Brinker’s Investments to Revive Chili’s Have Enhanced Its Scale Edge and Should Keep Diners Hooked

Brinker is well-positioned to steal market share in full-service dining, even amid a tumultuous consumer backdrop. Investments in labor, advertising, store infrastructure, menu innovation, and technology—paired with simplified operations—have forged a leaner operator better equipped to press its scale edge against smaller peers. Moreover, the turnaround unlocked enhanced service and capacity levels, just as savvy marketing and a value convergence with fast food lured diners through the door. This has been evidenced by 13% average annual comparable sales growth over the last three years, besting the full-service industry’s 6% rate, per Euromonitor. Now, Brinker aims to keep new and returning diners engaged by ramping up its investments, with capital expenditures expected to reach 5.4% of sales on average over the next five years, by our estimates, above the 4.1% in the prior period. This should translate into continued outperformance, with our 4.2% company-owned sales forecast outpacing dine-in’s 3% estimate.