Brinker Vs Darden: Which Restaurant Stock Should You Consider Now?

Core Viewpoint - Brinker International, Inc. (EAT) and Darden Restaurants, Inc. (DRI) are both major players in the casual dining sector, with Brinker showing stronger growth potential and market performance compared to Darden in the current volatile environment [1][16]. Brinker International, Inc. (EAT) - EAT has successfully driven traffic and revenue through various sales-building initiatives, including menu streamlining and food presentation improvements [1]. - In Q2 of fiscal 2025, Brinker reported a 31.4% increase in sales at Chili's and a 19.9% rise in traffic year-over-year, attributed to effective marketing campaigns [2]. - The company opened nine new Chili's restaurants in fiscal 2024 and plans to open 9-11 domestic and 21-25 international locations in fiscal 2025 [3]. - Menu innovation continues to be a focus, with the introduction of new items like Honey Chipotle Mozz Sticks, contributing to a significant increase in sales from the Triple Dipper campaign, which accounted for 14% of total sales in Q2 [4][5]. - The Zacks Consensus Estimate for Brinker's fiscal 2025 sales and EPS indicates year-over-year growth of 18.7% and 102.4%, respectively, with recent upward revisions in earnings estimates [9]. - Brinker's stock has surged 185.2% over the past year, outperforming the industry and the S&P 500 [11]. Darden Restaurants, Inc. (DRI) - Darden benefits from the strong performance of Cheddar's Scratch Kitchen, enhancing its brand portfolio and scale [6]. - The partnership with Uber for on-demand delivery at Cheddar's Scratch Kitchen is currently being piloted at 10 locations, improving customer service [7]. - Darden plans to open 50-55 new restaurants in fiscal 2025 and 60-65 in fiscal 2026, with LongHorn Steakhouse reporting a 5.1% sales increase year-over-year to $768.1 million in Q3 fiscal 2025 [8]. - The Zacks Consensus Estimate for Darden's fiscal 2025 sales and EPS suggests year-over-year increases of 6% and 7%, but earnings estimates have seen slight downward revisions [10]. - DRI's stock has increased by 19.4% over the past year [11]. Comparison and Conclusion - EAT is trading at a forward P/E ratio of 15.00X, above its two-year median of 12.23X, while DRI's forward P/E is at 17.89X, close to its median of 17.21X [14]. - Brinker is viewed as the more attractive investment option due to its strong marketing, menu innovation, and expansion efforts, leading to improved earnings outlook and investor confidence [16][17]. - Darden remains a solid operator but shows softer growth estimates, leading to a more cautious analyst outlook [17].