Brinker International - 10-Q quarterly report FY2024 Q3

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 27, 2024

Commission File Number 1-10275

BRINKER INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

75-1914582

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

3000 Olympus Blvd

Dallas

75019

(Address of principal executive offices)

(Zip Code)

(972)

980-9917

(Registrant’s telephone number, including area code)

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock, $0.10 par value

EAT

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of April 25, 2024: 44,490,516 shares.

BRINKER INTERNATIONAL, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION			3
Item 1. Financial Statements			3
Consolidated Statements of Comprehensive Income (Unaudited) - Thirteen and Thirty-Nine Week Periods Ended March 27, 2024 and March 29, 2023			3
Consolidated Balance Sheets - March 27, 202 4 (Unaudited) and June 28, 2023			4
Consolidated Statements of Cash Flows (Unaudited) - Thirty-Nine Week Periods Ended March 27, 2024 and March 29, 2023			5
Consolidated Statements of Shareholders’ Deficit (Unaudited) - Thirty-Nine Week Periods Ended March 27, 2024 and March 29, 2023			6
Notes to Consolidated Financial Statements (Unaudited)			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
Item 4. Controls and Procedures			35
PART II. OTHER INFORMATION			36
Item 1. Legal Proceedings			36
Item 1A. Risk Factors			36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 5. Other Information			36
Item 6. Exhibits			37
SIGNATURES			37

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BRINKER INTERNATIONAL, INC.

Consolidated Statements of Comprehensive Income (Unaudited)

(In millions, except per share amounts)


	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
	March 27, 2024		March 29, 2023		March 27, 2024		March 29, 2023
Revenues
Company sales	$	1,108.9	$	1,072.9	$	3,174.6	$	3,028.4
Franchise revenues	11.4		10.3		32.3		29.3
Total revenues	1,120.3		1,083.2		3,206.9		3,057.7
Operating costs and expenses
Food and beverage costs	277.8		287.5		809.7		866.4
Restaurant labor	370.6		361.2		1,074.8		1,026.4
Restaurant expenses	303.4		280.9		888.9		818.1
Depreciation and amortization	42.6		42.5		125.8		126.2
General and administrative	46.1		40.6		131.7		115.7
Other (gains) and charges	9.9		6.3		19.5		19.8
Total operating costs and expenses	1,050.4		1,019.0		3,050.4		2,972.6
Operating income	69.9		64.2		156.5		85.1
Interest expenses	16.2		14.2		49.9		40.4
Other income, net	(0.2)		(0.6)		(0.3)		(1.3)
Income before income taxes	53.9		50.6		106.9		46.0
Provision (benefit) for income taxes	5.2		(0.1)		8.9		(2.4)
Net income	$	48.7	$	50.7	$	98.0	$	48.4

Basic net income per share	$	1.10	$	1.15	$	2.21	$	1.10

Diluted net income per share	$	1.08	$	1.12	$	2.17	$	1.08

Basic weighted average shares outstanding	44.3		44.1		44.4		44.0

Diluted weighted average shares outstanding	45.2		45.1		45.2		44.8

Other comprehensive income (loss)
Foreign currency translation adjustment	$	(0.2)	$	0.1	$	(0.2)	$	(0.8)

Comprehensive income	$	48.5	$	50.8	$	97.8	$	47.6

See accompanying Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

BRINKER INTERNATIONAL, INC.

Consolidated Balance Sheets

(In millions, except per share amounts)


	Unaudited
	March 27, 2024		June 28, 2023
ASSETS
Current assets
Cash and cash equivalents	$	15.5	$	15.1
Accounts receivable, net	47.6		60.9
Inventories	32.5		34.5
Restaurant supplies	54.7		55.6
Prepaid expenses	20.2		17.2
Income taxes receivable	0.4		—
Total current assets	170.9		183.3
Property and equipment, at cost
Land	42.4		42.4
Buildings and leasehold improvements	1,678.2		1,635.7
Furniture and equipment	800.6		765.8
Construction-in-progress	32.7		30.1
	2,553.9		2,474.0
Less accumulated depreciation and amortization	(1,704.5)		(1,665.7)
Net property and equipment	849.4		808.3
Other assets
Operating lease assets	1,096.7		1,134.9
Goodwill	194.8		195.0
Deferred income taxes, net	106.2		93.4
Intangibles, net	21.1		23.9
Other	56.6		48.2
Total other assets	1,475.4		1,495.4
Total assets	$	2,495.7	$	2,487.0
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	150.5	$	125.7
Gift card liability	66.0		73.0
Accrued payroll	111.6		106.1
Operating lease liabilities	113.6		112.4
Other accrued liabilities	131.3		116.3
Income taxes payable	6.1		2.4
Total current liabilities	579.1		535.9
Long-term debt and finance leases, less current installments	818.5		912.2
Long-term operating lease liabilities, less current portion	1,083.9		1,125.8
Other liabilities	60.9		57.4
Commitments and contingencies (Note 7)
Shareholders’ deficit
Common stock (250.0 million authorized shares; $0.10 par value; 60.3 million shares issued; and 44.5 million shares outstanding at March 27, 2024 and 44.6 million shares outstanding at June 28, 2023)	6.0		6.0
Additional paid-in capital	693.4		690.0
Accumulated other comprehensive loss	(6.2)		(6.0)
Accumulated deficit	(253.9)		(351.9)
Treasury stock, at cost (15.8 million shares at March 27, 2024, and 15.7 million shares at June 28, 2023)	(486.0)		(482.4)
Total shareholders’ deficit	(46.7)		(144.3)
Total liabilities and shareholders’ deficit	$	2,495.7	$	2,487.0

See accompanying Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

BRINKER INTERNATIONAL, INC.

Consolidated Statements of Cash Flows (Unaudited)

(In millions)


	Thirty-Nine Week Periods Ended
	March 27, 2024		March 29, 2023
Cash flows from operating activities
Net income	$	98.0	$	48.4
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization	125.8		126.2
Stock-based compensation	16.5		10.3
Deferred income taxes, net	(12.9)		(18.9)
Non-cash other (gains) and charges	10.1		12.2
Net loss on disposal of assets	3.2		2.9
Other	2.1		1.3
Changes in assets and liabilities:
Accounts receivable, net	11.6		(10.0)
Inventories	1.5		0.5
Restaurant supplies	(0.4)		(0.7)
Prepaid expenses	(9.0)		(11.8)
Income taxes	2.5		9.2
Operating lease assets, net of liabilities	(2.9)		(2.2)
Other assets	(0.4)		(0.1)
Accounts payable	26.7		30.2
Gift card liability	(7.0)		(4.9)
Accrued payroll	5.4		(9.5)
Other accrued liabilities	7.8		14.6
Other liabilities	1.8		3.1
Net cash provided by operating activities	280.4		200.8
Cash flows from investing activities
Payments for property and equipment	(140.9)		(136.6)
Proceeds from note receivable	1.3		3.3
Proceeds from sale of assets	0.9		—
Insurance recoveries	0.7		—
Net cash used in investing activities	(138.0)		(133.3)
Cash flows from financing activities
Borrowings on revolving credit facility	304.0		375.0
Payments on revolving credit facility	(414.0)		(425.0)
Purchases of treasury stock	(25.6)		(2.2)
Payments on long-term debt	(14.4)		(16.7)
Payments for debt issuance costs	(0.7)		—
Proceeds from issuance of treasury stock	8.9		2.1
Payments of dividends	(0.2)		(0.4)
Net cash used in financing activities	(142.0)		(67.2)
Net change in cash and cash equivalents	0.4		0.3
Cash and cash equivalents at beginning of period	15.1		13.5
Cash and cash equivalents at end of period	$	15.5	$	13.8
Supplemental disclosure of cash flow information:
Income taxes paid, net	$	19.2	$	7.7
Interest paid, net of amounts capitalized	38.7		30.0
Accrued capital expenditures	10.5		13.5

See accompanying Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

BRINKER INTERNATIONAL, INC.

Consolidated Statements of Shareholders’ Deficit (Unaudited)

(In millions)


	Thirty-Nine Week Period Ended March 27, 2024
	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Loss		Total
Balances at June 28, 2023	$	6.0	$	690.0	$	(351.9)	$	(482.4)	$	(6.0)	$	(144.3)
Net income	—		—		7.2		—		—		7.2
Other comprehensive loss	—		—		—		—		(0.2)		(0.2)
Stock-based compensation	—		5.7		—		—		—		5.7
Purchases of treasury stock	—		(0.2)		—		(24.5)		—		(24.7)
Issuances of treasury stock	—		(11.7)		—		11.7		—		0.0
Balances at September 27, 2023	$	6.0	$	683.8	$	(344.7)	$	(495.2)	$	(6.2)	$	(156.3)
Net income	—		—		42.1		—		—		42.1
Other comprehensive income	—		—		—		—		0.2		0.2

Stock-based compensation	—		4.4		—		—		—		4.4
Purchases of treasury stock	—		(0.1)		—		(0.3)		—		(0.4)
Issuances of treasury stock	—		(1.1)		—		1.6		—		0.5

Balances at December 27, 2023	$	6.0	$	687.0	$	(302.6)	$	(493.9)	$	(6.0)	$	(109.5)
Net income	—		—		48.7		—		—		48.7
Other comprehensive loss	—		—		—		—		(0.2)		(0.2)

Stock-based compensation	—		6.4		—		—		—		6.4
Purchases of treasury stock	—		(0.2)		—		(0.3)		—		(0.5)
Issuances of treasury stock	—		0.2		—		8.2		—		8.4
Balances at March 27, 2024	$	6.0	$	693.4	$	(253.9)	$	(486.0)	$	(6.2)	$	(46.7)

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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	Thirty-Nine Week Period Ended March 29, 2023
	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Loss		Total
Balances at June 29, 2022	$	7.0	$	690.9	$	(148.4)	$	(812.3)	$	(5.3)	$	(268.1)

Net loss	—		—		(30.2)		—		—		(30.2)
Other comprehensive loss	—		—		—		—		(1.0)		(1.0)
Dividends	—		—		0.0		—		—		0.0
Stock-based compensation	—		4.7		—		—		—		4.7
Purchases of treasury stock	—		0.2		—		(2.2)		—		(2.0)
Issuances of treasury stock	—		(7.8)		—		7.8		—		0.0
Retirement of stock	(1.0)		—		(306.1)		307.1		—		—
Balances at September 28, 2022	$	6.0	$	688.0	$	(484.7)	$	(499.6)	$	(6.3)	$	(296.6)
Net income	—		—		27.9		—		—		27.9
Other comprehensive income	—		—		—		—		0.1		0.1

Stock-based compensation	—		1.2		—		—		—		1.2
Purchases of treasury stock	—		0.0		—		(0.1)		—		(0.1)
Issuances of treasury stock	—		(0.5)		—		0.5		—		0.0

Balances at December 28, 2022	$	6.0	$	688.7	$	(456.8)	$	(499.2)	$	(6.2)	$	(267.5)
Net income	—		—		50.7		—		—		50.7
Other comprehensive income	—		—		—		—		0.1		0.1

Stock-based compensation	—		4.4		—		—		—		4.4
Purchases of treasury stock	—		0.0		—		(0.1)		—		(0.1)
Issuances of treasury stock	—		(0.8)		—		2.9		—		2.1
Balances at March 29, 2023	$	6.0	$	692.3	$	(406.1)	$	(496.4)	$	(6.1)	$	(210.3)

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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BRINKER INTERNATIONAL, INC.

Notes to Consolidated Financial Statements (Unaudited)

Footnote Index

Note #

Description

Page

Note 1

Basis of Presentation

Note 2

Revenue Recognition

Note 3

Fair Value Measurements

Accrued Liabilities

Leases

Debt

Contingencies

Income Taxes

Shareholders’ Deficit

Note 10

Net Income Per Share

Note 11

Other Gains and Charges

Note 12

Segment Information

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1. BASIS OF PRESENTATION

References to “Brinker,” the “Company,” “we,” “us,” and “our” in this Form 10-Q refer to Brinker International, Inc. and its subsidiaries and any predecessor companies of Brinker International, Inc. Our Consolidated Financial Statements (Unaudited) as of March 27, 2024 and June 28, 2023, and for the thirteen and thirty-nine week periods ended March 27, 2024 and March 29, 2023, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

The Company is principally engaged in the ownership, operation, development and franchising of the Chili’s® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy® (“Maggiano’s”) restaurant brands. As of March 27, 2024, we owned, operated or franchised 1,618 restaurants, consisting of 1,176 Company-owned restaurants and 442 franchised restaurants, located in the United States, 27 other countries and two United States territories.

Use of Estimates

The preparation of the Consolidated Financial Statements (Unaudited) is in conformity with generally accepted accounting principles in the United States (“GAAP”) and requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements (Unaudited), and the reported amounts of revenues and costs and expenses in the reporting periods. Actual results could differ from those estimates.

The information furnished herein reflects all adjustments (consisting only of normal recurring accruals and adjustments) which are, in our opinion, necessary to fairly state the interim operating results, financial position and cash flows for the respective periods. However, these operating results are not necessarily indicative of the results expected for the full fiscal year. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with GAAP, have been omitted pursuant to SEC rules and regulations. The Notes to Consolidated Financial Statements (Unaudited) should be read in conjunction with the Notes to Consolidated Financial Statements contained in our June 28, 2023 Form 10-K. We believe the disclosures are sufficient for interim financial reporting purposes. All amounts in the Notes to Consolidated Financial Statements (Unaudited) are presented in millions unless otherwise specified.

Foreign Currency Translation

The foreign currency translation adjustment included in the Consolidated Statements of Comprehensive Income (Unaudited) represents the unrealized impact of translating the financial statements of our Canadian restaurants from Canadian dollars to United States dollars. This amount is not included in Net income and would only be realized upon disposition of our Canadian restaurants. The related Accumulated other comprehensive loss is presented in the Consolidated Balance Sheets (Unaudited).

Effect of New Accounting Standards

We reviewed accounting pronouncements that became effective for our fiscal 2024 and determined that either they were not applicable, or they did not have a material impact on the Consolidated Financial Statements (Unaudited).

In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, which would require us to adopt the provisions in our fiscal 2025 10-K. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. Management is currently evaluating this ASU to determine its impact on our disclosures.

We also reviewed other recently issued accounting pronouncements to be adopted in future periods and determined that they are not expected to have a material impact on the Consolidated Financial Statements (Unaudited).

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2. REVENUE RECOGNITION

Deferred Franchise and Development Fees

Our deferred franchise and development fees consist of the unrecognized fees received from franchisees. Recognition of these fees in subsequent periods is based on satisfaction of the contractual performance obligations of our active contracts with franchisees. We also expect to earn subsequent period royalties and advertising fees related to our franchise contracts; however, due to the variability and uncertainty of these future revenues based upon a sales-based measure, these future revenues are not yet estimable as the performance obligations remain unsatisfied.

Deferred franchise and development fees are classified within Other accrued liabilities for the current portion expected to be recognized within the next 12 months, and Other liabilities for the long-term portion in the Consolidated Balance Sheets (Unaudited).

The following table reflects the changes in deferred franchise and development fees between June 28, 2023 and March 27, 2024:


	Deferred Franchise and Development Fees

Balance as of June 28, 2023	$	11.1
Additions	0.4

Amount recognized to Franchise revenues	(1.7)

Balance as of March 27, 2024	$	9.8

The following table illustrates franchise and development fees expected to be recognized in the future related to performance obligations that were unsatisfied or partially unsatisfied as of March 27, 2024:


Fiscal Year	Franchise and Development Fees Revenue Recognition
Remainder of 2024	$	0.2
2025	0.8
2026	0.7
2027	0.7
2028	0.6
Thereafter	6.8
	$	9.8

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Deferred Gift Card Revenues

Deferred revenues related to our gift cards include the full value of unredeemed gift card balances less recognized breakage and the unamortized portion of third party fees. The following table reflects the changes in the Gift card liability between June 28, 2023 and March 27, 2024:


	Gift Card Liability

Balance as of June 28, 2023	$	73.0
Gift card sales	95.0
Gift card redemptions recognized to Company sales	(91.1)
Gift card breakage recognized to Company sales	(11.0)
Other	0.1
Balance as of March 27, 2024	$	66.0

3. FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date under market conditions. Fair value measurements are categorized in three levels based on the types of significant inputs used, as follows:


Level 1			Quoted prices in active markets for identical assets or liabilities
Level 2			Observable inputs other than quoted prices in active markets for identical assets or liabilities
Level 3			Unobservable inputs that cannot be corroborated by observable market data

Financial Instruments

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and long-term debt. The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying amounts because of the short maturity of these items.

The carrying amount of debt outstanding related to our revolving credit facility approximates fair value as the interest rate on this instrument approximates current market rates (Level 2). The fair values of the 5.000% and 8.250% notes are based on quoted market prices and are considered Level 2 fair value measurements.

The 5.000% notes and 8.250% notes carrying amounts, which are net of unamortized debt issuance costs and discounts, and fair values are as follows:


	March 27, 2024				June 28, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
5.000% notes	$	349.6	$	347.9	$	349.0	$	343.5
8.250% notes	345.0		368.9		344.3		348.3

Non-Financial Assets

The fair values of transferable liquor licenses are based on prices in the open market for licenses in the same or similar jurisdictions and are categorized as Level 2. The fair values of other non-financial assets are determined based on appraisals, sales prices of comparable assets or estimates of discounted cash flow and are categorized as Level 3.

We review the carrying amounts of non-financial assets, primarily long-lived property and equipment, finance lease assets, operating lease assets, reacquired franchise rights, goodwill and transferable liquor licenses annually or when events or circumstances indicate that the fair value may not substantially exceed the carrying amount. We record an impairment charge for the excess of the carrying amount over the fair value. Any impairment charges are included in Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited). During the

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thirteen and thirty-nine week periods ended March 27, 2024 and March 29, 2023, no indicators of impairment were identified.

Intangibles, net in the Consolidated Balance Sheets (Unaudited) includes both indefinite-lived intangible assets such as transferable liquor licenses and definite-lived intangible assets such as reacquired franchise rights. Accumulated amortization associated with definite-lived intangible assets at March 27, 2024 and June 28, 2023, was $16.2 million and $15.3 million, respectively.

4. ACCRUED LIABILITIES

Other accrued liabilities consist of the following:


	March 27, 2024		June 28, 2023
Insurance	$	27.2	$	29.3
Property tax	21.0		24.5
Sales tax	19.7		17.3
Current installments of finance lease obligations	15.5		10.2
Interest	15.5		6.4
Utilities and services	9.8		10.4



Other	22.6		18.2
	$	131.3	$	116.3

5. LEASES

We typically lease our restaurant facilities through ground leases (where we lease land only, but construct the building and improvements) or retail leases (where we lease the land/retail space and building). In addition to our restaurant facilities, we also lease our corporate headquarters location and certain equipment.

The components of lease expenses included in the Consolidated Statements of Comprehensive Income (Unaudited) were as follows:


	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
	March 27, 2024		March 29, 2023		March 27, 2024		March 29, 2023
Operating lease cost	$	45.7	$	45.3	$	136.9	$	135.5
Variable lease cost	16.3		16.5		47.4		47.3
Finance lease amortization	3.0		4.9		8.8		15.0
Finance lease interest	1.0		1.0		2.8		3.1
Short-term lease cost	0.1		—		0.2		0.2
Sublease income	(0.3)		(0.8)		(1.1)		(2.3)
Total lease costs, net	$	65.8	$	66.9	$	195.0	$	198.8

Supplemental cash flow information related to leases:


	Thirty-Nine Week Periods Ended
	March 27, 2024		March 29, 2023
Operating lease assets obtained in exchange for operating lease liabilities	$	53.1	$	59.1
Finance leases assets obtained in exchange for finance lease liabilities	30.7		0.2

Finance lease assets are recorded in Property and equipment, at cost, and the net balance as of March 27, 2024 and June 28, 2023 was $73.5 million and $51.3 million, respectively.

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Pre-Commencement Leases

In the third quarter of fiscal 2024, we executed one finance lease for Chili’s table-top devices with an initial term of 4 years after a rollout period, commencing as devices are installed. The undiscounted fixed payments over the initial term of the lease for the remaining devices not installed as of March 27, 2024 is $22.1 million.

Additionally, we have executed six leases for new Chili’s locations with undiscounted fixed payments over the initial term of $16.1 million. These leases are expected to commence during the next 12 months and are expected to have an economic lease term of 20 years. These leases will commence when the landlords make the property available to us for new restaurant construction.

6. DEBT

Long-term debt consists of the following:


	March 27, 2024		June 28, 2023
Revolving credit facility	$	51.3	$	161.3
5.000% notes(1)	350.0		350.0
8.250% notes	350.0		350.0
Finance lease obligations	88.1		67.8
Total long-term debt	839.4		929.1
Less: unamortized debt issuance costs and discounts	(5.4)		(6.7)
Total long-term debt, less unamortized debt issuance costs and discounts	834.0		922.4
Less: current installments of long-term debt and finance leases(2)	(15.5)		(10.2)
Total long-term debt, less current portion	$	818.5	$	912.2

(1)Obligations under our 5.000% notes, which will mature in October 2024, have been classified as long-term, reflecting our intent and ability to refinance these notes through our existing revolving credit facility.

(2)Current installments of long-term debt consist of finance leases and are recorded within Other accrued liabilities in the Consolidated Balance Sheets (Unaudited). Refer to Note 4 - Accrued Liabilities for further details.

Revolving Credit Facility

In the thirty-nine week period ended March 27, 2024, net repayments of $110.0 million were made on our revolving credit facility. As of March 27, 2024, $848.7 million of credit was available under the revolving credit facility.

The $900.0 million revolving credit facility matures on August 18, 2026 and bears interest of SOFR plus an applicable margin of 1.50% to 2.25% 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 27, 2024, our interest rate was 7.20% consisting of SOFR of 5.32% plus the applicable margin and spread adjustment of 1.88%.

Financial Covenants

Our debt agreements contain various financial covenants that, among other things, require the maintenance of certain leverage ratios. As of March 27, 2024, we were in compliance with our covenants pursuant to the $900.0 million revolving credit facility and under the terms of the indentures governing our 5.000% and 8.250% notes.

7. CONTINGENCIES

Lease Commitments

We have, in certain cases, divested brands or sold restaurants to franchisees and have not been released from lease guarantees for the related restaurants. As of March 27, 2024 and June 28, 2023, we have outstanding lease guarantees or are secondarily liable for an estimated $13.2 million and $16.9 million, respectively. These amounts

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represent the maximum known potential liability of rent payments under the leases, but outstanding rent payments can exist outside of our knowledge as a result of the landlord and tenant relationship being between two third parties. These leases have been assigned to the buyers and expire at the end of the respective lease terms, which range from fiscal 2024 through fiscal 2030.

We have received notices of default and have been named a party in lawsuits pertaining to some of these leases in circumstances where the current lessee did not pay its rent obligations. In the event of default under a lease by an owner of a divested brand, the indemnity and default clauses in our agreements with such third parties and applicable laws govern our ability to pursue and recover amounts we may pay on behalf of such parties. In the thirty-nine week period ended March 27, 2024 we recorded a $0.8 million charge in Other (gains) and charges in the Consolidated Statements of Comprehensive Income.

Letters of Credit

We provide letters of credit to various insurers to collateralize obligations for outstanding claims. As of March 27, 2024, we had $5.8 million in undrawn standby letters of credit outstanding. All standby letters of credit are renewable within the next 7 months.

Cyber Security Litigation

In fiscal 2018, we discovered malware at certain Chili’s restaurants that may have resulted in unauthorized access or acquisition of customer payment card data. We settled all claims from payment card companies related to this incident and do not expect material claims from payment card companies in the future. In connection with this event, the Company was also named as a defendant in a putative class action lawsuit in the United States District Court for the Middle District of Florida (the “Litigation”) relating to this incident. In the Litigation, plaintiffs assert various claims at the Company’s Chili’s restaurants involving customer payment card information and seek monetary damages in excess of $5.0 million, injunctive and declaratory relief, and attorney’s fees and costs.

The parties have completed their briefing on our petition for writ of certiorari in the United States Supreme Court seeking review of the Eleventh Circuit’s decision to uphold the plaintiff’s damages calculation methodology. We await the Court’s decision whether to take up the matter. Concurrently in the trial court, the court declined to stay the matter and ordered the parties to submit supplemental briefs on the issue of predominance as it relates to class certification in light of the Eleventh Circuit’s ruling on the issue. The parties completed their briefing on March 22, 2024, and now await the court’s ruling. We believe we have defenses and intend to continue defending the Litigation. As such, as of March 27, 2024, we have concluded that a loss, or range of loss, from this matter is not determinable, therefore, we have not recorded a liability related to the Litigation. We will continue to evaluate this matter based on new information as it becomes available.

Legal Proceedings

Evaluating contingencies related to litigation is a process involving judgment on the potential outcome of future events, and the ultimate resolution of litigated claims may differ from our current analysis. Accordingly, we review the adequacy of accruals and disclosures pertaining to litigated matters each quarter in consultation with legal counsel and we assess the probability and range of possible losses associated with contingencies for potential accrual in the Consolidated Financial Statements.

We are engaged in various legal proceedings and have certain unresolved claims pending. Liabilities have been established based on our best estimates of our potential liability in certain of these matters. Based upon consultation with legal counsel, management is of the opinion that there are no matters pending or threatened which are expected to have a material adverse effect, individually or in the aggregate, on the consolidated financial condition or results of operations.

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8. INCOME TAXES


	Thirty-Nine Week Periods Ended
		March 27, 2024		March 29, 2023
Effective income tax rate		8.3	%	(5.2)	%

The federal statutory tax rate was 21.0% for the thirty-nine week periods ended March 27, 2024 and March 29, 2023.

The change in the effective income tax rate in the thirty-nine week period ended March 27, 2024 to the thirty-nine week period ended March 29, 2023 is primarily due to higher Income before income taxes and the resulting deleverage of the FICA tip tax credit.

9. SHAREHOLDERS’ DEFICIT

Retirement of Common Stock

During the first quarter of fiscal 2023, the Board of Directors approved the retirement of 10.0 million shares of Treasury stock for a weighted average price per share of $30.71. As of March 27, 2024, 15.8 million shares remain in treasury.

Share Repurchases

Our Board of Directors approved a $300.0 million share repurchase program during fiscal 2022. Our share repurchase program is used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. We evaluate potential share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, proceeds from divestitures, borrowings and planned investment and financing needs.

In the thirty-nine week period ended March 27, 2024, we repurchased 0.8 million shares of our common stock for $25.6 million, including 0.7 million shares purchased for $21.0 million as part of our share repurchase program and 0.1 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 27, 2024, approximately $183.0 million of share repurchase authorization remains under the current share repurchase program.

Stock-based Compensation

The following table presents the restricted share awards granted and related weighted average fair value per share amounts.


	Thirty-Nine Week Periods Ended
	March 27, 2024		March 29, 2023
Restricted share awards
Restricted share awards granted	0.6		0.7
Weighted average fair value per share	$	33.60	$	29.69

10. NET INCOME PER SHARE

Basic net income per share is computed by dividing Net income by the Basic weighted average shares outstanding for the reporting period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of Diluted net income per share, the Basic weighted average shares outstanding is increased by the dilutive effect of stock options and restricted share awards. Stock options and restricted share awards with an anti-dilutive effect are

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not included in the Diluted net income per share calculation. Basic weighted average shares outstanding are reconciled to Diluted weighted average shares outstanding as follows:


	Thirteen Week Periods Ended		Thirty-Nine Week Periods Ended
	March 27, 2024	March 29, 2023	March 27, 2024	March 29, 2023
Basic weighted average shares outstanding	44.3	44.1	44.4	44.0
Dilutive stock options	0.1	0.1	0.1	0.0
Dilutive restricted shares	0.8	0.9	0.7	0.8
Total dilutive impact	0.9	1.0	0.8	0.8
Diluted weighted average shares outstanding	45.2	45.1	45.2	44.8

Awards excluded due to anti-dilutive effect	0.1	0.8	0.6	1.4

11. OTHER GAINS AND CHARGES

Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited) consist of the following:


	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
	March 27, 2024		March 29, 2023		March 27, 2024		March 29, 2023
Restaurant closure asset write-offs and charges	$	4.0	$	1.8	$	4.8	$	6.6
Enterprise system implementation costs	3.3		1.3		7.4		3.3
Litigation & claims, net	2.0		0.4		5.2		1.2
Severance	0.4		1.0		0.5		3.9
Lease contingencies	0.3		2.0		0.8		2.0
Remodel-related asset write-offs	0.1		0.1		0.4		1.1


Other	(0.2)		(0.3)		0.4		1.7
	$	9.9	$	6.3	$	19.5	$	19.8

•Restaurant closure asset write-offs and charges includes costs associated with the closure of certain Chili’s restaurants in the current year and both Chili’s and Maggiano’s restaurants in the prior year.

•Enterprise system implementation costs primarily consist of software subscription fees, certain consulting fees, and contract labor associated with the ongoing enterprise system implementation that are not capitalized.

•Litigation & claims, net primarily relates to claims on alcohol service cases and legal contingencies.

•Severance relates to changes in our management team and organizational structure.

•Lease contingencies includes expenses related to certain sublease receivables and lease guarantees for divested brands when we have determined it is probable that the current lessee will default on the lease obligation. Refer to Note 7 - Contingencies for additional information about our secondarily liable lease guarantees.

•Remodel-related asset write-offs relates to assets that are removed or discarded in connection with Maggiano’s and Chili’s remodel projects.

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12. SEGMENT INFORMATION

Our operating segments are Chili’s and Maggiano’s. The Chili’s segment includes the results of our Company-owned Chili’s restaurants, which are principally located in the United States, within the full-service casual dining segment of the industry. The Chili’s segment also has Company-owned restaurants in Canada, and franchised locations in the United States, 27 other countries and two United States territories. The Maggiano’s segment includes the results of our Company-owned Maggiano’s restaurants in the United States as well as the results from our domestic franchise business. Costs related to our restaurant support teams for the Chili’s and Maggiano’s brands, including operations, finance, franchise, marketing, human resources and culinary innovation are included in the results of our operating segments. The Corporate segment includes costs related to the common and shared infrastructure, including accounting, information technology, purchasing, guest relations, and legal and restaurant development.

Company sales for each segment include revenues generated by the operation of Company-owned restaurants including food and beverage sales, net of discounts, gift card breakage, Maggiano’s banquet service charge income, delivery, digital entertainment revenues, merchandise income and are net of gift card discounts from third-party gift card sales. Franchise revenues for each operating segment include royalties, franchise advertising fees, franchise and development fees and gift card equalization.

We do not rely on any major customers as a source of sales, and the customers and long-lived assets of our operating segments are predominantly located in the United States. There were no material transactions amongst our operating segments.

Our chief operating decision maker uses Operating income as the measure for assessing performance of our segments. Operating income includes revenues and expenses directly attributable to segment-level results of operations. Restaurant expenses during the periods presented primarily include restaurant rent, repairs and maintenance, advertising, utilities, supplies, delivery fees, payment processing fees, franchise and property taxes, supervision expenses, to-go supplies, and workers’ compensation and general liability insurance.

The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:


	Thirteen Week Period Ended March 27, 2024
	Chili's		Maggiano's		Corporate		Consolidated
Company sales	$	988.4	$	120.5	$	—	$	1,108.9
Franchise revenues	11.2		0.2		—		11.4
Total revenues	999.6		120.7		—		1,120.3

Food and beverage costs	249.3		28.5		—		277.8
Restaurant labor	331.3		39.3		—		370.6
Restaurant expenses	268.7		34.6		0.1		303.4
Depreciation and amortization	36.6		3.4		2.6		42.6
General and administrative	10.8		2.4		32.9		46.1
Other (gains) and charges	5.7		0.2		4.0		9.9
Total operating costs and expenses	902.4		108.4		39.6		1,050.4
Operating income (loss)	97.2		12.3		(39.6)		69.9
Interest expenses	0.8		0.1		15.3		16.2
Other income, net	—		—		(0.2)		(0.2)
Income (loss) before income taxes	$	96.4	$	12.2	$	(54.7)	$	53.9

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	Thirteen Week Period Ended March 29, 2023
	Chili's		Maggiano's		Corporate		Consolidated
Company sales	$	953.2	$	119.7	$	—	$	1,072.9
Franchise revenues	10.2		0.1		—		10.3
Total revenues	963.4		119.8		—		1,083.2

Food and beverage costs	257.9		29.6		—		287.5
Restaurant labor	322.0		39.2		—		361.2
Restaurant expenses	247.5		33.1		0.3		280.9
Depreciation and amortization	36.7		3.3		2.5		42.5
General and administrative	8.8		2.0		29.8		40.6
Other (gains) and charges	2.2		0.4		3.7		6.3
Total operating costs and expenses	875.1		107.6		36.3		1,019.0
Operating income (loss)	88.3		12.2		(36.3)		64.2
Interest expenses	1.0		—		13.2		14.2
Other income, net	—		—		(0.6)		(0.6)
Income (loss) before income taxes	$	87.3	$	12.2	$	(48.9)	$	50.6


	Thirty-Nine Week Period Ended March 27, 2024
	Chili's		Maggiano's		Corporate		Consolidated
Company sales	$	2,803.1	$	371.5	$	—	$	3,174.6
Franchise revenues	31.8		0.5		—		32.3
Total revenues	2,834.9		372.0		—		3,206.9

Food and beverage costs	721.6		88.1		—		809.7
Restaurant labor	955.3		119.5		—		1,074.8
Restaurant expenses	785.5		103.0		0.4		888.9
Depreciation and amortization	108.3		9.8		7.7		125.8
General and administrative	31.0		6.9		93.8		131.7
Other (gains) and charges	10.3		0.6		8.6		19.5
Total operating costs and expenses	2,612.0		327.9		110.5		3,050.4
Operating income (loss)	222.9		44.1		(110.5)		156.5
Interest expenses	2.5		0.2		47.2		49.9
Other income, net	(0.1)		—		(0.2)		(0.3)
Income (loss) before income taxes	$	220.5	$	43.9	$	(157.5)	$	106.9

Segment assets	$	2,111.4	$	252.7	$	131.6	$	2,495.7

Payments for property and equipment	121.3		12.3		7.3		140.9

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Footnote Index


	Thirty-Nine Week Period Ended March 29, 2023
	Chili's		Maggiano's		Corporate		Consolidated
Company sales	$	2,663.1	$	365.3	$	—	$	3,028.4
Franchise revenues	28.9		0.4		—		29.3
Total revenues	2,692.0		365.7		—		3,057.7

Food and beverage costs	772.5		93.9		—		866.4
Restaurant labor	908.7		117.7		—		1,026.4
Restaurant expenses	718.5		99.0		0.6		818.1
Depreciation and amortization	108.7		9.8		7.7		126.2
General and administrative	26.8		6.0		82.9		115.7
Other (gains) and charges	10.9		1.2		7.7		19.8
Total operating costs and expenses	2,546.1		327.6		98.9		2,972.6
Operating income (loss)	145.9		38.1		(98.9)		85.1
Interest expenses	2.9		0.2		37.3		40.4
Other income, net	—		—		(1.3)		(1.3)
Income (loss) before income taxes	$	143.0	$	37.9	$	(134.9)	$	46.0

Payments for property and equipment	$	119.4	$	10.7	$	6.5	$	136.6

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

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 27, 2024 and March 29, 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.

Overview

External Impacts to Our Operating Environment

Our operating results were impacted by geopolitical and other macroeconomic events, leading to higher than usual inflation on wages and food and beverage costs during fiscal 2023 and to a lesser extent during fiscal 2024.

Operations Strategy

We are committed to strategies and a Company culture that we believe will grow sales, increase profits, bring back guests and engage team members. Our strategies and culture are intended to strengthen our position in casual dining and grow our core business over time. Our primary brand strategy is to make our guests feel special through great food and quality service so that they return to our restaurants.

Chili’s - Our strategy is to make everyone feel special through a fun atmosphere, delicious food and drinks and our Chili’s hospitality. We are making work at Chili’s easier, more fun and more rewarding for our team members so that they are more engaged and provide a better experience for our guests. One way we have done this is by eliminating tasks that were unnecessary and did not add value to our guests. We have also simplified our menu to focus on core equities we believe can help grow sales—burgers, fajitas, Chicken Crispers®, and margaritas, as well as other classic favorites. Our team members can make our core menu items better and more consistently because we have fewer menu items that need to be perfected.

We have a flexible platform of value offerings at both lunch and dinner that we believe is compelling to our guests. Our “3 for Me” platform, a flexible value bundle, provides our guests an unbeatable everyday value. Additionally, we have continued our Margarita of the Month promotion that features a premium-liquor margarita every month at an every-day value price. Most of our value propositions are available for guests to enjoy in our dining rooms or off-premise.

In dining rooms, we use tabletop devices to engage our guests at the table. These devices provide functionality for guests to pay at the table, order or re-order, engage in digital entertainment, to provide guest feedback and interact with our My Chili’s Rewards program. Our My Chili’s Rewards loyalty program offers free chips and salsa or a non-alcoholic beverage to members based on their visit frequency. We customize offerings for these guests based on their purchase behavior. Our servers use handheld tablets to place orders for our guests, increasing the efficiency of our team members and allowing orders to reach our kitchen quicker for better service to our guests. Third-party delivery orders for our restaurants are sent directly into our point of sale system, creating efficiencies and a system that allows us to better serve our guests. The operating results for our virtual brand, It’s Just Wings®, are included in the results of our Chili’s brand.

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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. We have focused on increasing our carry-out and delivery business in recent years by creating partnerships with delivery service providers that have made our restaurants more accessible to guests and helped create an additional significant revenue channel. Our restaurants also have banquet rooms to host large party events and we have 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.

Franchise Partnerships - Our franchisees continue to grow our brands around the world, with 16 new restaurant openings and two new development agreements during the thirty-nine week period ended March 27, 2024. We plan to strategically pursue expansion of Chili’s internationally through development agreements with new and existing franchise partners.

Company Development - The following table details the number of restaurant openings during the thirteen and thirty-nine week periods ended March 27, 2024 and March 29, 2023, respectively, total full year projected openings in fiscal 2024 and the total restaurants open at each period end:


	Openings During the		Openings During the		Full Year Projected Openings
	Thirteen Week Periods Ended		Thirty-Nine Week Periods Ended			Total Open Restaurants at
	March 27, 2024	March 29, 2023	March 27, 2024	March 29, 2023	Fiscal 2024	March 27, 2024	March 29, 2023
Company-owned restaurants
Chili’s domestic	2	3	7	7	9	1,122	1,129
Chili’s international	—	—	—	—	—	4	5
Maggiano’s domestic	—	—	—	—	—	50	50
Total Company-owned	2	3	7	7	9	1,176	1,184
Franchise restaurants
Chili’s domestic	—	1	—	2	0-1	99	102
Chili’s international	2	6	16	14	19-24	341	366
Maggiano’s domestic	—	—	—	—	—	2	2
Total franchise	2	7	16	16	19-25	442	470
Total restaurants
Chili’s domestic	2	4	7	9	9-10	1,221	1,231
Chili’s international	2	6	16	14	19-24	345	371
Maggiano’s domestic	—	—	—	—	—	52	52
Total	4	10	23	23	28-34	1,618	1,654

At March 27, 2024, we own property for 50 of the 1,176 Company-owned restaurants and one closed restaurant. The net book values associated with these restaurants included land of $42.4 million and buildings of $12.8 million.

Revenues

Thirteen and Thirty-Nine Week Periods Ended March 27, 2024 compared to March 29, 2023

Revenues are presented in two separate captions in the Consolidated Statements of Comprehensive Income (Unaudited) to provide more clarity around Company-owned restaurant revenues and operating expenses trends:

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

•Franchise revenues include royalties, franchise advertising fees, franchise and development fees and gift card equalization.

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The following is a summary of the change in Total revenues:


	Total Revenues
	Chili’s		Maggiano’s		Total Revenues
Thirteen Week Period Ended March 29, 2023	$	963.4	$	119.8	$	1,083.2
Change from:
Comparable restaurant sales	33.4		1.9		35.3

Restaurant openings	11.3		—		11.3
Gift card discounts	0.4		—		0.4

Maggiano's banquet income	—		0.2		0.2
Merchandise Income	—		(0.1)		(0.1)
Delivery service fee income	(0.1)		0.1		—

Gift card breakage	0.1		—		0.1
Digital entertainment revenues	(0.4)		—		(0.4)
Restaurant closures	(9.5)		(1.3)		(10.8)
Company sales	35.2		0.8		36.0
Franchise revenues(1)	1.0		0.1		1.1
Thirteen Week Period Ended March 27, 2024	$	999.6	$	120.7	$	1,120.3


	Total Revenues
	Chili’s		Maggiano’s		Total Revenues
Thirty-Nine Week Period Ended March 29, 2023	$	2,692.0	$	365.7	$	3,057.7
Change from:
Comparable restaurant sales	127.6		13.5		141.1
Restaurant openings	36.7		—		36.7
Restaurant acquisitions	0.6		—		0.6

Maggiano's banquet income	—		0.3		0.3
Gift card discounts	0.4		0.1		0.5
Gift card breakage	0.3		(0.1)		0.2
Merchandise income	—		(0.1)		(0.1)
Digital entertainment revenues	(0.6)		—		(0.6)
Delivery service fee income	(0.5)		0.3		(0.2)
Restaurant closures	(24.5)		(7.8)		(32.3)

Company sales	140.0		6.2		146.2
Franchise revenues(1)	2.9		0.1		3.0
Thirty-Nine Week Period Ended March 27, 2024	$	2,834.9	$	372.0	$	3,206.9

(1)Franchise revenues increased in the thirteen and thirty-nine week periods ended March 27, 2024 compared to March 29, 2023 primarily due to higher franchise advertising fees. Our Chili’s and Maggiano’s franchisees generated sales of approximately $216.2 million and $2.9 million and $644.3 million and $8.5 million, respectively, for the thirteen and thirty-nine week periods ended March 27, 2024 compared to $213.6 million and $2.5 million and $639.9 million and $7.5 million, respectively, in for the thirteen and thirty-nine week periods ended March 29, 2023.

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The table below presents the percentage change in comparable restaurant sales and restaurant capacity for the thirteen and thirty-nine week periods ended March 27, 2024 compared to March 29, 2023:


	Percentage Change in the Thirteen Week Period Ended March 27, 2024 versus March 29, 2023
	Comparable Restaurant Sales(1)		Price Impact		Mix-Shift Impact(2)		Traffic Impact		Restaurant Capacity(3)
Company-owned	3.3	%	6.4	%	(0.7)	%	(2.4)	%	(0.5)	%
Chili’s	3.5	%	6.1	%	(0.8)	%	(1.8)	%	(0.5)	%
Maggiano’s	1.7	%	8.2	%	1.0	%	(7.5)	%	(1.2)	%
Franchise(4)	1.2	%
U.S.	4.9	%
International	(0.8)	%
Chili’s domestic(5)	3.6	%

System-wide(6)	3.0	%


	Percentage Change in the Thirty-Nine Week Period Ended March 27, 2024 versus March 29, 2023
	Comparable Restaurant Sales(1)		Price Impact		Mix-Shift Impact(2)		Traffic Impact		Restaurant Capacity(3)
Company-owned	4.7	%	7.4	%	0.4	%	(3.1)	%	(0.4)	%
Chili’s	4.8	%	7.1	%	0.5	%	(2.8)	%	(0.3)	%
Maggiano’s	3.9	%	9.4	%	0.2	%	(5.7)	%	(2.4)	%
Franchise(4)	1.8	%
U.S.	5.7	%
International	(0.3)	%
Chili’s domestic(5)	4.8	%

System-wide(6)	4.2	%

(1)Comparable Restaurant Sales include all restaurants that have been in operation for more than 18 full months. Restaurants temporarily closed 14 days or more are excluded from Comparable Restaurant Sales. Percentage amounts are calculated based on the comparable periods year-over-year.

(2)Mix-Shift is calculated as the year-over-year percentage change in Company sales resulting from the change in menu items ordered by guests.

(3)Restaurant Capacity is measured by sales weeks and is calculated based on comparable periods year-over-year.

(4)Franchise sales generated by franchisees are not included in Total revenues in the Consolidated Statements of Comprehensive Income (Unaudited); however, we generate royalty revenues and advertising fees based on franchisee revenues, where applicable. We believe presenting Franchise Comparable Restaurant Sales provides investors relevant information regarding total brand performance.

(5)Chili’s domestic Comparable Restaurant Sales percentages are derived from sales generated by Company-owned and franchise-operated Chili’s restaurants in the United States.

(6)System-wide Comparable Restaurant Sales are derived from sales generated by Chili’s and Maggiano’s Company-owned and franchise-operated restaurants.

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Costs and Expenses

Thirteen Week Period Ended March 27, 2024 compared to March 29, 2023

The following is a summary of the changes in Costs and Expenses:


	Thirteen Week Periods Ended								Favorable (Unfavorable) Variance
	March 27, 2024				March 29, 2023
	Dollars		% of Company Sales		Dollars		% of Company Sales		Dollars		% of Company Sales
Food and beverage costs	$	277.8	25.1	%	$	287.5	26.8	%	$	9.7	1.7	%
Restaurant labor	370.6		33.4	%	361.2		33.6	%	(9.4)		0.2	%
Restaurant expenses	303.4		27.4	%	280.9		26.2	%	(22.5)		(1.2)	%
Depreciation and amortization	42.6				42.5				(0.1)
General and administrative	46.1				40.6				(5.5)
Other (gains) and charges	9.9				6.3				(3.6)
Interest expenses	16.2				14.2				(2.0)
Other income, net	(0.2)				(0.6)				(0.4)

As a percentage of Company sales:

•Food and beverage costs were favorable 1.7% due to 1.6% from increased menu pricing and 0.1% of favorable menu item mix.

•Restaurant labor was favorable 0.2% due to 1.0% of sales leverage, partially offset by 0.4% of higher hourly labor expenses driven by wage rates, 0.3% of higher manager salaries, and 0.1% of higher other labor expenses.

•Restaurant expenses were unfavorable 1.2% due to 1.5% of higher advertising, 0.4% of higher repairs and maintenance, and 0.3% of higher other restaurant expenses, partially offset by 0.5% of sales leverage and 0.5% of lower delivery fees and to-go supplies.

Depreciation and amortization increased $0.1 million as follows:


	Depreciation and Amortization
Thirteen Week Period Ended March 29, 2023	$	42.5
Change from:
Additions for new and existing restaurant assets	6.8
Corporate assets	0.6

Finance leases	(1.8)
Retirements and fully depreciated restaurant assets	(5.5)


Thirteen Week Period Ended March 27, 2024	$	42.6

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General and administrative expenses increased $5.5 million as follows:


	General and Administrative
Thirteen Week Period Ended March 29, 2023	$	40.6
Change from:
Performance-based compensation(1)	3.5
Stock-based compensation(2)	2.0
Payroll expenses	0.7
Recruiting	(0.5)
Professional fees	(1.0)


Other	0.8
Thirteen Week Period Ended March 27, 2024	$	46.1

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

(2)Stock-based compensation increased primarily due to an increase in expense related to the fiscal 2023 performance share grant, which is expected to pay out above target due to better expected performance compared to plan.

Other (gains) and charges consisted of the following (for further details, refer to Note 11 - Other Gains and Charges):


	Thirteen Week Periods Ended
	March 27, 2024		March 29, 2023
Restaurant closure asset write-offs and charges	$	4.0	$	1.8
Enterprise system implementation costs	3.3		1.3
Litigation & claims, net	2.0		0.4
Severance	0.4		1.0
Lease contingencies	0.3		2.0
Remodel-related asset write-offs	0.1		0.1


Other	(0.2)		(0.3)
	$	9.9	$	6.3

Interest expenses increased $2.0 million due to higher interest rates on the 8.250% notes, offset by lower average revolver balance during the current year.

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Thirty-Nine Week Period Ended March 27, 2024 compared to March 29, 2023

The following is a summary of the changes in Costs and Expenses:


	Thirty-Nine Week Periods Ended								Favorable (Unfavorable) Variance
	March 27, 2024				March 29, 2023
	Dollars		% of Company Sales		Dollars		% of Company Sales		Dollars		% of Company Sales
Food and beverage costs	$	809.7	25.5	%	$	866.4	28.6	%	$	56.7	3.1	%
Restaurant labor	1,074.8		33.9	%	1,026.4		33.9	%	(48.4)		—	%
Restaurant expenses	888.9		28.0	%	818.1		27.0	%	(70.8)		(1.0)	%
Depreciation and amortization	125.8				126.2				0.4
General and administrative	131.7				115.7				(16.0)
Other (gains) and charges	19.5				19.8				0.3
Interest expenses	49.9				40.4				(9.5)
Other income, net	(0.3)				(1.3)				(1.0)

As a percentage of Company sales:

•Food and beverage costs were favorable 3.1% due to 2.0% from increased menu pricing, 0.6% of favorable commodity costs driven primarily by lower poultry costs, partially offset by higher beverage costs, and 0.5% of favorable menu item mix.

•Restaurant labor was flat due to 1.4% of sales leverage, offset by 1.0% of higher hourly labor expenses driven by both wage rates and staffing levels, and 0.4% of higher manager salaries.

•Restaurant expenses were unfavorable 1.0% due to 1.9% of higher advertising, 0.4% of higher repairs and maintenance expenses, and 0.5% of higher other restaurant expenses, partially offset by 0.9% of sales leverage and 0.9% of lower delivery fees and to-go supplies.

Depreciation and amortization increased $0.4 million as follows:


	Depreciation and Amortization
Thirty-Nine Week Period Ended March 29, 2023	$	126.2
Change from:
Additions for existing and new restaurant assets	19.6

Corporate assets	2.0

Finance leases	(6.0)
Retirements and fully depreciated restaurant assets	(15.9)
Other	(0.1)
Thirty-Nine Week Period Ended March 27, 2024	$	125.8

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General and administrative expenses increased $16.0 million as follows:


	General and Administrative
Thirty-Nine Week Period Ended March 29, 2023	$	115.7
Change from:
Performance-based compensation(1)	6.8
Stock-based compensation(2)	6.3

Corporate technology initiatives	1.5
Payroll expenses	0.9



Professional fees	(1.1)
Recruiting	(1.2)




Other	2.8
Thirty-Nine Week Period Ended March 27, 2024	$	131.7

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

(2)Stock-based compensation increased primarily due to an increase in expense in third quarter of fiscal 2024 related to the fiscal 2023 performance share grant, which is expected to pay above target due to better expected performance compared to plan and the impact of reversing expense in the prior year related to the fiscal 2022 performance share grant, when we determined the performance target was unlikely to be achieved.

Other (gains) and charges consisted of the following (for further details, refer to Note 11 - Other Gains and Charges):


	Thirty-Nine Week Periods Ended
	March 27, 2024		March 29, 2023
Enterprise system implementation costs	$	7.4	$	3.3
Litigation & claims, net	5.2		1.2
Restaurant closure asset write-offs and charges	4.8		6.6
Lease contingencies	0.8		2.0
Severance	0.5		3.9

Remodel-related asset write-offs	0.4		1.1


Other	0.4		1.7
	$	19.5	$	19.8

Interest expenses increased $9.5 million due to higher interest rates on the 8.250% notes, slightly offset by lower average revolver balance during the current year.

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Income Taxes


	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
	March 27, 2024		March 29, 2023		March 27, 2024		March 29, 2023
Effective income tax rate	9.6	%	(0.2)	%	8.3	%	(5.2)	%

The federal statutory tax rate was 21.0% for the thirteen and thirty-nine week periods ended March 27, 2024 and March 29, 2023.

The change in the effective income tax rate in the thirteen and thirty-nine week periods ended March 27, 2024 to the thirteen and thirty-nine week periods ended March 29, 2023 is primarily due to higher Income before income taxes and the resulting deleverage of the FICA tip tax credit.

Segment Results

Chili’s Segment

Thirteen Week Period Ended March 27, 2024 compared to March 29, 2023


	Thirteen Week Periods Ended				Favorable (Unfavorable) Variance		Variance as percentage
	March 27, 2024		March 29, 2023
Company sales	$	988.4	$	953.2	$	35.2	3.7	%
Franchise revenues	11.2		10.2		1.0		9.8	%
Total revenues	$	999.6	$	963.4	$	36.2	3.8	%

Chili’s Total revenues increased by 3.8% primarily due to favorable comparable restaurant sales driven by menu price increases, partially offset by lower traffic and unfavorable menu item mix. Refer to “Revenues” section above for further details about Chili’s revenues changes.

The following is a summary of the changes in Chili’s operating costs and expenses:


	Thirteen Week Periods Ended								Favorable (Unfavorable) Variance
	March 27, 2024				March 29, 2023
	Dollars		% of Company Sales		Dollars		% of Company Sales		Dollars		% of Company Sales
Food and beverage costs	$	249.3	25.2	%	$	257.9	27.0	%	$	8.6	1.8	%
Restaurant labor	331.3		33.5	%	322.0		33.8	%	(9.3)		0.3	%
Restaurant expenses	268.7		27.2	%	247.5		26.0	%	(21.2)		(1.2)	%
Depreciation and amortization	36.6				36.7				0.1
General and administrative	10.8				8.8				(2.0)
Other (gains) and charges	5.7				2.2				(3.5)

As a percentage of Company sales:

•Chili’s Food and beverage costs were favorable 1.8% due to 1.7% from increased menu pricing and 0.1% of favorable commodity costs.

•Chili’s Restaurant labor was favorable 0.3% due to 1.0% of sales leverage, partially offset by 0.4% of higher hourly labor driven by wage rates, and 0.3% of increased manager salary.

•Chili’s Restaurant expenses were unfavorable 1.2% due to 1.8% of higher advertising, 0.3% of higher repairs and maintenance, and 0.3% of higher other restaurant expenses, partially offset by 0.7% of sales leverage and 0.5% lower delivery fees and to-go supplies.

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Chili’s Depreciation and amortization decreased $0.1 million as follows:


	Depreciation and Amortization
Thirteen Week Period Ended March 29, 2023	$	36.7
Change from:
Additions for new and existing restaurant assets	6.0

Finance leases	(1.8)
Retirements and fully depreciated restaurant assets	(4.1)
Other	(0.2)
Thirteen Week Period Ended March 27, 2024	$	36.6

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


	General and Administrative
Thirteen Week Period Ended March 29, 2023	$	8.8
Change from:
Performance-based compensation	0.9
Defined contribution plan employer expenses and other benefits	0.3
Stock-based compensation	0.4

Other	0.4
Thirteen Week Period Ended March 27, 2024	$	10.8

Chili’s Other (gains) and charges consisted of the following (for further details, refer to Note 11 - Other Gains and Charges):


	Thirteen Week Periods Ended
	March 27, 2024		March 29, 2023
Restaurant closure asset write-offs and charges	$	4.0	$	1.5
Litigation & claims, net	1.9		0.3




Other	(0.2)		0.4
	$	5.7	$	2.2

Thirty-Nine Week Period Ended March 27, 2024 compared to March 29, 2023


	Thirty-Nine Week Periods Ended				Favorable (Unfavorable) Variance		Variance as percentage
	March 27, 2024		March 29, 2023
Company sales	$	2,803.1	$	2,663.1	$	140.0	5.3	%
Franchise revenues	31.8		28.9		2.9		10.0	%
Total revenues	$	2,834.9	$	2,692.0	$	142.9	5.3	%

Chili’s Total revenues increased 5.3% primarily due to favorable comparable restaurant sales driven by menu price increases partially offset by lower traffic. Refer to “Revenues” section above for further details about Chili’s revenues changes.

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The following is a summary of the changes in Chili’s operating costs and expenses:


	Thirty-Nine Week Periods Ended								Favorable (Unfavorable) Variance
	March 27, 2024				March 29, 2023
	Dollars		% of Company Sales		Dollars		% of Company Sales		Dollars		% of Company Sales
Food and beverage costs	$	721.6	25.7	%	$	772.5	29.0	%	$	50.9	3.3	%
Restaurant labor	955.3		34.1	%	908.7		34.1	%	(46.6)		—	%
Restaurant expenses	785.5		28.0	%	718.5		27.0	%	(67.0)		(1.0)	%
Depreciation and amortization	108.3				108.7				0.4
General and administrative	31.0				26.8				(4.2)
Other (gains) and charges	10.3				10.9				0.6

As a percentage of Company sales:

•Chili’s Food and beverage costs were favorable 3.3% due to 2.1% from increased menu pricing, 0.6% of favorable menu item mix, and 0.6% of favorable commodity costs driven primarily by lower poultry costs, partially offset by higher beverage costs.

•Chili’s Restaurant labor was flat due to 1.5% of sales leverage, offset by 1.0% of higher hourly labor expenses driven by both wage rates and staffing levels and 0.5% of increased manager salaries.

•Chili’s Restaurant expenses were unfavorable 1.0% due to 2.1% of higher advertising, 0.4% of higher repairs and maintenance expenses, and 0.5% of higher other restaurant expenses, partially offset by 1.0% of sales leverage and 1.0% of lower delivery fees and to-go supplies.

Chili’s Depreciation and amortization decreased $0.4 million as follows:


	Depreciation and Amortization
Thirty-Nine Week Period Ended March 29, 2023	$	108.7
Change from:
Additions for existing and new restaurant assets	17.4

Finance leases	(6.0)
Retirements and fully depreciated restaurant assets	(11.7)

Other	(0.1)
Thirty-Nine Week Period Ended March 27, 2024	$	108.3

Chili’s General and administrative increased $4.2 million as follows:


	General and Administrative
Thirty-Nine Week Period Ended March 29, 2023	$	26.8
Change from:
Performance-based compensation	1.9
Defined contribution plan employer expenses and other benefits	1.3
Stock-based compensation	0.9

Recruiting	(0.8)

Other	0.9
Thirty-Nine Week Period Ended March 27, 2024	$	31.0

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Chili’s Other (gains) and charges consisted of the following (for further details, refer to Note 11 - Other Gains and Charges):


	Thirty-Nine Week Periods Ended
	March 27, 2024		March 29, 2023
Litigation & claims, net	$	4.9	$	0.7
Restaurant closure asset write-offs and charges	4.8		5.7
Severance	0.1		1.9
Remodel-related asset write-offs	—		1.1
Loss (gain) on disposition of restaurants	(0.4)		—
Loss from natural disasters, net of (insurance recoveries)	(0.4)		0.8

Other	1.3		0.7
	$	10.3	$	10.9

Maggiano’s Segment

Thirteen Week Period Ended March 27, 2024 compared to March 29, 2023


	Thirteen Week Periods Ended				Favorable (Unfavorable) Variance		Variance as a percentage
	March 27, 2024		March 29, 2023
Company sales	$	120.5	$	119.7	$	0.8	0.7	%
Franchise revenues	0.2		0.1		0.1		100.0	%
Total revenues	$	120.7	$	119.8	$	0.9	0.8	%

Maggiano’s Total revenues increased 0.8% primarily due to favorable comparable restaurant sales driven by increased menu pricing, partially offset by lower traffic. Refer to “Revenues” section above for further details about Maggiano’s revenues changes.

The following is a summary of the changes in Maggiano’s operating costs and expenses:


	Thirteen Week Periods Ended								Favorable (Unfavorable) Variance
	March 27, 2024				March 29, 2023
	Dollars		% of Company Sales		Dollars		% of Company Sales		Dollars		% of Company Sales
Food and beverage costs	$	28.5	23.7	%	$	29.6	24.7	%	$	1.1	1.0	%
Restaurant labor	39.3		32.6	%	39.2		32.7	%	(0.1)		0.1	%
Restaurant expenses	34.6		28.7	%	33.1		27.7	%	(1.5)		(1.0)	%
Depreciation and amortization	3.4				3.3				(0.1)
General and administrative	2.4				2.0				(0.4)
Other (gains) and charges	0.2				0.4				0.2

As a percentage of Company sales:

•Maggiano’s Food and beverage costs were favorable 1.0% due to 1.5% from increased menu pricing, partially offset by 0.3% of unfavorable commodity costs and 0.2% of unfavorable menu item mix.

•Maggiano’s Restaurant labor was favorable 0.1% due to sales leverage.

•Maggiano’s Restaurant expenses were unfavorable 1.0% due to 0.7% of higher repairs and maintenance and 0.4% of higher worker’s compensation and general liability insurance, partially offset by 0.1% of sales leverage.

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Thirty-Nine Week Period Ended March 27, 2024 compared to March 29, 2023


	Thirty-Nine Week Periods Ended				Favorable (Unfavorable) Variance		Variance as a percentage
	March 27, 2024		March 29, 2023
Company sales	$	371.5	$	365.3	$	6.2	1.7	%
Franchise revenues	0.5		0.4		0.1		25.0	%
Total revenues	$	372.0	$	365.7	$	6.3	1.7	%

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

The following is a summary of the changes in Maggiano’s operating costs and expenses:


	Thirty-Nine Week Periods Ended								Favorable (Unfavorable) Variance
	March 27, 2024				March 29, 2023
	Dollars		% of Company Sales		Dollars		% of Company Sales		Dollars		% of Company Sales
Food and beverage costs	$	88.1	23.7	%	$	93.9	25.7	%	$	5.8	2.0	%
Restaurant labor	119.5		32.2	%	117.7		32.2	%	(1.8)		—	%
Restaurant expenses	103.0		27.7	%	99.0		27.1	%	(4.0)		(0.6)	%
Depreciation and amortization	9.8				9.8				—
General and administrative	6.9				6.0				(0.9)
Other (gains) and charges	0.6				1.2				0.6

As a percentage of Company sales:

•Maggiano’s Food and beverage costs were favorable 2.0% due to 1.7% from increased menu pricing and 0.4% of favorable commodity costs driven primarily by lower poultry costs, and 0.1% of unfavorable menu item mix.

•Maggiano’s Restaurant labor was flat due to 0.5% of sales leverage offset by 0.2% of higher hourly labor costs, 0.2% of increased manager salaries and 0.1% of higher other labor costs.

•Maggiano’s Restaurant expenses were unfavorable 0.6% due to 0.6% of higher repairs and maintenance, 0.2% of higher worker’s compensation and general liability insurance, 0.2% of higher supervision, 0.2% of higher rent, and 0.2% of higher supplies, partially offset by 0.4% of sales leverage and 0.4% of lower delivery fees and to-go supplies.

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Liquidity and Capital Resources

Cash Flows

Cash Flows from Operating Activities


	Thirty-Nine Week Periods Ended				Favorable (Unfavorable) Variance
	March 27, 2024		March 29, 2023
Net cash provided by operating activities	$	280.4	$	200.8	$	79.6

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

Cash Flows from Investing Activities


	Thirty-Nine Week Periods Ended				Favorable (Unfavorable) Variance
	March 27, 2024		March 29, 2023






Net cash used in investing activities	$	(138.0)	$	(133.3)	$	(4.7)

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

Cash Flows from Financing Activities


	Thirty-Nine Week Periods Ended				Favorable (Unfavorable) Variance
	March 27, 2024		March 29, 2023








Net cash used in financing activities	$	(142.0)	$	(67.2)	$	(74.8)

Net cash used in financing activities increased primarily due to $110.0 million of net repayment activity in fiscal 2024 compared to $50.0 million of net payment activity in fiscal 2023 on the revolving credit facility and an increase in share repurchases in fiscal 2024 of $23.4 million.

Debt

Net repayments of $110.0 million were made during the thirty-nine week period ended March 27, 2024 on the revolving credit facility. As of March 27, 2024, $848.7 million of credit was available under the revolving credit facility.

As of March 27, 2024, we were in compliance with our covenants pursuant to the $900.0 million revolving credit facility and under the terms of the indentures governing our 5.000% and 8.250% notes. We expect to remain in compliance with our covenants during the remainder of fiscal 2024.

We intend to refinance our 5.000% notes, which will mature in October 2024, through our existing revolving credit facility.

Refer to Note 6 - Debt for further information about our notes and revolving credit facility.

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Share Repurchase Program

Cash Flow Outlook

Cash flow from operations typically provides the company with a significant source of liquidity. Additionally, during fiscal 2023, we increased the capacity under our revolving credit facility by $100.0 million and issued new $350.0 million senior notes that mature in 2030.

Based on the current level of operations, we believe that our current cash and cash equivalents, coupled with cash generated from operations and availability under our existing revolving credit facility will be adequate to meet our capital expenditure and working capital needs for at least the next twelve months. We continue to monitor the macro environment and will adjust our overall approach to capital allocation, including share repurchases, as events and macroeconomic trends unfold.

Critical Accounting Estimates

The preparation of the financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates. Our critical accounting estimates have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year ended June 28, 2023.

Recent Accounting Pronouncements

The impact of recent accounting pronouncements can be found at Note 1 - Basis of Presentation in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I, Item 1 of this Form 10-Q report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

The terms of our revolving credit facility require us to pay interest on outstanding borrowings at SOFR plus an applicable margin based on a function of our debt-to-cash flow ratio. As of March 27, 2024, $51.3 million was outstanding under the revolving credit facility. We estimate that a hypothetical 100 basis point increase in the current interest rate on the outstanding balance of this variable rate financial instrument as of March 27, 2024 would result in an additional $0.5 million of annual interest expense.

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Commodity Price Risk

We purchase food and other commodities for use in our operations based on market prices established with our suppliers. While our purchasing commitments partially mitigate the risk of such fluctuations, there is no assurance that supply and demand factors such as inclement weather or recent geopolitical unrest, will not cause the prices of the commodities used in our restaurant operations to fluctuate. Additionally, if there is a time lag between increasing commodity prices and our ability to increase menu prices or if we believe a commodity price increase to be short in duration and we choose not to pass on the cost increases, our short-term financial results could be negatively affected.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13(a)-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective.

INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting during the thirteen week period ended March 27, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

FORWARD-LOOKING STATEMENTS

Information and statements contained in this Form 10-Q, in our other filings with the SEC or in our written and verbal communications that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are generally accompanied by words like “believes,” “anticipates,” “estimates,” “predicts,” “expects,” “plans,” “intends,” “projects,” “continues” and other similar expressions that convey uncertainty about future events or outcomes. Forward-looking statements are based on our current plans and expectations and involve risks and uncertainties which could cause actual results to differ materially from our historical results or from those projected in forward-looking statements. These risks and uncertainties are, in many instances, beyond our control. We wish to caution you against placing undue reliance on forward-looking statements because of these risks and uncertainties. Except as required by law, we expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

The forward-looking statements contained in this Form 10-Q report are subject to the risks and uncertainties described in Part I, Item IA “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 28, 2023, and below in Part II, Item 1A “Risk Factors” in this report on Form 10-Q, as well as the risks and uncertainties that generally apply to all businesses. We further caution that it is not possible to identify all risks and uncertainties, and you should not consider the identified factors as a complete list of all risks and uncertainties. Among the factors that could cause actual results to differ materially are: the impact of general economic conditions, including inflation, on economic activity and on our operations; disruptions on our business including consumer demand, costs, product mix, our strategic initiatives, our partners’ supply chains, operations, technology and assets, and our financial performance; the impact of competition; changes in consumer preferences; consumer perception of food safety; reduced consumer discretionary spending; unfavorable publicity; governmental regulations; the Company's ability to meet its business strategy plan; loss of key management personnel; failure to hire and retain high-quality restaurant management and team members; increasing regulation surrounding wage inflation and competitive labor markets; the impact of social media or other unfavorable publicity; reliance on technology and third party delivery providers; failure to protect the security of data of our guests and team members; product availability and supply chain disruptions; regional business and economic conditions; volatility in consumer, commodity, transportation, labor, currency and capital markets; litigation; franchisee success; technology failures; failure to protect our intellectual property; outsourcing; impairment of goodwill or assets; failure to

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maintain effective internal control over financial reporting; downgrades in credit ratings; changes in estimates regarding our assets; actions of activist shareholders; failure to comply with new environmental, social and governance (“ESG”) requirements; failure to achieve any goals, targets or objectives with respect to ESG matters; adverse weather conditions; terrorist acts; health epidemics or pandemics; tax reform; inadequate insurance coverage and limitations imposed by our credit agreements

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information regarding legal proceedings is incorporated by reference from Note 7 - Contingencies in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I, Item 1 of this Form 10-Q report.

ITEM 1A. RISK FACTORS

In addition to the other information in this Form 10-Q report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended June 28, 2023, which could materially affect our business, financial condition or results of operations. It is not possible to predict or identify all risk factors. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business, financial condition or results of operations. Therefore, the risks identified are not intended to be a complete discussion of all potential risks or uncertainties.

There have been no material changes in the risk factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 28, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Our Board of Directors approved a $300.0 million share repurchase program during fiscal 2022.

During the thirteen week period ended March 27, 2024, we repurchased shares as follows (in millions, except per share amounts, unless otherwise noted):


	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value that May Yet be Purchased Under the Program
December 28, 2023 through January 31, 2024	—	$	—	—	$	183.0
February 1, 2024 through February 28, 2024	0.000	44.63		—	183.0
February 29, 2024 through March 27, 2024	0.010	46.21		—	183.0
Total	0.010	$	46.16	—

(1)These amounts include shares purchased as part of our publicly announced programs and shares owned and tendered by team members to satisfy tax withholding obligations on the vesting of restricted share awards, which are not deducted from shares available to be purchased under publicly announced programs. Unless otherwise indicated, shares owned and tendered by team members to satisfy tax withholding obligations were purchased at the average of the high and low prices of the Company’s shares on the date of vesting. During the thirteen week period ended March 27, 2024, 10,745 shares were tendered by team members at an average price of $46.16.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS


Exhibit						Description
3.1						Certificate of Incorporation of Registrant, as amended(1)
3.2						Bylaws of Registrant(2)
31(a)						Certification by Kevin D. Hochman, President and Chief Executive Officer of the Registrant and President of Chili’s Grill & Bar, pursuant to 17 CFR 240.13a – 14(a) or 17 CFR 240.15d – 14(a)*
31(b)						Certification by Joseph G. Taylor, Executive Vice President and Chief Financial Officer of the Registrant, pursuant to 17 CFR 240.13a – 14(a) or 17 CFR 240.15d – 14(a)*
32(a)						Certification by Kevin D. Hochman, President and Chief Executive Officer of the Registrant and President of Chili’s Grill & Bar, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32(b)						Certification by Joseph G. Taylor, Executive Vice President and Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH						XBRL Schema Document
101.CAL						XBRL Calculation Linkbase Document
101.DEF						XBRL Definition Linkbase Document
101.LAB						XBRL Label Linkbase Document
101.PRE						XBRL Presentation Linkbase
104						The cover page from the Registrant's Quarterly Report on Form 10-Q for the thirteen week period ended March 27, 2024 is formatted in Inline XBRL.

(1)Filed as an exhibit to Annual Report on Form 10-K for fiscal year ended June 28, 1995 and incorporated herein by reference.

(2)Filed as an exhibit to Annual Report on Form 10-K for fiscal year ended June 27, 2018 and incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	BRINKER INTERNATIONAL, INC., a Delaware corporation

Date: April 30, 2024	By:	/S/ KEVIN D. HOCHMAN
		Kevin D. Hochman,
		President and Chief Executive Officer
		of Brinker International, Inc.
		and President of Chili’s Grill & Bar
		(Principal Executive Officer)

Date: April 30, 2024	By:	/S/ JOSEPH G. TAYLOR
		Joseph G. Taylor,
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

Brinker International - 10-Q quarterly report FY2024 Q3

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