What changed in this filing

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Item 1. Business

2024-08-21 compared with 2023-08-23 · 39 added, 67 removed, 180 unchanged (37% 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 a virtual brand, 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.

We completed the acquisition of Maggiano’s in August 1995.

We own, develop, operate and franchise the Chili’s ® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy ® (“Maggiano’s”) restaurant brands.

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

We completed the acquisition of Maggiano’s in 1995.

References to “fiscal” or “fiscal year” are to the fiscal year ended of the applicable year.

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Chili’s has been operating restaurants for over 49 years and enjoys a global presence with restaurants in the United States, 27 other countries and two United States territories.

Whether domestic or international, or franchised, Chili’s is dedicated to delivering delicious and craveable food with value-centric offerings such as “3 for Me” starting at only $10.99, as well as dining experiences in a vibrant atmosphere that make guests feel special.

Whether domestic, international, or franchised, Chili’s is dedicated to delivering delicious food & drink with value-centric offerings such as “3 for Me ® ” starting at only $10.99, as well as dining experiences in a vibrant atmosphere intended to make everyone feel special.

Our menu features bold, Southwest inspired American favorites and Chili’s has built a reputation for big mouth burgers, full-on sizzling fajitas, crispy Chicken Crispers ® and hand-shaken margaritas.

As part of our new strategy, we’re improving and innovating on these four core food and drink offerings.

We believe our shift in focusing on four core equities, simplifying our menu, being intentional about our fun laid-back Chilihead culture, and maintaining our strong hospitality standards allow Chili’s to differentiate its high-quality food and service from other casual dining restaurants.

In fiscal 2023, entrée selections at our Company-owned restaurants ranged in menu price from $8.29 to $23.17.

We believe our focus on these four core equities, simplifying our menu, being intentional about our fun laid-back Chilihead culture, and maintaining our strong Chilihead hospitality allow Chili’s to differentiate its high-quality food and service from other casual dining restaurants.

In fiscal 2024, entrée selections at our Company-owned restaurants ranged in average menu price from $10.19 to $24.06.

Our average annual net sales per Company-owned Chili’s restaurant during fiscal 2024 was $3.6 million, and the average revenue per meal, including alcoholic beverages, was approximately $20.28 per guest.

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Food and non-alcoholic beverage sales accounted for 87.8% of Maggiano’s Company sales for fiscal 2024 with alcoholic beverage sales accounting for the remainder.

Virtual Brands

Our virtual brand, It’s Just Wings, provides restaurant-like menu offerings that are only available for purchase digitally.

It’s Just Wings primarily offers chicken wings available with a variety of different sauces and rubs.

It’s Just Wings is available for purchase through our third-party service providers and a brand specific website, itsjustwings.com.

Maggiano’s Italian Classics, which offered a select group of items inspired by the menu at Maggiano’s Little Italy, was phased out by the end of fiscal 2023 so we can focus on the Chili’s strategies discussed below.

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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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.

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

Our team members can make our core menu items better and more consistently because we have fewer menu items that need to be perfected.

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Our “3 for Me” platform allows guests to enjoy a non-alcoholic drink, an appetizer and certain entrées starting at just $10.99.

In fiscal 2023, we returned to advertising on television with a campaign that highlighted this incredible value and we believe our value offerings will continue to be an important traffic driver in the current economic circumstances.

We believe our value offerings will continue to be an important traffic driver in the current economic circumstances and we will continue to highlight this value in our marketing efforts.

We have increased menu pricing in other areas in light of the inflationary challenges and we have also improved menu offerings and merchandising to incentivize our guests to purchase higher priced items.

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Our To-Go menu is 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.

Our It’s Just Wings ® offering is available through the website, itsjustwings.com.

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

In dining rooms, we use tabletop devices with functionality for guests to pay at the table, provide guest feedback and interact with our My Chili’s Rewards ® program.

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This warm and generous hospitality creates an environment where guests come together to celebrate birthdays, weddings and many more special occasions.

While our dining rooms support the majority of our business, we have focused on increasing our carry-out and delivery business in recent years, including through 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 a 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.

While our dining rooms support the majority of our business, we also offer carry-out and delivery options through partnerships with delivery service providers that have made our restaurants more accessible to guests.

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.

Company Development

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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) that can adequately support our restaurant brands.

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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Fiscal Year Openings Projected Openings

Company-owned restaurants

Chili’s domestic 9 7

Chili’s international — —

Maggiano’s domestic — —

Total Company-owned new openings 14 12

Company-owned relocations

Chili’s domestic 1 —

We periodically evaluate the financial performance of Company-owned restaurants to assess whether performance has fallen below our minimum standards.

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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 2023, excluding temporary closures, we permanently closed 16 Company-owned Chili’s, including one relocation closure and two Company-owned Maggiano’s restaurants that were performing below our standards and were near or at the expiration of their lease terms.

During fiscal 2024, we permanently closed 23 Company-owned Chili’s, including one international Chili’s sold to a franchisee, that were performing below our standards or we were unable to negotiate additional lease terms for such location.

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.

Franchise Development

We also pursue expansion through the development of our franchisees.

We pursue expansion through the development of our franchisees.

The following table illustrates the franchise-operated restaurants opened during fiscal 2024 and the projected openings for fiscal 2025.

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Total openings 20 22-29

The following table illustrates the percentages of franchise-operated restaurants out of the total Company-owned and franchise-operated restaurants as of June 28, 2023, by restaurant brand:

The following table illustrates the percentages of domestic, international and overall franchise-operated restaurants in relation to the total Company-owned and franchise operated restaurants as of June 26, 2024, by restaurant brand:

Percentage of Franchise-Operated Restaurants

International (2)

Brinker 8 % 99 % 28 %

Chili’s 8 % 99 % 28 %

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As of June 26, 2024, we have 17 active development arrangements.

During fiscal 2023, we opened 18 new locations, and entered into three new arrangements, both with existing and new franchise partners.

During fiscal 2024, we opened 20 new locations, and entered into three new development arrangements, both with existing and new franchise partners.

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

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Domestic Franchises

As of June 28, 2023, no domestic development arrangement existed, however, certain of our domestic partners have opened new domestic franchised locations.

As of June 26, 2024, no active domestic development arrangements existed.

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.

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.

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

Restaurant Management

Our Chili’s and Maggiano’s brands have separate designated teams who support each brand, including operations, finance, franchise, marketing, human resources and culinary.

Our Chili’s and Maggiano’s brands have separate designated teams who support each brand, including operations, finance, marketing, human resources and culinary.

We believe these strategic, brand-focused teams foster the identities of the individual and uniquely positioned brands.

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Routine restaurant visits by Regional Management and brand and executive leadership 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.

Each brand is responsible for maintaining their operational training

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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Chili’s primary focus for developing menu innovation and targeting our digital advertising and loyalty program direct promotions are the Generation X and Millennial families who desire quality food, good value and a service experience that allows them to connect with family and friends.

These young families represent a significant

percentage of our guest base today and, we believe, will only grow in importance in the years ahead.

We rely on digital marketing, direct marketing, social media and word of mouth to advertise.

In fiscal 2023, we returned to advertising on television with a campaign that highlighted our “3 for Me” value offering.

These young families represent a significant percentage of our guest base today and, we believe, will only grow in importance in the years ahead.

In order to reach that market we updated our strategy in fiscal 2023 to include significant investments in television, streaming, digital video and social media.

In fiscal 2024, we have continued various advertising campaigns in several platforms that highlights our different value offerings.

Our domestic Chili’s franchise agreements generally require advertising contributions to us by the franchisees.

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Any such local advertising is required to be approved by us.

Maggiano’s, as a “polished casual” restaurant with 52 Company-owned and franchise-operated locations, primarily targets guests from affluent households who live and work around the higher-end malls where the majority of Maggiano’s restaurants are located.

Maggiano’s primarily targets guests from affluent households who live and work around the higher-end malls where the majority of Maggiano’s restaurants are located.

Maggiano’s relies on digital marketing, direct marketing, social media and word of mouth to advertise.

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Our ability to sustainably deliver profits to shareholders is built on a foundation of investing in and caring for all of our team members, safely serving great quality food to our guests and acting responsibly in all that we do.

Our Board’s Governance and Nominating Committee oversees and provides input on the sustainability strategic framework, goals and initiatives, as well as reviews ESG metrics and results.

Our Board’s Governance and Nominating Committee oversees and provides input on the sustainability strategic framework,

goals and initiatives, as well as reviews ESG metrics and results.

For more information, please review our Sustainability report on our Sustainability page on our website at www.brinker.com .

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We provide separate development programs for each of our new managers, managers preparing to become general managers and general managers preparing to become directors of operations.

Approximately 90% of our new general managers are promoted from our existing team members.

In fiscal 2023, our certified shift leader (“CSL”) apprenticeship program provided hourly team members the first step into the path to management.

Beginning in fiscal 2024, our hourly team members identified for potential leadership positions will be immediately elevated to assistant managers and we have discontinued the CSL program.

During fiscal 2024, approximately 95% of our new general managers were promoted from our existing team members.

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.

Beginning in fiscal 2024 this program is available to all team members on their first day of employment.

During fiscal 2024 this program was available to all team members on their first day of employment.

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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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.

We ask all of our team members to take a survey semi-annually, which includes meaningful feedback on how our team members feel about their overall work experience, their manager and our culture.

Our executive management team reviews the results of these surveys with our Board of Directors and strives to incorporate this feedback into future strategies.

We ask the team members to take a survey either as a new hire or after termination.

These surveys allow us to gather more in the moment and real time feedback through a new hire survey or exit survey.

The goal is that these Team Members provide meaningful feedback on how they felt about their overall experience, management, training, and the culture.

Diversity, Equity and Inclusion (“DE&I”)

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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:

• 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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• Communities of Interest – Six 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.

• Culture of Inclusion Activation 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.

Information Technology and Cyber Security

• Serving it Forward – Allowing 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.

Information Technology

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, tabletop and handheld devices and QR code payment.

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

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

Our service desk supports the needs of both our restaurant support center and each of our restaurants.

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We believe our information systems are sufficient to support our business and we continually seek to improve our processes based on the strategic and financial priorities of the business.

Our existing cyber security policy includes continuous monitoring and detection programs, network security precautions, encryption of critical data, in depth security assessment of vendors and incident response guidelines.

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

Relevant restaurant level personnel and employees at the restaurant support center receive annual training on information security best practices.

Additionally, we provide annual credit card handling training following Payment Card Industry guidelines to team members that handle guest payment information.

We maintain a disaster recovery plan and protect against business interruption by backing up our major systems.

In addition, we periodically scan our environment for any vulnerability, perform penetration testing and engage third parties to assess effectiveness of our data security practices.

A third-party conducts regular network security reviews, scans and audits.

The Audit Committee of the Board of Directors has oversight responsibility for our data security practices and we believe the committee has the requisite skills and visibility into the design and operation of our data security practices, to fulfill this responsibility effectively.

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 are currently investing in new enterprise resource planning (“ERP”) and human capital management to provide our restaurant management and restaurant support teams with the tools necessary to enhance our ability to record and track data, make more effective real-time decisions, and drive process efficiencies.

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We maintain a website with the address of http://www.brinker.com.

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.

You may obtain at our website, free of charge, copies of our reports filed with, or furnished to, 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 to the SEC.

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

Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter, Governance and Nominating Committee Charter, Code of Conduct for the Board of Directors, Brinker International Inc.

Code of Conduct - Making People Feel Special and Policy Governing the Improper Use of Materials.

Audit Committee Charter, Talent and Compensation Committee Charter, Governance and Nominating Committee Charter, Code of Conduct for the Board of Directors, Brinker International Inc.

Code of Conduct - Making People Feel Special, Brinker Reporting and Whistleblower Policy, Foreign Corrupt Practices Act and Anti-Corruption Policy, Policy Governing the Improper Use of Material Nonpublic Information and Trading in Brinker’s

Securities, Code of Conduct for the Board of Directors, Supplier Code of Conduct, Policy Regarding Shareholder Meetings, and Human Rights Policy.

The information contained on our website is not a part of this Annual Report on Form 10-K.

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