Brinker International, Inc. Q3 FY2026 earnings call

• Chili's momentum driven by quarterly improvements in food, service, atmosphere, and everyday value leadership. Focused on fundamentals in Q3, preparing for chicken sandwich launch. Chicken sandwich platform launched with positive initial response. North of six initiative to increase capacity, focusing on simplification and speeding up cycle time. - Maggiano's continuing turnaround, making sequential progress in traffic and comp sales, working on improving service and removing non-value added processes. - Integrated marketing team and supplier partners recognized, Chili's named brand of the year for second straight year. Congratulated Chili's driver and team on NASCAR Cup Series win.

Chili's: Q3 same-store sales +4%, 20th consecutive quarter of same-store sales growth, outpaced casual dining industry by 420 basis points. Two-year cumulative comp 37%. Now number two casual dining brand for sales and number one casual dining traffic brand. Calendar 25 sales growth nearly $1 billion. Q3 Chili's restaurant teams focused on food fundamentals like chicken breading/cooking perfection, preparing for Q4 chicken sandwich launch. Dine-in GWAP 1.9%, food grade 75%, intent to return 79%. Chicken sandwich platform launched April 14th, initial response encouraging. Maggiano's: 8% of company sales, low single-digit profit contribution. Adjusting for Christmas Day and January weather, saw sequential improvement in traffic and comp sales. Customers noticing more abundant portions, classic dishes. Value scores improving, but still work to do on service and dine-in times.

Updated guidance for fiscal 2026: Annual revenues $5.78 billion to $5.82 billion, adjusted diluted EPS $10.60 to $10.85, capital expenditures $240 million to $250 million, weighted average shares $44.7 million to $45 million. Guidance assumes low single-digit wage and commodity inflation and tax rate ~19%. April started strong with mid-single digit sales growth and positive traffic, confident of lapping fourth quarter with mid-single digit sales and positive traffic at Chili's.

Q: David Palmer with Evercore ISI asked about chicken sandwich stats and big picture growth levers.

A: Chicken sandwich launch only two weeks, seeing 161% more sales than pre-launch, positive feedback. Big growth levers include food, service, atmosphere improvements, North of Six cycle time reduction, reimage, and world-class marketing.

Q: Chris O'Call with Stiefel asked about check management and margin flow through.

A: Seeing some check management in desserts and alcohol, but focusing on improving food service and atmosphere. Margin flow through impacted by R&M expense, expect similar margins in Q4, confident in margin growth.

Q: Dennis Geiger with UBS asked about chicken sandwich momentum and mid-single digit comp trajectory.

A: Mid-single digit comp still in view, focus on improving fundamentals like food service and atmosphere, token data shows new guests becoming like existing guests.

Q: Jeff Farmer with Gordon Haskett asked about margin expansion dynamics and menu pricing.

A: Margin expansion primarily from sales leverage, will continue to protect value proposition and balance menu pricing with value.

Q: Andrew Strelzyk with BMO asked about operational and service improvements.

A: Many technology and operational initiatives, including back office redo, team member handheld upgrade, Supermarket Simple, north of six cycle time acceleration.

Q: Jeffrey Bernstein with Barclays asked about new unit opportunity and Maggiano's turnaround.

A: Excited about new unit growth strategy, focused on turning around Maggiano's first before taking on more risk.

Q: John Tower with Citi asked about North of Six labor and remodels.

A: North of Six restaurants invest labor in different places, some baked into fiscal 27 guidance, remodels early with four restaurants, optimizing spend.

Q: Brian Harbor with Morgan Stanley asked about re-images and throughput, and food inflation.

A: Re-images mostly cosmetic, focus on equipment for throughput, expect mid-single digit food inflation.

Q: Brian Vaccaro with Raymond James asked about ad spend and sales mix.

A: Ad spend to pop in Q4, sales mix of Three For Me and Triple Dipper steady.

Q: Nick Setian with Mizuho Securities asked about ad spend and new store ramp.

A: Ad spend to increase in Q4, new store ramp focusing on optimizing box costs.

Q: Andrew Charles with TD Cowan asked about margin opportunities and new store box cost.

A: Margin opportunities from sales leverage and optimizing expenses, focus on optimizing new store box costs.

Q: Chris Carril with KeyBank Capital Markets asked about check mix and Maggiano's marketing.

A: Focus on improving off-premise experience, Maggiano's marketing focused on guest empathy in the overall experience.

Q: Christine Cho with Goldman Sachs asked about off-premise trends.

A: Off-premise steady, focus on improving pick-up experience by reducing friction and updating quote times.