A Member of Pat McKeough’s Inner Circle recently asked for his advice on Brinker International, the parent company of popular restaurant chains Chili’s Grill & Bar and Maggiano’s Little Italy.
Pat likes the firm’s proven operational turnaround that continues to deliver exceptional. The company also trades at an attractive forward P/E of just 11.0 based on its fiscal 2026 earnings estimate of $10.27 per share. However, Pat notes the casual dining sector faces structural challenges including elevated labor costs, rising construction expenses, and intense consumer focus on convenience and value.
Brinker International Inc. (Symbol EAT on New York; www.brinker.com) is a casual dining restaurant company.
Norman Brinker started the company in Dallas, Texas, in 1975. Today, the company develops, operates and franchises the Chili’s Grill & Bar and Maggiano’s Little Italy restaurant brands.
As of September 24, 2025, the company owns, operates or franchises 1,630 restaurants. That breaks down as 1,161 company-owned restaurants; and 469 franchised restaurants in the U.S., 27 other countries, and two U.S. territories.
Chili’s Grill & Bar is Brinker’s flagship brand. Launched in 1977, Chili’s has operated for over 49 years and enjoys a global presence. It aims to provide a value-focused menu of delicious food and drink, with meals starting at $10.99.
Chili’s features Southwest inspired American favourites. It has built a reputation for burgers, fajitas, crispy chicken, and hand-shaken margaritas.
Brinker acquired Maggiano’s Little Italy in 1995. Maggiano’s is a full-service, national restaurant brand that offers Italian American cuisine. The brand is known for catering to special occasions and large parties. Each location is uniquely designed and features open dining rooms with soft lighting.
Brinker is executing a successful turnaround at Chili’s. For years, the restaurant chain’s lower-quality offerings lost out to more modern dining experiences like those offered by the Olive Garden and Texas Roadhouse. A focus on discounts limited profits, thus making it difficult to invest in restaurant improvements.
In 2022, however, Brinker chose Kevin Hochman as Chili’s president and chief executive officer. Under Hochman, the chain upgraded the quality of the food that went into its recipes. It also made investments in marketing, labour and facility improvements while simplifying operations.
The success of these initiatives is showing up in Chili’s recent results. In Brinker’s latest quarter, the chain performed strongly: its same-restaurant sales, or sales from restaurants open 18 months or longer, soared 21.4% from a year earlier.
Brinker International Strong growth at Chili’s powers the latest results
Meanwhile, in the three months ended September 24, 2025, Brinker’s revenue jumped 18.5%, to $1.35 billion from $1.14 billion a year earlier. Revenue was higher due to a 21.4% increase in Chili’s same-restaurant sales. Menu enhancements and advertising initiatives drove the increase. However, that was not the case for Maggiano’s, which reported 6.4% lower same-restaurant sales. That was due to lower traffic, partially offset by higher menu pricing.
Excluding one-time items, Brinker earned $88.5 million, or $1.93 a share, in the latest quarter. That was up 103.4% from $43.5 million, or $0.95. The increase reflected the company’s ability to use increased sales to offset rising costs.
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For most consumers, dining out is a discretionary expenditure influenced by economic conditions. Factors such as pandemics, inflation, supply shortages, interest rates and unemployment can make the financial results for restaurant companies volatile.
Nonetheless, Brinker’s outlook is positive. Despite the competitive environment in which it operates, the company is benefiting from a growing number of new and returning guests at Chili’s. It’s also now taking steps to expand the culinary offerings and dining standards at Maggiano’s.
The company is having success with its advertising and social media. Chili’s also plans to spruce up its restaurants, including with new paint, artwork and tables, as well as potentially lifting the ceiling height of its bar areas with limited headroom.
The stock trades at just 11.0 times the estimated 2025 earnings of $10.27 a share. The company stopped paying a dividend in March 2020.
Recommendation in Pat’s Inner Circle: Brinker International Inc. is okay to hold.
