How I Made $5000 in the Stock Market

It’s Time to Dine Out on Brinker Stock

Oct 10, 2025 11:28:00 -0400 by Jacob Sonenshine | #Restaurants #The Trader

Same-store sales at Chili’s grew 14.9% in 2024 and 21.3% in 2025’s second calendar-year quarter. (Callaghan O’Hare/Bloomberg)

Key Points

The heat has come out of shares of Chili’s owner Brinker International . Its coming earnings report could restore its sizzle.

Brinker stock has had a tough time of it lately. Shares have slumped 25% over the past three months, and it would be easy to blame the slide on weakness in restaurant stocks generally—the AdvisorShares Restaurant exchange-traded fund has, after all, fallen 14% from its own July peak as restaurant spending slowed alongside a weakening job market.

But Brinker has its own concerns—the high expectations that come from the stock more than tripling in 2024. The strong performance was driven by a successful turnaround at Chili’s thanks to its “$3 for Me” campaign that finally got the business growing again. Same-store sales grew 14.9% in 2024 and 21.3% in 2025’s second calendar-year quarter.

Analysts expect Brinker’s 2025 same-store sales to grow 15% year over year, bringing total revenue to a record $5.55 billion, according to FactSet, far higher than the 5% annual growth for the decade ended last year, which includes a few years of declines.

That’s set up a tough comparison in 2026, and the stock’s performance suggests investors are dubious about the company’s ability to continue growing at such a pace. Analysts share those doubts: They expect sales growth to slow to 6% next year to $5.86 billion. Those concerns seem misguided: For one thing, 6% growth would still be better than the just over 4% growth the company said the broader industry has seen recently.

What’s more, the short-term focus ignores the potential Brinker has to make up for years of underinvestment and weak same-store sales, notes J.P. Morgan analyst John Ivankoe. He emphasizes management has invested in differentiating Chili’s, which recently represented 91% of the company’s revenue, allowing it to continue to win back market share.

“Shorter term investors are too focused on difficult compares and not enough for the various pieces in place to allow the core Chili’s brand to regain 20+ years of lost same-store-sales traffic,” writes Ivankoe, who upgraded the stock to Overweight from Neutral this past week.

First, Brinker has to get through its third-quarter earnings report, due on Oct. 29. The company is expected to report a profit of $1.72 a share on sales of $1.32 billion. Its recent history suggests it could exceed those numbers: It has beaten sales forecasts in each of the past five quarters by an average of 3.9%.

Brinker is also becoming more profitable, which would push earnings growth above that of sales. CEO Kevin Hochman, who has overseen the company’s resurgence and more than fourfold stock gain since 2022, is making tweaks to keep increasing traffic. He said the company has just finished eliminating a quarter of menu options, simplifying the dining experience.

He also said it has gotten through investments to repair kitchen equipment that it couldn’t tend to during Covid. This year, management will remodel several locations in Texas, beginning a multiyear remodeling program. Spending on marketing, which is expected to hit $140 million in 2025, up from $40 million in 2022, should slow.

The resulting profit growth can lift the valuation. Shares trade at 11.6 times expected earnings per share for the next 12 months, at the low end of its five-year range in the past five years. Once the market determines Brinker can sustain its growth, it could trade close to more proven growth stories such as Darden Restaurants and Texas Roadhouse , which trade at 17 and 23 times, respectively.

If Chili’s can deliver on those results, investors should enjoy the burn.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com