Brinker International’s shares fell on Wednesday after the company missed fourth-quarter earnings estimates and issued lower-than-expected full-year guidance.
The parent company of Chili’s and Maggiano’s saw operating costs rise by 11.7% year-over-year.
Despite higher costs, Brinker reported better-than-expected revenue and growth in same-store sales.
Brinker International (EAT), the parent company of popular restaurant chains Chili’s and Maggiano’s, saw its stock decline in intraday trading on Wednesday. The drop came after the company reported increased costs that negatively impacted its profits and future earnings outlook.
For the fiscal fourth quarter of 2024, Brinker posted adjusted earnings per share (EPS) of $1.61. This was $0.14 below the average estimate from analysts surveyed by Visible Alpha. Despite the earnings miss, revenue rose by 12.3% compared to the previous year, reaching $1.21 billion, which exceeded expectations.
However, Brinker faced significant challenges on the expense side. Operating costs and expenses surged by 11.7% to $1.14 billion. When excluding depreciation and general expenses, the company’s restaurant-specific costs increased by 10.8%, totaling $910.5 million.
Despite these rising costs, Brinker’s Chili’s restaurants benefited from higher menu prices and increased customer traffic.
This led to a 14.8% growth in comparable sales for Chili’s, which was a major contributor to the overall company’s 13.5% increase in sales. Meanwhile, Maggiano’s saw a 2.5% rise in comparable sales. These figures do not include sales from Chili’s franchises.
Fiscal 2025 Outlook Falls Short of Estimates
Looking ahead, Brinker International projected adjusted EPS for fiscal 2025 to be in the range of $4.35 to $4.75. This fell short of the consensus estimate of $4.84, as compiled by Visible Alpha. However, the company’s revenue forecast, ranging from $4.55 billion to $4.62 billion, exceeded analysts’ expectations.
As of 11 a.m. ET on Wednesday, Brinker’s stock was trading 11.3% lower at $62.45. Despite the day’s losses, the company’s shares have risen by about 45% so far this year.