5 Insightful Analyst Questions From Brinker International's Q1 Earnings Call

Yahoo

23-06-2025

Brinker International's first quarter results showcased substantial revenue growth, outpacing Wall Street expectations. Management attributed this to strong traffic gains at Chili's, driven by menu simplification, operational improvements, and effective marketing campaigns. CEO Kevin Hochman highlighted, 'Sales leverage and simplification continue to drive improved 4-wall economics, which allowed us to deliver an 18.9% restaurant operating margin.' Still, leadership noted the competitive promotional environment and acknowledged potential challenges in sustaining the current momentum as industry headwinds persist.
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Revenue: $1.43 billion vs analyst estimates of $1.39 billion (27.2% year-on-year growth, 2.7% 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
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: $7.94 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
David Palmer (Evercore ISI) pressed on the sustainability of same-store sales as comparisons become more challenging. CEO Kevin Hochman responded that continued focus on food, service, and atmosphere improvements gives management confidence, though he acknowledged forecasting future momentum is complex.
Dennis Geiger (UBS) asked whether the drivers of recent traffic gains had shifted. CFO Mika Ware noted momentum remains broad-based, with strong year-over-year traffic and consistent guest demand for value offerings.
Christine Cho (Goldman Sachs) questioned the impact of potential tariffs on cost of sales. Ware explained that over 80% of the supply chain is domestic, with flexibility to manage inflationary pressures and protect margins through pricing and sourcing.
Jeff Farmer (Gordon Haskett) inquired about the outlook for restaurant-level margins into next year. Ware said ongoing investments in productivity and leveraging higher average unit volumes should support margin stability or growth.
Eric Gonzalez (KeyBanc) asked about the Big QP launch's role in recent traffic trends. Hochman stated that the new burger is outperforming last year's Big Smasher, with strong PR and guest engagement fueling continued sales momentum.
In the upcoming quarters, the StockStory team will closely watch (1) the performance and guest response to new menu items like the upgraded rib platform and appetizers, (2) signs of sustained traffic growth as Brinker laps last year's elevated results, and (3) the impact of operational investments, such as kitchen equipment upgrades and labor initiatives, on both guest experience and profitability. Execution on Maggiano's turnaround and the ability to manage through industry-wide promotional pressures will also be important markers.
Brinker International currently trades at $178.87, up from $160.62 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it's free).
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