Brinker International(EAT) - 2025 Q2 - Quarterly Report

Restaurant Operations - As of December 25, 2024, the company owned, operated, or franchised a total of 1,624 restaurants, including 1,164 company-owned and 460 franchised locations[68]. - The company opened 21 new franchise restaurants during the twenty-six week period ended December 25, 2024, with plans for further international expansion[75]. Financial Performance - Total revenues for the thirteen-week period ended December 25, 2024, were $1,358.2 million, an increase from$1,074.1 million for the same period in 2023, representing a growth of approximately 26.5%[78]. - Chili's total revenues increased by 30.4% to $1,208.8 million for the thirteen-week period ended December 25, 2024, compared to$927.2 million for the same period in 2023[94]. - Chili's total revenues increased by 22.0% to $2,239.2 million for the twenty-six week period ended December 25, 2024, compared to$1,835.3 million for the same period in 2023[99]. - Maggiano's total revenues increased by 2.7% to $258.0 million for the twenty-six week period ended December 25, 2024, compared to$251.3 million for the same period in 2023[106]. Comparable Sales - Comparable restaurant sales for company-owned locations increased by 27.4% in the thirteen-week period ended December 25, 2024, driven by a 16.5% increase in traffic[80]. - The company reported a 20.4% increase in comparable restaurant sales for the twenty-six week period ended December 25, 2024, compared to the same period in 2023[80]. - Comparable restaurant sales for Chili's were driven by higher traffic, favorable menu item mix, and menu pricing, contributing to a significant increase in overall sales[94]. Cost Management - Food and beverage costs as a percentage of company sales decreased from 26.1% to 25.9%, with a favorable variance of 0.2% attributed to menu pricing[95]. - Restaurant labor costs improved by 2.5%, decreasing from 34.1% to 31.6% of company sales, due to sales leverage and lower other labor expenses[95]. - Chili's food and beverage costs were favorable by 0.3%, primarily due to 1.5% from menu pricing, partially offset by 0.7% of unfavorable commodity costs[101]. - Chili's restaurant labor costs were favorable by 1.9%, attributed to 4.2% of sales leverage and lower other labor expenses, despite higher hourly labor costs[101]. - Maggiano's food and beverage costs were favorable by 0.8%, driven by 1.4% from menu pricing, partially offset by unfavorable commodity costs[108]. - Maggiano's restaurant labor costs were favorable by 1.6%, due to lower hourly labor and sales leverage, despite higher manager salaries[108]. Expenses - General and administrative expenses rose by $19.3 million to$104.9 million, primarily due to performance-based and stock-based compensation increases[90]. - Chili's general and administrative expenses increased by $3.8 million to$24.0 million for the twenty-six week period ended December 25, 2024, compared to $20.2 million for the same period in 2023[102]. - Depreciation and amortization expenses increased by$10.8 million to $94.0 million, driven by additions for new and existing restaurant assets[88]. - Chili's depreciation and amortization increased by$10.6 million to $82.3 million for the twenty-six week period ended December 25, 2024, compared to$71.7 million for the same period in 2023[101]. Cash Flow and Financing - Net cash provided by operating activities increased to $281.0 million for the twenty-six week period ended December 25, 2024, compared to$150.3 million for the same period in 2023[109]. - Net cash used in investing activities increased to $(105.8) million for the twenty-six week period ended December 25, 2024, compared to$(86.8) million in the prior year, reflecting a variance of $(19.0) million[110]. - Net cash used in financing activities rose to$(225.0) million, an increase of $(169.1) million primarily due to higher net repayments of long-term debt and share repurchase activity[111]. - The company refinanced$350.0 million of 5.000% notes through its revolving credit facility, with net borrowings of $215.0 million drawn during the twenty-six week period ended December 25, 2024[112]. - As of December 25, 2024, the company had$685.0 million available under its revolving credit facility, which matures on August 18, 2026[113]. - The company repurchased 1.2 million shares for $85.2 million during the twenty-six week period ended December 25, 2024, with approximately$107.0 million remaining under the current share repurchase authorization[117]. - The company expects its current cash and cash equivalents, along with cash generated from operations and availability under the revolving credit facility, to meet capital expenditure and working capital needs for at least the next twelve months[118]. Risks and Challenges - A hypothetical 100 basis point increase in the current interest rate on the outstanding balance of the revolving credit facility would result in an additional $2.2 million of annual interest expense[121]. - The company is exposed to commodity price risk, which could negatively affect short-term financial results if there are delays in passing on increased costs to customers[122]. Technology and Marketing - The company has invested in technology to enhance the dining experience, including mobile app ordering and tabletop payment devices[72]. - The company has simplified its menu to focus on core items, which has contributed to improved sales consistency and guest satisfaction[71]. - The company plans to continue highlighting value offerings in marketing efforts to drive guest traffic amid inflationary challenges[71].