Brinker International Earnings: Chili’s Momentum Drives FY2026 Guidance Raise
- Hardik Shah
- 6 days ago
- 4 min read
TL;DR
Revenue Strength: Total revenues rose 7% year over year, driven by Chili’s same-store sales growth of 8.6%.
Margin Trends: Chili’s restaurant operating margin expanded on sales leverage, offset by targeted labor and marketing investments.
Forward Outlook: Management raised full-year fiscal 2026 revenue and earnings guidance despite weather-related headwinds.
Business Overview
Brinker International, Inc. (NYSE: EAT) is a global casual dining restaurant company operating two primary brands: Chili’s Grill & Bar and Maggiano’s Little Italy. The company owns, operates, and franchises more than 1,600 restaurants across the United States and 27 international markets.
Chili’s represents the overwhelming majority of revenue and profit, anchored in everyday value positioning, core menu innovation, and traffic-driving marketing. Maggiano’s, a smaller Italian American dining concept, is currently undergoing an operational and brand reset under the company’s “Back to Maggiano’s” strategy .
Brinker International Earnings Q2'26
Total revenues increased 7% year over year to $1.45 billion, supported by consolidated comparable restaurant sales growth of 7.5%.
Revenue & Sales
Company sales: $1.44 billion, up $92.7 million year over year
Comparable restaurant sales:
Brinker: +7.5%
Chili’s: +8.6%
Maggiano’s: –2.4%
Chili’s performance reflected a combination of menu pricing, positive traffic, and favorable mix, while Maggiano’s continued to face traffic pressure despite pricing actions .
Margins & Profitability
Restaurant operating margin (non-GAAP): 18.8% (–30 basis points year over year)
Operating income: $168.4 million (+8% year over year)
Adjusted EBITDA (non-GAAP): $223.5 million (+3.6% year over year)
Adjusted diluted EPS (non-GAAP): $2.87, up from $2.80 last year
At the brand level, Chili’s restaurant operating margin expanded by 40 basis points, benefiting from sales leverage, partially offset by higher labor, advertising, and insurance costs. Maggiano’s margins declined due to sales deleverage and higher commodity and operating expenses .
Chili’s continued to significantly outperform the casual dining industry, with management emphasizing the durability of its turnaround:
“With 19 consecutive quarters of same-store sales growth, Chili’s turnaround, led by guest experience improvements, is sustaining over the long term.”— Kevin Hochman, President & Chief Executive Officer
Forward Guidance
Brinker raised fiscal 2026 guidance, incorporating the impact of Winter Storm Fern:
Total revenues: $5.76–$5.83 billion (up from $5.60–$5.70 billion)
Adjusted diluted EPS (non-GAAP): $10.45–$10.85
Storm impact: ~$20 million revenue headwind and ~$0.15 EPS impact
Excluding weather disruptions, Chili’s underlying sales trends are expected to remain in the mid-single-digit range .
Operational Performance
Chili’s execution remained tightly aligned with internal goals:
Traffic growth: +2.7%, outperforming the casual dining category
Guest experience: “Guests With a Problem” (GWAP) improved to 2.1%, down from 2.9% a year ago
Menu simplification: Net reduction of six menu items to improve kitchen execution and consistency
Maggiano’s showed early signs of stabilization, with sequential improvement during the quarter and sales exceeding internal expectations for the first time in several periods, though management emphasized that a full turnaround will take time .
“We continue to be focused on improving our food, service, and atmosphere… that’s how you sustainably grow over time.”— Kevin Hochman, President & Chief Executive Officer
Market Insights
Management described the broader casual dining environment as mixed, citing uneven consumer demand, weather disruptions, and calendar shifts. However, Chili’s continues to gain market share through value leadership and operational execution, even as competitors lean into discounting and promotional intensity .
Consumer Behavior & Sentiment
Chili’s value positioning remains central to traffic gains:
Average check remains $3–$4 below key casual dining competitors
Strong performance from the $10.99 “3 For Me” platform, complemented by higher-tier offerings such as Triple Dippers and premium margaritas
Management emphasized that the brand’s “barbell” pricing strategy is designed to preserve margin integrity while maintaining strong entry-level value .
Strategic Initiatives
Brinker’s long-term value creation strategy is centered on menu-led traffic growth, brand reinvestment, and disciplined unit economics, with Chili’s as the primary engine.
Menu & Innovation Pipeline. Chili’s continues to pursue core menu renovation rather than limited-time offers, a deliberate strategy aimed at simplifying operations while building durable sales layers. Following successful upgrades across burgers, margaritas, ribs, queso, and nachos, management plans a national launch of a super-premium chicken sandwich platform in April, supported by a significant advertising push. The initiative targets one of the largest foodservice categories and is structured with tiered pricing to drive both entry-level traffic and higher-margin trade-ups.
Restaurant Re-Imaging & Asset Refresh. The company has completed its first four Chili’s reimage pilots, using them to refine design elements, capital intensity, and operational execution. Early learnings are informing a scalable approach, with 8–10 additional reimages planned for the remainder of fiscal 2026, followed by a ramp to 60–80 reimages in fiscal 2027. Management views reimaging as a critical lever to sustain brand relevance, improve guest experience, and support higher average unit volumes over time.
Unit Growth Optionality. While near-term unit growth remains measured, Brinker is rebuilding the development pipeline with the expectation of low single-digit unit growth beginning in fiscal 2028. Improved restaurant-level economics and stronger brand positioning are expanding the range of viable sites for Chili’s, giving the company greater long-term flexibility than it had earlier in the turnaround.
Maggiano’s Reset. At Maggiano’s, the focus remains on stabilizing the brand through food, service, and atmosphere improvements, including portion enhancements and the return of legacy favorites. While still a small contributor to consolidated profit, management sees Maggiano’s as a longer-dated option on growth once core economics and guest perception are reset.
Collectively, these initiatives reflect a strategy that prioritizes sustainable traffic growth, disciplined reinvestment, and optionality, rather than short-term promotional lifts—positioning Brinker for a longer runway of profitable expansion.
Capital Allocation
Share repurchases: $100 million repurchased in Q2
Capital expenditures: ~$64 million in Q2; full-year outlook reduced to $250–$260 million
Liquidity: Strong free cash flow generation supports continued reinvestment and shareholder returns
Management reaffirmed a disciplined approach to balancing growth investments with capital returns .
The Bottom Line
Brinker’s latest earnings reinforce that Chili’s turnaround is no longer cyclical—it is structural. Traffic-led growth, disciplined pricing, and improving guest experience continue to differentiate the brand in a volatile casual dining environment.
Key watch points for investors include Maggiano’s execution, commodity inflation in the back half of the year, and the pace of re-imaging and unit growth. With guidance raised and capital returns accelerating, Brinker enters the second half of fiscal 2026 with tangible momentum and a clearer long-term growth runway.
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