Group 1 - The article emphasizes the importance of observing megatrends to gain insights into the advancement of human society and potential investment opportunities [1] - It highlights the challenges in identifying which companies will best capitalize on emerging opportunities as society and technologies evolve [1] - The focus is on the significance of fundamentals, quality of leadership, and product pipeline in investment decisions, particularly for medium-sized companies and startups [1] Group 2 - The author has experience in evaluating startups and emerging industries/technologies, indicating a strong background in assessing potential investment opportunities [1] - There is a noted interest in macrotrends, futurism, and emerging technologies, suggesting a forward-looking approach to investment analysis [1] - The article suggests that while personal interests in megatrends and technological developments are important, fundamentals and technicals are crucial for uncovering investment opportunities [1]

Part I [Business](index=4&type=section&id=Item%201.%20Business) Brinker International, Inc. owns and franchises Chili's Grill & Bar and Maggiano's Little Italy, operating **1,628 restaurants** - The company owns, develops, operates, and franchises two main restaurant brands: Chili's Grill & Bar and Maggiano's Little Italy[13](index=13&type=chunk) [Restaurant Brands](index=5&type=section&id=Restaurant%20Brands) The company's portfolio includes Chili's Grill & Bar and Maggiano's Little Italy, with fiscal 2025 average sales of **$4.5M** and **$9.9M** FY 2025 Key Operating Metrics by Brand | Brand | Avg. Annual Sales per Company Restaurant | Avg. Revenue per Guest | Food & Non-Alcoholic Sales % | Alcoholic Beverage Sales % | | :--- | :--- | :--- | :--- | :--- | | **Chili's Grill & Bar** | $4.5 million | $21.90 | 90.7% | 9.3% | | **Maggiano's Little Italy** | $9.9 million | $39.06 | 86.9% | 13.1% | - Chili's is a global casual dining brand present in the United States, 27 other countries, and two U.S. territories, focusing on Southwest-inspired American favorites like burgers, fajitas, and margaritas[15](index=15&type=chunk)[16](index=16&type=chunk) - Maggiano's is a national polished casual brand known for Italian-American cuisine, catering to special occasions and large parties, with banquet sales comprising **14.7%** of its company sales in fiscal 2025[17](index=17&type=chunk)[18](index=18&type=chunk) [Business Strategy](index=5&type=section&id=Business%20Strategy) The company's strategy aims to grow sales and profits by enhancing guest and team member experiences through menu simplification and digital integration - Chili's strategy involves simplifying its menu to five core equities (burgers, fajitas, Chicken Crispers, margaritas, Triple Dipper) to improve quality and consistency[21](index=21&type=chunk) - A key traffic driver for Chili's is its "3 for Me" value platform, offering a non-alcoholic drink, appetizer, and entrée starting at **$10.99**[23](index=23&type=chunk) - Chili's has invested in technology to enhance the guest experience, including tabletop payment devices, the My Chili's loyalty program, and handheld ordering tablets for servers[25](index=25&type=chunk) - Maggiano's focuses on hospitality for special occasions and utilizes multiple revenue channels including dining rooms, carry-out, delivery partnerships, and profitable banquet rooms[26](index=26&type=chunk) [Company and Franchise Development](index=6&type=section&id=Company%20and%20Franchise%20Development) The company pursues growth through new Company-owned restaurants and franchise expansion, with **5** new Company-owned and **34** franchise locations opened in FY2025 Restaurant Openings and Projections (FY 2025-2026) | Development Type | Brand | FY 2025 Openings | FY 2026 Projected Openings | | :--- | :--- | :--- | :--- | | **Company-owned** | Chili's domestic | 5 | 7 | | **Franchise-operated** | Chili's domestic | 3 | 2-4 | | | Chili's international | 30 | 24-28 | | | Maggiano's domestic | 1 | — | - During fiscal 2025, the company permanently closed 13 Company-owned Chili's and one Maggiano's restaurant that were underperforming or had expiring leases[30](index=30&type=chunk) - As of June 25, 2025, franchise-operated restaurants constituted **29.4%** of all Chili's locations and **5.8%** of all Maggiano's locations system-wide[32](index=32&type=chunk) - International growth is driven by development agreements with franchise partners. In fiscal 2025, 30 new international locations were opened, and two new development arrangements were signed[34](index=34&type=chunk) [Human Capital Management](index=9&type=section&id=Human%20Capital%20Management) As of June 25, 2025, Brinker employed **83,840** team members, focusing on internal promotion and career development through programs like Best You EDU™ - The company's employee base totaled **83,840** team members as of June 25, 2025, including 5,069 in restaurant management and 667 at the support center[47](index=47&type=chunk) - The company promotes from within, with approximately **87%** of new general managers in fiscal 2025 being internal promotions[51](index=51&type=chunk) - All team members have access to the Best You EDU™ program from their first day of employment, providing GED, associate degree programs, and other educational benefits at no cost[52](index=52&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including strategic, operational, macroeconomic, IT, financial, legal, and regulatory challenges [Strategic and Operational Risks](index=11&type=section&id=Strategic%20and%20Operational%20Risks) Success depends on executing business strategy, managing food safety, third-party delivery, and mitigating regional concentration risks - The ability to increase revenues depends on successfully executing business strategies, including growing sales at existing locations, evolving marketing, and implementing technology initiatives[59](index=59&type=chunk)[61](index=61&type=chunk) - Food safety incidents, whether at company or competitor restaurants, could damage brand reputation and lead to declines in sales, regulatory action, and litigation[61](index=61&type=chunk)[62](index=62&type=chunk) - The company relies on third-party providers for delivery, which introduces risks related to service quality, driver availability, and potential changes in fees or platform operations[66](index=66&type=chunk)[67](index=67&type=chunk) - A high concentration of Company-owned restaurants in Texas (**18.9%**), Florida (**11.8%**), and California (**9.2%**) makes the company vulnerable to adverse economic conditions and events in those states[71](index=71&type=chunk) [Macroeconomic and Industry Risks](index=15&type=section&id=Macroeconomic%20and%20Industry%20Risks) The company operates in a highly competitive industry, vulnerable to economic downturns, inflation, and supply chain disruptions affecting discretionary spending - The restaurant business is highly competitive regarding price, service, location, and food quality, competing with local, national, and regional chains, as well as quick service and fast-casual restaurants[79](index=79&type=chunk) - The business is dependent on consumer discretionary spending, which can be negatively affected by economic conditions such as inflation, unemployment, and volatility in financial markets[84](index=84&type=chunk) - Ongoing macroeconomic challenges, including labor, commodity, and transportation inflation, as well as supply chain disruptions, have adversely impacted and may continue to impact the company[86](index=86&type=chunk) [Information and Technology Related Risks](index=17&type=section&id=Information%20and%20Technology%20Related%20Risks) The company faces significant cybersecurity risks and relies heavily on IT systems for operations, making it vulnerable to breaches and failures - The company faces cybersecurity risks from attacks targeting personal and financial data of guests and team members, which could result in reputational harm, litigation, and financial penalties[89](index=89&type=chunk)[90](index=90&type=chunk) - The business relies heavily on information systems for critical operations like point-of-sale processing and supply chain management. System failures could cause service delays and operational inefficiencies[93](index=93&type=chunk) [Financial Risks](index=18&type=section&id=Financial%20Risks) Financial stability is exposed to credit rating downgrades, goodwill impairment, and long-lived asset impairment charges - A downgrade of the company's credit ratings could increase the cost of borrowing, limit access to capital, and result in more restrictive debt covenants[96](index=96&type=chunk) - Changes in circumstances, such as a decline in stock price or consumer spending, could lead to the impairment of goodwill, resulting in non-cash charges that would adversely affect financial results[99](index=99&type=chunk) - In fiscal 2025, the company recognized **$4.6 million** of impairment charges on long-lived assets and liquor licenses[101](index=101&type=chunk) [Legal and Regulatory Risks](index=19&type=section&id=Legal%20and%20Regulatory%20Risks) The company is subject to litigation, increasing employment laws, and extensive regulations impacting labor costs and operational complexity - The company is subject to lawsuits and claims common in the food service industry, and significant legal fees or adverse judgments could materially affect financial performance[102](index=102&type=chunk) - Increasing federal, state, and local employment laws, particularly regarding minimum wage and tip credits, can significantly increase labor costs. For example, California's minimum wage for fast food workers was set at **$20** per hour effective April 1, 2024[105](index=105&type=chunk)[106](index=106&type=chunk) - The company is subject to extensive regulations related to facility operations, health and sanitation, menu labeling, and alcoholic beverage control, which can increase costs and operational complexity[107](index=107&type=chunk) [Unresolved Staff Comments](index=21&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved staff comments - The company reports no unresolved staff comments[115](index=115&type=chunk) [Cybersecurity](index=21&type=section&id=Item%201C.%20Cybersecurity) The company employs a risk-based, proactive cybersecurity approach with Board oversight, and has not experienced material impacts from prior threats - The company's cybersecurity strategy includes ongoing monitoring, network security, data encryption, vendor security assessments, and incident response guidelines[116](index=116&type=chunk) - The Audit Committee of the Board of Directors has overall oversight responsibility for data security practices and controls to monitor and mitigate technology risk exposure[122](index=122&type=chunk) - Management reports quarterly to the Board of Directors on the effectiveness of cybersecurity and data protection practices[123](index=123&type=chunk) - The company believes that risks from prior cybersecurity threats have not materially affected its results of operations or financial condition[121](index=121&type=chunk) [Properties](index=23&type=section&id=Item%202.%20Properties) As of June 25, 2025, Brinker's system comprised **1,628 restaurants** (**1,162** company-owned, **466** franchised), mostly leased Restaurant Portfolio as of June 25, 2025 | Brand | Ownership | Domestic | International | Total | | :--- | :--- | :--- | :--- | :--- | | **Chili's** | Company-owned | 1,109 | 4 | 1,113 | | | Franchise | 99 | 364 | 463 | | | **Total** | **1,208** | **368** | **1,576** | | **Maggiano's** | Company-owned | 49 | — | 49 | | | Franchise | 3 | — | 3 | | | **Total** | **52** | **—** | **52** | | **System-wide Total** | | **1,260** | **368** | **1,628** | - Of the 1,162 Company-owned restaurants, 1,108 are leased locations, typically with initial lease terms of 10 to 20 years[127](index=127&type=chunk) - The company's corporate headquarters is a leased office building in Dallas, Texas, containing approximately 216,300 square feet[128](index=128&type=chunk) [Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 8 - Commitments and Contingencies - Details on legal proceedings are located in Note 8 of the financial statements[129](index=129&type=chunk) [Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - This item is not applicable to the company[130](index=130&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Brinker's common stock trades on NYSE under 'EAT', with **$76.0 million** in share repurchases in FY2025 and a new **$400.0 million** authorization - The company's common stock is traded on the New York Stock Exchange (NYSE) under the symbol "EAT"[131](index=131&type=chunk) Comparison of Five Year Cumulative Total Return | | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Brinker International, Inc.** | $100.00 | $262.86 | $95.24 | $153.85 | $309.69 | $750.83 | | **S&P 500** | $100.00 | $140.79 | $125.85 | $150.51 | $187.47 | $215.89 | | **S&P Restaurants** | $100.00 | $140.30 | $127.89 | $165.63 | $159.43 | $185.53 | - In fiscal 2025, the company repurchased **1.0 million** shares for **$76.0 million**. Subsequent to the fiscal year-end, the Board authorized an additional **$400.0 million** for the share repurchase program, bringing the total available authority to **$507.0 million**[137](index=137&type=chunk)[141](index=141&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2025, total revenues increased to **$5.38 billion**, operating income more than doubled to **$512.0 million**, and net income rose to **$383.1 million** [Results of Operations](index=26&type=section&id=Results%20of%20Operations) For fiscal 2025, total revenues grew **21.9%** to **$5.38 billion**, driven by **22.7%** comparable sales growth, with operating margin expanding to **9.5%** Consolidated Operating Results (Fiscal Years Ended) | Metric | June 25, 2025 | June 26, 2024 | | :--- | :--- | :--- | | **Total Revenues** | $5,384.2 M | $4,415.1 M | | **Operating Income** | $512.0 M | $229.6 M | | **Operating Margin** | 9.5% | 5.2% | | **Net Income** | $383.1 M | $155.3 M | Comparable Restaurant Sales Change vs. Prior Year (FY 2025) | Category | Comparable Sales | Price Impact | Mix-Shift Impact | Traffic Impact | | :--- | :--- | :--- | :--- | :--- | | **Company-owned** | 22.7% | 4.8% | 4.4% | 13.5% | | Chili's | 25.3% | 4.5% | 4.8% | 16.0% | | Maggiano's | 1.5% | 7.8% | 1.2% | (7.5)% | - Restaurant labor costs improved by **1.4%** as a percentage of sales, driven by **4.0%** of sales leverage, partially offset by higher hourly labor costs from increased staffing and wage rates[151](index=151&type=chunk) - Restaurant expenses improved by **2.8%** as a percentage of sales, mainly due to **3.8%** of sales leverage, which was partially offset by higher repairs, maintenance, and advertising costs[151](index=151&type=chunk) - General and administrative expenses increased by **$38.3 million**, primarily due to higher costs for corporate technology initiatives (**+$8.6M**), payroll (**+$7.4M**), and performance-based compensation (**+$6.5M**)[152](index=152&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Primary liquidity sources are cash from operations (**$679.0 million** in FY2025) and a **$1.0 billion** revolving credit facility, extended to May 2030 Cash Flow Summary (Fiscal Years Ended) | Cash Flow Activity | June 25, 2025 | June 26, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $679.0 M | $421.9 M | | **Net cash used in investing activities** | ($263.4 M) | ($192.2 M) | | **Net cash used in financing activities** | ($461.3 M) | ($180.2 M) | - In October 2024, the **$350.0 million** of 5.00% senior notes matured and were repaid in full using borrowings from the revolving credit facility[176](index=176&type=chunk) - On May 1, 2025, the company amended its revolving credit facility, increasing its capacity from **$900.0 million** to **$1.0 billion** and extending the maturity to May 1, 2030[174](index=174&type=chunk)[175](index=175&type=chunk) Future Contractual Obligations as of June 25, 2025 (in millions) | Obligation Type | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | **Long-term debt** | $— | $— | $— | $350.0 | $350.0 | | **Interest** | $28.9 | $57.7 | $57.8 | $14.4 | $158.8 | | **Finance leases** | $22.7 | $52.5 | $14.5 | $27.9 | $117.6 | | **Operating leases** | $186.1 | $334.1 | $296.3 | $952.4 | $1,768.9 | | **Purchase obligations** | $21.5 | $22.1 | $2.5 | $— | $46.1 | [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates include gift card breakage revenue recognition and long-lived asset impairment testing, both requiring significant judgment - Gift card breakage income is estimated based on historical redemption patterns and actuarial models. A 50 basis point change in the breakage-rate assumption for fiscal 2025 would impact the income statement by approximately **$0.6 million**[164](index=164&type=chunk)[166](index=166&type=chunk) - The company assesses long-lived assets for impairment by comparing the carrying value of a restaurant's asset group to its projected future operating cash flows. This process requires significant estimates and assumptions[167](index=167&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rate fluctuations and commodity price volatility, impacting costs and margins - The company's only debt instrument with a variable interest rate is its revolving credit facility, which had no outstanding balance as of June 25, 2025[187](index=187&type=chunk) - The company faces commodity price risk as it purchases food based on market prices, which can fluctuate due to factors like weather, disease, and geopolitical events, potentially leading to cost inflation[188](index=188&type=chunk) [Financial Statements and Supplementary Data](index=38&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's consolidated financial statements for FY2025, including auditor's report, balance sheets, income, and cash flow statements [Report of Independent Registered Public Accounting Firm](index=39&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on financial statements and internal controls, identifying gift card breakage revenue as a critical audit matter - The independent auditor, KPMG LLP, expressed an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting[193](index=193&type=chunk)[194](index=194&type=chunk) - The critical audit matter identified was the assessment of gift card breakage revenue, which required subjective judgment in evaluating redemption patterns and actuarial models[197](index=197&type=chunk)[199](index=199&type=chunk) [Consolidated Financial Statements](index=44&type=section&id=Consolidated%20Financial%20Statements) For FY2025, the company reported total revenues of **$5.38 billion**, net income of **$383.1 million**, and total assets of **$2.68 billion** Consolidated Statements of Comprehensive Income (in millions) | | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | **Total revenues** | $5,384.2 | $4,415.1 | $4,133.2 | | **Operating income** | $512.0 | $229.6 | $144.4 | | **Net income** | $383.1 | $155.3 | $102.6 | | **Diluted net income per share** | $8.32 | $3.40 | $2.28 | Consolidated Balance Sheets (in millions) | | June 25, 2025 | June 26, 2024 | | :--- | :--- | :--- | | **Total current assets** | $207.0 | $234.1 | | **Net property and equipment** | $952.7 | $879.7 | | **Total assets** | $2,678.6 | $2,593.1 | | **Total current liabilities** | $675.6 | $622.3 | | **Long-term debt and finance leases** | $426.0 | $786.3 | | **Total shareholders' equity** | $370.9 | $39.4 | | **Total liabilities and shareholders' equity** | $2,678.6 | $2,593.1 | Consolidated Statements of Cash Flows (in millions) | | FY 2025 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | | **Net cash provided by operating activities** | $679.0 | $421.9 | $256.3 | | **Net cash used in investing activities** | ($263.4) | ($192.2) | ($174.2) | | **Net cash used in financing activities** | ($461.3) | ($180.2) | ($80.5) | | **Net change in cash and cash equivalents** | ($45.7) | $49.5 | $1.6 | | **Cash and cash equivalents at end of period** | $18.9 | $64.6 | $15.1 | [Notes to Consolidated Financial Statements](index=48&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, lease obligations (**$1.77 billion** operating leases), debt, and segment-level financial performance for Chili's and Maggiano's - The company's two operating segments and reporting units are Chili's and Maggiano's[228](index=228&type=chunk)[249](index=249&type=chunk) - As of June 25, 2025, the company had total future lease payments of **$1.77 billion** for operating leases and **$117.6 million** for finance leases[287](index=287&type=chunk) - Long-term debt as of June 25, 2025, consisted primarily of **$350.0 million** in 8.25% senior notes due 2030 and **$97.6 million** in finance lease obligations[289](index=289&type=chunk) - In fiscal 2025, the Chili's segment generated **$644.0 million** in operating income on **$4.88 billion** in total revenues, while the Maggiano's segment generated **$60.1 million** in operating income on **$501.3 million** in total revenues[336](index=336&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=70&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes in or disagreements with accountants on accounting and financial disclosure - The company reports no changes in or disagreements with accountants on accounting and financial disclosure[339](index=339&type=chunk) [Controls and Procedures](index=70&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 25, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of June 25, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[341](index=341&type=chunk) - There were no changes in internal control over financial reporting during the fourth quarter of fiscal 2025 that materially affected, or are reasonably likely to materially affect, internal controls[343](index=343&type=chunk) [Other Information](index=71&type=section&id=Item%209B.%20Other%20Information) A Board member adopted a Rule 10b5-1 trading plan on June 5, 2025, to sell up to **2,072** shares - A member of the Board of Directors, James C. Katzman, adopted a Rule 10b5-1 trading plan on June 5, 2025, to sell up to **2,072** shares[344](index=344&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=71&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement - This section incorporates information by reference from the company's 2025 Proxy Statement[346](index=346&type=chunk) [Executive Compensation](index=71&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the 2025 Proxy Statement - This section incorporates information by reference from the company's 2025 Proxy Statement[349](index=349&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=71&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership and related stockholder matters is incorporated by reference from the 2025 Proxy Statement - This section incorporates information by reference from the company's 2025 Proxy Statement[350](index=350&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=72&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2025 Proxy Statement - This section incorporates information by reference from the company's 2025 Proxy Statement[352](index=352&type=chunk)[353](index=353&type=chunk) [Principal Accountant Fees and Services](index=72&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2025 Proxy Statement - This section incorporates information by reference from the company's 2025 Proxy Statement[354](index=354&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=72&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements and exhibits filed with the Annual Report on Form 10-K - This section provides a list of all financial statements and exhibits filed with the Annual Report on Form 10-K[355](index=355&type=chunk)[357](index=357&type=chunk) [Form 10-K Summary](index=74&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary provided - The company did not provide a Form 10-K summary[359](index=359&type=chunk)

Group 1 - Brinker International (NYSE: EAT) shares have more than doubled in value over the past year, indicating strong performance [1] - Fast casual chains such as Cava (CAVA), Chipotle (CMG), and SweetGreen (SG) have also been highlighted in the context of market performance [1]

Core Insights - Brinker International, Inc. reported better-than-expected fourth-quarter EPS and sales results, raising FY2026 guidance above estimates [1][2] - The company achieved fourth-quarter adjusted EPS of $2.49, surpassing the analyst consensus estimate of $2.45, with quarterly sales of $1.462 billion, reflecting a 21% year-over-year increase [1] - For FY2026, Brinker projects adjusted EPS between $9.90 and $10.50, exceeding the consensus estimate of $8.84, and expects sales of $5.6 billion to $5.7 billion, above the forecast of $5.36 billion [2] Financial Performance - The company reported a two-year sales growth of 39% and a three-year growth of 45%, indicating sustained momentum [2] - Brinker shares rose 1.1% to $159.12 following the earnings announcement [3] Analyst Ratings and Price Targets - Barclays analyst Jeffrey Bernstein maintained an Equal-Weight rating and raised the price target from $166 to $170 [8] - BMO Capital analyst Andrew Strelzik maintained a Market Perform rating and increased the price target from $150 to $170 [8] - Evercore ISI Group analyst David Palmer maintained an In-Line rating and raised the price target from $180 to $190 [8] - UBS analyst Dennis Geiger maintained a Neutral rating and increased the price target from $155 to $165 [8] - Piper Sandler analyst Nicole Miller Regan maintained a Neutral rating and raised the price target from $155 to $168 [8] - B of A Securities analyst Katherine Griffin maintained a Neutral rating and increased the price target from $186 to $190 [8] - Morgan Stanley analyst John Glass maintained an Equal-Weight rating and raised the price target from $149 to $161 [8]

Core Insights - Brinker International, Inc. (EAT) reported strong fourth-quarter fiscal 2025 results, with earnings and revenues exceeding expectations and showing year-over-year growth [1][4][9] - The stock price increased by 1.6% following the earnings report [1] Financial Performance - Adjusted earnings per share (EPS) for Q4 were $2.49, surpassing the Zacks Consensus Estimate of $2.43, and up from $1.61 in the prior-year quarter [4][9] - Total revenues reached $1,461.9 million, exceeding the consensus estimate of $1,411 million, and reflecting a 21% increase year-over-year [4][11] Segment Performance - Chili's segment revenues rose 24% year-over-year to $1,339.6 million, driven by increased foot traffic and effective marketing strategies [5][9] - Maggiano's revenues decreased by 1.2% year-over-year to $122.3 million, primarily due to lower customer traffic, although menu price increases provided some offset [8][10] Operational Metrics - Chili's same-store sales increased by 24%, significantly outperforming the casual dining sector by 1,890 basis points [2] - Maggiano's comparable restaurant sales fell by 0.4% year-over-year, with traffic down 8.9% [8][10] Cost and Margin Analysis - Chili's restaurant expenses as a percentage of sales improved to 81.8% from 84.9% in the prior year, aided by sales leverage [6] - Adjusted restaurant operating margin for EAT was 17.8%, up from 15.2% in the prior-year quarter [11] Balance Sheet Highlights - As of June 25, 2025, cash and cash equivalents were $64.6 million, up from $15.1 million a year earlier, while long-term debt decreased to $426 million from $786.3 million [12] Future Outlook - For fiscal 2026, management anticipates total revenues between $5.60 billion and $5.70 billion, with adjusted diluted EPS projected in the range of $9.90 to $10.50 [13]

Core Viewpoint - Brinker International reported strong second-quarter earnings, with significant same-store sales growth, indicating resilience in consumer dining habits despite a cautious outlook for the remainder of 2025 [1][2][3]. Financial Performance - Overall revenue reached $1.46 billion, reflecting a 20% year-over-year increase [2]. - The company achieved a remarkable 54% year-over-year growth in earnings, showcasing its pricing power and ability to attract customers [2]. - Same-store sales growth for Chili's and Maggiano's chains was reported at 21.3% [1]. Future Outlook - The company provided cautious guidance for 2025, highlighting potential volatility in commodity costs and emphasizing menu innovation, digital ordering, and loyalty programs to enhance customer engagement [4]. - Analysts project a 12.65% earnings growth over the next 12 months, which is above the sector average [8]. Market Position - EAT stock has been one of the strongest-performing restaurant stocks over the past five years, trading at an attractive valuation of around 19x forward sales, which is a discount to the sector average [7][8]. - Despite recent gains, EAT stock is still down overall for the last five days, indicating a need for further confirmation of a new trend [2][9]. Stock Performance and Analyst Ratings - The current price target for EAT stock is $156.41, with a consensus hold rating among analysts [9][11]. - The stock is trading near the consensus price target, and analysts have been raising their price targets in the last two months [10][11].

Marketing Strategy & Investment - The company emphasizes its marketing team's excellence, recognized as brand of the year by Adage [1] - Marketing budget significantly increased from approximately $32 million to $137 million, a roughly 328% increase, providing more resources for marketing activities [2] - The company's marketing efforts aim to demonstrate the relevance of its proposition to people's lives [2] Media & Communication - Mentions of following Jim Kramer on X (formerly Twitter) and using madmentions to tweet questions [2] - Provides contact information for the show, including email (madmoney@cnbc.com) and phone number (1-800-743-CNNBC) [2] - Directs viewers to madmoney.cnbc.com for missed content [3]

Core Insights - Brinker International has significantly increased its marketing budget from $32 million three years ago to $137 million in the most recent fiscal year, which has positively impacted business performance [1] - The company reported strong earnings and revenue, with Chili's same-store sales rising by 23.7%, leading to an increase in the full-year forecast [1] - Social media influencers have played a crucial role in driving traffic to Chili's, with a mix of paid endorsements and organic customer posts contributing to the brand's visibility [2] Marketing Strategy - The refortification of marketing budgets has allowed the company to effectively promote its restaurant brands [1] - The use of social media influencers has been beneficial, providing them with creative freedom in advertising [2] Product Offering - The standardization of Chili's $10.99 value meal across various U.S. markets has been well-received by customers, eliminating the need for coupons or apps [3] Cost Management - The company is leveraging growth to address rising labor and goods costs, emphasizing that cost-cutting alone is insufficient to maintain margins in the current inflationary environment [4] - Investments in improving locations, food quality, and labor are starting to yield positive results, allowing the company to enhance margins [4]

Core Insights - Brinker International reported a significant increase in comparable sales for Chili's, with a year-over-year rise of 23.7% for the quarter ending June 25, while Maggiano's experienced a slight decline of 0.4% [2] - The growth in traffic at Chili's is attributed to effective advertising and operational improvements as part of a three-year turnaround plan [3] Marketing Strategies - A notable marketing initiative was the "Fast Food Financing" pop-up experience in New York City, which highlighted the value of Chili's meals compared to fast food [4][5] - The marketing efforts have successfully created nationwide buzz and reinforced Chili's position as a value leader in the restaurant sector [5] Operational Improvements - Recent operational enhancements at Chili's include the installation of new kitchen equipment for better cooking efficiency and a streamlined menu to simplify the ordering process [5] - Future plans for 2026 involve a significant simplification of the iPad application used for order taking, aimed at improving user experience and operational efficiency [6] Management and Leadership Changes - Brinker International is making leadership changes at Maggiano's, with plans to implement successful strategies from Chili's turnaround [7] - The company emphasizes the importance of listening to restaurant teams for ideas to accelerate Maggiano's recovery [8]

Economic Outlook - Pre-market futures are up following all-time closing highs from the S&P 500 and Nasdaq, driven by optimism around potential rate cuts by the Federal Open Market Committee (FOMC) [1] - U.S. Treasury Secretary suggested a 50 basis points cut in the Fed funds rate, which would lower rates to 3.75-4.00%, a level last seen in December 2022 [2][1] - July Inflation Rate reported at +2.7%, alleviating concerns about tariffs re-igniting inflation [2] Inflation and Price Trends - Current inflation is below +2.0%, with sub-3.0% inflation expected to be absorbed by the economy without significant disturbance [3] - Concerns arise about potential inflation increases if interest rates decrease while tariffs rise, with projections of 2-3 rate cuts leading to a Fed funds rate of 3.50-3.75% amid rising inflation [4] - Recent CPI report showed food prices steady, gasoline down -9.5%, and used cars and trucks up +4.8%, indicating a core CPI at a 5-month high [4] Producer Price Index (PPI) Expectations - Upcoming PPI report for July is projected to show +0.2% on headline and +0.3% on core, indicating potential tariff effects before retailers adjust prices [5] Company Earnings - Brinker International (EAT) reported fiscal Q4 earnings of $2.49 per share, exceeding expectations and showing significant growth from $1.61 per share year-over-year [6] - Revenues of $1.46 billion surpassed estimates by +2%, with a +16% growth in restaurant traffic [7] - Maggiano's Little Italy franchise saw a slight decline of -0.4%, but Chili's experienced exceptional growth of +24% year-over-year [7] Market Expectations - Cisco Systems (CSCO) is expected to report earnings after the closing bell, with shares up +20% year-to-date and projected earnings growth of +11.5% year-over-year [8]