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Brinker Intl (EAT) wrapped up FY25 on a high note. The stock is trading higher despite reporting fairly modest EPS/revenue upside with its Q4 (Jun) earnings report this morning. This restaurant operator (Chili's, Maggiano's) reported a huge 55% yr/yr jump in adjusted EPS to $2.49, by far its smallest upside in the past four quarters. Revenue rose a healthy 21.0% yr/yr to $1.46 bln, but that was just slight upside and follows two huge upside quarters in Q2 and Q3.

• So why is the stock higher? We got our first look at FY26 guidance and it was pretty solid. It was within analyst expectations, but the mid-point of adjusted EPS guidance of $9.90-10.50 was well above those expectations. The mid-point for revs was slightly above. However, given the macro pressures being faced by consumers, we think investors are taking the guidance as a win.
• The other big reason why the stock is higher is that Q4 same-restaurant comps were quite impressive. Comps came in at a whopping +21.3% (Chili's +23.7%; Maggiano's -0.4%), although they were a bit softer than Q3's (Mar) blowout comps of +28.2% (Chili's +31.6%; Maggiano's +0.4%). A final reason for the move today was EAT increasing its share buyback authorization by $400 mln.
• EAT described its Chili's segment as "officially back, baby back!" Chili's sales growth in Q4 was driven primarily by continued increases in traffic. It also benefitted from a favorable sales mix and menu pricing. Chili's also drove sales via on-point advertising that highlights its value and encourages guest trial. The company also cited operational improvements as contributing to traffic gains by driving repeat guest visits.
• Leveraging these higher sales, Chili's saw improved margins which allowed EAT to accelerate investments in the business and pay down debt. Specifically, company-wide operating margin in Q4 jumped to 9.8% from 6.1% a year ago. And restaurant operating margin (non-GAAP) rose to 17.8% from 15.2% a year ago. Its Maggiano's segment is struggling a bit, Q4 was impacted by lower traffic, partially offset by menu pricing.
• At the end of Q4, Chili's relaunched its ribs platform and customers are raving about the look, the size and the taste of the ribs. EAT said its new ribs are a very noticeable upgrade and says it's clear Chili's has a winning product with its new ribs. Chili's intent now is to use them to drive traffic. After a quarter to ramp up execution on the new ribs, Chili's plan is to turn on digital marketing in Q2 (Dec). Chili's also rolled out its new frozen margarita, which features a new premium Patrón.

Overall, this was a very solid end to FY25 and we think investors are pleased with its FY26 outlook, especially given the macro headwinds. But that is maybe working to Chili's advantage. Its value menu is quite impressive, offering a delicious meal at a good price. We really think EAT has curated its value offering and has gotten it down to a science with its 3-for-Me offering and it sounds like its upgraded ribs could drive additional traffic in FY26.