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Brinker Intl (EAT +16%) is trading sharply higher to a new all-time high after reporting huge EPS upside with its Q2 (Dec) earnings report this morning. This restaurant operator (Chili's, Maggiano's) reported a huge 183% yr/yr jump in adjusted EPS to $2.80, which blew away analyst expectations. Revenue rose a healthy 26.5% yr/yr to $1.36 bln, which also was much better than expected.

• The metric that really jumped out at us was same restaurant comps coming in at a whopping +27.4% (Chili's +31.4%; Maggiano's +1.8%). The comp increase at Chili's was primarily driven both by new guests trying Chili's and return guests coming more frequently despite a more competitive promotional environment. Chili's sales growth was driven by a 19.9% increase in traffic generated by investments in value-focused advertising.
• Chili's delivered another positive quarter in its turnaround and significantly outperformed the industry with its +31.4% comps. EAT says that Chili's turnaround has taken hold and it's sustainable. Growth continues to be well balanced, driven by the introduction of a new generation to the Chili's brand and by existing guests coming more often. Brinker says its marketing department is doing a great job of focusing on value, bringing guests in and putting Chili's back in culture again.
• EAT is encouraged with its ability to accelerate Chili's sales while also continuing to trim the menu. Fiscal YTD, Chili's has removed 13 menu items, full pantry SKUs and several prep sets. From a food standpoint, Chili's has moved to a higher quality chicken breast on every entree as well as guacamole made fresh in-house every day. Chili's also upgraded its recipes for chicken wings and bacon to make them crispier. Also, the installation of its new kitchen display systems is now complete.
• Chili's saw traffic and guest counts accelerate behind its better than fast food TV campaign and social media excitement around the Triple Dipper. Chili's also teased "big food innovation news" coming in Q4 (Jun) to bring excitement to the 3-for-Me platform. Chili's will disclose that on the MarQ call. Comps do get tougher in Q4 when EAT laps the Big Smasher roll out.

Brinker has been bucking the restaurant trend with back-to-back huge beats in Q1 and now in Q2. While other chains have been struggling, its Chili's brand has been impressive in recent quarters. The stock has really taken off since early October, up 135% since then. 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 with its 3-for-Me offering. Consumers want value right now and Chili's is a great deal. 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.