Casual restaurant chain Brinker International (NYSE:EAT) announced better-than-expected revenue in Q1 CY2025, with sales up 27.2% year on year to $1.43 billion. The company’s full-year revenue guidance of $5.34 billion at the midpoint came in 1.8% above analysts’ estimates. Its non-GAAP profit of $2.66 per share was 3.6% above analysts’ consensus estimates.
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Brinker International (EAT) Q1 CY2025 Highlights:
- Revenue: $1.43 billion vs analyst estimates of $1.39 billion (27.2% year-on-year growth, 2.6% beat)
- Adjusted EPS: $2.66 vs analyst estimates of $2.57 (3.6% beat)
- Adjusted EBITDA: $220.6 million vs analyst estimates of $203.4 million (15.5% margin, 8.5% beat)
- The company lifted its revenue guidance for the full year to $5.34 billion at the midpoint from $5.2 billion, a 2.7% increase
- Management raised its full-year Adjusted EPS guidance to $8.63 at the midpoint, a 11.3% increase
- Operating Margin: 11%, up from 6.2% in the same quarter last year
- Free Cash Flow Margin: 9.3%, up from 7% in the same quarter last year
- Locations: 1,626 at quarter end, up from 1,618 in the same quarter last year
- Same-Store Sales rose 25.9% year on year (3% in the same quarter last year)
- Market Capitalization: $7.13 billion
"Chili's delivered another positive quarter in our turnaround with +31% same store sales driven by +21% traffic," 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.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $5.13 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 grew its sales at a decent 8.2% 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 robust year-on-year revenue growth of 27.2%, and its $1.43 billion of revenue topped Wall Street estimates by 2.6%.
Looking ahead, sell-side analysts expect revenue to grow 5.5% over the next 12 months, a slight deceleration versus the last six years. This projection doesn't excite us and suggests its menu offerings will see some demand headwinds.
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Restaurant Performance
Number of Restaurants
The number of dining locations a restaurant chain operates is a critical driver of how quickly company-level sales can grow.
Brinker International listed 1,626 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 provides a deeper understanding of this issue because it measures organic growth at restaurants open for at least a year.
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 11.7%. 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 25.9% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from Brinker International’s Q1 Results
We liked that Brinker International beat analysts’ same-store sales and EPS expectations this quarter. Full-year guidance came in ahead of expectations as well. Still, shares traded down 12.8% to $139.99 immediately following the results.
Is Brinker International an attractive investment opportunity right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.