Brinker International(EAT) - 2025 Q1 - Quarterly Report

Revenue and Sales Performance - Total revenues for the thirteen week period ended September 25, 2024 were $1,139.0 million, compared to$ 1,012.5 million for the same period in 2023, driven by a $128.3 million increase in comparable restaurant sales and$ 8.4 million from new restaurant openings[83] - Comparable restaurant sales for Company-owned restaurants increased by 13.0%, with Chili's domestic leading at 14.1% and Maggiano's at 4.2%[84] - Franchise revenues increased to $1.2 million in the thirteen week period ended September 25, 2024, primarily due to higher royalties and franchise advertising revenues, with Chili's franchisees generating$ 225.7 million in sales and Maggiano's franchisees generating $3.2 million[83] - Chili's domestic comparable restaurant sales increased by 13.9%, driven by a 6.8% price impact and a 6.5% traffic impact, while Maggiano's saw a 4.2% increase with a 10.8% price impact but an 8.7% decline in traffic[84] - Chili's total revenues increased by 13.5% to$ 1,030.4 million, driven by favorable comparable restaurant sales, menu pricing, higher traffic, and favorable menu item mix[99] - Maggiano's total revenues increased by 4.0% to $108.6 million, primarily due to favorable comparable restaurant sales driven by menu pricing and favorable menu item mix[106] Cost Management and Efficiency - Food and beverage costs increased to$ 284.3 million, representing 25.2% of Company sales, a 0.6% favorable variance compared to the same period in 2023, driven by menu pricing partially offset by higher commodity costs[89][90] - Restaurant labor costs rose to $377.4 million, or 33.5% of Company sales, with a 1.3% favorable variance due to improved labor efficiency[89] - Restaurant labor costs were favorable by 1.3% due to 2.4% sales leverage and 0.1% lower other labor expenses, partially offset by 0.8% higher hourly labor expenses and 0.4% higher manager salaries[91] - Restaurant expenses were favorable by 1.2% due to 2.5% sales leverage and 0.3% lower delivery fees, partially offset by 1.3% higher repairs and maintenance and 0.3% higher other restaurant expenses[91] - Chili's food and beverage costs were favorable by 0.6% due to 1.8% from menu pricing, partially offset by 0.6% unfavorable commodity costs and 0.6% unfavorable menu item mix[100] Restaurant Operations and Expansion - The company operated 1,625 restaurants as of September 25, 2024, including 1,170 Company-owned and 455 franchised locations, with 14 new franchise restaurant openings during the period[71][79] - The company plans to open 29-36 new restaurants in fiscal 2025, including 9-11 Chili's domestic and 19-24 Chili's international locations[81] - Investments in digital technology and off-premise options have enhanced the dine-in experience and expanded To-Go and delivery options, with the Chili's mobile app and delivery partnerships driving convenience[75] - The "3 for Me" value platform, offering a non-alcoholic drink, appetizer, and entrée starting at$ 10.99, continues to be a key traffic driver in the current economic environment[74] Financial Performance and Cash Flow - Net cash provided by operating activities increased by $3.7 million to$ 62.8 million, driven by higher operating income, partially offset by increased payments of performance-based compensation and interest[111] - Net cash used in investing activities increased by $10.9 million to$ 56.5 million, primarily due to higher spend on Chili's capital maintenance and equipment[112] - Net cash used in financing activities increased by $40.5 million to$ 54.7 million, primarily due to $50.1 million in share repurchase activity, partially offset by$ 11.0 million in net borrowing activity[112] - The company repurchased 1.1 million shares of common stock for $74.8 million in the thirteen-week period ended September 25, 2024, with$ 117.0 million remaining under the current share repurchase program[119] Debt and Credit Facility - The company has a $900.0 million revolving credit facility with an interest rate of 6.46% as of September 25, 2024, consisting of SOFR of 4.86% plus an applicable margin and spread adjustment of 1.60%[114] - The company repaid$ 350.0 million of 5.000% senior notes on October 1, 2024, using available capacity under the existing revolving credit facility[116] - The company expects to remain in compliance with covenants under the $900.0 million revolving credit facility and the terms of the indentures governing its 5.000% and 8.250% notes for the remainder of fiscal 2024[115] - A hypothetical 100 basis point increase in the current interest rate on the$ 25.0 million outstanding under the revolving credit facility would result in an additional $0.3 million of annual interest expense[124] Liquidity and Capital Expenditures - The company believes its current cash and cash equivalents, along with cash generated from operations and availability under the revolving credit facility, will be adequate to meet capital expenditure and working capital needs for at least the next twelve months[121] - Depreciation and amortization increased by$ 4.4 million, with additions for new and existing restaurant assets contributing $7.5 million and retirements reducing it by$ 6.1 million[93] General and Administrative Expenses - General and administrative expenses increased by $9.4 million, driven by$ 3.2 million in performance-based compensation and $1.9 million in payroll expenses[94] Commodity Price Risk - The company faces commodity price risk due to potential fluctuations in food and other commodity prices, which could negatively affect short-term financial results if cost increases are not passed on to customers[126]