BRINKER INTERNATIONAL INC

Previous wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand our Company, our operations and our current operating environment. For an understanding of the significant factors that influenced our performance during the thirteen and twenty-six week periods ended December 25, 2024 and December 27, 2023, the MD&A should be read in conjunction with the Consolidated Financial Statements (Unaudited) and related Notes to Consolidated Financial Statements (Unaudited) included in this quarterly report. All amounts within the MD&A are presented in millions unless otherwise specified.

Current wording

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand our Company, our operations and our current operating environment. For an understanding of the significant factors that influenced our performance during the thirteen and thirty-nine week periods ended March 26, 2025 and March 27, 2024, the MD&A should be read in conjunction with the Consolidated Financial Statements (Unaudited) and related Notes to Consolidated Financial Statements (Unaudited) included in this quarterly report. All amounts within the MD&A are presented in millions unless otherwise specified.

Previous wording

We own, develop, operate and franchise the Chili’s® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy® (“Maggiano’s”) restaurant brands. As of December 25, 2024, we owned, operated or franchised 1,624 restaurants, consisting of 1,164 Company-owned restaurants and 460 franchised restaurants, located in the United States, 27 other countries and two United States territories. Our restaurant brands, Chili’s and Maggiano’s, are both operating segments and reporting units.

Current wording

We own, develop, operate and franchise the Chili’s® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy® (“Maggiano’s”) restaurant brands. As of March 26, 2025, we owned, operated or franchised 1,626 restaurants, consisting of 1,163 Company-owned restaurants and 463 franchised restaurants, located in the United States, 28 other countries and two United States territories. Our restaurant brands, Chili’s and Maggiano’s, are both operating segments and reporting units.

Previous wording

In addition, Chili’s has focused on a seamless digital experience as our guests’ preferences and expectations around dining convenience have evolved in recent years. Investments in our technology and off-premise options have enabled us to provide a faster, more convenient dine-in experience and to offer more To-Go and delivery options for our guests. Our To-Go menu is available through the Chili’s mobile app, chilis.com, our delivery partners DoorDash, Uber Eats and Grubhub, Google Food Ordering or by calling the restaurant directly. Our It’s Just Wings® offering is available through the website, itsjustwings.com. The operating results for this virtual brand are included in the results of our Chili’s brand, based on the restaurants that prepared and processed the food orders.

Current wording

In addition, Chili’s has focused on a seamless digital experience as our guests’ preferences and expectations around dining convenience have evolved in recent years. Investments in our technology and off-premise options have enabled us to provide a faster, more convenient dine-in experience and to offer more To-Go and delivery options for our guests. Our To-Go menu is available through the Chili’s mobile app, chilis.com, our delivery partners DoorDash, Uber Eats and Grubhub, Google Food Ordering or by calling the restaurant directly. The operating results for our virtual brand, It’s Just Wings®, are included in the results of our Chili’s brand, based on the restaurants that prepared and processed the food orders.

Previous wording

Maggiano’s - At Maggiano’s, we are focused on making our guests feel special. This warm and generous hospitality creates an environment where guests come together to celebrate birthdays, weddings and many more special occasions. While our dining rooms support the majority of our business, we also offer carry-out and delivery options through partnerships with delivery service providers that have made our restaurants more accessible to guests. Our restaurants also have banquet rooms to host large party events and we have a begun to renovate these banquet rooms in certain restaurants to provide a better experience for this profitable revenue channel, particularly during the holiday season in the second and third quarters of the fiscal year.

Current wording

Maggiano’s - At Maggiano’s, we are focused on making our guests feel special. This warm and generous hospitality creates an environment where guests come together to celebrate birthdays, weddings and many more special occasions. While our dining rooms support the majority of our business, we also offer carry-out and delivery options through partnerships with delivery service providers that have made our restaurants more accessible to guests. Our restaurants also have banquet rooms, a profitable revenue channel, to host large special events, particularly during the holiday season in the second and third quarters of the fiscal year.

Previous wording

Franchise Partnerships -During the twenty-six week period ended December 25, 2024, there were 21 new franchise restaurant openings and two new development agreements. We plan to strategically pursue expansion of Chili’s internationally through development agreements with new and existing franchise partners.

Current wording

Franchise Partnerships -During the thirty-nine week period ended March 26, 2025, there were 27 new franchise restaurant openings and two new development agreements. We plan to strategically pursue expansion of Chili’s internationally through development agreements with new and existing franchise partners.

Previous wording

Company Development - The following table details the number of restaurant openings during the thirteen and twenty-six week periods ended December 25, 2024 and December 27, 2023, respectively, total full year projected openings in fiscal 2025 and the total restaurants open at each period end:

Current wording

Company Development - The following table details the number of restaurant openings during the thirteen and thirty-nine week periods ended March 26, 2025 and March 27, 2024, respectively, total full year projected openings in fiscal 2025 and the total restaurants open at each period end:

Previous wording

As of December 25, 2024, we own property for 50 of the 1,164 Company-owned restaurants and one closed restaurant. The net book values associated with these restaurants included land of $41.7 million and buildings of $13.0 million.

Current wording

During the third quarter of fiscal 2025, the Company acquired land and building valued at $3.1 million and $8.0 million, respectively, associated with four Company-owned restaurants that were previously leased. As of March 26, 2025, we own property for 54 of the 1,163 Company-owned restaurants and one closed restaurant. The net book values associated with these restaurants included land of $44.8 million and buildings of $19.0 million.

Previous wording

•Company sales include revenues generated by the operation of Company-owned restaurants including food and beverage sales, net of discounts, Maggiano’s banquet service charge income, delivery service fee income, gift card breakage, digital entertainment revenues, merchandise income and are net of gift card discounts from third-party gift card sales.

Current wording

•Company sales include revenues generated by the operation of Company-owned restaurants including food and beverage sales, net of discounts, Maggiano’s banquet service charge income, gift card breakage, delivery service fee income, digital entertainment revenues, merchandise income, and are net of gift card discounts from third-party gift card sales.

Previous wording

(1)Franchise revenues increased in the thirteen and twenty-six week periods ended December 25, 2024 compared to December 27, 2023 primarily because of higher royalties and franchise advertising fees. Our Chili’s and Maggiano’s franchisees generated sales of approximately $232.3 million and $4.2 million and $458.0 million and $7.3 million respectively for the thirteen and twenty-six week periods ended December 25, 2024 compared to $216.9 million and $2.8 million and $426.2 million and $5.6 million respectively in sales for the thirteen and twenty-six week periods ended December 27, 2023.

Current wording

(1)Franchise revenues increased in the thirteen and thirty-nine week periods ended March 26, 2025 compared to March 27, 2024 primarily because of higher royalties. Our Chili’s and Maggiano’s franchisees generated sales of approximately $237.4 million and $5.0 million and $700.1 million and $12.2 million respectively for the thirteen and thirty-nine week periods ended March 26, 2025 compared to $216.2 million and $2.9 million and $644.3 million and $8.5 million respectively in sales for the thirteen and thirty-nine week periods ended March 27, 2024.

Previous wording

The table below presents the percentage change in comparable restaurant sales and restaurant capacity for the thirteen and twenty-six week periods ended December 25, 2024 compared to December 27, 2023:

Current wording

The table below presents the percentage change in comparable restaurant sales and restaurant capacity for the thirteen and thirty-nine week periods ended March 26, 2025 compared to March 27, 2024:

Previous wording

General and administrative expenses increased $9.9 million as follows:

Current wording

General and administrative expenses increased $12.2 million as follows:

Previous wording

(2)Stock-based compensation increased primarily due to higher overall equity compensation levels to our officers, a special performance share grant to certain executives during the current quarter, and higher expected payout on certain performance share grants compared to the prior year.

Current wording

(2)Stock-based compensation increased primarily due to higher overall equity compensation levels to our officers, including special performance share grants to certain officers in the second quarter of fiscal 2025..

Previous wording

•Chili’s Food and beverage costs were favorable 0.3%, due to 1.5% from menu pricing, partially offset by 0.7% of unfavorable commodity costs primarily driven by poultry and produce and 0.5% of unfavorable menu item mix.

Current wording

•Food and beverage costs were favorable 0.3%, due to 1.4% from menu pricing, partially offset by 0.7% of unfavorable menu item mix and 0.4% of unfavorable commodity costs primarily driven by poultry and produce.

Previous wording

General and administrative expenses increased $19.3 million as follows:

Current wording

General and administrative expenses increased $31.5 million as follows:

Previous wording

(2)Stock-based compensation increased primarily due to higher overall equity compensation levels to our officers, a special performance share grant to certain executives during the current quarter, and higher expected payout on certain performance share grants compared to the prior year.

Current wording

(1)Stock-based compensation increased primarily due to higher overall equity compensation levels to our officers, including special performance share grants to certain officers in the second quarter of fiscal 2025.

Previous wording

(1)Performance-based compensation increased primarily due to higher expected annual performance compared to target in the current year.

Current wording

(2)Performance-based compensation increased primarily due to higher expected annual performance compared to target in the current year.

Previous wording

The federal statutory tax rate was 21.0% for the thirteen and twenty-six week periods ended December 25, 2024 and December 27, 2023.

Current wording

The federal statutory tax rate was 21.0% for the thirteen and thirty-nine week periods ended March 26, 2025 and March 27, 2024.

Previous wording

The change in the effective income tax rate in the thirteen and twenty-six week periods ended December 25, 2024 to the thirteen and twenty-six week periods ended December 27, 2023 is primarily due to higher Income before income taxes and the resulting deleverage of the FICA tip tax credit.

Current wording

The change in the effective income tax rate in the thirteen and thirty-nine week periods ended March 26, 2025 to the thirteen and thirty-nine week periods ended March 27, 2024 is primarily due to higher Income before income taxes and the resulting deleverage of the FICA tip tax credit.

Previous wording

Chili’s Total revenues increased by 30.4% primarily due to favorable comparable restaurant sales driven by higher traffic, favorable menu item mix and menu pricing. Refer to “Revenues” section above for further details about Chili’s revenues changes.

Current wording

Chili’s Total revenues increased by 30.5% primarily due to favorable comparable restaurant sales driven by higher traffic, favorable menu item mix, and menu pricing. Refer to “Revenues” section above for further details about Chili’s revenues changes.

Previous wording

•Restaurant labor was favorable 1.8%, due to 3.8% of sales leverage and 0.1% of lower other labor expenses, partially offset by 1.5% of higher hourly labor driven by increased staffing levels and wage rates, 0.4% of higher manager salaries, and 0.2% of higher manager bonus.

Current wording

•Chili’s Restaurant labor was favorable 1.5%, due to 5.5% of sales leverage and 0.1% of lower other labor expenses, partially offset by 3.3% of higher hourly labor driven by increased staffing levels and wage rates, 0.4% of higher manager salaries, and 0.4% of higher manager bonus.

Previous wording

•Restaurant expenses were favorable 3.6%, due to 4.2% of sales leverage and 0.2% of lower delivery fees, partially offset by 0.4% of higher repairs and maintenance, 0.3% of higher workers’ compensation and general liability insurance, and 0.1% of higher other restaurant expenses.

Current wording

•Chili’s Restaurant expenses were favorable 3.7%, due to 4.9% of sales leverage and 0.2% of lower delivery fees, partially offset by 0.5% of higher repairs and maintenance, 0.4% of higher advertising, 0.4% of higher workers' compensation and general liability insurance, and 0.1% of higher other restaurant expenses.

Previous wording

Chili’s General and administrative increased $2.0 million as follows:

Current wording

Chili’s General and administrative increased $1.9 million as follows:

Previous wording

Chili’s Total revenues increased by 22.0% primarily due to favorable comparable sales driven by higher traffic, menu pricing and favorable menu item mix. Refer to “Revenues” section above for further details about Chili’s revenues changes.

Current wording

Chili’s Total revenues increased by 25.0% primarily due to favorable comparable sales driven by higher traffic, menu pricing, and favorable menu item mix. Refer to “Revenues” section above for further details about Chili’s revenues changes.

Previous wording

•Chili’s Food and beverage costs were favorable 0.2%, due to 1.2% from menu pricing, partially offset by 0.6% of unfavorable commodity costs primarily driven by produce and poultry and 0.4% of unfavorable menu item mix.

Current wording

•Chili’s Food and beverage costs were favorable 0.2%, due to 1.4% from menu pricing, partially offset by 0.9% of unfavorable menu item mix and 0.3% of unfavorable commodity costs primarily driven by poultry and produce.

Previous wording

•Restaurant labor was favorable 2.2%, due to 4.7% of sales leverage and 0.4% of lower other labor expenses, partially offset by 2.2% of higher hourly labor driven by increased staffing levels and wage rates, 0.4% of higher manager salaries, and 0.3% of higher manager bonus.

Current wording

•Chili’s Restaurant labor was favorable 1.8%, due to 4.7% of sales leverage and 0.2% of lower other labor expenses, partially offset by 2.4% of higher hourly labor driven by increased staffing levels and wage rates, 0.4% of higher manager bonus, and 0.3% of higher manager salaries.

Previous wording

•Chili’s Restaurant expenses were favorable 3.0%, due to 3.9% of sales leverage and 0.4% lower delivery fees, partially offset by 1.0% of higher repairs and maintenance, 0.2% of higher workers’ compensation and general liability insurance, and 0.1% of higher other restaurant expenses.

Current wording

•Chili’s Restaurant expenses were favorable 3.2%, due to 4.3% of sales leverage and 0.3% lower delivery fees, partially offset by 0.8% of higher repairs and maintenance, 0.2% of higher workers' compensation and general liability insurance, 0.2% of higher rent, and 0.2% of higher other restaurant expenses.

Previous wording

Chili’s General and administrative increased $3.8 million as follows:

Current wording

Chili’s General and administrative increased $5.7 million as follows:

Previous wording

Maggiano’s Total revenues increased 1.7% primarily due to favorable comparable restaurant sales driven by menu pricing, partially offset by lower traffic. Refer to “Revenues” section above for further details about Maggiano’s revenues changes.

Current wording

Maggiano’s Total revenues increased 0.2% primarily due to favorable comparable restaurant sales driven by menu pricing and favorable menu item mix, partially offset by lower traffic. Refer to “Revenues” section above for further details about Maggiano’s revenues changes.

Previous wording

•Food and beverage costs were favorable 0.2%, due to 1.2% from menu pricing, partially offset by 0.5% of unfavorable menu item mix and 0.5% of unfavorable commodity costs primarily driven by produce and poultry.

Current wording

•Maggiano’s Food and beverage costs were flat, due to 1.2% from menu pricing, partially offset by 0.9% of unfavorable commodity costs primarily driven by poultry, dairy, and seafood and 0.3% unfavorable menu item mix.

Previous wording

•Maggiano’s Restaurant labor was favorable 0.7%, due to 0.7% of lower hourly labor, 0.4% of sales leverage, and 0.3% of lower other labor expenses, partially offset by 0.7% of higher manager salaries.

Current wording

•Maggiano’s Restaurant labor was favorable 0.2%, due to 0.3% of lower hourly labor, 0.2% of lower manager bonus, and 0.2% of lower other labor expenses, partially offset by 0.5% of higher manager salaries.

Previous wording

•Maggiano’s Restaurant expenses were unfavorable 1.4%, due to 0.8% of higher advertising, 0.5% of higher repairs and maintenance, and 0.5% of higher other restaurant expenses, partially offset by 0.4% of sales leverage.

Current wording

•Maggiano’s Restaurant expenses were unfavorable 0.9%, due to 0.6% of higher advertising and 0.5% of higher repairs and maintenance, partially offset by 0.1% of sales leverage and 0.1% of lower other restaurant expenses.

Previous wording

Maggiano’s Total revenues increased 2.7% primarily due to favorable comparable restaurant sales driven by menu pricing, partially offset by lower traffic. Refer to “Revenues” section above for further details about Maggiano’s revenues changes.

Current wording

Maggiano’s Total revenues increased 1.9% primarily due to favorable comparable restaurant sales driven by menu pricing and favorable menu item mix, partially offset by lower traffic. Refer to “Revenues” section above for further details about Maggiano’s revenues changes.

Previous wording

•Maggiano’s Food and beverage costs were favorable 0.8%, due to 1.4% from menu pricing partially offset by 0.5% of unfavorable commodity costs primarily driven by dairy and poultry and 0.1% of unfavorable menu item mix.

Current wording

•Maggiano’s Food and beverage costs were favorable 0.5%, due to 1.4% from menu pricing, partially offset by 0.8% of unfavorable commodity costs primarily driven by dairy and poultry and 0.1% of unfavorable menu item mix.

Previous wording

•Maggiano’s Restaurant labor was favorable 1.6%, due to 1.1% of lower hourly labor, 0.6% of sales leverage, and 0.3% of lower other labor expenses, partially offset by 0.4% of higher manager salaries.

Current wording

•Maggiano’s Restaurant labor was favorable 1.1%, due to 0.9% of lower hourly labor, 0.3% of lower other labor expenses, and 0.2% of sales leverage, partially offset by 0.3% of higher manager salaries.

Previous wording

•Maggiano’s Restaurant expenses were unfavorable 0.8%, due to 0.6% of higher advertising, 0.4% of higher repairs and maintenance, 0.3% of higher rent, and 0.3% of higher other restaurant expenses, partially offset by 0.4% lower supervision and 0.4% of sales leverage.

Current wording

•Maggiano’s Restaurant expenses were unfavorable 0.8%, due to 0.6% of higher advertising, 0.4% of higher repairs and maintenance, 0.3% of higher rent, partially offset by 0.3% of lower other restaurant expenses and 0.2% of sales leverage.

Previous wording

Net cash provided by operating activities increased due to an increase in operating income partially offset by an increase in payments of interest on the 8.250% notes and income taxes in the current year, and the timing of other operational receipts and payments.

Current wording

Net cash provided by operating activities increased due to an increase in operating income partially offset by an increase in payments of income taxes and interest on the 8.250% notes in the current year, and the timing of other operational receipts and payments.

Previous wording

Net cash used in investing activities increased compared to the prior year. Increased spend on Chili’s capital maintenance and equipment were partially offset by decreased spend on new restaurant construction.

Current wording

Net cash used in investing activities increased compared to the prior year primarily due to increased spend on Chili’s equipment and capital maintenance.

Previous wording

We refinanced our $350.0 million 5.000% notes, which matured in October 2024, through our existing revolving credit facility. During the twenty-six week period ended December 25, 2024, net borrowings of $215.0 million were drawn on the revolving credit facility. As of December 25, 2024, $685.0 million of credit was available under the revolving credit facility.

Current wording

We refinanced our $350.0 million 5.000% notes, which matured in October 2024, through our existing revolving credit facility. During the thirty-nine week period ended March 26, 2025, net borrowings of $90.0 million were drawn on the revolving credit facility. As of March 26, 2025, $810.0 million of credit was available under the revolving credit facility.

Previous wording

Our $900.0 million revolving credit facility, as amended, matures on August 18, 2026 and bears interest at a rate of SOFR plus an applicable margin of 1.60% to 2.35% and an undrawn commitment fee of 0.25% to 0.35%, both based on a function of our debt-to-cash-flow ratio. As of December 25, 2024, our interest rate was 5.94% consisting of SOFR of 4.34% plus the applicable margin and spread adjustment of 1.60%.

Current wording

Our $900.0 million revolving credit facility, as amended, matures on August 18, 2026 and bears interest at a rate of SOFR plus an applicable margin of 1.60% to 2.35% and an undrawn commitment fee of 0.25% to 0.35%, both based on a function of our debt-to-cash-flow ratio. As of March 26, 2025, our interest rate was 5.93% consisting of SOFR of 4.33% plus the applicable margin and spread adjustment of 1.60%.

Previous wording

In the twenty-six week period ended December 25, 2024, we repurchased 1.2 million shares of our common stock for $85.2 million, including 1.0 million shares purchased for $76.0 million as part of our share repurchase program and 0.2 million shares purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares. These withheld shares of common stock are not considered common stock repurchases under our authorized common stock repurchase plan. As of December 25, 2024, approximately $107.0 million of share repurchase authorization remains under the current share repurchase program.

Current wording

In the thirty-nine week period ended March 26, 2025, we repurchased 1.2 million shares of our common stock for $86.3 million, including 1.0 million shares purchased for $76.0 million as part of our share repurchase program and 0.2 million shares purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares. These withheld shares of common stock are not considered common stock repurchases under our authorized common stock repurchase plan. As of March 26, 2025, approximately $107.0 million of share repurchase authorization remains under the current share repurchase program.