Inquiring about the reasons for the significant acceleration in sales in July and August and which parts are sustainable.

Kevin attributed the acceleration to the Big Crispy chicken sandwich, which continues to build sales, and social media-driven successes like the Bombshell Marg and the Molten on top of skillet cookies. He emphasized that these gains tend to become habitual for guests and are supported by ongoing operational improvements. “number one is chicken sandwich. So the chicken sandwich continues to build. It's doing everything that we thought it would do. It was part of our plan to continue the better than fast food campaign, continue to drive our value leadership in the industry, but most importantly, continue to give the guest unbelievable abundant value that tastes great, and that's exactly what it's doing.”

Questioned why margin expansion is guided at 20-40 bps despite expected flow-through improvements from compensation changes, and if there's a ceiling on restaurant margins.

Mika explained that the 20-40 bps margin improvement reflects conservative pricing (lower end of 3-5%) due to inflation in commodities, labor, and other expenses, prioritizing long-term traffic over short-term margin maximization. Kevin added that as AUVs grow, margins naturally expand, and the company has historically exceeded initial margin guidance. There isn't a hard cap, but growth will moderate as the business matures. “we've been very mindful of how much price we're taking. So our pricing strategy had been 3% to 5%. We're on the lower end of that. And we actually have just a lot of inflationary pressure.”

Asked about major menu categories being addressed in the near term and potential for future sales growth beyond FY27, specifically mentioning salads, bowls, and improved steak.

Kevin outlined FY27 focus on continuing the chicken sandwich, revamping the kids' menu (Grilled Chicken Tenders, mini Moltens, cheese quesadillas, floats, mocktails), renovating the pasta platform, and upgrading desserts (Skillet Cookies, Molten on top of cookie, Cheesecake). For FY28, salads are planned for the first half, followed by steaks and Guiltless Grill in the back half. “In '28, that's when we're going to launch in the front half, we're going to launch salads. So we push that out a little bit based on what's happening. And then we'll have steaks and Guiltless Grill, hopefully, in the back half of '28 also.”

EAT

Brinker International (EAT) Q4 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q4 FY26)· Consumer Discretionary· Aug 12, 2026

Source: earnings call transcript

Executive summary

Brinker International Q4 FY26 — Chili's Sustains Traffic Growth and Margin Expansion

Brinker International delivered a strong Q4 FY26, driven by Chili's sustained traffic growth and margin expansion, marking its 21st consecutive quarter of same-store sales growth. The company's focus on value leadership and guest experience continues to drive performance, with the Big Crispy chicken sandwich significantly boosting sales. While Maggiano's turnaround remains mixed, the company is poised for continued profitable growth in FY27, with strategic investments in restaurant reimages and a disciplined capital allocation approach.

Highlights

Chili's same-store sales increased 5.6% in Q4 FY26, marking the 21st consecutive quarter of growth and a 50% 3-year cumulative comp.
Adjusted diluted EPS for Q4 FY26 rose 23% to $3.07, up from $2.49 last year.
Restaurant operating margin improved 20 basis points year-over-year to 18% in Q4 FY26.
Sales of the Big Crispy chicken sandwich increased 175% to 55 per restaurant per day by the end of Q4 FY26.
The company repurchased $100 million of common stock in Q4 FY26, bringing the FY26 total to almost $400 million, with $750 million remaining authorization.

Concerns

Maggiano's comp sales were negative 2.5% in Q4 FY26, with traffic down 5.3%, and its turnaround is slower than planned.
Food and beverage costs increased 80 basis points in Q4 FY26, driven by 4.4% commodity inflation, primarily from higher beef costs and a temporary spike in tomato prices.
FY27 restaurant operating margin improvement is projected to moderate to 20-40 basis points (52-week basis), or up to 50 basis points (53-week basis).

Guidance & targets

Category	Target	Timeline	Confidence
Annual Revenues	$6.15 billion to $6.27 billion high materiality	FY27	High
Adjusted Diluted EPS	$12.60 to $13.40 high materiality	FY27	High
Weighted Average Shares	42 million to 43 million medium materiality	FY27	High
Capital Expenditures	$265 million to $285 million medium materiality	FY27	High
Commodity and Wage Inflation	low-single digits medium materiality	FY27	High
Tax Rate	~19% medium materiality	FY27	High
Net New Company-Owned Restaurant Openings	3 medium materiality	FY27	High
Chili's Same-Store Sales	mid-single digit high materiality	FY27	High
Chili's Traffic	positive high materiality	FY27	High
Restaurant Level Margin Improvement (52-week basis)	20 to 40 basis points medium materiality	FY27	High
Restaurant Level Margin Improvement (with 53rd week)	up to 50 basis points medium materiality	FY27	High
Maggiano's Revenues	flat low materiality	FY27	High
Maggiano's Profits	flat low materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Chili's 21st consecutive quarter of same-store sales growth, significantly outpacing the industry. Driven by price and positive traffic, partially offset by negative mix. July sales and traffic significantly accelerated. Price: 4.3%Traffic: 1.5%Mix: -0.2%	—	5.6%	—	—
Maggiano's Comp sales were negative, primarily due to negative traffic and mix, partially offset by price. Turnaround has been mixed and slower than planned. Traffic: -5.3%Mix: -0.1%Price: 2.9%	—	-2.5%	—	—
Brinker (Consolidated) Total revenues of $1.536 billion with consolidated comp sales of positive 5%. Restaurant operating margins improved 20 basis points year-over-year, driven by sales leverage, partially offset by unfavorable food and beverage costs and higher advertising/insurance. Restaurant operating margin improvement: 20 bps YoY	$1.536 billion	5%	—	18%

Product announcements

Product	Type	Timeline
Kids Menu Revamp	update	launched, rest next quarter
Pasta Platform Renovation	update	finished renovating, featured in Q2
Skillet Cookies Upgrade	update	recently upgraded
Cheesecake	launch	next quarter
Salads	roadmap	H1 FY28
Steaks and Guiltless Grill	roadmap	H2 FY28

Deals & partnerships

Valente (implied) Acquisition of 12 Chili's franchise restaurants (including real estate for 6 locations) in Alabama and Mississippi.

The acquired restaurants are lower performing than the brand average. The company secured a great price for the acquisition.

Risks & headwinds

Macro headwinds current

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Mitigation:Chili's is positioned to continue winning with improvements in food service and atmosphere, coupled with industry-leading value.

Maggiano's turnaround slower than planned Q4 FY26 and ongoing

Maggiano's comp sales negative 2.5% with negative 5.3% traffic in Q4 FY26.

Mitigation:Focused efforts on delivering important changes; FY27 guidance assumes flat revenues and profits to reduce pressure and allow for focused improvement.

Commodity inflation Q4 FY26, Q1-Q4 FY27

4.4% commodity inflation in Q4 FY26, leading to 80 bps increase in food and beverage costs. FY27 commodity inflation modeled at Q1: 4%, Q2: 3%, Q3: 2%, Q4: 1%.

Mitigation:Built into conservative pricing strategy; tomato costs have since normalized.

Higher advertising and insurance costs Q4 FY26 and ongoing

Advertising expenses increased 20 bps YoY to 3% of sales in Q4 FY26.

Mitigation:Partially offset by sales leverage; built into conservative pricing strategy.

Alcohol category pressure current

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Mitigation:Margarita of the Month program is driving traffic and incidents despite broader macro trends against alcohol attachment.

What to watch in Q1 FY27

Chili's Same-Store Sales & Traffic

Q1 FY27

Current Q4 comp +5.6%, traffic +1.5%; Q1 YTD significantly accelerated

Target Continued mid-single-digit comp and positive traffic

Why it matters

Sustained traffic growth is the core of Chili's strategy and key to margin expansion.

if Chili's was 6% in Q4, that means it's higher than that in Q1. So I'm happy to talk about all of that when the quarter ends, won't go over all of the results in quarter 1, but we're just really, really pleased with the strong start to the year and the traffic drivers.

Find out whether EAT delivers this. Inve re-checks your case every morning.

Q&A highlights

Seeking more specifics on Chili's same-store sales assumptions for FY27 and details on margin and earnings flow-through, considering reinvestment opportunities.

Mika stated FY27 guidance assumes mid-single-digit same-store sales and positive traffic for Chili's, with potential upside. For margins, 20-40 bps improvement is expected on a 52-week basis, up to 50 bps with the 53rd week. Inflation (commodities, labor, rent, advertising, insurance) is built in, but pricing is conservative to protect value and drive long-term traffic.

“what we've done and what's implied in this guidance is we built in a little bit of upside for July. But basically, for the remainder of the year, we have assumed mid-single digit same-store sales and positive traffic for Chili's.”

asked by Dennis Geiger · answered by Mika Ware

2 min read 6 chapters

Detailed narrative

Chili's Turnaround and Value Leadership

Chili's achieved its 21st consecutive quarter of same-store sales growth, significantly outpacing the industry with a 3-year cumulative comp of 50%. This success is attributed to a focus on long-term sustainable growth, improving food service, atmosphere, and team member experience, coupled with value leadership ($3-$4 below competition).

The brand is recognized for value, quality, service, and overall experience, driving a flywheel of traffic, sales growth, and margin expansion.

Big Crispy Chicken Sandwich Success

The Big Crispy launch was a major success, increasing chicken sandwich sales by 175% to 55 per restaurant per day by the end of Q4. This performance surpassed previous successful launches like the Big Smasher and Big QP, positioning the Big Crispy as a signature sandwich and reinforcing Chili's "Better Than Fast Food" strategy.

Customer reviews have been highly positive regarding size, price, value, and taste.

Operational Efficiency Initiatives

Chili's is implementing initiatives to remove friction and improve restaurant throughput. This includes simplifying shift line checks from 8 pages to 1, freeing up 30 minutes of manager time daily (22 years annually across the system), and upgrading scheduling tools.

VPs of operations are now focused on traffic and profit improvement, with profits being a larger percentage of their bonus structure to enhance ownership of restaurant expenses.

Guest Experience and Cycle Time Improvements

A new initiative aims to speed up restaurant cycle time by attacking bottlenecks in kitchen prep and dining experience. The first rollout, "Supermarket simple" loyalty reward redemption via Ziosk, automatically applies discounts and informs guests of savings, reducing manager time, speeding table turns, and improving guest satisfaction. Future efforts will focus on host stand management, order time, drink refills, and dessert bottlenecks.

Maggiano's Performance and Strategy

Maggiano's, representing only 8% of sales, has shown mixed turnaround results. While operational and culinary improvements have been made, these have been offset by losses with core guests. The company believes it's on the right strategy but needs more focused execution. FY27 guidance assumes flat revenues and profits for Maggiano's to allow for focused improvement without pressure.

Employee Engagement and Retention

The company's commitment to making GM jobs more fun, easier, and rewarding has led to almost 80% of GMs earning over $100,000 annually. Manager turnover has consistently been ahead of the industry, and hourly turnover recently surpassed industry averages, indicating successful employee engagement strategies.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.