Chili's: Still Cheap, Still Ignored, Still A Strong BuyCasual dining has been in limbo post-pandemic—too pricey for impulse meals, not fancy enough to feel special. But Brinker International (EAT), parent of Chili’s and Maggiano’s, is proving there's still a winning formula if you get the execution right.
🛠️ Operational Overhaul at Chili’s
Chili’s has quietly transformed itself. A deep operational review led to smarter kitchen processes and a slimmed-down menu. These changes boosted both food quality and efficiency. By simplifying things like wing sauces and adding real-time kitchen tools, Chili’s improved service speed and cut costs—freeing up staff to focus on core offerings like burgers and margaritas.
As management put it: "Marketing brings guests in, operations bring them back."
📣 Marketing That Works
Chili’s is also nailing the branding. Viral TikToks and a more relaxed, value-focused message have resonated with consumers—both old fans and new. Unlike competitors chasing trends or discounts, Chili’s has leaned into what it does best: an affordable, comfortable dining experience.
The strategy is working. Traffic is up, and customers are coming back—not just for the hype, but for the value.
📊 Financials and Growth Potential
Analysts expect revenue growth of 21%, 5%, and 5.5% over the next three years, with EPS potentially growing more than 11% annually. However, we believe these estimates undervalue Chili’s long-term growth, especially as margins improve and brand momentum continues.
At just 11x cash flow and a PEG ratio of 0.47, EAT is significantly cheaper than peers like Darden (2.1) and Shake Shack (3.8). That discount suggests the market hasn’t fully priced in Brinker’s turnaround.
⚠️ Risks to Watch
Slowing improvements: Much of the "low-hanging fruit" in operations may already be picked, so future gains could taper off.
Debt load: With $430M in long-term debt, a business slowdown could raise financial pressure, despite recent earnings strength.
✅ Bottom Line: Strong Buy
Chili’s turnaround is more than a viral blip—it’s a smart reinvention. Combined with solid execution at Maggiano’s, Brinker International is proving that casual dining can still thrive.
With strong fundamentals, smart leadership, and a discounted valuation, EAT stock looks like a compelling 'Strong Buy' for the next 12 months.
