BRINKER INTERNATIONAL, INC 10-Q

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 26, 2025 and March 27, 2024, 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 We own, develop, operate and franchise the Chili’s ® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy ® (“Maggiano’s”) restaurant brands. As of March 26, 2025, we owned, operated or franchised 1,626 restaurants, consisting of 1,163 Company-owned restaurants and 463 franchised restaurants, located in the United States, 28 other countries and two United States territories. Our restaurant brands, Chili’s and Maggiano’s, are both operating segments and reporting units. Operating Environment During recent years, our operating results were impacted by geopolitical and other macroeconomic events, leading to higher than usual inflation on wages and food and beverage costs. Geopolitical and other macroeconomic events have led, and in the future may lead to, wage inflation, staffing challenges, product cost inflation and/or disruptions in the supply chain that impact our restaurants’ ability to obtain the products needed to support their operation. Such events could also negatively affect consumer spending potentially reducing guest traffic and/or reducing the average amount guests spend in our restaurants. 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. 19 Table of Contents 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 allows guests to enjoy a non-alcoholic drink, an appetizer and certain entrées starting at just $10.99. 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. 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 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. The operating results for our virtual brand, It’s Just Wings®, 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. Our My Chili’s Rewards loyalty program offers free chips and salsa or a non-alcoholic beverage to members based on their visit frequency and allows us to communicate and advertise to our guests through email and text. 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. 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. 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, a profitable revenue channel, to host large special events, particularly during the holiday season in the second and third quarters of the fiscal year. Franchise Partnerships - During the thirty-nine week period ended March 26, 2025, there were 27 new franchise restaurant openings and two new development agreements. We plan to strategically pursue expansion of Chili’s internationally through development agreements with new and existing franchise partners. 20 Table of Contents Company Development - The following table details the number of restaurant openings during the thirteen and thirty-nine week periods ended March 26, 2025 and March 27, 2024, respectively, total full year projected openings in fiscal 2025 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 26, 2025 March 27, 2024 March 26, 2025 March 27, 2024 Fiscal 2025 March 26, 2025 March 27, 2024 Company-owned restaurants Chili’s domestic 1 2 2 7 5 1,109 1,122 Chili’s international — — — — — 4 4 Maggiano’s domestic — — — — — 50 50 Total Company-owned 1 2 2 7 5 1,163 1,176 Franchise restaurants Chili’s domestic — — 2 — 2-3 99 99 Chili’s international 6 2 24 16 27-29 361 341 Maggiano’s domestic — — 1 — 1 3 2 Total franchise 6 2 27 16 30-33 463 442 Total restaurants Chili’s domestic 1 2 4 7 7-8 1,208 1,221 Chili’s international 6 2 24 16 27-29 365 345 Maggiano’s domestic — — 1 — 1 53 52 Total 7 4 29 23 35-38 1,626 1,618 During the third quarter of fiscal 2025, the Company acquired land and building valued at $3.1 million and $8.0 million, respectively, associated with four Company-owned restaurants that were previously leased. As of March 26, 2025, we own property for 54 of the 1,163 Company-owned restaurants and one closed restaurant. The net book values associated with these restaurants included land of $44.8 million and buildings of $19.0 million. Revenues Thirteen and Thirty-Nine Week Periods Ended March 26, 2025 compared to March 27, 2024 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, Maggiano’s banquet service charge income, gift card breakage, delivery service fee income, 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. 21 Table of Contents The following is a summary of the change in Total revenues: Total Revenues Chili’s Maggiano’s Total Revenues Thirteen Week Period Ended March 27, 2024 $ 999.6 $ 120.7 $ 1,120.3 Change from: Comparable restaurant sales 304.5 0.4 304.9 Restaurant openings 8.1 — 8.1 Digital entertainment revenues 0.8 — 0.8 Delivery service fee income 0.4 — 0.4 Gift card discounts (0.2) — (0.2) Gift card breakage (0.9) (0.1) (1.0) Restaurant closures (8.9) — (8.9) Company sales 303.8 0.3 304.1 Franchise revenues (1) 0.7 — 0.7 Thirteen Week Period Ended March 26, 2025 $ 1,304.1 $ 121.0 $ 1,425.1 Total Revenues Chili’s Maggiano’s Total Revenues Thirty-Nine Week Period Ended March 27, 2024 $ 2,834.9 $ 372.0 $ 3,206.9 Change from: Comparable restaurant sales 708.6 7.3 715.9 Restaurant openings 26.8 — 26.8 Digital entertainment revenues 1.7 — 1.7 Delivery service fee income 0.8 0.1 0.9 Merchandise income 0.1 — 0.1 Gift card breakage (2.2) (0.2) (2.4) Maggiano's banquet income — (0.3) (0.3) Restaurant closures (30.9) — (30.9) Company sales 704.9 6.9 711.8 Franchise revenues (1) 3.5 0.1 3.6 Thirty-Nine Week Period Ended March 26, 2025 $ 3,543.3 $ 379.0 $ 3,922.3 (1) Franchise revenues increased in the thirteen and thirty-nine week periods ended March 26, 2025 compared to March 27, 2024 primarily because of higher royalties. Our Chili’s and Maggiano’s franchisees generated sales of approximately $237.4 million and $5.0 million and $700.1 million and $12.2 million respectively for the thirteen and thirty-nine week periods ended March 26, 2025 compared to $216.2 million and $2.9 million and $644.3 million and $8.5 million respectively in sales for the thirteen and thirty-nine week periods ended March 27, 2024. 22 Table of Contents The table below presents the percentage change in comparable restaurant sales and restaurant capacity for the thirteen and thirty-nine week periods ended March 26, 2025 compared to March 27, 2024: Percentage Change in the Thirteen Week Period Ended March 26, 2025 versus March 27, 2024 Comparable Restaurant Sales (1) Price Impact Mix-Shift Impact (2) Traffic Impact Restaurant Capacity (3) Company-owned 28.2 % 4.6 % 5.9 % 17.7 % (1.3) % Chili’s 31.6 % 4.4 % 6.3 % 20.9 % (1.4) % Maggiano’s 0.4 % 7.3 % 1.3 % (8.2) % — % Franchise (4) 12.8 % U.S. 24.1 % International 5.8 % Chili’s domestic (5) 31.1 % System-wide (6) 25.9 % Percentage Change in the Thirty-Nine Week Period Ended March 26, 2025 versus March 27, 2024 Comparable Restaurant Sales (1) Price Impact Mix-Shift Impact (2) Traffic Impact Restaurant Capacity (3) Company-owned 23.2 % 5.5 % 4.4 % 13.3 % (1.2) % Chili’s 25.9 % 5.3 % 4.7 % 15.9 % (1.3) % Maggiano’s 2.0 % 8.0 % 1.1 % (7.1) % — % Franchise (4) 10.1 % U.S. 17.2 % International 5.8 % Chili’s domestic (5) 25.4 % System-wide (6) 21.1 % (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. 23 Table of Contents Costs and Expenses Thirteen Week Period Ended March 26, 2025 compared to March 27, 2024 The following is a summary of the changes in Costs and Expenses: Thirteen Week Periods Ended Favorable (Unfavorable) Variance March 26, 2025 March 27, 2024 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 353.1 25.0 % $ 277.8 25.1 % $ (75.3) 0.1 % Restaurant labor 452.2 32.0 % 370.6 33.4 % (81.6) 1.4 % Restaurant expenses 340.9 24.1 % 303.4 27.4 % (37.5) 3.3 % Depreciation and amortization 54.7 42.6 (12.1) General and administrative 58.3 46.1 (12.2) Other (gains) and charges 9.0 9.9 0.9 Interest expenses 13.2 16.2 3.0 Other income, net (0.1) (0.2) (0.1) As a percentage of Company sales: • Food and beverage costs were favorable 0.1%, due to 1.1% from menu pricing, partially offset by 0.7% of unfavorable menu item mix and 0.3% of unfavorable commodity costs primarily driven by meat and poultry, partially offset by favorable rebate impact. • Restaurant labor was favorable 1.4%, due to 4.9% of sales leverage and 0.2% of lower other labor expenses, partially offset by 2.9% of higher hourly labor driven by increased staffing levels and wage rates, 0.4% of higher manager salaries, and 0.4% of higher manager bonus. • Restaurant expenses were favorable 3.3%, due to 4.4% of sales leverage and 0.2% of lower delivery fees, partially offset by 0.4% of higher repairs and maintenance, 0.4% of higher advertising, 0.3% of higher workers' compensation and general liability insurance, and 0.2% of higher rent. Depreciation and amortization increased $12.1 million as follows: Depreciation and Amortization Thirteen Week Period Ended March 27, 2024 $ 42.6 Change from: Additions for new and existing restaurant assets 6.3 Finance leases (1) 3.8 Corporate assets 0.3 Retirements and fully depreciated restaurant assets (3.4) Other 5.1 Thirteen Week Period Ended March 26, 2025 $ 54.7 (1) Finance lease amortization increased primarily due to new tabletop and tablet devices in our restaurants. 24 Table of Contents General and administrative expenses increased $12.2 million as follows: General and Administrative Thirteen Week Period Ended March 27, 2024 $ 46.1 Change from: Corporate technology initiatives (1) 2.5 Stock-based compensation (2) 2.5 Payroll expenses 2.1 Professional fees 2.1 Performance-based compensation 1.4 Defined contribution plan employer expenses and other benefits 1.1 Other 0.5 Thirteen Week Period Ended March 26, 2025 $ 58.3 (1) Corporate technology initiatives increased primarily due to ERP system subscription costs and amortization of software implementation costs. (2) Stock-based compensation increased primarily due to higher overall equity compensation levels to our officers, including special performance share grants to certain officers in the second quarter of fiscal 2025.. Other (gains) and charges consisted of the following (for further details, refer to Note 11 - Other Gains and Charges): Thirteen Week Periods Ended March 26, 2025 March 27, 2024 Litigation & claims, net $ 2.5 $ 2.0 Enterprise system implementation costs 2.4 3.3 Severance and other benefit charges 2.0 0.4 Lease contingencies 1.5 0.3 Restaurant closure asset write-offs and charges 0.8 4.0 Lease modification gain, net (0.2) (0.1) $ 9.0 $ 9.9 Interest expenses decreased $3.0 million primarily due to the lower average outstanding debt balances, partially offset by higher interest on financed leased equipment. 25 Table of Contents Thirty-Nine Week Period Ended March 26, 2025 compared to March 27, 2024 The following is a summary of the changes in Costs and Expenses: Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance March 26, 2025 March 27, 2024 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 981.3 25.2 % $ 809.7 25.5 % $ (171.6) 0.3 % Restaurant labor 1,250.6 32.2 % 1,074.8 33.9 % (175.8) 1.7 % Restaurant expenses 979.2 25.2 % 888.9 28.0 % (90.3) 2.8 % Depreciation and amortization 148.7 125.8 (22.9) General and administrative 163.2 131.7 (31.5) Other (gains) and charges 30.0 19.5 (10.5) Interest expenses 42.2 49.9 7.7 Other income, net (0.7) (0.3) 0.4 As a percentage of Company sales: • Food and beverage costs were favorable 0.3%, due to 1.4% from menu pricing, partially offset by 0.7% of unfavorable menu item mix and 0.4% of unfavorable commodity costs primarily driven by poultry and produce. • Restaurant labor was favorable 1.7%, due to 4.1% of sales leverage and 0.2% of lower other labor expenses, partially offset by 2.0% of higher hourly labor driven by increased staffing levels and wage rates, 0.4% of higher manager salaries, and 0.2% of higher manager bonus. • Restaurant expenses were favorable 2.8%, due to 3.9% of sales leverage and 0.2% of lower delivery fees, partially offset by 0.7% of higher repairs and maintenance, 0.2% of higher advertising, 0.2% of higher workers' compensation and general liability insurance, and 0.2% of higher rent. Depreciation and amortization increased $22.9 million as follows: Depreciation and Amortization Thirty-Nine Week Period Ended March 27, 2024 $ 125.8 Change from: Additions for new and existing restaurant assets 20.1 Finance leases (1) 10.5 Corporate assets 1.8 Retirements and fully depreciated restaurant assets (14.4) Other 4.9 Thirty-Nine Week Period Ended March 26, 2025 $ 148.7 (1) Finance lease amortization increased primarily due to new tabletop and tablet devices in our restaurants. 26 Table of Contents General and administrative expenses increased $31.5 million as follows: General and Administrative Thirty-Nine Week Period Ended March 27, 2024 $ 131.7 Change from: Stock-based compensation (1) 6.6 Performance-based compensation (2) 6.4 Corporate technology initiatives (3) 6.2 Payroll expenses 4.7 Professional fees 3.6 Defined contribution plan employer expenses and other benefits 2.6 Other 1.4 Thirty-Nine Week Period Ended March 26, 2025 $ 163.2 (1) Stock-based compensation increased primarily due to higher overall equity compensation levels to our officers, including special performance share grants to certain officers in the second quarter of fiscal 2025. (2) Performance-based compensation increased primarily due to higher expected annual performance compared to target in the current year. (3) Corporate technology initiatives increased primarily due to ERP system subscription costs and amortization of software implementation costs. 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 26, 2025 March 27, 2024 Enterprise system implementation costs $ 12.0 $ 7.4 Litigation & claims, net 11.1 5.2 Severance and other benefit charges 2.3 0.5 Restaurant closure asset write-offs and charges 2.3 4.8 Lease contingencies 1.5 0.8 Loss from natural disasters, net (of insurance recoveries) 0.7 (0.4) Lease modification gain, net (1.2) (0.2) Other 1.3 1.4 $ 30.0 $ 19.5 Interest expenses decreased $7.7 million primarily due to the lower average outstanding debt balances, partially offset by higher interest on financed leased equipment. Income Taxes Thirteen Week Periods Ended Thirty-Nine Week Periods Ended March 26, 2025 March 27, 2024 March 26, 2025 March 27, 2024 Effective income tax rate 17.2 % 9.6 % 15.8 % 8.3 % The federal statutory tax rate was 21.0% for the thirteen and thirty-nine week periods ended March 26, 2025 and March 27, 2024. 27 Table of Contents The change in the effective income tax rate in the thirteen and thirty-nine week periods ended March 26, 2025 to the thirteen and thirty-nine week periods ended March 27, 2024 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 26, 2025 compared to March 27, 2024 Thirteen Week Periods Ended Favorable (Unfavorable) Variance Variance as percentage March 26, 2025 March 27, 2024 Company sales $ 1,292.2 $ 988.4 $ 303.8 30.7 % Franchise revenues 11.9 11.2 0.7 6.3 % Total revenues $ 1,304.1 $ 999.6 $ 304.5 30.5 % Chili’s Total revenues increased by 30.5% primarily due to favorable comparable restaurant sales driven by higher traffic, favorable menu item mix, and menu pricing. 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 26, 2025 March 27, 2024 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 324.5 25.1 % $ 249.3 25.2 % $ (75.2) 0.1 % Restaurant labor 413.1 32.0 % 331.3 33.5 % (81.8) 1.5 % Restaurant expenses 304.5 23.5 % 268.7 27.2 % (35.8) 3.7 % Depreciation and amortization 48.9 36.6 (12.3) General and administrative 12.7 10.8 (1.9) Other (gains) and charges 2.7 5.7 3.0 As a percentage of Company sales: • Chili’s Food and beverage costs were favorable 0.1%, due to 1.1% from menu pricing, partially offset by 0.8% of unfavorable menu item mix and 0.2% of unfavorable commodity costs primarily driven by meat and poultry, partially offset by favorable rebate impact. • Chili’s Restaurant labor was favorable 1.5%, due to 5.5% of sales leverage and 0.1% of lower other labor expenses, partially offset by 3.3% of higher hourly labor driven by increased staffing levels and wage rates, 0.4% of higher manager salaries, and 0.4% of higher manager bonus. • Chili’s Restaurant expenses were favorable 3.7%, due to 4.9% of sales leverage and 0.2% of lower delivery fees, partially offset by 0.5% of higher repairs and maintenance, 0.4% of higher advertising, 0.4% of higher workers' compensation and general liability insurance, and 0.1% of higher other restaurant expenses. 28 Table of Contents Chili’s Depreciation and amortization increased $12.3 million as follows: Depreciation and Amortization Thirteen Week Period Ended March 27, 2024 $ 36.6 Change from: Additions for new and existing restaurant assets 5.7 Finance leases (1) 3.8 Retirements and fully depreciated restaurant assets (2.5) Other 5.3 Thirteen Week Period Ended March 26, 2025 $ 48.9 (1) Finance lease amortization increased primarily due to new tabletop and tablet devices in our restaurants. Chili’s General and administrative increased $1.9 million as follows: General and Administrative Thirteen Week Period Ended March 27, 2024 $ 10.8 Change from: Performance-based compensation 0.6 Defined contribution plan employer expenses and other benefits 0.5 Payroll expenses 0.4 Stock-based compensation 0.4 Thirteen Week Period Ended March 26, 2025 $ 12.7 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 26, 2025 March 27, 2024 Litigation & claims, net $ 2.0 $ 1.9 Restaurant closure asset write-offs and charges 0.8 4.0 Lease modification gain, net (0.2) (0.1) Other 0.1 (0.1) $ 2.7 $ 5.7 29 Table of Contents Thirty-Nine Week Period Ended March 26, 2025 compared to March 27, 2024 Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance Variance as percentage March 26, 2025 March 27, 2024 Company sales $ 3,508.0 $ 2,803.1 $ 704.9 25.1 % Franchise revenues 35.3 31.8 3.5 11.0 % Total revenues $ 3,543.3 $ 2,834.9 $ 708.4 25.0 % Chili’s Total revenues increased by 25.0% primarily due to favorable comparable sales driven by higher traffic, menu pricing, and favorable 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: Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance March 26, 2025 March 27, 2024 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 893.7 25.5 % $ 721.6 25.7 % $ (172.1) 0.2 % Restaurant labor 1,133.1 32.3 % 955.3 34.1 % (177.8) 1.8 % Restaurant expenses 870.1 24.8 % 785.5 28.0 % (84.6) 3.2 % Depreciation and amortization 131.2 108.3 (22.9) General and administrative 36.7 31.0 (5.7) Other (gains) and charges 11.8 10.3 (1.5) As a percentage of Company sales: • Chili’s Food and beverage costs were favorable 0.2%, due to 1.4% from menu pricing, partially offset by 0.9% of unfavorable menu item mix and 0.3% of unfavorable commodity costs primarily driven by poultry and produce. • Chili’s Restaurant labor was favorable 1.8%, due to 4.7% of sales leverage and 0.2% of lower other labor expenses, partially offset by 2.4% of higher hourly labor driven by increased staffing levels and wage rates, 0.4% of higher manager bonus, and 0.3% of higher manager salaries. • Chili’s Restaurant expenses were favorable 3.2%, due to 4.3% of sales leverage and 0.3% lower delivery fees, partially offset by 0.8% of higher repairs and maintenance, 0.2% of higher workers' compensation and general liability insurance, 0.2% of higher rent, and 0.2% of higher other restaurant expenses. Chili’s Depreciation and amortization increased $22.9 million as follows: Depreciation and Amortization Thirty-Nine Week Period Ended March 27, 2024 $ 108.3 Change from: Additions for new and existing restaurant assets 18.3 Finance leases (1) 10.6 Retirements and fully depreciated restaurant assets (10.9) Other 4.9 Thirty-Nine Week Period Ended March 26, 2025 $ 131.2 (1) Finance lease amortization increased primarily due to new tabletop and tablet devices in our restaurants. 30 Table of Contents Chili’s General and administrative increased $5.7 million as follows: General and Administrative Thirty-Nine Week Period Ended March 27, 2024 $ 31.0 Change from: Performance-based compensation 1.8 Stock-based compensation 1.4 Defined contribution plan employer expenses and other benefits 1.4 Payroll expenses 1.0 Other 0.1 Thirty-Nine Week Period Ended March 26, 2025 $ 36.7 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 26, 2025 March 27, 2024 Litigation & claims, net $ 8.6 $ 4.9 Restaurant closure asset write-offs and charges 2.3 4.8 Loss from natural disasters, net (of insurance recoveries) 0.7 (0.4) Lease modification gain, net (1.2) (0.2) Other 1.4 1.2 $ 11.8 $ 10.3 31 Table of Contents Maggiano’s Segment Thirteen Week Period Ended March 26, 2025 compared to March 27, 2024 Thirteen Week Periods Ended Favorable (Unfavorable) Variance Variance as a percentage March 26, 2025 March 27, 2024 Company sales $ 120.8 $ 120.5 $ 0.3 0.2 % Franchise revenues 0.2 0.2 — — % Total revenues $ 121.0 $ 120.7 $ 0.3 0.2 % Maggiano’s Total revenues increased 0.2% primarily due to favorable comparable restaurant sales driven by menu pricing and favorable menu item mix, 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 26, 2025 March 27, 2024 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 28.6 23.7 % $ 28.5 23.7 % $ (0.1) — % Restaurant labor 39.1 32.4 % 39.3 32.6 % 0.2 0.2 % Restaurant expenses 35.8 29.6 % 34.6 28.7 % (1.2) (0.9) % Depreciation and amortization 3.5 3.4 (0.1) General and administrative 2.5 2.4 (0.1) Other (gains) and charges 0.8 0.2 (0.6) As a percentage of Company sales: • Maggiano’s Food and beverage costs were flat, due to 1.2% from menu pricing, partially offset by 0.9% of unfavorable commodity costs primarily driven by poultry, dairy, and seafood and 0.3% unfavorable menu item mix. • Maggiano’s Restaurant labor was favorable 0.2%, due to 0.3% of lower hourly labor, 0.2% of lower manager bonus, and 0.2% of lower other labor expenses, partially offset by 0.5% of higher manager salaries. • Maggiano’s Restaurant expenses were unfavorable 0.9%, due to 0.6% of higher advertising and 0.5% of higher repairs and maintenance, partially offset by 0.1% of sales leverage and 0.1% of lower other restaurant expenses. 32 Table of Contents Thirty-Nine Week Period Ended March 26, 2025 compared to March 27, 2024 Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance Variance as a percentage March 26, 2025 March 27, 2024 Company sales $ 378.4 $ 371.5 $ 6.9 1.9 % Franchise revenues 0.6 0.5 0.1 20.0 % Total revenues $ 379.0 $ 372.0 $ 7.0 1.9 % Maggiano’s Total revenues increased 1.9% primarily due to favorable comparable restaurant sales driven by menu pricing and favorable menu item mix, 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 26, 2025 March 27, 2024 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 87.6 23.2 % $ 88.1 23.7 % $ 0.5 0.5 % Restaurant labor 117.5 31.1 % 119.5 32.2 % 2.0 1.1 % Restaurant expenses 107.8 28.5 % 103.0 27.7 % (4.8) (0.8) % Depreciation and amortization 10.3 9.8 (0.5) General and administrative 7.9 6.9 (1.0) Other (gains) and charges 1.2 0.6 (0.6) As a percentage of Company sales: • Maggiano’s Food and beverage costs were favorable 0.5%, due to 1.4% from menu pricing, partially offset by 0.8% of unfavorable commodity costs primarily driven by dairy and poultry and 0.1% of unfavorable menu item mix. • Maggiano’s Restaurant labor was favorable 1.1%, due to 0.9% of lower hourly labor, 0.3% of lower other labor expenses, and 0.2% of sales leverage, partially offset by 0.3% of higher manager salaries. • Maggiano’s Restaurant expenses were unfavorable 0.8%, due to 0.6% of higher advertising, 0.4% of higher repairs and maintenance, 0.3% of higher rent, partially offset by 0.3% of lower other restaurant expenses and 0.2% of sales leverage. 33 Table of Contents Liquidity and Capital Resources Cash Flows Cash Flows from Operating Activities Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance March 26, 2025 March 27, 2024 Net cash provided by operating activities $ 493.0 $ 280.4 $ 212.6 Net cash provided by operating activities increased due to an increase in operating income partially offset by an increase in payments of income taxes and interest on the 8.250% notes in the current year, and the timing of other operational receipts and payments. Cash Flows from Investing Activities Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance March 26, 2025 March 27, 2024 Net cash used in investing activities $ (185.4) $ (138.0) $ (47.4) Net cash used in investing activities increased compared to the prior year primarily due to increased spend on Chili’s equipment and capital maintenance. Cash Flows from Financing Activities Thirty-Nine Week Periods Ended Favorable (Unfavorable) Variance March 26, 2025 March 27, 2024 Net cash used in financing activities $ (354.7) $ (142.0) $ (212.7) Net cash used in financing activities increased primarily due to increases in net repayments of long-term debt and share repurchase activity in fiscal 2025 compared to fiscal 2024. Debt We refinanced our $350.0 million 5.000% notes, which matured in October 2024, through our existing revolving credit facility. During the thirty-nine week period ended March 26, 2025, net borrowings of $90.0 million were drawn on the revolving credit facility. As of March 26, 2025, $810.0 million of credit was available under the revolving credit facility. Our $900.0 million revolving credit facility, as amended, matures on August 18, 2026 and bears interest at a rate of SOFR plus an applicable margin of 1.60% to 2.35% 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 26, 2025, our interest rate was 5.93% consisting of SOFR of 4.33% plus the applicable margin and spread adjustment of 1.60%. As of March 26, 2025, 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 8.250% notes. We expect to remain in compliance with our covenants during the remainder of fiscal 2025. Share Repurchase Program 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 dilution to our shares outstanding that results from equity compensation grants. We evaluate potential share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, proceeds from divestitures, 34 Table of Contents borrowings and planned investment and financing needs. Repurchased shares are reflected as an increase in Treasury stock within Shareholder’s equity in the Consolidated Balance Sheets (Unaudited). In the thirty-nine week period ended March 26, 2025, we repurchased 1.2 million shares of our common stock for $86.3 million, including 1.0 million shares purchased for $76.0 million as part of our share repurchase program and 0.2 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 26, 2025, approximately $107.0 million of share repurchase authorization remains under the current share repurchase program. Cash Flow Outlook 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. 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 26, 2024. 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.