Brinker International (EAT)

Casual restaurant chain Brinker International (NYSE:EAT) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 6.9% year on year to $1.45 billion. The company’s full-year revenue guidance of $5.80 billion at the midpoint came in 0.7% above analysts’ estimates. Its non-GAAP profit of $2.87 per share was 9.2% above analysts’ consensus estimates.

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.

Sit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.

Multi-brand full-service restaurant competitors include Darden (NYSE:DRI), Bloomin’ Brands (NASDAQ:BLMN), Dine Brands (NYSE:DIN), and The Cheesecake Factory (NASDAQ:CAKE).

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $5.69 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 9.3% annualized revenue growth over the last six years was decent 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 6.9%, and its $1.45 billion of revenue exceeded Wall Street’s estimates by 2.9%.

Looking ahead, sell-side analysts expect revenue to grow 3.1% over the next 12 months, a deceleration versus the last six years. This projection doesn't excite us and indicates its menu offerings will face some demand challenges.

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 operated 1,627 locations in the latest quarter, and over the last two years, has kept its restaurant count flat 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 gives us insight into this topic 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 15.4%. 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 7.5% year on year. This was a meaningful deceleration from its historical levels. We’ll be watching closely to see if Brinker International can reaccelerate growth.

Brinker International has bad unit economics for a restaurant company, signaling it operates in a competitive market and has little room for error if demand unexpectedly falls. As you can see below, it averaged a 17.7% gross margin over the last two years. Said differently, Brinker International had to pay a chunky $82.33 to its suppliers for every $100 in revenue.

Brinker International’s gross profit margin came in at 19.5% this quarter, in line with the same quarter last year. On a wider time horizon, Brinker International’s full-year margin has been trending up over the past 12 months, increasing by 2.2 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Brinker International has done a decent job managing its cost base over the last two years. The company has produced an average operating margin of 9%, higher than the broader restaurant sector.

Analyzing the trend in its profitability, Brinker International’s operating margin rose by 2.9 percentage points over the last year, as its sales growth gave it operating leverage.

In Q4, Brinker International generated an operating margin profit margin of 11.6%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Brinker International’s EPS grew at a decent 16.2% compounded annual growth rate over the last six years, higher than its 9.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

In Q4, Brinker International reported adjusted EPS of $2.87, up from $2.80 in the same quarter last year. This print beat analysts’ estimates by 9.2%. Over the next 12 months, Wall Street expects Brinker International’s full-year EPS of $9.95 to grow 11.1%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Brinker International has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.5% over the last two years, better than the broader restaurant sector.

Taking a step back, we can see that Brinker International’s margin expanded by 1 percentage points over the last year. This is encouraging because it gives the company more optionality.

Brinker International’s free cash flow clocked in at $155.2 million in Q4, equivalent to a 10.7% margin. The company’s cash profitability regressed as it was 1.7 percentage points lower than in the same quarter last year, but it’s still above its two-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, leading to short-term swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Brinker International hasn’t been the highest-quality company lately, it historically found a few growth initiatives that worked out well. Its five-year average ROIC was 14.7%, impressive for a restaurant business.

Brinker International reported $15 million of cash and $1.62 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $828.9 million of EBITDA over the last 12 months, we view Brinker International’s 1.9× net-debt-to-EBITDA ratio as safe. We also see its $23.9 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

This was a 'beat and raise' quarter. We were impressed by how significantly Brinker International blew past analysts’ same-store sales expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. The company capped things off by raising full-year guidance. Zooming out, we think this was a very solid print. The stock traded up 7.7% to $169.43 immediately following the results.

Updated: January 28, 2026 at 6:58 AM EST

When considering an investment in Brinker International, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Brinker International has some positive attributes, but it isn’t one of our picks. To kick things off, its revenue growth was solid over the last six years. And while Brinker International’s gross margins make it more challenging to reach positive operating profits compared to other restaurant businesses, its marvelous same-store sales growth is on another level.

Brinker International’s P/E ratio based on the next 12 months is 14.2x. This valuation multiple is fair, but we don’t have much faith in the company. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $183.68 on the company (compared to the current share price of $169.43).