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Casual restaurant chain Brinker International (NYSE:EAT) reported results ahead of analysts’ expectations in Q2 CY2024, with revenue up 12.3% year on year to $1.21 billion. The company’s full-year revenue guidance of $4.59 billion at the midpoint also came in 1.3% above analysts’ estimates. It made a non-GAAP profit of $1.61 per share, improving from its profit of $1.39 per share in the same quarter last year.
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Brinker International (EAT) Q2 CY2024 Highlights:
- Revenue: $1.21 billion vs analyst estimates of $1.16 billion (3.8% beat)
- EPS (non-GAAP): $1.61 vs analyst expectations of $1.72 (6.6% miss)
- EPS (non-GAAP) guidance for the upcoming financial year 2025 is $4.55 at the midpoint, missing analyst estimates by 4.9%
- Gross Margin (GAAP): 16%, up from 14.3% in the same quarter last year
- EBITDA Margin: 11.7%, up from 10.6% in the same quarter last year
- Free Cash Flow Margin: 6.9%, up from 0.7% in the same quarter last year
- Locations: 1,614 at quarter end, down from 1,657 in the same quarter last year
- Same-Store Sales rose 11.9% year on year (6.3% in the same quarter last year)
- Market Capitalization: $3.13 billion
Founded by Norman Brinker in Dallas, Texas, Brinker International (NYSE:EAT) is a casual restaurant chain that operates under the Chili’s, Maggiano’s Little Italy, and It’s Just Wings banners.
Sit-Down DiningSit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.
Sales GrowthBrinker International is one of the larger restaurant chains in the industry and benefits from a strong brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company’s annualized revenue growth rate of 6.5% over the last five years was mediocre as its restaurant footprint remained unchanged, implying that growth was driven by more sales at existing, established dining locations.
This quarter, Brinker International reported robust year-on-year revenue growth of 12.3%, and its $1.21 billion in revenue exceeded Wall Street’s estimates by 3.8%. Looking ahead, Wall Street expects sales to grow 2.3% over the next 12 months, a deceleration from this quarter.
Same-Store SalesSame-store sales growth is a key performance indicator used to measure organic growth and demand for restaurants.
Brinker International’s demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company’s same-store sales have grown by 7.1% year on year. Given its flat restaurant base over the same period, this performance stems from increased foot traffic or larger order sizes per customer at existing locations.
In the latest quarter, Brinker International’s same-store sales rose 11.9% year on year. This growth was an acceleration from the 6.3% year-on-year increase it posted 12 months ago, which is always an encouraging sign.
Key Takeaways from Brinker International’s Q2 Results We liked how Brinker International beat analysts’ revenue expectations this quarter. On the other hand, EPS missed and its full-year earnings forecast missed analysts’ expectations as well. Zooming out, we think this was a mixed quarter, but the outlook is weighing on shares. The stock traded down 11.1% to $62.50 immediately following the results.
