Brinker International (NYSE:EAT) executives highlighted continued momentum at Chili’s and raised full-year guidance as the company reported fiscal 2026 second-quarter results. Management said Chili’s delivered another quarter of strong comparable sales growth and ongoing operational improvements, while Maggiano’s posted a decline in comps but showed “encouraging progress” in its turnaround efforts.
Chili’s posts strong same-store sales and traffic gains
Chief Executive Officer Kevin Hochman said Chili’s second-quarter same-store sales increased 8.6%, which he said outpaced the casual dining industry by 680 basis points. Hochman described the performance as part of a sustained turnaround, noting it was Chili’s 19th consecutive quarter of same-store sales growth. He added that results were driven by “world-class marketing and brand building” that brought guests in, and continued improvements in food, service, and atmosphere that brought guests back.
Ware also noted a calendar benefit: Christmas Day shifted out of the second quarter into the third quarter, which she said resulted in a 1.2% favorable impact on comparable sales.
Menu changes and operational focus highlighted
Hochman emphasized continued menu renovation efforts designed to build “bigger, sustainable sales layers” while simplifying execution. He said the company successfully brought back Original Skillet Queso based on guest feedback, and that the reintroduction helped lift combined queso sales.
- Chili’s is selling about 20% more Southwestern Queso and Original Skillet Queso versus the prior two-queso lineup, according to management.
- Relaunched nachos are now a 170% larger business than the prior nachos, Hochman said.
- A bacon upgrade to thicker strips and a bacon cheeseburger update featuring triple the prior bacon contributed to the upgraded burger delivering 30% to 43% more sales than the prior bacon burger, he said.
Hochman said the company eliminated a net total of six menu items in the quarter to make it easier for teams to deliver hot, consistent food. He added that Chili’s has stayed disciplined on innovation by avoiding limited-time food offerings, allowing more focus on core menu execution and fundamentals like hospitality and food quality.
As a measure of operational progress, Hochman cited an improvement in the company’s “Guests with a Problem” (GWAP) metric to 2.1% from 2.9% a year earlier, and compared that with roughly 5% when the turnaround began more than three years ago. He also cited internal improvements in food grade scores (from 68% in the prior-year quarter to 74%) and “intent to return” (from 72% to nearly 78%).
Hochman also said third-party syndicated metrics that previously ranked Chili’s near the bottom of its competitive set across seven categories now place Chili’s in the top three for quality, value, service, atmosphere, taste, cleanliness, and overall experience, while acknowledging there remains room to improve.
Chicken sandwich lineup planned for national launch in April
Management said Chili’s will launch a “super premium chicken sandwich lineup” chain-wide in April with a substantial advertising campaign. Hochman described chicken sandwiches as a large market and said the lineup has shown strong mix results in merchandising-only tests. Ware said the sandwich lineup is currently in more than 200 restaurants to gather learnings, with the “real launch” and television advertising planned for late April.
Hochman said the lineup will be structured with a “barbell strategy” and multiple tiers (including an opening price point and more premium offerings), emphasizing the importance of avoiding an overconcentration of sales at the lowest price tier. He also said the base sandwich build includes a brioche bun, pickle, mayonnaise, and a large hand-breaded chicken breast, with additional flavor variations planned.
Maggiano’s shows “green shoots,” but comps decline
Maggiano’s comparable sales were down 2.4% in the quarter, Ware said. Hochman described sequential improvement and said sales beat internal expectations “for the first time in a while,” while noting “lots of work ahead” on service, atmosphere, and team culture.
He outlined recent changes based on guest feedback, including bringing back menu items such as Gigi’s Butter Cake, eggplant parmesan, baked ziti, and classic meat sauce. He also said pasta portions were increased by 20%, with additional portion increases in other dishes, which he said helped improve value scores in recent months. Hochman noted Maggiano’s represents about 8% of company sales and about 3% of profit contribution.
Financial results, capital allocation, and updated guidance
Ware said Brinker reported second-quarter total revenues of $1.45 billion, up 7% year over year, with consolidated comparable sales up 7.5%. Adjusted diluted EPS was $2.87, compared with $2.80 a year earlier. Adjusted EBITDA was approximately $223.5 million, a 3.6% increase from the prior year.
Restaurant operating margin at the Brinker level was 18.8%, down from 19.1% a year ago, which Ware attributed mainly to Maggiano’s sales deleverage and investments to improve that business. She said Chili’s restaurant operating margin increased 40 basis points year over year due to sales leverage, partially offset by incremental investments in labor and advertising as well as higher health and workers’ compensation insurance costs tied to increased headcount.
On cost trends, Ware said food and beverage was unfavorable by 20 basis points year over year due to menu mix, with commodity inflation of 0.8% offset by price. She said wage rate inflation was approximately 3.3% in the quarter, while labor as a percentage of sales was favorable by 30 basis points due to top-line growth offsetting investments and inflation. Advertising was 2.9% of sales, up 40 basis points year over year due to additional weeks on TV.
Capital expenditures were approximately $63.7 million for the quarter, driven by maintenance spending. Ware said the company has begun a Chili’s reimage program, completing the first four reimages and planning another 8 to 10 during the balance of fiscal 2026, before ramping to 60 to 80 in fiscal 2027. She said the company expects to fully roll out its reimage and new unit growth programs during fiscal 2028.
Brinker also continued share repurchases, with Ware saying the company repurchased an additional $100 million of common stock during the quarter.
Management raised fiscal 2026 guidance, calling for:
- Revenue: $5.76 billion to $5.83 billion
- Adjusted diluted EPS: $10.45 to $10.85
- Capital expenditures: $250 million to $260 million
- Weighted average shares: 44.7 million to 45.2 million
The guidance includes the negative impact from Winter Storm Fern through Tuesday, Jan. 27, which Ware said reduced revenue by about $20 million and lowered adjusted diluted EPS by $0.15. Ware said that prior to the storm, Chili’s comps were running solidly in the mid-single-digit range (including a holiday timing headwind), and management expects same-store sales to return to the mid-single-digit range after weather impacts subside.
Looking ahead on inflation, Ware said the company still expects wage inflation in the low single digits and a tax rate of about 19%. She said commodity inflation is now anticipated to be in the low single digits for the year due to the removal of Brazil-based ground beef tariffs and better-than-expected poultry and dairy prices, though the company still expects mid-single-digit inflation in the back half due to rising beef prices.
About Brinker International (NYSE:EAT)
Brinker International, Inc (NYSE: EAT) is a leading global operator of casual dining restaurants. The company’s portfolio is anchored by its flagship Chili’s® Grill & Bar concept and Maggiano’s® Little Italy full?service restaurants, offering a range of American?style menu items, handcrafted cocktails and family?friendly dining experiences. Through dine?in, takeout, delivery and catering services, Brinker seeks to meet consumer preferences across multiple channels.
The Chili’s brand features signature items such as baby back ribs, burgers and fajitas alongside a rotating selection of limited?time offerings and seasonal beverages.
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