What changed in this filing

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Item 1. Business

2022-08-26 compared with 2021-08-26 · 62 added, 56 removed, 191 unchanged (38% of the section changed)

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and its subsidiaries and any predecessor companies of Brinker International, Inc.

We own, develop, operate and franchise the Chili’s ® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy ® (“Maggiano’s”) restaurant brands, as well as certain virtual brands including It’s Just Wings ® .

The Company was organized under the laws of the State of Delaware in September 1983 to succeed to the business operated by Chili’s, Inc., a Texas corporation, which was organized in August 1977.

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Chili’s has been operating restaurants for over 47 years and enjoys a global presence with restaurants in the United States, 28 countries and two United States territories.

Whether domestic or international, Company-owned or franchised, Chili’s is dedicated to delivering fresh and high-quality food with a unique point of view, as well as dining experiences that make guests feel special.

Historically, Chili’s menu featured bold, kicked-up American favorites and Chili’s has built a reputation for big mouth burgers, full-on sizzling fajitas, baby back ribs and hand-shaken margaritas.

In recent years, we have focused on these core food offerings with our culinary innovations.

We believe our shift in focusing on a few core equities on our menu, our fun laid-back Chilihead culture, and hospitality standards have allowed Chili’s to differentiate its food and service from other casual dining restaurants.

Whether domestic or international, Company-owned or franchised, Chili’s is dedicated to delivering fresh and high-quality food with value-centric offerings such as 3 for Me, as well as dining experiences that make guests feel special.

Historically, the menu featured bold, kicked-up American favorites and Chili’s has built a reputation for big mouth burgers, full-on sizzling fajitas, baby back ribs and hand-shaken margaritas.

In recent years, our culinary innovations have focused on these core food offerings.

We believe our shift in focusing on a few core equities on our menu, our fun laid-back Chilihead culture, and our strong hospitality standards that prioritize making our guests feel special have allowed Chili’s to differentiate its high-quality food and service from other casual dining restaurants.

In addition, Chili’s has focused on a seamless digital experience as our guests’ preferences and expectations around dining convenience have evolved in recent years.

Investments in our technology and off-premise options have enabled us to provide a faster, more convenient dine-in experience and to offer more To-Go and delivery options for our guests.

Our To-Go menu is now available through the Chili’s mobile app, chilis.com, our delivery partner DoorDash, Google Food Ordering, or by calling the restaurant directly.

Since 2013, we have leveraged tabletop devices in our restaurants to enhance the overall guest experience by giving them more control of their dining experience and allowing them to pay at the table.

In fiscal 2018, we relaunched our My Chili’s Rewards program and began offering free chips and salsa or a non-alcoholic beverage to members based on their visit frequency.

We customize offerings for our guests based on their purchase behavior, and we continue to shift more of our overall marketing spend to these customized channels and promotions.

We expect this strategy to continue to give us a sustained competitive advantage over independent restaurants and the majority of our competitors.

Our To-Go menu is now available through the Chili’s mobile app, chilis.com, our delivery partners DoorDash, Uber Eats and Grubhub, Google Food Ordering or by calling the restaurant directly.

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, provide guest feedback and interact with our My Chili’s Rewards program.

Our My Chili’s Rewards ® program offers free chips and salsa or a non-alcoholic beverage to members based on their visit frequency.

We customize offerings for our guests based on their purchase behavior.

In fiscal 2022, entrée selections at our Company-owned restaurants ranged in menu price from $8.00 to $21.63.

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With a passion for making people feel special, the brand is known for catering to special occasions and large parties.

Each Maggiano’s location is uniquely designed and features open dining rooms with fresh flowers, rich woods, warm carpets and soft lighting.

Each Maggiano’s location is uniquely designed and features open dining rooms with fresh flowers, warm carpets and soft lighting.

Most locations feature designated banquet facilities and all offer catering for large parties at homes or local businesses.

Our full carryout menu is also available for pick up or delivered through a third-party service.

Our full carryout menu is also available for pick up or delivered through third-party delivery providers.

Each Maggiano’s has an executive chef preparing authentic recipes from scratch ingredients.

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Virtual Brands

We are investing in virtual brands, restaurant-like menu offerings that are only available for purchase digitally, to drive restaurant traffic and sales growth.

We expect that our virtual brands will enable us to capitalize on the growth in off-premise dining and to leverage excess kitchen capacity in our existing restaurant infrastructure, while adding minimal complexity in our restaurants’ kitchens.

Our first virtual brand, It’s Just Wings, launched on June 23, 2020 and is a no-frills offering that consists of chicken wings available in 11 different sauces and rubs, curly fries, ranch dressing and fried Oreos for a value price.

It is available for purchase through DoorDash, Google Food Ordering and itsjustwings.com.

The operating results for It’s Just Wings are included in the results of our Chili’s and Maggiano’s brands, based on the restaurants that prepared and processed the food orders.

We plan to continue to test and strategically launch additional virtual brands in the future to further drive our growth.

We have invested in virtual brands, restaurant-like menu offerings that are only available for purchase digitally, to drive restaurant traffic and sales growth.

Our virtual brands have enabled us to capitalize on the growth in off-premise dining and to leverage excess kitchen capacity in our existing restaurant infrastructure, while adding minimal complexity in our restaurants’ kitchens.

It’s Just Wings, launched on June 23, 2020, and is a no-frills offering that consists of chicken wings available in a variety of different sauces and rubs, curly fries, ranch dressing and hand pies for a value price.

Maggiano’s Italian Classics offers a select group of items inspired by the menu at Maggiano’s Little Italy, including several appetizers, salads, pastas, entrées and hand pies.

These brands are available for purchase through our third-party service providers including DoorDash, Google Food Ordering, Uber Eats, as well as the brand specific websites, itsjustwings.com and maggianosclassics.com.

The operating results for virtual brands are included in the results of our Chili’s and Maggiano’s brands, based on the restaurants that prepared and processed the food orders.

Business Strategy

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We differentiate Chili’s from our competitors with a flexible platform of value offerings at both lunch and dinner and are committed to offering consistent, quality products at a price point that is compelling to our guests.

Our “3 for $10” platform allows guests to combine a starter, a non-alcoholic beverage and an entrée for just $10.00 as part of the every-day base menu and is available for guests to enjoy in our dining rooms or off-premise.

Additionally, we have continued our Margarita of the Month promotion that features a premium-liquor margarita every month at an every-day value price of $5.00.

We discontinued the 3 for $10.99 platform and replaced it with 3 for Me, a flexible value bundle providing guests an unbeatable everyday value, while allowing us to be more flexible in terms of pricing, in light of the inflationary challenges.

Guests can order customized meals inclusive of a non-alcoholic drink, appetizer and entrée starting at just $10.99.

The bundle can be augmented with a premium appetizer, dessert, or alcoholic beverage, each for just $2.49 extra.

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.

We have also invested in our technology and off-premise options as more guests are opting for To-Go and delivery.

Since fiscal 2019, as of the end of fiscal 2021, Chili’s off-premise business has grown by 273%.

Chili’s partnership with DoorDash has proven instrumental in offering our guests continued service during the COVID-19 pandemic.

We leveraged technology so that DoorDash orders are sent directly into our point of sale system, creating efficiencies and a system that allows us to better serve our guests.

From the beginning of fiscal 2020 to the end of fiscal 2022, Chili’s off-premise business has grown by 51%.

Chili’s partnership with DoorDash was instrumental in offering our guests continued service during the COVID-19 pandemic.

During fiscal 2022, we expanded partnerships with third-party delivery companies, and by the end of the year Chili’s, Maggiano’s, and It’s Just Wings brands were available on DoorDash, Uber Eats, and Grubhub.

Orders to these third-party delivery companies are sent directly into our point-of-sale system, creating efficiencies and a system that allows us to better serve our guests.

In addition, Maggiano’s Italian Classics is now available to order through DoorDash and Uber Eats at over 800 Chili’s restaurants.

We believe that guests will continue to prefer more convenience and off-premise options.

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Our domestic expansion efforts focus not only on major metropolitan areas in the United States but also on smaller market areas and partnerships with franchisees to enter non-traditional locations (such as airports and universities) that can adequately support our restaurant brands.

For smaller market areas, we have developed a smaller Chili’s prototype building that allows us to expand into these markets and serve our guests while maintaining a focus on profitability and return on invested capital.

For smaller market areas, we have developed a smaller Chili’s building prototype that allows us to expand into these markets and serve our guests while maintaining a focus on profitability and return on invested capital.

The restaurant site selection process is critical, and we devote significant effort to the investigation of new locations utilizing a variety of sophisticated analytical techniques.

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• Supply and demand trends, such as proposed infrastructure improvements, new developments and existing and potential competition.

The specific rate at which we are able to open new restaurants is determined, in part, by our success in locating satisfactory sites, negotiating acceptable lease or purchase terms, securing appropriate local governmental permits and approvals, and by our capacity to supervise construction and recruit and train management and hourly team members.

The temporary shutdown of development activities during the COVID-19 pandemic negatively impacted the fiscal 2022 pipeline.

The following table illustrates the Company-owned restaurants opened in fiscal 2021 and the projected openings in fiscal 2022:

The temporary shutdown of development activities during the COVID-19 pandemic negatively impacted the 2022 opening count.

However, in fiscal 2023, we will resume development activities at a higher scale.

The following table illustrates the Company-owned restaurants opened during fiscal 2022 and the projected openings for fiscal 2023.

The fiscal 2023 projected openings remain subject to change:

Fiscal 2022 Fiscal 2023

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Total Company-owned new openings 5 18

Relocation Openings

Chili’s domestic Company-owned relocations 2 —

We periodically re-evaluate Company-owned restaurant sites to monitor that attributes have not deteriorated below our minimum standards.

Company-owned relocations

Chili’s domestic — 1

We periodically re-evaluate Company-owned restaurant sites to monitor that their attributes have not deteriorated below our minimum standards.

In the event site deterioration occurs, each brand makes a concerted effort to improve the restaurant’s performance by providing physical, operating, and marketing enhancements unique to each restaurant’s situation.

In some cases, the brand considers relocation to a proximate, more desirable site, or evaluates closing the restaurant if the brand’s measurement criteria, such as cash flow and area demographic trends, do not support relocation.

During fiscal 2021, we relocated two Company-owned restaurants.

Also during fiscal 2021, excluding temporary closures, we permanently closed three Company-owned Chili’s restaurants that were performing below our standards and were near or at the expiration of their lease terms.

During fiscal 2022, excluding temporary closures, we permanently closed six Company-owned Chili’s restaurants that were performing below our standards and were near or at the expiration of their lease terms.

Our strategic plan is targeted to support our long-term growth objectives, with a focus on continued development of those restaurant locations that have the greatest return potential for the Company and our shareholders.

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As of June 29, 2022, we have 15 active development arrangements.

During fiscal 2021, we opened six new locations, and entered into two new arrangements, one with an existing franchise partner and one with a new franchise partner.

During fiscal 2022, we opened 12 new locations, and entered into two new arrangements, both with existing franchise partners.

We plan to strategically pursue expansion of Chili’s internationally in areas where we see the most growth opportunities.

Our international agreements provide for development fees and initial franchise fees revenues in addition to subsequent royalty fees based on the gross sales of each restaurant.

Our international agreements provide for development fees and initial franchise fee revenues in addition to subsequent royalty fee revenues based on the gross sales of each restaurant.

We expect future agreements to remain limited to enterprises that demonstrate a proven track record as a restaurant operator and showcase financial strength that can support a multi-unit development agreement.

Domestic Franchises

As of June 30, 2021, one domestic development arrangement existed.

Similar to our international agreements, a typical domestic agreement provides for development and initial franchise fees revenues in addition to subsequent royalty and advertising fees based on the gross sales of each restaurant.

As of June 29, 2022, no domestic development arrangement existed, however, certain of our domestic partners have opened new domestic franchised locations.

Similar to our international agreements, a typical domestic franchise agreement provides for initial franchise fees revenues in addition to subsequent royalty and advertising fee revenues based on the gross sales of each restaurant.

We have from time to time purchased restaurants from our franchisees in order to support our growth objectives in certain markets.

In fiscal 2022, we purchased 68 Chili’s restaurants from three former franchisees located in the Mid-Atlantic, Great Lakes and Northwest regions of the United States.

We believe these acquisitions represent an opportunity to create value for our shareholders and to generate additional earnings and cash flow growth.

We remain committed to supporting the growth of our existing franchisees.

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At the restaurant level, management structure varies by brand.

A typical restaurant is led by a management team including a general managing partner, two additional managers and shift leaders and for Maggiano’s, an additional three to four chefs.

A typical restaurant is led by a management team including a general managing partner, two additional managers and certified shift leaders and for Maggiano’s, an executive chef partner with an additional two to three chefs.

The level of restaurant supervision depends upon the operating complexity and sales volume of individual locations.

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In that regard, we encourage longer tenure at all management positions through various short and long-term incentive programs, which may include equity ownership.

These programs, coupled with a general management philosophy emphasizing quality of life, have enabled us to attract and retain key team members, and enjoy lower turnover of managers and team members that we believe is below industry averages.

These programs, coupled with a general management philosophy emphasizing quality of life, have enabled us to attract and retain key team members.

We strive to ensure consistent quality standards in our brands through the issuance of operational manuals covering all elements of operations and food and beverage manuals, which provide guidance for preparation of brand-formulated recipes.

Routine visitation to the restaurants by all levels of supervision enforces strict adherence to our overall brand standards and operating procedures.

Each brand is responsible for maintaining their operational

training program.

Routine restaurant visits by all levels of management from our President and CEO and Chili’s Leadership Team to our Vice Presidents of Operations and Directors of Operations enforce strict adherence to our overall brand standards and operating procedures and also create an opportunity to capture and act on feedback so we continue to improve.

Each brand is responsible for maintaining their operational training program.

Depending on the brand, the training program typically includes a training period of two to three months for restaurant management trainees, as well as special training for high-potential team members and managers.

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All essential products are available from pre-qualified distributors to be delivered to our restaurant brands.

We have not experienced significant supply chain disruptions during the COVID-19 pandemic.

Although we have not experienced significant supply chain disruptions since the COVID-19 pandemic, we have experienced limited product shortages in our supply chain.

Additionally, as a purchaser of a variety of food products, we require our suppliers to adhere to our supplier code of conduct, which sets forth our expectation of business integrity, food safety and food ingredients, animal welfare and sustainability.

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Of our hourly team members, approximately 28% are full-time and 72% are part-time employees.

As of June 30, 2021, approximately 53% of our employees are women and approximately 53% of our employees

(who self-identified as a race or ethnicity) are racially or ethnically diverse.

As of June 29, 2022, approximately 52% of our employees are women and approximately 55% of our employees (who self-identified as a race or ethnicity) are racially or ethnically diverse.

Our team members are not covered by any collective bargaining agreements.

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We believe that hiring, training, mentoring and supporting team members is the key to retention and living our culture.

We strive to help on helping our team members turn their restaurant jobs into lasting careers.

We strive to help our team members turn their restaurant jobs into lasting careers.

These career paths are made possible by a number of development programs, including the Certified Shift Leader (“CSL”) program at Chili’s, which is accredited as an apprenticeship through the National Restaurant Association Education Foundation and United States Department of Labor.

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Approximately 73% of our new general managers are promoted from our existing team members.

Our no-cost education program, Best You EDU, provides foundational learning, ESL, citizenship preparation courses, GED, associate’s degree programs and other educational benefits, such as tutoring.

Our no-cost education program, Best You EDU ™ , provides foundational learning, ESL, citizenship preparation courses, GED, associate degree programs and other educational benefits, such as Spanish and standard tuition reimbursement.

This program is available for all team members with a minimum of 45 days of tenure and at least 15 hours of work per week.

These tenure and minimum hourly requirements will be lowered in fiscal 2022.

Brinker cares about the health and wellbeing of all team members and provides resources and opportunities to help team members be their best, while at work and at home with their family, with our Be Well program.

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career, social, financial, physical/emotional and community.

In addition to our career development programs discussed above, we provide resources and opportunities to raise millions of dollars annually for charitable causes, and we provide annual fitness reimbursements for salaried team members and free mental health counselling for those enrolled in our benefit plans.

In addition to our career development programs discussed above, we provide resources and opportunities to raise millions of dollars

annually for charitable causes, and we provide annual fitness reimbursements for salaried team members and free mental health counselling for those enrolled in our benefit plans.

We believe that every team member should feel valued and respected and know that their work is meaningful and makes a difference in our brands and our communities.

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We are working to strengthen the foundation of our culture of inclusion and to build greater diverse leadership at Brinker through the following programs and initiatives:

• Leadership Listens Series – Opportunities for team members to share their personal stories, experiences and feedback with Brinker leadership

• Leadership Inclusion Council – An executive leadership group that guides DE&I initiatives and incorporates them into day-to-day management practices

• Journey Groups – Opportunities for team members to connect with other team members interested in taking steps on their personal journey to learn and discuss anti-racism, allyship and equality in a safe space focused on a supporting book, video, podcast, etc.

• Women Taking the Lead – Development, mentoring and resources to help professionally develop female leaders

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• DE&I Training – Online learning paths on topics such as conscious and unconscious bias, as well as additional mandatory training programs for certain operations leaders

• Communities of Interest – Five resource groups providing safe spaces for underrepresented groups to develop connections, share ideas and encourage diversity of thought in the organization

• Communities of Interest – Five resource groups providing safe spaces for underrepresented groups and allies to develop connections, share ideas and encourage diversity of thought in the organization

• Culture of Inclusion Series – Events to help educate team members about inclusion and different cultures

• TM Highlights – Opportunities for team members to share their personal stories, experiences, and what inclusion and allyship means to them

• Serving it Forward – allows us to go out and support, learn and impact communities to help create a better more-inclusive tomorrow partnering with non-profits that align with our giveback pillars of education, kids and hunger

COVID-19 Team Member Support

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We pride ourselves on being innovators in our field, striving to create and procure cutting edge technology to improve the guest experience and create operational efficiencies.

We have created and implemented technologies to facilitate a contactless guest experience through apps, digital menus, tabletop and hand held devices and QR code payment.

We have created and implemented technologies to facilitate a contactless guest experience through apps, tabletop and handheld devices and QR code payment.

Our restaurant operators utilize our back office systems for inventory control, curbside management, forecasting, demand preparation and productivity.

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We continue to invest and innovate around the areas of protection of systems, sensitive data, technology and processes using third-party and in-house tools and resources.

We remain vigilant in staying ahead of new and emerging risks utilizing our tools and security teams and continue to review

and make strategic continued investments in our systems to keep the Company, our guests and our team members data secure.

We remain vigilant in staying ahead of new and emerging risks utilizing our tools and security teams and continue to review and make strategic continued investments in our systems to keep the Company, our guests and our team members data secure.

We subscribe to multiple feeds and associations that discuss and monitor risks of any technology compromise or risks at our business partners where relevant.

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Management reporting on the effectiveness of these practices is provided to the Board of Directors, including the Audit Committee, on a quarterly basis or as needed.

We have registered or have pending, among other marks, “Brinker International”, “Chili’s”, “Maggiano’s”, “Maggiano’s Little Italy” and “It’s Just Wings”, as trademarks with the United States Patent and Trademark Office.

We have registered, among other marks, “Brinker International”, “Chili’s”, “Maggiano’s”, “Maggiano’s Little Italy”, “It’s Just Wings” and “Maggiano’s Italian Classics” as trademarks with the United States Patent and Trademark Office.

Available Information

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You may obtain at our website, free of charge, copies of our reports filed with, or furnished to, the Securities and Exchange Commission (the “SEC”) on Forms 10-K, 10-Q and 8-K.

The SEC also maintains a website, with the address of www.sec.gov, which contains reports, proxy and information statements, and other information filed electronically or furnished with the SEC.

The SEC also maintains a website, with the address of www.sec.gov, which contains reports, proxy and information statements, and other information filed electronically or furnished to the SEC.

In addition, you may view and obtain, free of charge, at our website, copies of our corporate governance materials, including:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business