Brinker International (EAT) Q4 2025: Chili’s Traffic Jumps 16%, Unlocking Margin and AUV Expansion
Chili’s delivered a seventh straight quarter of industry-beating traffic and double-digit same-store sales, fueled by menu simplification, operational reinvestment, and a sharp value proposition. With AUVs topping $4.5 million and restaurant operating margin at multi-year highs, Brinker’s leadership is signaling a pivot from turnaround to growth, ramping up remodels and new unit development. The focus now shifts to sustaining gains, scaling best practices, and accelerating unit growth as the Maggiano’s turnaround blueprint is set to mirror Chili’s playbook.
Summary
- Chili’s Turnaround Drives Sustainable Traffic Gains: Focused investment in food, labor, and operations has reset the brand’s guest experience baseline.
- Margin Expansion Anchored by Operational Leverage: Higher sales volumes and disciplined cost management are compounding margin improvement.
- Growth Mode Begins as Reinvestment Winds Down: Capital is shifting toward remodels and new unit builds, with leadership aiming for positive net unit growth by 2027.
Performance Analysis
Brinker International’s Q4 marked a decisive continuation of its multi-year turnaround, with Chili’s posting a 16.3% traffic increase and same-store sales up 23.7%, outpacing the casual dining industry by nearly 19 percentage points. This performance caps a three-year period of compounding gains, driving Chili’s average unit volumes (AUVs, per-store annual sales) to $4.5 million from $3.1 million in fiscal 2022, and extending a 17-quarter streak of positive same-store sales.
Restaurant operating margin reached 17.8% for the quarter, up 260 basis points year-over-year, reflecting both sales leverage and ongoing cost discipline, even as food and beverage inflation and higher advertising spend partially offset gains. Labor investments, now $160 million above 2022 levels, are embedded in margins, supporting improved guest experience and operational consistency. Maggiano’s, meanwhile, saw comp sales dip slightly, highlighting the need for a focused turnaround.
- Traffic as Primary Growth Lever: Chili’s outperformed peers for a seventh consecutive quarter, with traffic gains leading comp growth.
- Menu Simplification and Innovation: Removal of 25% of menu items, SKU reduction, and focused innovation (ribs, frozen margaritas, Big QP) are driving operational efficiency and guest satisfaction.
- Balanced Marketing and Value Strategy: Marketing spend has quadrupled since 2022, supporting both premium and value-oriented offerings while maintaining profitability.
These results suggest Brinker’s operational model is now structurally more resilient, with higher throughput, better cost absorption, and a guest experience aligned with elevated brand marketing. The challenge ahead will be to sustain these gains while scaling new unit growth and replicating the turnaround at Maggiano’s.
Executive Commentary
"With a significantly streamlined menu, more labor deployed, a restaurant in a state in better condition with better equipment, and a brand new culture that people are excited about, Chili's is well positioned to continue growing market share in the industry for years to come."
Kevin Hochman, President and CEO
"For the year, we reported total revenue growth of 21.9%, eclipsing over $5 billion in revenues for the first time in our history. We also reported restaurant operating margin improvement of 420 basis points and adjusted EPS growth of 117.1%."
Micah Ware, Chief Financial Officer
Strategic Positioning
1. Operational Investments Drive Durable Change
Brinker’s transformation hinges on sustained investment in core restaurant operations: Labor budgets, repairs, and equipment upgrades have materially improved the guest experience and operational throughput. The company has invested over $100 million in repairs and maintenance and $160 million in incremental labor since 2022, creating a foundation for consistent execution and reduced turnover.
2. Menu Rationalization and Brand Focus
Menu simplification—removing 25% of items—and SKU reduction have sharpened execution and guest satisfaction. The “five to drive” core (burgers, crispers, fajitas, margaritas, triple dipper) now accounts for a growing share of sales, while new product launches (upgraded ribs, premium frozen margaritas, Big QP burger) reinforce Chili’s value and quality positioning. This focused approach has also enabled better marketing ROI and operational consistency.
3. Marketing Scale and Value Leadership
Marketing spend has increased from $32 million to $137 million over three years, supporting both value (Big QP, 3-for-me at $10.99) and premium (Patron frozen margs, $6 margaritas of the month) offerings. The company’s “barbell” pricing strategy is designed to protect value seekers while capturing incremental spend from guests seeking upgraded experiences.
4. Capital Deployment Shifts to Growth
With the core estate refreshed and margins restored, Brinker is pivoting capital to remodels and new builds, targeting 10% of the fleet refreshed annually and a return to net unit growth by fiscal 2027. The new $1 billion revolver and $507 million in share repurchase authorization underscore balance sheet flexibility and a disciplined capital allocation framework.
5. Maggiano’s Turnaround to Mirror Chili’s Playbook
Leadership changes and the application of Chili’s turnaround principles signal a back-to-basics approach at Maggiano’s, emphasizing core menu favorites, abundant portions, and hospitality. The goal is to reignite growth by focusing on what made the brand successful, with new leadership drawn from Chili’s top-performing regions.
Key Considerations
Brinker’s Q4 results highlight a business at an inflection point, moving from aggressive turnaround to scalable growth. Investors should weigh the durability of traffic gains, the scalability of operational improvements, and the risks inherent in ramping capital deployment to new builds and remodels.
Key Considerations:
- Traffic Leadership as a Structural Advantage: Chili’s has now outperformed the industry on traffic for seven straight quarters, suggesting brand momentum and guest experience improvements are resonating beyond promotional spikes.
- Margin Expansion Supported by Embedded Investments: Labor, marketing, and maintenance investments are now built into the margin structure, reducing the risk of future margin givebacks as sales normalize.
- Remodel and New Unit Ramp Carries Execution Risk: The shift from defensive capital deployment to offensive growth (remodels, new builds) will test the organization’s ability to scale best practices and maintain returns.
- Maggiano’s Recovery Remains a Work in Progress: While not material to consolidated results, Maggiano’s turnaround will require focused leadership and operational discipline to avoid distraction from Chili’s core growth engine.
Risks
Key risks include potential consumer pullback in the face of macroeconomic uncertainty, commodity and wage inflation exceeding management’s guidance, and operational complexity as new units and remodels ramp. The magnitude of recent gains creates a high base for future comps, and any slip in execution or guest experience could erode hard-won traffic gains. Maggiano’s underperformance, if prolonged, could dilute management focus and margin progress.
Forward Outlook
For Q1 2026, Brinker guided to:
- Chili’s same-store sales and traffic remaining positive, with strongest comp growth expected in Q1 before moderating as comparisons toughen.
- Margin expansion of 30 to 40 basis points, with inflationary pressures offset by sales leverage and embedded cost discipline.
For full-year 2026, management maintained guidance:
- Annual revenues of $5.6 to $5.7 billion
- Adjusted EPS of $9.90 to $10.50
- Capital expenditures of $270 to $290 million
Management highlighted several factors that will shape results:
- Continued focus on traffic as the “obsession metric” for field leadership
- Full-year benefit from ribs and frozen margarita launches, plus new chicken sandwich platform in the back half
- Remodel pilot and new unit ramp to scale in 2027
Takeaways
Brinker’s results signal a structurally improved Chili’s business, with operational investments compounding into margin and AUV gains. The organization is now shifting from turnaround to growth, with remodels and new units poised to drive the next phase.
- Turnaround Fundamentals Are Embedded: Labor, maintenance, and menu simplification have reset execution and guest experience, supporting sustainable traffic outperformance.
- Growth Path Is Capital-Intensive, but Well-Funded: Balance sheet strength and cash flow support the planned ramp in remodels and new unit builds, but execution risk rises as the capital cycle turns.
- Future Watchpoint: Track Maggiano’s turnaround progress and the ability to replicate Chili’s operational discipline as the brand scales new builds and refreshes.
Conclusion
Brinker exits fiscal 2025 with Chili’s operating at a new level of efficiency and guest relevance, positioning the brand for scalable growth and sustained market share gains. The next phase will test the organization’s ability to extend these gains through disciplined capital deployment and execution at scale, while Maggiano’s turnaround remains a secondary but important watchpoint.
Industry Read-Through
Brinker’s results underscore a broader shift in casual dining toward operational reinvestment, menu simplification, and value-centric marketing as levers for sustainable traffic growth. The success of Chili’s turnaround, driven by labor, maintenance, and menu focus, provides a blueprint for peers seeking to reset stagnant traffic trends. The pivot to remodels and new unit growth signals renewed confidence in the category’s long-term demand, but also raises the bar for operational execution and return on capital. Competitors lagging in operational reinvestment or clinging to bloated menus may face share loss as consumer expectations reset higher.