Casual restaurant chain Brinker International (NYSE: EAT) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 18.5% year on year to $1.35 billion. On the other hand, the company’s full-year revenue guidance of $5.65 billion at the midpoint came in 1.2% below analysts’ estimates. Its non-GAAP profit of $1.93 per share was 8.8% above analysts’ consensus estimates.
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Brinker International (EAT) Q3 CY2025 Highlights:
- Revenue: $1.35 billion vs analyst estimates of $1.33 billion (18.5% year-on-year growth, 1.3% beat)
- Adjusted EPS: $1.93 vs analyst estimates of $1.77 (8.8% beat)
- Adjusted EBITDA: $172.4 million vs analyst estimates of $167.3 million (12.8% margin, 3% beat)
- The company reconfirmed its revenue guidance for the full year of $5.65 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $10.20 at the midpoint
- Operating Margin: 8.7%, up from 5% in the same quarter last year
- Free Cash Flow Margin: 4.6%, up from 0.6% in the same quarter last year
- Locations: 1,630 at quarter end, up from 1,625 in the same quarter last year
- Same-Store Sales rose 18.9% year on year (12% in the same quarter last year)
- Market Capitalization: $5.52 billion
"Chili's continues to deliver industry leading results with first quarter sales of +21% and traffic of +13%, against a tough macro environment," said Kevin Hochman, President & CEO of Brinker International.
Company Overview
Founded by Norman Brinker in Dallas, Brinker International (NYSE: EAT) is a casual restaurant chain that operates the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $5.59 billion in revenue over the past 12 months, Brinker International is one of the larger restaurant chains in the industry and benefits from a well-known brand that influences consumer purchasing decisions.
As you can see below, Brinker International’s sales grew at a decent 9.5% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) despite not opening many new restaurants, implying that growth was driven by higher sales at existing, established dining locations.
This quarter, Brinker International reported year-on-year revenue growth of 18.5%, and its $1.35 billion of revenue exceeded Wall Street’s estimates by 1.3%.
Looking ahead, sell-side analysts expect revenue to grow 3.2% over the next 12 months, a deceleration versus the last six years. This projection doesn't excite us and implies its menu offerings will face some demand challenges. At least the company is tracking well in other measures of financial health.
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Restaurant Performance
Number of Restaurants
A restaurant chain’s total number of dining locations influences how much it can sell and how quickly revenue can grow.
Brinker International listed 1,630 locations in the latest quarter and has kept its restaurant count flat over the last two years while other restaurant businesses have opted for growth.
When a chain doesn’t open many new restaurants, it usually means there’s stable demand for its meals and it’s focused on improving operational efficiency to increase profitability.
Same-Store Sales
A company's restaurant base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales is an industry measure of whether revenue is growing at those existing restaurants and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Brinker International has been one of the most successful restaurant chains over the last two years thanks to skyrocketing demand within its existing dining locations. On average, the company has posted exceptional year-on-year same-store sales growth of 15%. Given its flat restaurant base over the same period, this performance stems from a mixture of higher prices and increased foot traffic at existing locations.
In the latest quarter, Brinker International’s same-store sales rose 18.9% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from Brinker International’s Q3 Results
We were impressed by how significantly Brinker International beat analysts’ same-store sales expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance slightly missed and its full-year EPS guidance fell short of Wall Street’s estimates. This forward outlook is weighing on shares, and the stock traded down 6.6% to $116 immediately after reporting.
Should you buy the stock or not? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
