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Brinker Intl (EAT) has been bucking the restaurant trend. While other chains have been struggling, this restaurant operator (Chili's, Maggiano's) has been impressive in recent quarters. The stock has been trending higher for much of 2024, but has really taken off since early October, up more than 70% in just the past two months to new all-time highs.

• On October 30, EAT reported a huge EPS beat for Q1 (Sep) with nice upside revs. It also raised FY25 EPS guidance pretty significantly to $5.20-5.50 from $4.35-4.75. To raise guidance so substantially this early in the fiscal year tells us management is confident about the balance of FY25. Oftentimes, management is hesitant to raise full year guidance early in the year in order to leave wiggle room in case subsequent quarters fall short, so that is a great sign.
• The metric that really jumps out at us was its huge consolidated comps of +13.0%, with its flagship Chili's brand posting even higher comps at +14.1%. driven by price of +6.8%, positive mix of +0.8%, and positive traffic of +6.5% with traffic improving sequentially throughout the quarter.
• Chili's has been paring down its menu with a greater focus on value. Over the past 2.5 years, Chili's has removed around a quarter of its menu to focus on core offerings: burgers, crispers, fajitas and margaritas, which now represent 47% of sales. Its 3-for-Me $10.99 bundle has been a hit. It includes an appetizer of unlimited chips and salsa, a 7.5-ounce burger and fries, and a bottomless soft drink. That is tough for competitors to match and Chili's advertising has been very effective.
• EAT says its 3-for-Me offering clearly resonates with guests who are looking for high quality food at a very reasonable price. While other chains have talked about a challenged consumer, Chili's has been seeing big traffic gains driven by its Big Smasher burger and its 3-for-Me offering. Another key driver is the success of its Triple Dipper with Q1 sales up 70% yr/yr. It's popular with younger guests who prefer more variety, customization and experiential flavors.
• Chili's has also been raising prices on several entrees. That includes the phaseout of its $10 lunch special, which included a starter and entrée. Plus if you are a rewards member, you can get a free drink each visit. It is tough to see how they were turning a profit on this deal. However, its lunch prices are now higher and the starter is only chips & salsa. While it's frustrating to lose that good deal, this is a more realistic price point.

Overall, EAT has really been turning itself around. Paring down the menu makes it simpler and makes employees more efficient. Also, we really think EAT has curated its value offering and has gotten it down to a science. We see that in the strong traffic growth despite raising prices in some areas. It seems that consumers in all income cohorts are looking for value these days. Briefing.com has been profiling Brinker for some time and we have wondered why the stock had been a laggard. However, it has been making up for lost time. In fairness, the stock does look overextended in the near term, but it's a name to keep on the radar.