Brinker International(US:EAT)2025-04-29 14:00Financial Data and Key Metrics Changes - For Q3 2025, Brinker International reported total revenues of $1.425 billion with consolidated comp sales growth of 28.2% [21] - Adjusted diluted EPS for the quarter was $2.66, up from $1.24 in the previous year [22] - Restaurant operating margins improved to 18.9%, a 470 basis points increase year-over-year [24] Business Line Data and Key Metrics Changes - Chili's reported same restaurant sales growth of 31.6%, driven by a 20.9% increase in traffic, a 6.3% positive mix, and a 4.4% price increase [22] - Maggiano's reported comp sales growth of 0.4%, driven by a 7.3% price increase, a 1.3% positive mix, but offset by an 8.2% decline in traffic [23] Market Data and Key Metrics Changes - Chili's sales performance significantly outpaced the industry despite no new food or value news, indicating strong operational performance [7] - The company noted that guests are pulling back on restaurant visits, favoring brands that deliver superior experiences [20] Company Strategy and Development Direction - The company is focused on improving the fundamentals of food, service, and atmosphere to sustain growth [32] - Chili's is launching new menu items and marketing campaigns to enhance brand value and customer experience, including the Big QP burger [12][13] - Maggiano's is following a similar turnaround strategy as Chili's, focusing on menu simplification and eliminating unprofitable discounting [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining positive same-store sales growth despite upcoming tougher comparisons [29] - The company is committed to investing in labor and operational improvements to enhance guest experiences and drive traffic [74][76] - Management acknowledged the competitive environment but believes that their value proposition and guest experience will help maintain market share [110] Other Important Information - Capital expenditures for the quarter were approximately $80 million, driven by investments in kitchen equipment and maintenance [26] - The company repaid approximately $125 million in funded debt, reducing overall leverage [26] Q&A Session Summary Question: Concerns about sustainability of same-store sales growth - Management acknowledged the challenges of tougher comparisons but emphasized their focus on improving fundamentals to sustain growth [32] Question: Notable contributors to recent momentum - Management noted that traffic remains strong year-over-year, with no significant slowdown observed [40] Question: Clarification on Chili's maintained momentum in April - Management confirmed that trends in April were similar to Q3, with strong traffic and sales results [43] Question: Expectations for restaurant level margins moving into FY 2026 - Management expects to maintain or grow restaurant margins through strategic investments and improved productivity [49] Question: Estimated tariff impact on cost of sales - Management indicated that over 80% of their supply chain is sourced domestically, minimizing tariff impacts [56] Question: Upgrading the menu platform - Management is excited about upcoming upgrades to the rib and nacho offerings, aiming to enhance customer appeal [64][66] Question: Investments in labor and operator feedback - Management is focused on strategic investments in labor to improve guest experiences and manage increased traffic [74] Question: Breakdown of traffic increase sources - Management stated that traffic growth is coming from both new guests and increased frequency from existing customers [82] Question: Pricing expectations for Chili's - Management expects pricing to moderate to 2% to 3% in the fourth quarter, with a longer-term range of 3% to 5% [88] Question: Advertising spend expectations - Management anticipates advertising spend to increase to approximately 3% of sales in the fourth quarter [97]