Brinker Bets On Chili’s Strength After Strong Q4, Annual Outlook: Retail Traders Bite, This Analyst Doesn't
Synopsis
Chili’s same-store sales rose 24% last quarter, defying industry-wide softness.
Brinker International is flying high on the strong performance of its Chili’s chain, which is defying an industry-wide slowdown, but an analyst warns that the momentum might be tough to sustain given tougher comparison rates going forward.
Still, CEO Kevin Hochman expressed confidence, citing improving fundamentals and a greater marketing push. "Our operations have gotten so much stronger," he told CNBC in an interview.
"Margins are at 18% vs. 12% in recent years, and our AUVs are so much higher." For the next three years, the focus will be on fundamentals and reimaging, he said.
Brinker, which also operates Maggiano’s chain, published strong fourth-quarter results and a full-year outlook on Wednesday.
Revenue rose to $1.46 billion from $1.21 billion, beating analysts' estimate of $1.17 billion. Adjusted earnings of $2.49 per share were also higher than expectations of $2.
For fiscal 2026, Brinker's revenue view, between $5.6 billion and $5.7 billion, and adjusted per-share profit outlook, between $9.90 and $10.50, also came in above expectations.
The strong performance from the casual dining restaurant company comes as consumers broadly rein in spending on eating out. Major chains like Chipotle Mexican Grill (CMG), Cava Group (CAVA), and Sweetgreen (SG) have reported weak numbers.
Brinker shares rose 1.6% to $157.38 on Wednesday, and Barclays raised its price target on the stock to $170 from $166. The research firm, however, warned that the company faces tougher comparison rates going forward.
On Stocktwits, the retail sentiment turned 'extremely bullish' just after the earnings report and has stayed in the zone since.
"Brinker Intl wrapped up FY25 on a high note," a user said, with others noting strong Chili's momentum in an otherwise glum market.
The quarterly results were boosted by demand at Chili’s, which saw a roughly 24% increase in comparable sales. For Maggiano’s, comparable sales were down 0.4%.
Brinker stock is up 20% year-to-date.
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