Brinker International (EAT +1.70%), parent company of Chili's and Maggiano's restaurant chains, held its second-quarter fiscal 2025 conference call on January 29, 2025. The company posted excellent performance with same-restaurant sales up 31% year over year at Chili's. Management attributed this success to operational improvements, strategic marketing, and an upgraded guest experience. Here are the three most important takeaways for long-term investors.
Chili's Turnaround Has Taken Hold and Is Sustainable
Chili's remarkable turnaround appears durable despite increased competitive pressure, with traffic, same-store sales, and restaurant margins all showing significant improvement.
Chili's delivered another positive quarter in our turnaround and significantly outperformed the industry with same-restaurant sales up 31% versus a year ago. We're pleased with our sustained momentum, the strength of the operational muscle we built and our significantly improved Chili's guest experience. ... Chili's turnaround has taken hold, and it is sustainable. Our growth continues to be well balanced, driven by the introduction of a new generation to the Chili's brand and by existing guests coming more often.
-- Kevin Hochman, President, CEO, and Director
NYSE: EAT
Key Data Points
Operational Simplification Is Driving Performance
Brinker's strategic focus on kitchen efficiency and menu simplification is enabling better execution despite significantly increased traffic, with specific improvements like faster cooking equipment and streamlined prep processes.
We also continue to challenge our processes to simplify and make the job easier for our team members. The installation of our new kitchen display systems is now complete, which has not only eliminated hundreds of pages of reference finders in the kitchen and made it easier to find recipes, it also has enabled slightly faster ticket times even with the dramatic increases in traffic. ... Three other impactful operational changes we've made recently include the use of steak weight to trim cook time up to 40%, the elimination of chicken portioning and the removal of the It's Just Wings station tower in the fry area Zone 1, which frees up space and time cleaning for the Zone 1 cooks.
-- Kevin Hochman
Maggiano's Turnaround Strategy Is Following the Chili's Playbook
Management is applying their successful Chili's turnaround blueprint to Maggiano's, including operational simplification and menu upgrades, though they cautioned investors that meaningful traffic improvements may take several quarters.
We've got an established playbook with the successful Chili's turnaround, and we started deploying elements to Maggiano's with the bring the magic back plan. And it focuses on simplifying operations while accelerating improvements to the guest and team member experience. ... I do want to remind everyone that while we started growing sales immediately during the Chili's turnaround, it did take five quarters to start turning traffic trend, and it took seven quarters to turn positive on traffic. So that should give you some type of guide on what we're expecting from Maggiano's.
-- Kevin Hochman, President
Looking Ahead
Brinker's management expressed strong confidence in their growth strategy, pointing to their improved financial position and operational momentum. Executives highlighted that restaurant operating margin increased to 19.1%, a 600-basis-point improvement year over year, while adjusted earnings before interest, taxes, appreciation, and amortization (EBITDA) doubled to approximately $216 million.
The company is focusing on reinvesting in the business through targeted initiatives like simplifying operations, improving core menu items, and developing a new reimage prototype to refresh older locations. With a focus on sustaining Chili's momentum while applying proven strategies to Maggiano's, management believes the business is well positioned for continued growth.
