Brinker International, Inc. (EAT) - Q1 2026 Summary
Business Context and Reporting Period
This Form 10-Q covers the thirteen-week period ended September 24, 2025 (Fiscal Q1 2026). Brinker International operates the Chili's Grill & Bar and Maggiano's Little Italy restaurant brands. As of the period end, the company owned, operated, or franchised 1,630 restaurants globally, comprising 1,161 company-owned and 469 franchised locations.
Key Financial Metrics
| Metric | Q1 2026 (Sep 24, 2025) | Q1 2025 (Sep 25, 2024) |
|---|---|---|
| Total Revenues | $1,349.2 million | $1,139.0 million |
| Operating Income | $117.9 million | $56.4 million |
| Net Income | $99.5 million | $38.5 million |
| Diluted EPS | $2.17 | $0.84 |
| Operating Cash Flow | $120.8 million | $62.8 million |
| Cash & Equivalents | $33.6 million | $16.2 million |
| Long-Term Debt | $525.8 million | $426.0 million |
| Comparable Sales (Company-owned) | +18.8% | N/A |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 18.5% year-over-year, driven primarily by a 21.3% increase in Chili's revenues and a 17.4% increase in franchise revenues. Maggiano's revenues declined 8.4% due to lower traffic and restaurant closures.
- Profitability: Operating income more than doubled to $117.9 million, aided by a significant reduction in "Other (gains) and charges" from $8.9 million in the prior year to $0.9 million.
- Cost Management: Restaurant labor costs as a percentage of sales improved by 1.2% due to sales leverage, despite higher wage rates. Food and beverage costs increased slightly as a percentage of sales (0.6%) due to commodity inflation and mix shifts.
- Debt & Liquidity: The company drew $90.0 million on its revolving credit facility, increasing total long-term debt. However, operating cash flow surged to $120.8 million, significantly improving liquidity.
Guidance, Outlook, and Risks
- Share Repurchases: The Board approved a $400 million increase to the repurchase program in August 2025. During the quarter, the company repurchased 0.9 million shares for $134.5 million. Approximately $415.0 million of authorization remains.
- Expansion: The company plans 32-38 total restaurant openings for Fiscal 2026, with a focus on international franchise expansion for Chili's.
- Tax Legislation: The "One Big Beautiful Bill Act" (OBBBA) enacted in July 2025 restored 100% bonus depreciation, impacting the timing of tax deductions.
- Risks: Key risks include wage inflation, commodity price volatility (meat/seafood), supply chain disruptions, and geopolitical events affecting consumer spending. The company is monitoring lease guarantees for divested brands.
Investor Verification Checklist
- Maggiano's Performance: Verify the sustainability of the 12.8% traffic decline at Maggiano's and the impact of ongoing reimage costs on future profitability.
- Commodity Inflation: Monitor the trajectory of meat and seafood costs and the company's ability to pass these costs to consumers via menu pricing without further traffic erosion.
- Debt Utilization: Assess the rationale for increasing revolver borrowings ($90M) despite strong operating cash flow generation ($120.8M).
- Legal Contingencies: Review the status of lease guarantees for divested brands and any potential exposure from past cyber security incidents, though the primary class action was dismissed in September 2025.