BRINKER INTERNATIONAL, INC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM
10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
September 24, 2025
Commission File Number
1-10275
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
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(Zip Code)
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(Registrant’s telephone number, including area code)
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Title of each class
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Trading Symbol(s)
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Name of exchange on which registered
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes
☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No ☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of October 23, 2025:
44,431,215
shares
BRINKER INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BRINKER INTERNATIONAL, INC.
Consolidated Statements of Comprehensive Income (Unaudited)
(In millions, except per share amounts)
| Thirteen Week Periods Ended | |||||||||||
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September 24,
2025 |
September 25,
2024 |
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| Revenues | |||||||||||
| Company sales | $ |
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$ |
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| Franchise revenues |
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| Total revenues |
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| Operating costs and expenses | |||||||||||
| Food and beverage costs |
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| Restaurant labor |
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| Restaurant expenses |
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| Depreciation and amortization |
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| General and administrative |
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| Other (gains) and charges |
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| Total operating costs and expenses |
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| Operating income |
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| Interest expenses |
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| Other income, net |
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(
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| Income before income taxes |
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| Provision for income taxes |
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| Net income | $ |
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$ |
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| Basic net income per share | $ |
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$ |
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| Diluted net income per share | $ |
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$ |
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| Basic weighted average shares outstanding |
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| Diluted weighted average shares outstanding |
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| Other comprehensive income (loss) | |||||||||||
| Foreign currency translation adjustment | $ |
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$ |
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| Comprehensive income | $ |
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$ |
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See accompanying Notes to Consolidated Financial Statements (Unaudited)
3
BRINKER INTERNATIONAL, INC.
Consolidated Balance Sheets
(In millions, except per share amounts)
| Unaudited | |||||||||||
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September 24,
2025 |
June 25,
2025 |
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| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ |
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$ |
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| Accounts receivable, net |
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| Inventories |
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| Restaurant supplies |
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| Prepaid expenses |
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| Total current assets |
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| Property and equipment, at cost | |||||||||||
| Land |
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| Buildings and leasehold improvements |
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| Furniture and equipment |
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| Construction-in-progress |
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| Less accumulated depreciation and amortization |
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(
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| Net property and equipment |
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| Other assets | |||||||||||
| Operating lease assets |
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| Goodwill |
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| Deferred income taxes, net |
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| Intangibles, net |
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| Other |
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| Total other assets |
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| Total assets | $ |
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$ |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ |
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$ |
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| Gift card liability |
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| Accrued payroll |
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| Operating lease liabilities |
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| Other accrued liabilities |
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| Income taxes payable, net |
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| Total current liabilities |
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| Long-term debt and finance leases, less current installments |
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| Long-term operating lease liabilities, less current portion |
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| Other liabilities |
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| Commitments and contingencies (Note 7) |
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| Shareholders’ equity | |||||||||||
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Common stock (
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| Additional paid-in capital |
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| Accumulated other comprehensive loss |
(
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(
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| Retained earnings |
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Treasury stock, at cost (
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(
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(
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| Total shareholders’ equity |
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| Total liabilities and shareholders’ equity | $ |
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$ |
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See accompanying Notes to Consolidated Financial Statements (Unaudited)
4
BRINKER INTERNATIONAL, INC.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
| Thirteen Week Periods Ended | |||||||||||
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September 24,
2025 |
September 25,
2024 |
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| Cash flows from operating activities | |||||||||||
| Net income | $ |
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$ |
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| Adjustments to reconcile Net income to Net cash provided by operating activities: | |||||||||||
| Depreciation and amortization |
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| Stock-based compensation |
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| Deferred income taxes, net |
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| Non-cash other (gains) and charges |
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| Net loss on disposal of assets |
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| Other |
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| Changes in assets and liabilities: | |||||||||||
| Accounts receivable, net |
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| Inventories |
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| Restaurant supplies |
(
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(
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| Prepaid expenses |
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(
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| Income taxes |
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| Operating lease assets, net of liabilities |
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| Other assets |
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| Accounts payable |
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| Gift card liability |
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| Accrued payroll |
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| Other accrued liabilities |
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| Other liabilities |
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| Net cash provided by operating activities |
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| Cash flows from investing activities | |||||||||||
| Payments for property and equipment |
(
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(
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| Proceeds from sale of assets |
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| Insurance recoveries |
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| Net cash used in investing activities |
(
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(
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| Cash flows from financing activities | |||||||||||
| Borrowings on revolving credit facility |
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| Payments on revolving credit facility |
(
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(
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| Purchases of treasury stock |
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| Payments on long-term debt |
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(
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| Proceeds from issuance of treasury stock |
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| Payments for debt issuance costs |
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(
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| Net cash used in financing activities |
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(
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| Net change in cash and cash equivalents |
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(
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| Cash and cash equivalents at beginning of period |
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| Cash and cash equivalents at end of period | $ |
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$ |
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| Supplemental disclosure of cash flow information: | |||||||||||
| Income taxes paid, net | $ |
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$ |
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| Interest paid, net of amounts capitalized |
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| Accrued capital expenditures |
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See accompanying Notes to Consolidated Financial Statements (Unaudited)
5
BRINKER INTERNATIONAL, INC.
Consolidated Statements of Shareholders’ Equity
(Unaudited)
(In millions)
| Thirteen Week Period Ended September 24, 2025 | |||||||||||||||||||||||||||||||||||
| Common Stock |
Additional
Paid-In Capital |
Retained Earnings |
Treasury
Stock |
Accumulated
Other Comprehensive Loss |
Total | ||||||||||||||||||||||||||||||
| Balances at June 25, 2025 | $ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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| Net income |
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| Other comprehensive loss |
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(
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(
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| Stock-based compensation |
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| Purchases of treasury stock |
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(
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| Issuances of treasury stock |
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| Balances at September 24, 2025 | $ |
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$ |
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$ |
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$ |
(
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$ |
(
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$ |
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| Thirteen Week Period Ended September 25, 2024 | |||||||||||||||||||||||||||||||||||
| Common Stock |
Additional
Paid-In Capital |
Accumulated Deficit |
Treasury
Stock |
Accumulated
Other Comprehensive Loss |
Total | ||||||||||||||||||||||||||||||
| Balances at June 26, 2024 | $ |
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$ |
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$ |
(
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$ |
(
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$ |
(
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$ |
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| Net income |
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| Other comprehensive income |
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| Stock-based compensation |
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| Purchases of treasury stock |
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| Issuances of treasury stock |
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| Balances at September 25, 2024 | $ |
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$ |
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$ |
(
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$ |
(
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$ |
(
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$ |
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See accompanying Notes to Consolidated Financial Statements (Unaudited)
6
BRINKER INTERNATIONAL, INC.
Notes to Consolidated Financial Statements (Unaudited)
Footnote Index
| Note # | Description | Page | ||||||||||||
| Basis of Presentation | ||||||||||||||
| Revenue Recognition | ||||||||||||||
| Fair Value Measurements | ||||||||||||||
| Accrued Liabilities | ||||||||||||||
| Leases | ||||||||||||||
| Debt | ||||||||||||||
| Commitments and Contingencies | ||||||||||||||
| Income Taxes | ||||||||||||||
| Shareholders’ Equity | ||||||||||||||
| Net Income Per Share | ||||||||||||||
| Other Gains and Charges | ||||||||||||||
| Segment Information | ||||||||||||||
7
1. BASIS OF PRESENTATION
References to “Brinker,” the “Company,” “we,” “us,” and “our” in this Form 10-Q refer to Brinker International, Inc. and its subsidiaries and any predecessor companies of Brinker International, Inc. Our Consolidated Financial Statements (Unaudited) as of September 24, 2025 and June 25, 2025, and for the thirteen week periods ended September 24, 2025 and September 25, 2024, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
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 restaurant brands, Chili’s and Maggiano’s, are both operating segments and reporting units.
Use of Estimates
The preparation of the Consolidated Financial Statements (Unaudited) is in conformity with generally accepted accounting principles in the United States (“GAAP”) and requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements (Unaudited), and the reported amounts of revenues and costs and expenses in the reporting periods. Actual results could differ from those estimates.
The information furnished herein reflects all adjustments (consisting only of normal recurring accruals and adjustments) which are, in our opinion, necessary to fairly state the interim operating results, financial position and cash flows for the respective periods. However, these operating results are not necessarily indicative of the results expected for the full fiscal year. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with GAAP, have been omitted pursuant to SEC rules and regulations. The Notes to Consolidated Financial Statements (Unaudited) should be read in conjunction with the Notes to Consolidated Financial Statements contained in our June 25, 2025 Form 10-K. We believe the disclosures are sufficient for interim financial reporting purposes. All amounts in the Notes to Consolidated Financial Statements (Unaudited) are presented in millions unless otherwise specified.
Foreign Currency Translation
The Foreign currency translation adjustment represents the unrealized impact of translating the financial statements of our Canadian restaurants from their respective functional currency (Canadian dollars) to United States dollars and are reported as a component of Comprehensive income and recorded in Accumulated other comprehensive loss on our Consolidated Balance Sheets (Unaudited).
Recently Issued Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a company’s effective tax rate reconciliation and requires disclosure of income taxes paid by jurisdiction. The amendments are effective for fiscal years beginning after December 15, 2024, which require us to adopt the provisions in our fiscal 2026 Form 10-K. The amendments should be applied prospectively; however, retrospective application is permitted. Management does not expect this ASU to have a material impact on our disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires, for each relevant expense caption on the income statement, detailed disclosure amounts for purchases of inventory, employee compensation, depreciation, and intangible asset amortization. In addition, this ASU requires companies to include amounts already required by GAAP in the same disclosure, provide a qualitative description of remaining amounts not separately disaggregated, and disclose the amount of total selling expenses along with the companies’ definition of selling expenses. The amendment is effective for fiscal years beginning after December 15, 2026, which would require us to adopt the provisions in our fiscal 2028 Form 10-K. Early adoption is permitted.
8
2. REVENUE RECOGNITION
Deferred Franchise and Development Fees
Our deferred franchise and development fees consist of the unrecognized fees received from franchisees. Recognition of these fees in subsequent periods is based on satisfaction of the contractual performance obligations of the active contracts with franchisees. We also expect to earn subsequent period royalties and advertising fees related to our franchise contracts; however, due to the variability and uncertainty of these future revenues which depend upon a sales-based measure, these future revenues are not yet estimable as the performance obligations remain unsatisfied. Deferred franchise and development fees are classified within Other accrued liabilities for the current portion expected to be recognized within the next 12 months, and Other liabilities for the long-term portion in the Consolidated Balance Sheets (Unaudited).
The following table reflects the changes in deferred franchise and development fees between June 25, 2025 and September 24, 2025:
| Deferred Franchise and Development Fees | |||||
| Balance as of June 25, 2025 | $ |
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| Additions |
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| Amount recognized to Franchise revenues |
(
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| Balance as of September 24, 2025 | $ |
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The following table illustrates franchise and development fees expected to be recognized in the future related to performance obligations that were unsatisfied or partially unsatisfied as of September 24, 2025:
| Fiscal Year | Franchise and Development Fees Revenue Recognition | ||||
| Remainder of 2026 | $ |
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| 2027 |
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| 2028 |
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| 2029 |
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| 2030 |
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| Thereafter |
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| $ |
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9
Deferred Gift Card Revenues
Total deferred revenues related to our gift cards include the full value of unredeemed gift card balances less recognized breakage and the unamortized portion of third party fees.
The following table reflects the changes in the Gift card liability between June 25, 2025 and September 24, 2025:
| Gift Card Liability | |||||
| Balance as of June 25, 2025 | $ |
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| Gift card sales |
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| Gift card redemptions recognized to Company sales |
(
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| Gift card breakage recognized to Company sales |
(
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| Other |
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Balance as of September 24, 2025
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$ |
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3. FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date under market conditions. Fair value measurements are categorized in three levels based on the types of significant inputs used, as follows:
| Level 1 | Quoted prices in active markets for identical assets or liabilities | ||||
| Level 2 | Observable inputs other than quoted prices in active markets for identical assets or liabilities | ||||
| Level 3 | Unobservable inputs that cannot be corroborated by observable market data | ||||
Financial Instruments
The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying amounts because of the short maturity of these items.
The carrying amount of debt outstanding related to our revolving credit facility approximates fair value as the interest rate on this instrument approximates current market rates (Level 2). The fair values of our note is based on quoted market prices and is considered a Level 2 fair value measurements.
The carrying amounts of the note, which are net of unamortized debt issuance costs, and fair values are as follows:
| September 24, 2025 | June 25, 2025 | ||||||||||||||||||||||
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
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$ |
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$ |
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$ |
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$ |
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Non-Financial Assets
We review the carrying amounts of non-financial assets, primarily long-lived property and equipment, finance lease assets, operating lease assets, reacquired franchise rights, goodwill and transferable liquor licenses annually or when events or circumstances indicate that the fair value may not substantially exceed the carrying amount. We determine the fair values of property and equipment, including finance lease assets, operating lease assets and reacquired franchise rights based on Level 3 fair value measurements. The fair values of transferable liquor licenses are based on prices in the open market for licenses in the same or similar jurisdictions and are categorized as Level 2. We record an impairment charge for the excess of the carrying amount over the fair value. Any impairment charges are included in Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited). During the thirteen week periods ended September 24, 2025 and September 25, 2024,
no
indicators of impairment were identified.
Intangibles, net in the Consolidated Balance Sheets (Unaudited) includes both indefinite-lived intangible assets such as transferable liquor licenses and definite-lived intangible assets such as reacquired franchise rights. Accumulated
10
amortization associated with definite-lived intangible assets at September 24, 2025 and June 25, 2025, was $
19.5
million and $
19.0
million, respectively.
4. ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
|
September 24,
2025 |
June 25,
2025 |
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| Insurance | $ |
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$ |
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| Property tax |
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| Current installments of finance lease obligations |
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| Sales tax |
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| Utilities and services |
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| Interest |
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| Other |
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| $ |
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$ |
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5. LEASES
We typically lease our restaurant facilities through ground leases (where we lease land only, but construct the building and improvements) or retail leases (where we lease the land/retail space and building). In addition to our restaurant facilities, we also lease our corporate headquarters location and certain equipment.
The components of lease expenses included in the Consolidated Statements of Comprehensive Income (Unaudited) were as follows:
| Thirteen Week Periods Ended | |||||||||||
|
September 24,
2025 |
September 25,
2024 |
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| Operating lease cost | $ |
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$ |
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| Variable lease cost |
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| Finance lease amortization |
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| Finance lease interest |
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| Short-term lease cost |
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| Sublease income |
(
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(
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| Total lease costs, net | $ |
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$ |
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Supplemental cash flow information related to leases:
| Thirteen Week Periods Ended | |||||||||||
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September 24,
2025 |
September 25,
2024 |
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Operating lease assets obtained in exchange for operating lease liabilities
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$ |
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$ |
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Finance lease assets obtained in exchange for finance lease liabilities
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Finance lease assets are recorded in Property and equipment, at cost, and the net balance as of September 24, 2025 and June 25, 2025 was $
98.1
million and $
85.8
million, respectively.
11
6. DEBT
Long-term debt consists of the following:
|
September 24,
2025 |
June 25,
2025 |
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| Revolving credit facility | $ |
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$ |
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| Finance lease obligations |
|
|
|||||||||
| Total long-term debt |
|
|
|||||||||
| Less: unamortized debt issuance costs |
(
|
(
|
|||||||||
| Total long-term debt, less unamortized debt issuance costs |
|
|
|||||||||
|
Less: current installments of long-term debt
(1)
|
(
|
(
|
|||||||||
| Total long-term debt, less current portion | $ |
|
$ |
|
|||||||
Revolving Credit Facility
In the thirteen week period ended September 24, 2025, net borrowings of $
90.0
million were drawn on our revolving credit facility. As of September 24, 2025, $
910.0
million of credit was available under the revolving credit facility.
The $
1.0
billion revolving credit facility 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
%.
Financial Covenants
The indenture for our 8.25% notes contains certain covenants, including, but not limited to, limitations and restrictions on the ability of the Company and its Restricted Subsidiaries (as defined in the indentures) to (i) create liens on Principal Property (as defined in the indenture) and (ii) merge, consolidate or amalgamate with or into any other person or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of their property. These covenants are subject to a number of important conditions, qualifications, exceptions, and limitations.
7. COMMITMENTS AND CONTINGENCIES
Lease Commitments and Guarantees
We have, in certain cases, divested brands or sold restaurants to franchisees and have not been released from lease guarantees for the related restaurants. As of September 24, 2025 and June 25, 2025, we have outstanding lease guarantees or are secondarily liable for an estimated $
11.3
million and $
11.9
million, respectively. These amounts represent the maximum known potential liability of rent payments under the leases, but outstanding rent payments can exist outside of our knowledge as a result of the landlord and tenant relationship being between two third parties. These leases have been assigned to the buyers and expire at the end of the respective lease terms, which range from fiscal 2026 through fiscal 2035. In the event of default under a lease by an owner of a divested brand, the indemnity and default clauses in our agreements with such third parties and applicable laws govern our ability to pursue and recover amounts we may pay on behalf of such parties. We have received notices of default and have
12
been named a party in lawsuits pertaining to some of these leases in circumstances where the current lessee did not pay its rent obligations and management is closely monitoring any exposure.
Letters of Credit
We provide letters of credit to various insurers to collateralize obligations for outstanding claims. As of September 24, 2025, we had $
34.1
million in undrawn standby letters of credit outstanding. All standby letters of credit are renewable within the next 11 months.
Cyber Security Litigation
In fiscal 2018, we discovered malware at certain Chili’s restaurants that may have resulted in unauthorized access or acquisition of customer payment card data. In connection with this event, the Company was also named as a defendant in a putative class action lawsuit in the United States District Court for the Middle District of Florida relating to this incident.
On September 9, 2025, the plaintiff filed a notice of voluntary dismissal of all her individual claims without prejudice. The court subsequently entered its order of dismissal on September 25, 2025, and the matter is now closed.
Legal Proceedings
Evaluating contingencies related to litigation is a process involving judgment on the potential outcome of future events, and the ultimate resolution of litigated claims may differ from our current analysis. Accordingly, we review the adequacy of accruals and disclosures pertaining to litigated matters each quarter in consultation with legal counsel and we assess the probability and range of possible losses associated with contingencies for potential accrual in the Consolidated Financial Statements (Unaudited).
We are engaged in various legal proceedings and have certain unresolved claims pending. Liabilities have been established based on our best estimates of our potential liability in certain of these matters. Based upon consultation with legal counsel, management is of the opinion that there are
no
matters pending or threatened which are expected to have a material adverse effect, individually or in the aggregate, on the consolidated financial condition or results of operations.
8. INCOME TAXES
| Thirteen Week Periods Ended | |||||||||||
|
September 24,
2025 |
September 25,
2024 |
||||||||||
| Effective income tax rate |
|
% |
|
% | |||||||
The federal statutory tax rate was
21.0
% for the thirteen week periods ended September 24, 2025 and September 25, 2024.
9. SHAREHOLDERS’ EQUITY
Share Repurchases
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.
13
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.
Stock-based Compensation
The following table presents restricted share awards granted under the Company’s various equity compensation plans and the related weighted average fair value per share amounts.
| Thirteen Week Periods Ended | |||||||||||
|
September 24,
2025 |
September 25,
2024 |
||||||||||
| Restricted share awards | |||||||||||
| Restricted share awards granted |
|
|
|||||||||
| Weighted average fair value per share | $ |
|
$ |
|
|||||||
10. NET INCOME PER SHARE
Basic net income per share is computed by dividing Net income by the Basic weighted average shares outstanding for the reporting period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of Diluted net income per share, the Basic weighted average shares outstanding is increased by the dilutive effect of stock options and restricted share awards. Stock options and restricted share awards with an anti-dilutive effect are not included in the Diluted net income per share calculation.
Basic weighted average shares outstanding are reconciled to Diluted weighted average shares outstanding as follows:
| Thirteen Week Periods Ended | |||||||||||
|
September 24,
2025 |
September 25,
2024 |
||||||||||
| Basic weighted average shares outstanding |
|
|
|||||||||
| Dilutive stock options |
|
|
|||||||||
| Dilutive restricted shares |
|
|
|||||||||
| Total dilutive impact |
|
|
|||||||||
| Diluted weighted average shares outstanding |
|
|
|||||||||
| Awards excluded due to anti-dilutive effect |
|
|
|||||||||
14
11. OTHER GAINS AND CHARGES
Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited) consist of the following:
| Thirteen Week Periods Ended | |||||||||||
|
September 24,
2025 |
September 25,
2024 |
||||||||||
| Severance and other benefit charges | $ |
|
$ |
|
|||||||
| Litigation & claims, net |
|
|
|||||||||
| Restaurant closure asset write-offs and charges |
|
|
|||||||||
| Enterprise system implementation costs |
|
|
|||||||||
| Loss from natural disasters, net (of insurance recoveries) |
(
|
|
|||||||||
| Other |
|
|
|||||||||
| $ |
|
$ |
|
||||||||
•
Severance and other benefit charges
relates to changes in our management team and organizational structure.
•
Litigation & claims, net
in the current year relates to legal contingencies.
•
Restaurant closure asset write-offs and charges
includes costs associated with the closure of certain Chili’s and Maggiano’s restaurants in the current year.
•
Enterprise system implementation costs
in the prior year primarily consist of consulting fees, software subscription fees, and contract labor associated with the enterprise system implementation.
•
Loss from natural disasters, net (of insurance recoveries)
relates to proceeds received from fiscal 2021 Winter Storm claim.
12. SEGMENT INFORMATION
Our chief operating decision maker (“CODM”) is the President and Chief Executive Officer.
Our CODM uses Operating income as the measure for assessing performance and allocating resources of our segments. Our operating segments are Chili’s and Maggiano’s. The Chili’s segment includes the results of our Company-owned Chili’s restaurants, which are principally located in the United States, within the full-service casual dining segment of the industry. The Chili’s segment also includes results of our Canadian Company-owned restaurants and royalties and other fees from our franchised locations in the United States,
28
other countries and
two
United States territories. The Maggiano’s segment includes the results of our Company-owned Maggiano’s restaurants in the United States as well as royalties and other fees from our domestic franchise business. Costs related to our restaurant support teams for the Chili’s and Maggiano’s brands, including operations, brand recruiting, finance,
marketing, culinary innovation and franchise are included in the results of our operating segments.
The Corporate segment includes unallocated costs such as information technology, human capital management, accounting, legal, purchasing, and restaurant development.
Company sales for each operating segment 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 for each operating segment include royalties, franchise advertising fees, franchise and development fees, and other service fees.
Operating income includes revenues and expenses directly attributable to segment-level results of operations. Restaurant expenses primarily includes restaurant rent, repairs and maintenance, advertising, supplies, utilities, delivery fees, payment processing fees, franchise and property taxes, workers’ compensation and general liability insurance, to-go supplies, and supervision expenses.
15
The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
| Thirteen Week Period Ended September 24, 2025 | |||||||||||||||||||||||
| Chili's | Maggiano's | Corporate | Consolidated | ||||||||||||||||||||
| Company sales | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Franchise revenues |
|
|
|
|
|||||||||||||||||||
| Total revenues |
|
|
|
|
|||||||||||||||||||
| Food and beverage costs |
|
|
|
|
|||||||||||||||||||
| Restaurant labor |
|
|
|
|
|||||||||||||||||||
| Restaurant expenses |
|
|
|
|
|||||||||||||||||||
| Depreciation and amortization |
|
|
|
|
|||||||||||||||||||
| General and administrative |
|
|
|
|
|||||||||||||||||||
| Other (gains) and charges |
(
|
|
|
|
|||||||||||||||||||
| Total operating costs and expenses |
|
|
|
|
|||||||||||||||||||
| Operating income (loss) |
|
(
|
(
|
|
|||||||||||||||||||
| Interest expenses |
|
|
|
|
|||||||||||||||||||
| Other income, net |
|
|
(
|
(
|
|||||||||||||||||||
| Income (loss) before income taxes | $ |
|
$ |
(
|
$ |
(
|
$ |
|
|||||||||||||||
| Segment assets | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Thirteen Week Period Ended September 25, 2024 | |||||||||||||||||||||||
| Chili's | Maggiano's | Corporate | Consolidated | ||||||||||||||||||||
| Company sales | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
| Franchise revenues |
|
|
|
|
|||||||||||||||||||
| Total revenues |
|
|
|
|
|||||||||||||||||||
| Food and beverage costs |
|
|
|
|
|||||||||||||||||||
| Restaurant labor |
|
|
|
|
|||||||||||||||||||
| Restaurant expenses |
|
|
|
|
|||||||||||||||||||
| Depreciation and amortization |
|
|
|
|
|||||||||||||||||||
| General and administrative |
|
|
|
|
|||||||||||||||||||
| Other (gains) and charges |
|
|
|
|
|||||||||||||||||||
| Total operating costs and expenses |
|
|
|
|
|||||||||||||||||||
| Operating income (loss) |
|
|
(
|
|
|||||||||||||||||||
| Interest expenses |
|
|
|
|
|||||||||||||||||||
| Other income, net |
(
|
|
(
|
(
|
|||||||||||||||||||
| Income (loss) before income taxes | $ |
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
| Segment assets | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
16
ITEM 2. 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.
17
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:
18
•
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.
19
(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 labor
was 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 expenses
were 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.
20
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.
21
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.
22
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.
23
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.
24
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.
25
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
The terms of our revolving credit facility require us to pay interest on outstanding borrowings at SOFR plus an applicable margin based on a function of our debt-to-cash flow ratio. As of September 24, 2025, $90.0 million was outstanding under the revolving credit facility. We estimate that a hypothetical 100 basis point increase in the current interest rate on the outstanding balance of this variable rate financial instrument as of September 24, 2025 would result in an additional $0.9 million of annual interest expense.
Commodity Price Risk
We purchase food and other commodities for use in our operations based on market prices established with our suppliers. While our purchasing commitments partially mitigate the risk of such fluctuations, there is no assurance that supply and demand factors such as disease, inclement weather, tariffs, or recent geopolitical unrest, will not cause the prices of the commodities used in our restaurant operations to fluctuate. The aggregate impact of these and other factors contributed to cost inflation in recent years. Additionally, if there is a time lag between increasing commodity prices and our ability to increase menu prices or if we believe a commodity price increase to be short in duration and we choose not to pass on the cost increases, our short-term financial results could be negatively affected.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective.
INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the thirteen week period ended September 24, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
FORWARD-LOOKING STATEMENTS
Information and statements contained in this Form 10-Q, in our other filings with the Securities and Exchange Commission (“SEC”) or in our written and verbal communications that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally accompanied by words like “believes,” “anticipates,” “estimates,” “predicts,” “expects,” “plans,” “intends,” “projects,” “continues” and other similar expressions that convey uncertainty about future events or outcomes. All forward-looking statements
26
are made only based on our current plans and expectations as of the date such statements are made, and except as required by law, we undertake no obligation to update forward-looking statements to reflect events or circumstances arising after the date such statements are made. Forward-looking statements are neither predictions nor guarantees of future events or performance and are subject to risks and uncertainties which could cause actual results to differ materially from our historical results or from those projected in forward-looking statements.
The forward-looking statements contained in this Form 10-Q report are subject to the risks and uncertainties described in Part I, Item IA “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 25, 2025, and below in Part II, Item 1A “Risk Factors” in this report on Form 10-Q, as well as the risks and uncertainties that generally apply to all businesses. We further caution that it is not possible to identify all risks and uncertainties, and you should not consider the identified factors as a complete list of all risks and uncertainties. Such risks and uncertainties include, among other things, the impact of general economic conditions, including inflation, on economic activity and on our operations; disruptions on our business including consumer demand, costs, product mix, our strategic initiatives, operations, technology and assets, and our financial performance; the impact of current and potential tariffs and trade barriers; the impact of competition, including competitors employing our same strategies or discounting their offerings; changes in consumer preferences, including shifts in their brand preferences; consumer perception of food safety; reduced consumer discretionary spending; governmental regulations; the effectiveness of the Company's business strategy plan; loss of key management personnel; failure to hire and retain high-quality restaurant management and team members; increasing regulation surrounding wage inflation and competitive labor markets; the impact of social media, including the potential governmental ban of platforms used by the Company in its marketing initiatives; reputational damage or unfavorable publicity for our brands, which may result from actions of franchisees not within our control; reliance on technology and third party delivery providers; failure to protect the security of data of our guests and team members; product availability and supply chain disruptions; regional business and economic conditions; volatility in consumer, commodity, transportation, labor, currency and capital markets; litigation; franchisee success; technology failures; failure to protect our intellectual property; outsourcing; impairment of goodwill or assets; failure to maintain effective internal control over financial reporting; downgrades in credit ratings; changes in estimates regarding our assets; actions of activist shareholders; our pursuit of or failure to comply with new environmental and sustainability requirements; our pursuit of or failure to achieve any goals, targets or objectives with respect to sustainability matters; adverse weather conditions; terrorist acts; cybersecurity, artificial intelligence and phishing threats; health epidemics or pandemics; tax reform; inadequate insurance coverage; and limitations imposed by our credit agreements.
27
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information regarding legal proceedings is incorporated by reference from Note 7 - Commitments and Contingencies in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I, Item 1 of this Form 10-Q report.
ITEM 1A. RISK FACTORS
In addition to the other information in this Form 10-Q report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended June 25, 2025, which could materially affect our business, financial condition or results of operations. It is not possible to predict or identify all risk factors. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business, financial condition or results of operations. Therefore, the risks identified are not intended to be a complete discussion of all potential risks or uncertainties.
There have been no material changes in the risk factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 25, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Our Board of Directors approved a $400.0 million increase in our share repurchase program in August 2025.
During the thirteen week period ended September 24, 2025, we repurchased shares as follows (in millions, except per share amounts, unless otherwise noted):
|
Total Number of Shares Purchased
(1)
|
Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program |
Approximate Dollar Value that May Yet be Purchased Under the Program
|
||||||||||||||||||||
| June 26, 2025 through July 30, 2025 | 0.001 | $ | 144.39 | — | $ | 107.0 | |||||||||||||||||
| July 31, 2025 through August 27, 2025 | 0.462 | 155.99 | 0.3 | 457.0 | |||||||||||||||||||
| August 28, 2025 through September 24, 2025 | 0.397 | 157.06 | 0.3 | 415.0 | |||||||||||||||||||
| Total | 0.860 | $ | 156.47 | 0.6 | |||||||||||||||||||
(1)
These amounts include shares purchased as part of our publicly announced programs and shares owned and tendered by team members to satisfy tax withholding obligations on the vesting of restricted share awards, which are not deducted from shares available to be purchased under publicly announced programs. Unless otherwise indicated, shares owned and tendered by team members to satisfy tax withholding obligations were purchased at the
average of the high and low prices of the Company’s shares on the date of vesting. During the thirteen week period ended September 24, 2025, 272,484 shares were tendered by team members at an average price of $155.93.
ITEM 5. OTHER INFORMATION
During
the
thirteen week period ended September 24, 2025
, no director or officer
adopted
or
terminated
any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as such terms are defined in Item 408 of Regulation S-K.
28
ITEM 6. EXHIBITS
| Exhibit | Description | |||||||
|
Certificate of Incorporation of Registrant, as amended
(1)
|
||||||||
|
Amended and Restated Bylaws of Registrant
(2)
|
||||||||
|
Registrant’s Terms of Restricted Stock Unit Award for Fiscal 2026*
|
||||||||
|
Registrant’s Fiscal 2026 Performance Share Plan*
|
||||||||
|
Certification by Kevin D. Hochman, President and Chief Executive Officer of the Registrant, pursuant to 17 CFR 240.13a – 14(a) or 17 CFR 240.15d – 14(a)*
|
||||||||
|
Certification by Michaela M. Ware, Executive Vice President and Chief Financial Officer of the Registrant, pursuant to 17 CFR 240.13a – 14(a) or 17 CFR 240.15d – 14(a)*
|
||||||||
|
Certification by Kevin D. Hochman, President and Chief Executive Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
|
||||||||
|
Certification by Michaela M. Ware, Executive Vice President and Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
|
||||||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
| 101.SCH | XBRL Schema Document | |||||||
| 101.CAL | XBRL Calculation Linkbase Document | |||||||
| 101.DEF | XBRL Definition Linkbase Document | |||||||
| 101.LAB | XBRL Label Linkbase Document | |||||||
| 101.PRE | XBRL Presentation Linkbase | |||||||
| 104 |
The cover page from the Registrant's Quarterly Report on Form 10-Q for the thirteen week period ended September 24, 2025 is formatted in Inline XBRL.
|
|||||||
* Filed herewith.
(1)
Filed as an exhibit to Annual Report on Form 10-K for fiscal year ended June 28, 1995 and incorporated herein by reference.
(2)
Filed as an exhibit to Annual Report on Form 10-K for fiscal year ended June 26, 2024 and incorporated herein by reference.
29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
BRINKER INTERNATIONAL, INC.,
a Delaware corporation |
|||||||||||
| Date: October 29, 2025 | By: | /S/ KEVIN D. HOCHMAN | |||||||||
| Kevin D. Hochman, | |||||||||||
| President and Chief Executive Officer | |||||||||||
| of Brinker International, Inc. and President | |||||||||||
| of Chili’s Grill & Bar and Maggiano's Little Italy | |||||||||||
| (Principal Executive Officer) | |||||||||||
| Date: October 29, 2025 | By: | /S/ MICHAELA M. WARE | |||||||||
| Michaela M. Ware, | |||||||||||
| Executive Vice President and Chief Financial Officer | |||||||||||
| (Principal Financial and Accounting Officer) | |||||||||||
30
TABLE OF CONTENTS
Part I. Financial InformationItem 1. Financial StatementsItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II. Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 5. Other InformationItem 6. Exhibits