revolving credit facility. Refer to Note 7 - Debt for further details.
As of September 23, 2026, we were in compliance with our covenants pursuant to the $1.0 billion revolving credit facility. We expect to remain in compliance with our covenants during the remainder of fiscal 2027.
Share Repurchase Program
On August 10, 2026 our Board of Directors approved an increase in authorized share repurchases of $718.0 million increasing our total authorization to $750.0 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 23, 2026, we repurchased 0.8 million shares of our common stock for $165.2 million, including 0.6 million shares purchased for $125.0 million as part of our share repurchase program and 0.2 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 23, 2026, approximately $700.0 million of share repurchase authorization remains under the current share repurchase program.
Subsequent to the end of the first quarter fiscal 2027, we repurchased an additional 0.3 million shares of our common stock for $65.0 million.
Cash Flow Outlook
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.
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 24, 2026.
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 28, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 28, 2026 at 20:38 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]