Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
BRINKER INTERNATIONAL, INC.
Consolidated Statements of Comprehensive Income (Unaudited)
(In millions, except per share amounts)
Thirteen Week Periods Ended Twenty-Six Week Periods Ended
December 24,
2025 December 25,
2024 December 24,
2025 December 25,
2024
Revenues
Company sales $ 1,438.8 $ 1,346.1 $ 2,774.2 $ 2,473.4
Franchise revenues 13.4 12.1 27.2 23.8
Total revenues 1,452.2 1,358.2 2,801.4 2,497.2
Operating costs and expenses
Food and beverage costs 370.5 343.9 715.1 628.2
Restaurant labor 446.4 421.0 877.4 798.4
Restaurant expenses 352.1 324.4 696.1 638.3
Depreciation and amortization 54.6 47.7 108.2 94.0
General and administrative 59.7 53.1 116.9 104.9
Other (gains) and charges 0.5 12.1 1.4 21.0
Total operating costs and expenses 1,283.8 1,202.2 2,515.1 2,284.8
Operating income 168.4 156.0 286.3 212.4
Interest expenses 10.7 14.7 21.2 29.0
Other income, net ( 0.4 ) ( 0.4 ) ( 0.6 ) ( 0.6 )
Income before income taxes 158.1 141.7 265.7 184.0
Provision for income taxes 29.6 23.2 37.7 27.0
Net income $ 128.5 $ 118.5 $ 228.0 $ 157.0
Basic net income per share $ 2.92 $ 2.67 $ 5.14 $ 3.52
Diluted net income per share $ 2.86 $ 2.61 $ 5.03 $ 3.44
Basic weighted average shares outstanding 44.0 44.4 44.4 44.7
Diluted weighted average shares outstanding 44.9 45.5 45.4 45.7
Other comprehensive income (loss)
Foreign currency translation adjustment $ 0.1 $ ( 0.5 ) $ — $ ( 0.4 )
Comprehensive income $ 128.6 $ 118.0 $ 228.0 $ 156.6
See accompanying Notes to Consolidated Financial Statements (Unaudited)
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BRINKER INTERNATIONAL, INC.
Consolidated Balance Sheets
(In millions, except per share amounts)
Unaudited
December 24,
2025 June 25,
2025
ASSETS
Current assets
Cash and cash equivalents $ 15.0 $ 18.9
Accounts receivable, net 105.8 73.4
Inventories 36.4 35.2
Restaurant supplies 56.5 54.9
Prepaid expenses 27.2 24.6
Total current assets 240.9 207.0
Property and equipment, at cost
Land 45.2 44.9
Buildings and leasehold improvements 1,787.2 1,755.2
Furniture and equipment 902.2 845.3
Construction-in-progress 53.4 71.8
2,788.0 2,717.2
Less accumulated depreciation and amortization ( 1,816.3 ) ( 1,764.5 )
Net property and equipment 971.7 952.7
Other assets
Operating lease assets 1,183.4 1,149.1
Goodwill 194.8 194.7
Deferred income taxes, net 88.6 101.4
Intangibles, net 16.3 17.4
Other 53.5 56.3
Total other assets 1,536.6 1,518.9
Total assets $ 2,749.2 $ 2,678.6
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable $ 163.9 $ 168.5
Gift card liability 76.9 57.2
Accrued payroll 126.2 156.2
Operating lease liabilities 111.9 114.6
Other accrued liabilities 186.3 172.6
Income taxes payable, net 4.5 6.5
Total current liabilities 669.7 675.6
Long-term debt and finance leases, less current installments 451.3 426.0
Long-term operating lease liabilities, less current portion 1,172.8 1,135.3
Other liabilities 76.1 70.8
Commitments and contingencies (Note 7)
Shareholders’ equity
Common stock ( 250.0 million authorized shares; $ 0.10 par value; 60.3 million shares issued and 43.5 million shares outstanding at December 24, 2025 and 60.3 million shares issued and 44.5 million shares outstanding at June 25, 2025)
6.0 6.0
Additional paid-in capital 668.3 714.5
Accumulated other comprehensive loss ( 6.4 ) ( 6.4 )
Retained earnings 414.5 186.5
Treasury stock, at cost ( 16.8 million shares at December 24, 2025, and 15.8 million shares at June 25, 2025)
( 703.1 ) ( 529.7 )
Total shareholders’ equity 379.3 370.9
Total liabilities and shareholders’ equity $ 2,749.2 $ 2,678.6
See accompanying Notes to Consolidated Financial Statements (Unaudited)
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BRINKER INTERNATIONAL, INC.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
Twenty-Six Week Periods Ended
December 24,
2025 December 25,
2024
Cash flows from operating activities
Net income $ 228.0 $ 157.0
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization 108.2 94.0
Stock-based compensation 16.0 14.3
Deferred income taxes, net 12.8 8.3
Non-cash other (gains) and charges 2.2 7.9
Net loss on disposal of assets 4.2 6.1
Other 0.9 1.3
Changes in assets and liabilities:
Accounts receivable, net ( 17.7 ) ( 23.0 )
Inventories ( 1.3 ) ( 2.6 )
Restaurant supplies ( 3.0 ) ( 0.3 )
Prepaid expenses ( 8.0 ) ( 1.2 )
Income taxes ( 2.6 ) ( 3.5 )
Operating lease assets, net of liabilities ( 1.1 ) ( 0.6 )
Other assets 1.7 ( 0.3 )
Accounts payable 11.5 11.5
Gift card liability 19.7 16.0
Accrued payroll ( 30.0 ) ( 4.5 )
Other accrued liabilities ( 5.8 ) ( 1.3 )
Other liabilities 4.0 1.9
Net cash provided by operating activities 339.7 281.0
Cash flows from investing activities
Payments for property and equipment ( 122.3 ) ( 105.8 )
Proceeds from sale of assets 0.2 —
Insurance recoveries 0.5 —
Net cash used in investing activities ( 121.6 ) ( 105.8 )
Cash flows from financing activities
Borrowings on revolving credit facility 475.0 515.0
Payments on revolving credit facility ( 455.0 ) ( 300.0 )
Payments on long-term debt ( 7.2 ) ( 362.1 )
Purchases of treasury stock ( 235.0 ) ( 85.2 )
Proceeds from issuance of treasury stock 0.2 7.4
Payments for debt issuance costs — ( 0.1 )
Net cash used in financing activities ( 222.0 ) ( 225.0 )
Net change in cash and cash equivalents ( 3.9 ) ( 49.8 )
Cash and cash equivalents at beginning of period 18.9 64.6
Cash and cash equivalents at end of period $ 15.0 $ 14.8
Supplemental disclosure of cash flow information:
Income taxes paid, net $ 27.5 $ 22.1
Interest paid, net of amounts capitalized 20.1 32.6
Accrued capital expenditures 18.0 7.6
See accompanying Notes to Consolidated Financial Statements (Unaudited)
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BRINKER INTERNATIONAL, INC.
Consolidated Statements of Shareholders’ Equity (Unaudited)
(In millions)
Twenty-Six Week Period Ended December 24, 2025
Common Stock Additional
Paid-In
Capital Retained Earnings Treasury
Stock Accumulated
Other
Comprehensive
Loss Total
Balances at June 25, 2025 $ 6.0 $ 714.5 $ 186.5 $ ( 529.7 ) $ ( 6.4 ) $ 370.9
Net income — — 99.5 — — 99.5
Other comprehensive loss — — — — ( 0.1 ) ( 0.1 )
Stock-based compensation — 7.9 — — — 7.9
Purchases of treasury stock — ( 32.4 ) — ( 102.1 ) — ( 134.5 )
Issuances of treasury stock — ( 29.2 ) — 29.4 — 0.2
Balances at September 24, 2025 $ 6.0 $ 660.8 $ 286.0 $ ( 602.4 ) $ ( 6.5 ) $ 343.9
Net income — — 128.5 — — 128.5
Other comprehensive income — — — — 0.1 0.1
Stock-based compensation — 8.1 — — — 8.1
Purchases of treasury stock — ( 0.2 ) — ( 101.1 ) — ( 101.3 )
Issuances of treasury stock — ( 0.4 ) — 0.4 — —
Balances at December 24, 2025 $ 6.0 $ 668.3 $ 414.5 $ ( 703.1 ) $ ( 6.4 ) $ 379.3
Twenty-Six Week Period Ended December 25, 2024
Common Stock Additional
Paid-In
Capital Accumulated Deficit Treasury
Stock Accumulated
Other
Comprehensive
Loss Total
Balances at June 26, 2024 $ 6.0 $ 707.8 $ ( 196.6 ) $ ( 471.5 ) $ ( 6.3 ) $ 39.4
Net income — — 38.5 — — 38.5
Other comprehensive income — — — — 0.1 0.1
Stock-based compensation — 7.1 — — — 7.1
Purchases of treasury stock — ( 4.8 ) — ( 70.3 ) — ( 75.1 )
Issuances of treasury stock — ( 12.2 ) — 14.9 — 2.7
Balances at September 25, 2024 $ 6.0 $ 697.9 $ ( 158.1 ) $ ( 526.9 ) $ ( 6.2 ) $ 12.7
Net income — — 118.5 — — 118.5
Other comprehensive loss — — — — ( 0.5 ) ( 0.5 )
Stock-based compensation — 7.2 — — — 7.2
Purchases of treasury stock — ( 0.3 ) — ( 10.1 ) — ( 10.4 )
Issuances of treasury stock — ( 0.3 ) — 4.3 — 4.0
Balances at December 25, 2024 $ 6.0 $ 704.5 $ ( 39.6 ) $ ( 532.7 ) $ ( 6.7 ) $ 131.5
See accompanying Notes to Consolidated Financial Statements (Unaudited)
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Footnote Index
BRINKER INTERNATIONAL, INC.
Notes to Consolidated Financial Statements (Unaudited)
Footnote Index
Note # Description Page
Note 1
Basis of Presentation 8
Note 2
Revenue Recognition 9
Note 3
Fair Value Measurements 10
Note 4
Accrued Liabilities 11
Note 5
Leases 11
Note 6
Debt 12
Note 7
Commitments and Contingencies 12
Note 8
Income Taxes 13
Note 9
Shareholders’ Equity 13
Note 10
Net Income Per Share 14
Note 11
Other Gains and Charges 14
Note 12
Segment Information 15
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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 December 24, 2025 and June 25, 2025, and for the thirteen and twenty-six week periods ended December 24, 2025 and December 25, 2024, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
We own, develop, operate and franchise the Chili’s ® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy ® (“Maggiano’s”) restaurant brands. As of December 24, 2025, we owned, operated or franchised 1,627 restaurants, consisting of 1,160 Company-owned restaurants and 467 franchised restaurants, located in the United States, 27 other countries and two United States territories. Our restaurant brands, Chili’s and Maggiano’s, are both operating segments and reporting units.
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 25, 2025 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 represents the unrealized impact of translating the financial statements of our Canadian restaurants from their respective functional currency (Canadian dollars) to United States dollars and are reported as a component of Comprehensive income and recorded in Accumulated other comprehensive loss on our Consolidated Balance Sheets (Unaudited).
Recently Issued Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a company’s effective tax rate reconciliation and requires disclosure of income taxes paid by jurisdiction. The amendments are effective for fiscal years beginning after December 15, 2024, which require us to adopt the provisions in our fiscal 2026 Form 10-K. The amendments should be applied prospectively; however, retrospective application is permitted. Management does not expect this ASU to have a material impact on our disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires, for each relevant expense caption on the income statement, detailed disclosure amounts for purchases of inventory, employee compensation, depreciation, and intangible asset amortization. In addition, this ASU requires companies to include amounts already required by GAAP in the same disclosure, provide a qualitative description of remaining amounts not separately disaggregated, and disclose the amount of total selling expenses along with the companies’ definition of selling expenses. The amendment is effective for fiscal years beginning after December 15, 2026, which would require us to adopt the provisions in our fiscal 2028 Form 10-K. The amendments should be
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applied prospectively; however, retrospective application is permitted. Management is currently evaluating this ASU to determine its impact on our disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU modernizes outdated guidance for internal-use software costs to reflect current development practices, including agile and iterative methods, replacing the previous waterfall-based model. The amendments eliminate the requirement to classify costs by development stages (preliminary, application development, and post-implementation) and introduce a principles-based threshold for capitalization. Under the new guidance, capitalization begins when management authorizes and commits funding for the project and it is probable the project will be completed and the software will perform its intended function (probable-to-complete threshold). The amendments are effective for fiscal years beginning after December 15, 2027, which would require us to adopt the provisions as of the beginning of our fiscal year 2029. Management is currently evaluating the impact of this guidance on our consolidated financial statements and related disclosures.
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 the 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 which depend 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 25, 2025 and December 24, 2025:
Deferred Franchise and Development Fees
Balance as of June 25, 2025 $ 9.8
Additions 0.2
Amount recognized to Franchise revenues ( 0.7 )
Balance as of December 24, 2025 $ 9.3
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 December 24, 2025:
Fiscal Year Franchise and Development Fees Revenue Recognition
Remainder of 2026 $ 0.4
2027 0.8
2028 0.7
2029 0.6
2030 0.5
Thereafter 6.3
$ 9.3
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Deferred Gift Card Revenues
Total 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 25, 2025 and December 24, 2025:
Gift Card Liability
Balance as of June 25, 2025 $ 57.2
Gift card sales 75.0
Gift card redemptions recognized to Company sales ( 49.3 )
Gift card breakage recognized to Company sales ( 4.6 )
Other ( 1.4 )
Balance as of December 24, 2025
$ 76.9
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
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 our note are based on quoted market prices and are considered a Level 2 fair value measurement.
The carrying amounts of the note, which are net of unamortized debt issuance costs, and fair value are as follows:
December 24, 2025 June 25, 2025
Carrying Amount Fair Value Carrying Amount Fair Value
8.25 % notes $ 346.4 $ 371.1 $ 346.0 $ 372.3
Non-Financial Assets
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 determine the fair values of property and equipment, including finance lease assets, operating lease assets and reacquired franchise rights based on Level 3 fair value measurements. 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. 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 thirteen and twenty-six week periods ended December 24, 2025 and December 25, 2024, 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
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amortization associated with definite-lived intangible assets at December 24, 2025 and June 25, 2025, was $ 20.1 million and $ 19.0 million, respectively.
4. ACCRUED LIABILITIES
Other accrued liabilities consist of the following:
December 24,
2025 June 25,
2025
Insurance $ 42.0 $ 39.7
Property tax 27.4 25.2
Current installments of finance lease obligations 27.3 17.6
Sales tax 24.4 22.8
Interest 13.7 13.5
Utilities and services 10.6 10.5
Other 40.9 43.3
$ 186.3 $ 172.6
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 Twenty-Six Week Periods Ended
December 24,
2025 December 25,
2024 December 24,
2025 December 25,
2024
Operating lease cost $ 47.5 $ 45.8 $ 95.0 $ 91.4
Variable lease cost 18.1 17.5 36.2 33.6
Finance lease amortization 6.6 6.8 13.2 12.5
Finance lease interest 1.6 1.6 3.3 3.1
Short-term lease cost 0.2 0.2 0.4 0.3
Sublease income ( 0.4 ) ( 0.4 ) ( 0.7 ) ( 0.8 )
Total lease costs, net $ 73.6 $ 71.5 $ 147.4 $ 140.1
Supplemental cash flow information related to leases:
Twenty-Six Week Periods Ended
December 24,
2025 December 25,
2024
Operating lease assets obtained in exchange for operating lease liabilities $ 94.7 $ 43.4
Finance lease assets obtained in exchange for finance lease liabilities 21.9 16.6
Finance lease assets are recorded in Property and equipment, at cost, and the net balance as of December 24, 2025 and June 25, 2025 was $ 94.2 million and $ 85.8 million, respectively.
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6. DEBT
Long-term debt consists of the following:
December 24,
2025 June 25,
2025
Revolving credit facility $ 20.0 $ —
8.25 % notes 350.0 350.0
Finance lease obligations 112.2 97.6
Total long-term debt 482.2 447.6
Less: unamortized debt issuance costs ( 3.6 ) ( 4.0 )
Total long-term debt, less unamortized debt issuance costs 478.6 443.6
Less: current installments of long-term debt (1)
( 27.3 ) ( 17.6 )
Total long-term debt, less current portion $ 451.3 $ 426.0
(1) 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 twenty-six week period ended December 24, 2025, net borrowings of $ 20.0 million were drawn on our revolving credit facility. Additionally, availability was reduced by a $ 30.1 million letter of credit as of December 24, 2025. Refer to Note 7 - Commitments and Contingencies for further information about our letters of credit. As of December 24, 2025, $ 949.9 million of credit was available under the revolving credit facility.
The $ 1.0 billion revolving credit facility matures on May 1, 2030 and bears interest at a rate of SOFR plus an applicable margin of 1.25 % to 2.00 % and an undrawn commitment fee of 0.20 % to 0.30 %, both based on a function of our debt-to-cash-flow ratio. As of December 24, 2025, our interest rate was 4.98 % consisting of SOFR of 3.73 % plus the applicable margin of 1.25 %.
Financial Covenants
The indenture for our 8.25% notes contains certain covenants, including, but not limited to, limitations and restrictions on the ability of the Company and its Restricted Subsidiaries (as defined in the indentures) to (i) create liens on Principal Property (as defined in the indenture) and (ii) merge, consolidate or amalgamate with or into any other person or sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of their property. These covenants are subject to a number of important conditions, qualifications, exceptions, and limitations.
Our debt agreements contain various financial covenants that, among other things, require the maintenance of certain leverage ratios. As of December 24, 2025, we were in compliance with our covenants pursuant to the $1.0 billion revolving credit facility and under the terms of the indentures governing our 8.25% notes .
7. COMMITMENTS AND CONTINGENCIES
Lease Commitments and Guarantees
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 December 24, 2025 and June 25, 2025, we have outstanding lease guarantees or are secondarily liable for an estimated $ 10.1 million and $ 11.9 million, respectively. These amounts 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 2026 through fiscal 2035. 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. We have received notices of default and have
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been named a party in lawsuits pertaining to some of these leases in circumstances where the current lessee did not pay its rent obligations and management is closely monitoring any exposure.
Letters of Credit
We provide letters of credit to various insurers to collateralize obligations for outstanding claims. As of December 24, 2025, we had $ 34.1 million in undrawn standby letters of credit outstanding. All standby letters of credit are renewable within the next 8 months.
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 (Unaudited).
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.
8. INCOME TAXES
Twenty-Six Week Periods Ended
December 24,
2025 December 25,
2024
Effective income tax rate 14.2 % 14.7 %
The federal statutory tax rate was 21.0 % for the twenty-six week periods ended December 24, 2025 and December 25, 2024.
The change in the effective income tax rate in the twenty-six week period ended December 24, 2025 to the twenty-six week period ended December 25, 2024 is primarily due to significantly higher excess tax benefits from stock based compensation of $ 11.9 million in fiscal 2026, partially offset by higher Income before income taxes and resulting deleverage of the FICA tip tax credit.
9. SHAREHOLDERS’ EQUITY
Share Repurchases
Our Board of Directors approved a $ 400.0 million increase in our share repurchase program in August 2025 allowing for a total available authority of $ 507.0 million. 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, 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 twenty-six week period ended December 24, 2025, we repurchased 1.8 million shares of our common stock for $ 235.0 million, including 1.5 million shares purchased for $ 192.0 million as part of our share repurchase program and 0.3 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 December 24, 2025, approximately $ 315.0 million of share repurchase authorization remains under the current share repurchase program.
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Stock-based Compensation
The following table presents restricted share awards granted under the Company’s various equity compensation plans and the related weighted average fair value per share amounts.
Twenty-Six Week Periods Ended
December 24,
2025 December 25,
2024
Restricted share awards
Restricted share awards granted 0.2 0.6
Weighted average fair value per share $ 155.81 $ 85.45
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 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 Twenty-Six Week Periods Ended
December 24,
2025 December 25,
2024 December 24,
2025 December 25,
2024
Basic weighted average shares outstanding 44.0 44.4 44.4 44.7
Dilutive stock options — 0.1 — 0.1
Dilutive restricted shares 0.9 1.0 1.0 0.9
Total dilutive impact 0.9 1.1 1.0 1.0
Diluted weighted average shares outstanding 44.9 45.5 45.4 45.7
Awards excluded due to anti-dilutive effect 0.1 — — —
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 Twenty-Six Week Periods Ended
December 24,
2025 December 25,
2024 December 24,
2025 December 25,
2024
Restaurant closure asset write-offs and charges $ 1.5 $ 0.8 $ 2.1 $ 1.5
Litigation & claims, net 0.8 6.1 1.5 8.6
Severance and other benefit charges 0.2 — 1.7 0.3
Loss from natural disasters, net (of insurance recoveries) — 0.7 ( 2.3 ) 0.7
Enterprise system implementation costs — 5.2 — 9.6
Lease modification gain, net ( 2.5 ) ( 0.7 ) ( 2.5 ) ( 1.0 )
Other 0.5 — 0.9 1.3
$ 0.5 $ 12.1 $ 1.4 $ 21.0
• Restaurant closure asset write-offs and charges includes costs associated with the closure of certain Chili’s and Maggiano’s restaurants in the current year and Chili’s restaurants in the prior year.
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• Litigation & claims, net primarily relates to claims on alcohol service cases and legal contingencies, and the current year is inclusive of an insurance reimbursement for an extraordinary one-time settlement related to an employment claim.
• Severance and other benefit charges relates to changes in our management team and organizational structure.
• Loss from natural disasters, net (of insurance recoveries) primarily relates to proceeds received in the current year related to a fiscal 2021 Winter Storm claim, and the prior year includes costs related to two major hurricanes.
• Enterprise system implementation costs primarily consists of software subscription fees and certain other costs prior to implementation and post go-live support of the cloud-based Enterprise Resource Planning (“ERP”) system.
• Lease modification gain, net includes gains related to the reduction of lease liabilities associated with closed Chili’s restaurants, and the current year also includes a lease termination fee received from a landlord at one of these closed restaurants.
12. SEGMENT INFORMATION
Our chief operating decision maker (“CODM”) is the President and Chief Executive Officer. Our CODM uses Operating income as the measure for assessing performance and allocating resources of our segments. 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 includes results of our Canadian Company-owned restaurants and royalties and other fees from our 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 royalties and other fees from our domestic franchise business. Costs related to our restaurant support teams for the Chili’s and Maggiano’s brands, including operations, brand recruiting, finance, marketing, culinary innovation and franchise are included in the results of our operating segments. The Corporate segment includes unallocated costs such as information technology, human capital management, accounting, legal, purchasing, and restaurant development.
Company sales for each operating segment include revenues generated by the operation of Company-owned restaurants including food and beverage sales, net of discounts, delivery service fee income, gift card breakage, digital entertainment revenues, merchandise income, Maggiano’s banquet service charge income, and are net of gift card discount costs from third-party gift card sales. Franchise revenues for each operating segment include royalties, franchise advertising fees, franchise and development fees, and other service fees.
Operating income includes revenues and expenses directly attributable to segment-level results of operations. Restaurant expenses primarily includes restaurant rent, repairs and maintenance, advertising, supplies, utilities, delivery fees, payment processing fees, franchise and property taxes, workers’ compensation and general liability insurance, and to-go supplies.
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 between our operating segments.
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The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
Thirteen Week Period Ended December 24, 2025
Chili's Maggiano's Corporate Consolidated
Company sales $ 1,304.1 $ 134.7 $ — $ 1,438.8
Franchise revenues 13.2 0.2 — 13.4
Total revenues 1,317.3 134.9 — 1,452.2
Food and beverage costs 336.5 34.0 — 370.5
Restaurant labor 406.6 39.8 — 446.4
Restaurant expenses 312.5 39.4 0.2 352.1
Depreciation and amortization 47.5 4.3 2.8 54.6
General and administrative 14.6 2.1 43.0 59.7
Other (gains) and charges ( 0.4 ) 0.3 0.6 0.5
Total operating costs and expenses 1,117.3 119.9 46.6 1,283.8
Operating income (loss) 200.0 15.0 ( 46.6 ) 168.4
Interest expenses 1.4 — 9.3 10.7
Other income, net ( 0.1 ) — ( 0.3 ) ( 0.4 )
Income (loss) before income taxes $ 198.7 $ 15.0 $ ( 55.6 ) $ 158.1
Thirteen Week Period Ended December 25, 2024
Chili's Maggiano's Corporate Consolidated
Company sales $ 1,196.9 $ 149.2 $ — $ 1,346.1
Franchise revenues 11.9 0.2 — 12.1
Total revenues 1,208.8 149.4 — 1,358.2
Food and beverage costs 310.1 33.8 — 343.9
Restaurant labor 378.4 42.6 — 421.0
Restaurant expenses 285.0 39.0 0.4 324.4
Depreciation and amortization 41.8 3.4 2.5 47.7
General and administrative 12.2 2.4 38.5 53.1
Other (gains) and charges 6.2 — 5.9 12.1
Total operating costs and expenses 1,033.7 121.2 47.3 1,202.2
Operating income (loss) 175.1 28.2 ( 47.3 ) 156.0
Interest expenses 1.6 — 13.1 14.7
Other income, net — — ( 0.4 ) ( 0.4 )
Income (loss) before income taxes $ 173.5 $ 28.2 $ ( 60.0 ) $ 141.7
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Twenty-Six Week Period Ended December 24, 2025
Chili’s Maggiano's Corporate Consolidated
Company sales $ 2,540.3 $ 233.9 $ — $ 2,774.2
Franchise revenues 26.7 0.5 — 27.2
Total revenues 2,567.0 234.4 — 2,801.4
Food and beverage costs 656.2 58.9 — 715.1
Restaurant labor 801.9 75.5 — 877.4
Restaurant expenses 620.1 75.6 0.4 696.1
Depreciation and amortization 94.2 8.5 5.5 108.2
General and administrative 27.3 3.7 85.9 116.9
Other (gains) and charges ( 1.7 ) 1.3 1.8 1.4
Total operating costs and expenses 2,198.0 223.5 93.6 2,515.1
Operating income (loss) 369.0 10.9 ( 93.6 ) 286.3
Interest expenses 2.7 0.1 18.4 21.2
Other income, net ( 0.1 ) — ( 0.5 ) ( 0.6 )
Income (loss) before income taxes $ 366.4 $ 10.8 $ ( 111.5 ) $ 265.7
Segment assets $ 2,193.7 $ 307.4 $ 248.1 $ 2,749.2
Twenty-Six Week Period Ended December 25, 2024
Chili’s
Maggiano's Corporate Consolidated
Company sales
$ 2,215.8 $ 257.6 $ — $ 2,473.4
Franchise revenues
23.4 0.4 — 23.8
Total revenues 2,239.2 258.0 — 2,497.2
Food and beverage costs 569.2 59.0 — 628.2
Restaurant labor 720.0 78.4 — 798.4
Restaurant expenses 565.6 72.0 0.7 638.3
Depreciation and amortization 82.3 6.8 4.9 94.0
General and administrative 24.0 5.4 75.5 104.9
Other (gains) and charges 9.1 0.4 11.5 21.0
Total operating costs and expenses 1,970.2 222.0 92.6 2,284.8
Operating income (loss) 269.0 36.0 ( 92.6 ) 212.4
Interest expenses 2.9 0.1 26.0 29.0
Other income, net ( 0.1 ) — ( 0.5 ) ( 0.6 )
Income (loss) before income taxes $ 266.2 $ 35.9 $ ( 118.1 ) $ 184.0
Segment assets $ 2,112.6 $ 256.1 $ 191.6 $ 2,560.3
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.