Brinker International, Inc. Q4 FY2025 earnings call

• Chili's Q4 Highlights: Relaunched ribs platform, rolled out new frozen marg program, successful Big QP launch, TurboChef installed in all restaurants, menu simplification, increased labor investment (over $160M more than fiscal '22), GWAP at 2.3% (lowest), and marketing spend increased to $137M in fiscal '25 (from $32M in fiscal '22).
• Fiscal '26 Plans: Focus on traffic as obsession metric, full year of ribs upgrade, queso and nacho upgrades in Q2, chicken sandwich platform relaunch, new frozen marg platform, food ingredient upgrades, 4 quarters of simplification rollouts, north of six initiatives, hospitality initiatives, and store reimaging with plans to remodel 10% of fleet annually.
• Maggiano's: Leadership change with Dominique Barone stepping away, interim leadership by Kevin Hochman, applying Chili's turnaround learnings to improve food, service, and atmosphere.

Chili's: Q4 same-store sales were +24%, outperforming the casual dining industry by 1,890 basis points. For the year, total revenue growth was 21.9%, with comp sales of positive 21.3%. Chili's comps for Q4 were +23.7%, driven by positive traffic of 16.3%, positive mix of 4.7%, and price of 2.7%. Chili's AUVs grew to $4.5 million, and restaurant operating margin improved from 11.9% in fiscal '22 to 17.6% in fiscal '25. Maggiano's: Reported comp sales for the quarter of negative 0.4%.

• Fiscal '26 guidance: Expected annual revenues in the range of $5.6 billion to $5.7 billion, adjusted diluted EPS in the range of $9.90 to $10.50, weighted average shares in the range of 45 million to 46 million, and capital expenditures in the range of $270 million to $290 million. Assumes planned commodity and wage inflation in the low single digits, a tax rate of approximately 19%, and 1 to 4 net company-owned restaurant closures.
• Expectations: Strong same-store sales growth at Chili's, positive traffic expected each quarter, and continued focus on investing in fundamentals to drive growth.

• Commodity and wage inflation could impact margins. - Execution risks for reimaging and new initiatives. - Macro-economic headwinds that could affect business performance.

Q: Congratulations on the successful 3-year milestone. I was hoping to get a little bit more detail on your store reimage plans this year, particularly around that 200 priority assets that need updating. Any color on the timeline, scope required investments and any early sense of kind of the sales lift or return profile for these investments?

A: Michaela M. Ware mentioned they are early in the process, with plans to reimage 4 restaurants in Dallas to evaluate results, and expect more details later in the fiscal year on investments, sales lift, and ramp-up.

Q: Where do you see the chance to build more Chili's as you sort of get to that unit growth plan? And I guess, are there still other kind of -- I think you've done successful relocations in the past, too. Are there still opportunities to do that?

A: Michaela M. Ware said there are opportunities to build more Chili's in markets historically not focused on, including the Northeast and Pacific Northwest, leveraging the brand's strength and sales/margins to expand growth outside of top states.