TD Cowen Reiterates Buy Rating on Brinker Int'l (EAT)

TD Cowen analyst Andrew Charles reiterated a Buy rating and $270.00 price target on Brinker Int'l (NYSE: EAT).

The analyst comments "We attended Brinker’s Investor Day in Dallas and came away encouraged by management’s framework to sustain positive traffic growth and drive continued beats & raises seen in F2023-2026. We note four tangible, symbiotic sales drivers: Menu Innovation: Looking ahead, we walked away with greater confidence that Chili's is in middle innings of upgrading the menu, noting only ~60% of the menu has been upgraded to date. Further, we share management’s confidence in expanding into Mexican-inspired offerings over time, where the brand has credibility to participate. This will include steak quesadilla and chicken crisper tacos that can be included in the successful Better Than Fast Food value campaign utilized in recent years. Brand Relevance through Marketing: Under CMO George Felix, Chili's has shown no shortage of creative marketing ideas that we expect to persist. Using tokenized credit card data, Chili’s is consistently attracting roughly 3.0–3.5 million new guests per month, while average visitation frequency has remained stable at ~3 visits per year, suggesting new guests are converting into repeat customers, rather than creating one-time promotional spikes. This negates the need to increase CRM efforts via the dormant loyalty program. Better Operations: We were also encouraged by management's commentary around Chili's remaining traffic runway. Average weekly guests per restaurant have grown at a 7% CAGR from ~3,400 in FY23 to ~4,200, though the system's historical peak was closer to 5,200 in the early 2000s. Management highlighted the goal to reach 4,300 average guests per week that would translate to ~2% same store sales. To illustrate dining room capacity, we note the business in the early 2000's was far higher dine-in while the company has an impressive suit of employee and back office technological tools to speed up the experience without rushing consumers. The strong sales backdrop that is leading to better tips for severs along with technological tools has led hourly turnover to decline to 84%, while management turnover has stabilized at ~20%."

For an analyst ratings summary and ratings history on Brinker Int'l click here. For more ratings news on Brinker Int'l click here.

Shares of Brinker Int'l closed at $199.56 yesterday.

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