eat-20220928
0000703351--06-282023Q1falsetruefalse0.7511111500007033512022-06-302022-09-2800007033512022-10-28xbrli:shares0000703351eat:CompanysalesMember2022-06-302022-09-28iso4217:USD0000703351eat:CompanysalesMember2021-07-012021-09-290000703351eat:FranchiseRevenuesMember2022-06-302022-09-280000703351eat:FranchiseRevenuesMember2021-07-012021-09-2900007033512021-07-012021-09-29iso4217:USDxbrli:shares00007033512022-09-2800007033512022-06-2900007033512021-06-3000007033512021-09-29eat:Restaurants0000703351us-gaap:EntityOperatedUnitsMember2022-09-280000703351us-gaap:FranchisedUnitsMember2022-09-280000703351eat:ChilisRestaurantsMember2022-09-28eat:Countryeat:territories0000703351eat:DeferredFranchiseAndDevelopmentFeesMember2022-06-290000703351eat:DeferredFranchiseAndDevelopmentFeesMember2022-06-302022-09-280000703351eat:DeferredFranchiseAndDevelopmentFeesMember2022-09-2800007033512022-10-292022-09-2800007033512023-06-292022-09-2800007033512024-06-272022-09-2800007033512025-06-252022-09-2800007033512026-06-252022-09-2800007033512027-06-302022-09-280000703351eat:GiftCardSalesMember2022-06-302022-09-280000703351eat:GiftCardRedemptionsMember2022-06-302022-09-280000703351eat:GiftCardBreakageMember2022-06-302022-09-280000703351eat:GiftCardOtherMember2022-06-302022-09-28utr:Rate0000703351us-gaap:EmployeeStockOptionMember2022-06-302022-09-280000703351us-gaap:EmployeeStockOptionMember2021-07-012021-09-290000703351eat:RestrictedShareAwardMember2022-06-302022-09-280000703351eat:RestrictedShareAwardMember2021-07-012021-09-290000703351eat:CompanysalesMembereat:ChilisRestaurantsMember2022-06-302022-09-280000703351eat:CompanysalesMembereat:MaggianosRestaurantsMember2022-06-302022-09-280000703351eat:CompanysalesMemberus-gaap:CorporateAndOtherMember2022-06-302022-09-280000703351eat:FranchiseRevenuesMembereat:ChilisRestaurantsMember2022-06-302022-09-280000703351eat:MaggianosRestaurantsMembereat:FranchiseRevenuesMember2022-06-302022-09-280000703351us-gaap:CorporateAndOtherMembereat:FranchiseRevenuesMember2022-06-302022-09-280000703351eat:ChilisRestaurantsMember2022-06-302022-09-280000703351eat:MaggianosRestaurantsMember2022-06-302022-09-280000703351us-gaap:CorporateAndOtherMember2022-06-302022-09-280000703351eat:MaggianosRestaurantsMember2022-09-280000703351us-gaap:CorporateAndOtherMember2022-09-280000703351eat:CompanysalesMembereat:ChilisRestaurantsMember2021-07-012021-09-290000703351eat:CompanysalesMembereat:MaggianosRestaurantsMember2021-07-012021-09-290000703351eat:CompanysalesMemberus-gaap:CorporateAndOtherMember2021-07-012021-09-290000703351eat:FranchiseRevenuesMembereat:ChilisRestaurantsMember2021-07-012021-09-290000703351eat:MaggianosRestaurantsMembereat:FranchiseRevenuesMember2021-07-012021-09-290000703351us-gaap:CorporateAndOtherMembereat:FranchiseRevenuesMember2021-07-012021-09-290000703351eat:ChilisRestaurantsMember2021-07-012021-09-290000703351eat:MaggianosRestaurantsMember2021-07-012021-09-290000703351us-gaap:CorporateAndOtherMember2021-07-012021-09-290000703351eat:FranchiseeMembereat:ChilisRestaurantsMember2022-06-290000703351eat:LiquorLicensesMember2021-07-012021-09-290000703351eat:LiquorLicensesMember2022-06-302022-09-2800007033512021-07-012022-06-290000703351eat:A3.875notesMember2022-09-28xbrli:pure0000703351eat:A5.000notesMember2022-09-280000703351eat:A3.875notesMember2022-06-290000703351eat:A5.000notesMember2022-06-29eat:leases0000703351eat:A8000MRevolvingCreditFacilityMember2022-09-280000703351eat:A8000MRevolvingCreditFacilityMember2022-06-290000703351eat:A8000MRevolvingCreditFacilityMember2022-06-302022-09-280000703351us-gaap:LondonInterbankOfferedRateLIBORMembereat:A8000MRevolvingCreditFacilityMember2022-06-302022-09-280000703351srt:MinimumMembereat:A8000MRevolvingCreditFacilityMember2022-06-302022-09-280000703351srt:MaximumMembereat:A8000MRevolvingCreditFacilityMember2022-06-302022-09-280000703351us-gaap:CommonStockMember2022-06-290000703351us-gaap:AdditionalPaidInCapitalMember2022-06-290000703351us-gaap:RetainedEarningsMember2022-06-290000703351us-gaap:TreasuryStockMember2022-06-290000703351us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-290000703351us-gaap:CommonStockMember2022-06-302022-09-280000703351us-gaap:AdditionalPaidInCapitalMember2022-06-302022-09-280000703351us-gaap:RetainedEarningsMember2022-06-302022-09-280000703351us-gaap:TreasuryStockMember2022-06-302022-09-280000703351us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-302022-09-280000703351us-gaap:CommonStockMember2022-09-280000703351us-gaap:AdditionalPaidInCapitalMember2022-09-280000703351us-gaap:RetainedEarningsMember2022-09-280000703351us-gaap:TreasuryStockMember2022-09-280000703351us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-280000703351us-gaap:CommonStockMember2021-06-300000703351us-gaap:AdditionalPaidInCapitalMember2021-06-300000703351us-gaap:RetainedEarningsMember2021-06-300000703351us-gaap:TreasuryStockMember2021-06-300000703351us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000703351us-gaap:CommonStockMember2021-07-012021-09-290000703351us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-290000703351us-gaap:RetainedEarningsMember2021-07-012021-09-290000703351us-gaap:TreasuryStockMember2021-07-012021-09-290000703351us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-290000703351us-gaap:CommonStockMember2021-09-290000703351us-gaap:AdditionalPaidInCapitalMember2021-09-290000703351us-gaap:RetainedEarningsMember2021-09-290000703351us-gaap:TreasuryStockMember2021-09-290000703351us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-2900007033512021-08-160000703351eat:WithheldFromEmployeesMember2022-06-302022-09-280000703351eat:MidAtlanticRegionAcquisitionMembereat:ChilisRestaurantsMember2021-09-020000703351eat:LeaseGuaranteesAndSecondaryObligationsMembersrt:MaximumMember2022-09-280000703351eat:LeaseGuaranteesAndSecondaryObligationsMembersrt:MaximumMember2022-06-290000703351eat:LeaseGuaranteesAndSecondaryObligationsMember2022-09-280000703351eat:CybersecurityincidentMember2022-09-28eat:LegalMatter0000703351eat:GreatLakesRegionAcquisitionMembereat:ChilisRestaurantsMember2021-10-310000703351eat:NorthwestRegionAcquisitionMembereat:ChilisRestaurantsMember2022-02-010000703351eat:NorthwestRegionAcquisitionMembereat:ChilisRestaurantsMember2022-05-050000703351eat:FranchiseeMembereat:ChilisRestaurantsMember2021-07-012022-06-290000703351eat:MidAtlanticRegionAcquisitionMembereat:ChilisRestaurantsMember2021-09-022021-09-020000703351eat:GreatLakesRegionAcquisitionMembereat:ChilisRestaurantsMember2021-10-312021-10-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 28, 2022
Commission File Number 1-10275
https://cdn.kscope.io/9af04eb3e8303ba1030e0b92157b1453-eat-20220928_g1.jpg
BRINKER INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DE
75-1914582
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3000 Olympus Blvd
Dallas
TX
75019
(Address of principal executive offices)(Zip Code)
(972)
980-9917
(Registrant’s telephone number, including area code)
Title of each class
Trading Symbol(s)
Name of exchange on which registered
Common Stock, $0.10 par value
EAT
NYSE
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    No ☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of October 28, 2022: 44,031,628 shares



BRINKER INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page

2

Table of Contents

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BRINKER INTERNATIONAL, INC.
Consolidated Statements of Comprehensive (Loss) Income (Unaudited)
(In millions, except per share amounts)
Thirteen Week Periods Ended
September 28,
2022
September 29,
2021
Revenues
Company sales$946.1 $865.6 
Franchise revenues9.4 10.8 
Total revenues955.5 876.4 
Operating costs and expenses
Food and beverage costs289.5 234.3 
Restaurant labor330.6 304.9 
Restaurant expenses268.8 231.3 
Depreciation and amortization41.9 39.3 
General and administrative39.5 36.5 
Other (gains) and charges5.0 4.5 
Total operating costs and expenses975.3 850.8 
Operating (loss) income(19.8)25.6 
Interest expenses12.3 12.5 
Other income, net(0.4)(0.3)
(Loss) Income before income taxes(31.7)13.4 
(Benefit) Provision for income taxes(1.5)0.2 
Net (loss) income$(30.2)$13.2 
Basic net (loss) income per share$(0.69)$0.29 
Diluted net (loss) income per share$(0.69)$0.28 
Basic weighted average shares outstanding43.9 45.9 
Diluted weighted average shares outstanding43.9 47.0 
Other comprehensive loss
Foreign currency translation adjustment$(1.0)$(0.4)
Other comprehensive loss(1.0)(0.4)
Comprehensive (loss) income$(31.2)$12.8 
See accompanying Notes to Consolidated Financial Statements (Unaudited)
3

Table of Contents

BRINKER INTERNATIONAL, INC.
Consolidated Balance Sheets
(In millions, except per share amounts)
Unaudited
September 28,
2022
June 29,
2022
ASSETS
Current assets
Cash and cash equivalents$19.5 $13.5 
Accounts receivable, net57.6 66.4 
Inventories36.3 35.6 
Restaurant supplies55.4 55.5 
Prepaid expenses35.4 25.7 
Income taxes receivable, net5.6 4.5 
Total current assets209.8 201.2 
Property and equipment, at cost
Land43.4 43.4 
Buildings and leasehold improvements1,612.4 1,603.9 
Furniture and equipment802.4 793.0 
Construction-in-progress48.4 33.6 
2,506.6 2,473.9 
Less accumulated depreciation and amortization(1,683.5)(1,657.2)
Net property and equipment823.1 816.7 
Other assets
Operating lease assets1,152.1 1,160.5 
Goodwill194.8 195.1 
Deferred income taxes, net66.5 62.5 
Intangibles, net26.8 27.4 
Other20.7 21.0 
Total other assets1,460.9 1,466.5 
Total assets$2,493.8 $2,484.4 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable$146.5 $134.3 
Gift card liability75.0 83.9 
Accrued payroll106.0 111.0 
Operating lease liabilities112.8 112.7 
Other accrued liabilities133.3 116.1 
Total current liabilities573.6 558.0 
Long-term debt and finance leases, less current installments1,020.8 989.1 
Long-term operating lease liabilities, less current portion1,141.1 1,151.1 
Other liabilities54.9 54.3 
Commitments and contingencies (Note 13)
Shareholders’ deficit
Common stock (250.0 million authorized shares; $0.10 par value; 60.3 million shares issued and 44.0 million shares outstanding at September 28, 2022, and 70.3 million shares issued and 43.8 million shares outstanding at June 29, 2022)
6.0 7.0 
Additional paid-in capital688.0 690.9 
Accumulated other comprehensive loss(6.3)(5.3)
Accumulated deficit(484.7)(148.4)
Treasury stock, at cost (16.3 million shares at September 28, 2022, and 26.5 million shares at June 29, 2022)
(499.6)(812.3)
Total shareholders’ deficit(296.6)(268.1)
Total liabilities and shareholders’ deficit$2,493.8 $2,484.4 
See accompanying Notes to Consolidated Financial Statements (Unaudited)
4

Table of Contents

BRINKER INTERNATIONAL, INC.
Consolidated Statements of Cash Flows (Unaudited)
(In millions)
Thirteen Week Periods Ended
September 28,
2022
September 29,
2021
Cash flows from operating activities
Net (loss) income$(30.2)$13.2 
Adjustments to reconcile Net (loss) income to Net cash provided by operating activities:
Depreciation and amortization41.9 39.3 
Stock-based compensation4.7 4.3 
Restructure and impairment charges2.4 1.9 
Net loss on disposal of assets1.5 0.7 
Other0.4 1.5 
Changes in assets and liabilities, net of the impact of acquisitions:
Accounts receivable, net6.1 12.7 
Inventories(1.1)(0.3)
Restaurant supplies0.0 (0.3)
Prepaid expenses(9.7)(4.6)
Operating lease assets, net of liabilities(0.9)8.1 
Deferred income taxes, net(4.1)8.2 
Other assets0.0 0.1 
Accounts payable7.1 (12.7)
Gift card liability(8.9)(4.8)
Accrued payroll(5.0)(24.8)
Other accrued liabilities18.7 7.7 
Current income taxes1.4 (9.1)
Other liabilities0.3 (0.9)
Net cash provided by operating activities24.6 40.2 
Cash flows from investing activities
Payments for property and equipment(46.7)(37.3)
Proceeds from note receivable1.1  
Payments for franchise restaurant acquisitions (47.5)
Proceeds from sale leaseback transactions, net of related expenses 20.5 
Net cash used in investing activities(45.6)(64.3)
Cash flows from financing activities
Borrowings on revolving credit facility135.0 285.0 
Payments on revolving credit facility(100.0)(205.0)
Payments on long-term debt(5.8)(5.5)
Purchases of treasury stock(2.0)(39.6)
Payments of dividends(0.2)(0.8)
Payments for debt issuance costs (3.0)
Proceeds from issuance of treasury stock0.0 0.3 
Net cash provided by financing activities27.0 31.4 
Net change in cash and cash equivalents6.0 7.3 
Cash and cash equivalents at beginning of period13.5 23.9 
Cash and cash equivalents at end of period$19.5 $31.2 
See accompanying Notes to Consolidated Financial Statements (Unaudited)
5

Table of Contents
Footnote Index
BRINKER INTERNATIONAL, INC.
Notes to Consolidated Financial Statements (Unaudited)
Footnote Index
Note #DescriptionPage
Basis of Presentation
Revenue Recognition
Other Gains and Charges
Income Taxes
Net (Loss) Income Per Share
Segment Information
Fair Value Measurements
Leases
Debt
Accrued and Other Liabilities
Shareholders’ Deficit
Supplemental Cash Flow Information
Contingencies
Fiscal 2022 Chili’s Restaurant Acquisitions

6

Table of Contents
Footnote Index

1. BASIS OF PRESENTATION
References to “Brinker,” the “Company,” “we,” “us,” and “our” in this Form 10-Q refer to Brinker International, Inc. and its subsidiaries and any predecessor companies of Brinker International, Inc. Our Consolidated Financial Statements (Unaudited) as of September 28, 2022 and June 29, 2022, and for the thirteen week periods ended September 28, 2022 and September 29, 2021, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
Effective for the first quarter of fiscal 2023, we are presenting certain revenue streams related to gift cards, digital entertainment, Maggiano’s banquet service charges and delivery fees within Company sales to better align with the presentation used within the casual dining industry. Our presentation of Franchise revenues will now include only revenues related to the ongoing franchise-operated restaurants. Comparative figures in prior years have been adjusted to conform to the current year’s presentation. These reclassifications have no effect on Total revenues or Net income previously reported.
We are principally engaged in the ownership, operation, development and franchising of the Chili’s® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy® (“Maggiano’s”) restaurant brands, as well as virtual brands including It’s Just Wings® and Maggiano’s Italian Classics®. As of September 28, 2022, we owned, operated or franchised 1,645 restaurants, consisting of 1,182 Company-owned restaurants and 463 franchised restaurants, located in the United States, 28 countries and two United States territories.
Use of Estimates
The preparation of the Consolidated Financial Statements (Unaudited) is in conformity with generally accepted accounting principles in the United States (“GAAP”) and requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements (Unaudited), and the reported amounts of revenues and costs and expenses in the reporting periods. Actual results could differ from those estimates.
The information furnished herein reflects all adjustments (consisting only of normal recurring accruals and adjustments) which are, in our opinion, necessary to fairly state the interim operating results, financial position and cash flows for the respective periods. However, these operating results are not necessarily indicative of the results expected for the full fiscal year. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with GAAP, have been omitted pursuant to SEC rules and regulations. The Notes to Consolidated Financial Statements (Unaudited) should be read in conjunction with the Notes to Consolidated Financial Statements contained in our June 29, 2022 Form 10-K. We believe the disclosures are sufficient for interim financial reporting purposes. All amounts in the Notes to Consolidated Financial Statements (Unaudited) are presented in millions unless otherwise specified.
Foreign Currency Translation
The foreign currency translation adjustment included in Comprehensive (loss) income in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited) represents the unrealized impact of translating the financial statements of our Canadian restaurants from Canadian dollars to United States dollars. This amount is not included in Net (loss) income and would only be realized upon disposition of our Canadian restaurants. The related Accumulated other comprehensive loss is presented in the Consolidated Balance Sheets (Unaudited).
Impact of COVID-19 Pandemic
The number of open dining rooms and the dining room capacity restrictions have fluctuated over the course of the COVID-19 pandemic based on state and local mandates and has resulted in significant adverse impacts to our guest traffic and sales primarily in fiscal 2021. Starting fiscal 2022, we have experienced limited product shortages and service disruptions in our supply chain, limited availability of labor to operate our restaurants due to a tight labor market and an increase in employee turnover. It is possible that supply chain and labor shortages or disruptions could continue or increase in future periods if demand for goods, transportation and labor remains high.

7

Table of Contents
Footnote Index
We have been carefully assessing the effect of COVID-19 on our business as conditions continue to evolve throughout the communities we serve. At this time, the ultimate impact of COVID-19 cannot be reasonably estimated due to the uncertainty about the extent and the duration of the spread of the virus and could lead to further reduced sales, capacity restrictions, restaurant closures, delays in our supply chain or impair our ability to staff accordingly which could adversely impact our financial results.
Impact of Inflation
During the first quarter of fiscal 2023, inflation did have a material impact on our operations. Increasing inflation could have a severe impact on the United States or global economies and have an adverse impact on our business, financial condition and results of operations. If commodity pricing and labor costs increase significantly, we may not be able to adjust menu prices to sufficiently offset the effect of the various cost increases without negatively impacting consumer demand.
New Accounting Standards Implemented in Fiscal 2023
We reviewed accounting pronouncements that became effective for our fiscal 2023 and determined that either they were not applicable or they did not have a material impact on the Consolidated Financial Statements (Unaudited). We also reviewed recently issued accounting pronouncements to be adopted in future periods and determined that they are not expected to have a material impact on the Consolidated Financial Statements (Unaudited).
2. REVENUE RECOGNITION
Deferred Franchise and Development Fees
Our deferred franchise and development fees consist of the unrecognized fees received from franchisees. Recognition of these fees in subsequent periods is based on satisfaction of the contractual performance obligations of our active contracts with franchisees. We also expect to earn subsequent period royalties and advertising fees related to our franchise contracts; however, due to the variability and uncertainty of these future revenues based upon a sales-based measure, these future revenues are not yet estimable as the performance obligations remain unsatisfied.
Deferred franchise and development fees are classified within Other accrued liabilities for the current portion expected to be recognized within the next 12 months, and Other liabilities for the long-term portion in the Consolidated Balance Sheets (Unaudited).
The following table reflects the changes in deferred franchise and development fees between June 29, 2022 and September 28, 2022:
Deferred Franchise and Development Fees
Balance as of June 29, 2022$10.1 
Additions0.7 
Amount recognized to Franchise revenues(0.3)
Balance as of September 28, 2022$10.5 

8

Table of Contents
Footnote Index
The following table illustrates franchise and development fees expected to be recognized in the future related to performance obligations that were unsatisfied or partially unsatisfied as of September 28, 2022:
Fiscal YearFranchise and Development Fees Revenue Recognition
Remainder of 2023$0.7 
20240.9 
20250.8 
20260.8 
20270.7 
Thereafter6.6 
$10.5 
Deferred Gift Card Revenues
Deferred revenues related to our gift cards include the full value of unredeemed gift card balances less recognized breakage and the unamortized portion of third party fees. The following table reflects the changes in the Gift card liability between June 29, 2022 and September 28, 2022:
Gift Card Liability
Balance as of June 29, 2022$83.9 
Gift card sales17.1 
Gift card redemptions recognized to Company sales(23.8)
Gift card breakage recognized to Company sales(2.8)
Other0.6 
Balance as of September 28, 2022
$75.0 
3. OTHER GAINS AND CHARGES
Other (gains) and charges in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited) consist of the following:
Thirteen Week Periods Ended
September 28,
2022
September 29,
2021
Restaurant closure charges$1.5 $0.2 
Enterprise system implementation costs1.0 0.6 
Remodel-related costs0.8 1.5 
Lease modification gain, net(0.7) 
Other2.4 2.2 
$5.0 $4.5 
Restaurant closure charges related to closure costs and leases associated with certain closed Chili’s restaurants for all periods presented.
Enterprise system implementation costs primarily consisted of consulting fees and subscription fees related to the ongoing enterprise system implementation for all periods presented.
Remodel-related costs related to existing fixed asset write-offs associated with the ongoing Chili’s and Maggiano’s remodel projects for all periods presented.
Lease modification gain, net related to the lease termination of certain Chili’s operating lease liabilities.

9

Table of Contents
Footnote Index
4. INCOME TAXES
Thirteen Week Periods Ended
September 28,
2022
September 29,
2021
Effective income tax rate4.7 %1.5 %
The federal statutory tax rate for the periods presented was 21.0%. Reconciliation between the statutory tax rate and the effective tax rate is as follows:
Thirteen Week Period Ended
September 28,
2022
Federal statutory tax rate21.0 %
FICA tip tax credit(22.8)%
State income taxes, net of federal benefit5.9 %
Stock-based compensation tax shortfalls0.7 %
Other(0.1)%
Effective income tax rate4.7 %
5. NET (LOSS) INCOME PER SHARE
Basic net (loss) income per share is computed by dividing Net (loss) income by the Basic weighted average shares outstanding for the reporting period. Diluted net (loss) income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of Diluted net (loss) income per share, the Basic weighted average shares outstanding is increased by the dilutive effect of stock options and restricted share awards. Stock options and restricted share awards with an anti-dilutive effect are not included in the Diluted net (loss) income per share calculation. Basic weighted average shares outstanding are reconciled to Diluted weighted average shares outstanding as follows:
Thirteen Week Periods Ended
September 28,
2022
September 29,
2021
Basic weighted average shares outstanding43.9 45.9 
Dilutive stock options 0.4 
Dilutive restricted shares 0.7 
Total dilutive impact 1.1 
Diluted weighted average shares outstanding43.9 47.0 
Awards excluded due to anti-dilutive effect2.8 0.0 
6. SEGMENT INFORMATION
Our operating segments are Chili’s and Maggiano’s. The Chili’s segment includes the results of our Company-owned Chili’s restaurants, which are principally located in the United States, within the full-service casual dining segment of the industry. The Chili’s segment also has Company-owned restaurants in Canada, and franchised locations in the United States, 28 countries and two United States territories. The Maggiano’s segment includes the results of our Company-owned Maggiano’s restaurants in the United States as well as the results from our domestic franchise business. The Other segment includes costs related to our restaurant support teams for the Chili’s and Maggiano’s brands, including operations, finance, franchise, marketing, human resources and culinary innovation. The Other segment also includes costs related to the common and shared infrastructure, including accounting, information technology, purchasing, guest relations, legal and restaurant development.

10

Table of Contents
Footnote Index
Company sales for each segment include revenues generated by the operation of Company-owned restaurants including food and beverage sales, net of discounts, Maggiano’s banquet service charge income, gift card breakage, delivery income, digital entertainment revenues, merchandise income and gift card discount costs from third-party gift card sales. Franchise revenues for each operating segment include royalties, franchise advertising fees, franchise and development fees and gift card equalization.
We do not rely on any major customers as a source of sales, and the customers and long-lived assets of our operating segments are predominantly located in the United States. There were no material transactions amongst our operating segments.
Our chief operating decision maker uses Operating (loss) income as the measure for assessing performance of our segments. Operating income includes revenues and expenses directly attributable to segment-level results of operations. Restaurant expenses during the periods presented primarily included restaurant rent, property and equipment maintenance, utilities, delivery fees, supplies, credit card processing fees, property taxes, supervision expenses, and worker’s comp and general liability insurance.
The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
Thirteen Week Period Ended September 28, 2022
Chili’sMaggiano’sOtherConsolidated
Company sales$840.6 $105.5 $ $946.1 
Franchise revenues9.3 0.1  9.4 
Total revenues849.9 105.6  955.5 
Food and beverage costs260.9 28.6  289.5 
Restaurant labor294.4 36.2  330.6 
Restaurant expenses236.9 31.7 0.2 268.8 
Depreciation and amortization36.0 3.2 2.7 41.9 
General and administrative9.5 2.5 27.5 39.5 
Other (gains) and charges3.0 0.5 1.5 5.0 
Total operating costs and expenses840.7 102.7 31.9 975.3 
Operating income (loss)9.2 2.9 (31.9)(19.8)
Interest expenses1.0 0.1 11.2 12.3 
Other income, net  (0.4)(0.4)
Income (loss) before income taxes$8.2 $2.8 $(42.7)$(31.7)
Segment assets$2,127.4 $220.0 $146.4 $2,493.8 
Segment goodwill156.4 38.4  194.8 
Payments for property and equipment42.7 1.9 2.1 46.7 

11

Table of Contents
Footnote Index
Thirteen Week Period Ended September 29, 2021
Chili’s(1)
Maggiano’sOtherConsolidated
Company sales(2)
$776.9 $88.7 $ $865.6 
Franchise revenues(2)
10.7 0.1  10.8 
Total revenues787.6 88.8  876.4 
Food and beverage costs213.4 20.9  234.3 
Restaurant labor273.5 31.4  304.9 
Restaurant expenses204.6 26.6 0.1 231.3 
Depreciation and amortization33.0 3.4 2.9 39.3 
General and administrative8.0 2.0 26.5 36.5 
Other (gains) and charges2.8 0.2 1.5 4.5 
Total operating costs and expenses735.3 84.5 31.0 850.8 
Operating income (loss)52.3 4.3 (31.0)25.6 
Interest expenses1.4 0.1 11.0 12.5 
Other income, net(0.1) (0.2)(0.3)
Income (loss) before income taxes$51.0 $4.2 $(41.8)$13.4 
Payments for property and equipment$33.7 $1.9 $1.7 $37.3 
(1)Chili’s segment information for fiscal 2022 includes the results of operations and the fair values of assets related to the 68 restaurants purchased from three former franchisees subsequent to the acquisition dates. Refer to Note 14 - Fiscal 2022 Chili’s Restaurant Acquisitions for further details.
(2)Certain changes in presentation have been made to fiscal 2022 revenue amounts to enhance comparability to the fiscal 2023 presentation. These reclassifications have no effect on Total revenues or Net income previously reported. Refer to Note 1 - Basis of Presentation for further details.
7. FAIR VALUE MEASUREMENTS
Fair value is the price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market participants on the measurement date. Fair value measurements are categorized in three levels based on the types of significant inputs used, as follows:
Level 1
Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2
Observable inputs available at measurement date other than quote prices included in Level 1
Level 3Unobservable inputs that cannot be corroborated by observable market data
Non-Financial Assets Measured on a Non-Recurring Basis
We review the carrying amounts of long-lived property and equipment including finance lease assets, operating lease assets, reacquired franchise rights and transferable liquor licenses annually or when events or circumstances indicate that the fair value may not substantially exceed the carrying amount. We record an impairment charge for the excess of the carrying amount over the fair value. All impairment charges were included in Other (gains) and charges in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited) for the periods presented.
Intangibles, net in the Consolidated Balance Sheets (Unaudited) includes both indefinite-lived intangible assets such as transferable liquor licenses and definite-lived intangible assets such as reacquired franchise rights and trademarks. Intangibles, net included accumulated amortization associated with definite-lived intangible assets at September 28, 2022 and June 29, 2022, of $13.2 million and $12.6 million, respectively.

12

Table of Contents
Footnote Index
Definite Lived Assets Impairment
Definite lived assets include property and equipment, including finance lease assets, operating lease assets and reacquired franchise rights. During the thirteen week periods ended September 28, 2022 and September 29, 2021, no indicators of impairment were identified.
Indefinite Lived Assets Impairment
The fair values of transferable liquor licenses are based on prices in the open market for licenses in the same or similar jurisdictions and are categorized as Level 2. During the thirteen week periods ended September 28, 2022 and September 29, 2021, no indicators of impairment were identified.
Goodwill
We review the carrying amounts of goodwill annually or when events or circumstances indicate that the carrying amount may not be recoverable. We may elect to perform a qualitative assessment for our reporting units to determine whether it is more likely than not that the fair value of the reporting unit is greater than its carrying value. If a qualitative assessment is not performed, or if the result of the qualitative assessment indicates a potential impairment, then the fair value of the reporting unit is compared to its carrying value. If the carrying amount is not recoverable, we record an impairment charge for the excess of the carrying amount over the implied fair value of the goodwill.
Related to the qualitative assessment, changes in circumstances existing at the measurement date or at other times in the future, such as declines in our market capitalization, as well as in the market capitalization of other companies in the restaurant industry, declines in sales at our restaurants, and significant adverse changes in the operating environment for the restaurant industry could result in an impairment loss of all or a portion of our goodwill. We performed our annual goodwill impairment analysis in the second quarter of fiscal 2022 using a qualitative approach based on these factors and no indicators of impairment were identified. During the thirteen week period ended September 28, 2022, management concluded that no triggering event occurred.
Chili’s Restaurant Acquisitions
In fiscal 2022, we completed the acquisition of 68 Chili’s restaurants from three former franchisees. The preliminary fair value of assets acquired and liabilities assumed for these restaurants utilized Level 3 inputs. The fair values of intangible assets acquired were primarily based on significant inputs not observable in an active market, including estimates of replacement costs, future cash flows, and discount rates. Refer to Note 14 - Fiscal 2022 Chili’s Restaurant Acquisitions for further details.
Other Financial Instruments
Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and long-term debt. The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying amounts because of the short maturity of these items.
Long-Term Debt
The carrying amount of debt outstanding related to our revolving credit facility approximates fair value as the interest rate on this instrument approximates current market rates (Level 2). The fair values of the 3.875% and 5.000% notes are based on quoted market prices and are considered Level 2 fair value measurements.
The 3.875% notes and 5.000% notes carrying amounts, which are net of unamortized debt issuance costs and discounts, and fair values are as follows:
September 28, 2022June 29, 2022
Carrying AmountFair ValueCarrying AmountFair Value
3.875% notes
$299.8 $297.0 $299.7 $295.4 
5.000% notes
348.4 338.3 348.2 329.0 

13

Table of Contents
Footnote Index
8. LEASES
We typically lease our restaurant facilities through ground leases (where we lease land only, but construct the building and improvements) or retail leases (where we lease the land/retail space and building). In addition to our restaurant facilities, we also lease our corporate headquarters location and certain equipment.
Lease Amounts Included in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited)
The components of lease expenses included in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited) were as follows:
Thirteen Week Periods Ended
September 28,
2022
September 29,
2021
Operating lease expenses (amortization and interest)$45.1 $41.4 
Variable lease cost15.6 15.1 
Finance lease amortization5.2 5.6 
Finance lease interest1.1 1.6 
Short-term lease cost0.1 0.1 
Sublease income(0.9)(1.1)
Total lease costs, net$66.2 $62.7 
Pre-Commencement Leases
As of the end of the first quarter of fiscal 2023, we have 11 pre-commencement leases for new Chili’s locations with undiscounted fixed payments of $15.8 million over the initial term. These leases are expected to commence in the next 12 months and are expected to have an economic lease term of 20 years. These leases will commence when the landlords make the property available to us for new restaurant construction. We will assess the reasonably certain lease term at the lease commencement date.
9. DEBT
Long-term debt consists of the following:
September 28,
2022
June 29,
2022
Revolving credit facility$306.3 $271.3 
5.000% notes350.0 350.0 
3.875% notes(1)
300.0 300.0 
Finance lease obligations84.5 90.2 
Total long-term debt and finance leases1,040.8 1,011.5 
Less: unamortized debt issuance costs and discounts(1.8)(2.1)
Total long-term debt, less unamortized debt issuance costs and discounts1,039.0 1,009.4 
Less: current installments of long-term debt and finance leases(2)
(18.2)(20.3)
Long-term debt and finance leases, less current installments$1,020.8 $989.1 
(1)Obligations under our 3.875% notes, which will mature in May 2023, have been classified as long-term, reflecting our intent and ability to refinance these notes through our existing revolving credit facility.
(2)Current installments of long-term debt consist of finance leases and are recorded within Other accrued liabilities in the Consolidated Balance Sheets (Unaudited). Refer to Note 10 - Accrued and Other Liabilities for further details.

14

Table of Contents
Footnote Index
Revolving Credit Facility
In the thirteen week period ended September 28, 2022, net borrowings of $35.0 million were drawn on our revolving credit facility. As of September 28, 2022, $493.7 million of credit was available under the revolving credit facility.
The $800.0 million revolving credit facility matures on August 18, 2026 and bears interest of LIBOR plus an applicable margin of 1.500% to 2.250% and an undrawn commitment fee of 0.250% to 0.350%, both based on a function of our debt-to-cash-flow ratio. As of September 28, 2022, our interest rate was 4.875% consisting of LIBOR of 3.125% plus the applicable margin of 1.750%.
Financial Covenants
Our debt agreements contain various financial covenants that, among other things, require the maintenance of certain leverage ratios. As of September 28, 2022, we were in compliance with our covenants pursuant to the $800.0 million revolving credit facility and under the terms of the indentures governing our 3.875% notes and 5.000% notes. We expect to remain in compliance with our covenants during the remainder of fiscal 2023.
10. ACCRUED AND OTHER LIABILITIES
Other accrued liabilities consist of the following:
September 28,
2022
June 29,
2022
Property tax$28.6 $23.3 
Insurance24.0 23.5 
Current installments of long-term debt and finance leases18.2 20.3 
Sales tax17.4 14.4 
Interest13.9 6.5 
Utilities and services10.2 9.6 
Other(1)
21.0 18.5 
$133.3 $116.1 
(1)Other primarily consists of guest deposits for Maggiano’s banquets, contingent lease liabilities related to our lease guarantees, rent-related accruals, charitable donations, deferred franchise and development fees, state income taxes payable and other various accruals. Refer to Note 13 - Contingencies for additional information about our lease guarantees.
Other liabilities consist of the following:
September 28,
2022
June 29,
2022
Insurance$37.0 $36.9 
Deferred franchise and development fees9.6 9.2 
Unrecognized tax benefits3.0 3.0 
Other5.3 5.2 
$54.9 $54.3 

15

Table of Contents
Footnote Index
11. SHAREHOLDERS’ DEFICIT
The changes in Total shareholders’ deficit during the thirteen week periods ended September 28, 2022 and September 29, 2021, respectively, were as follows:
Thirteen Week Period Ended September 28, 2022
Common StockAdditional
Paid-In
Capital
Accumulated DeficitTreasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Balances at June 29, 2022$7.0 $690.9 $(148.4)$(812.3)$(5.3)$(268.1)
Net loss  (30.2)  (30.2)
Other comprehensive loss    (1.0)(1.0)
Dividends  0.0   0.0 
Stock-based compensation 4.7    4.7 
Purchases of treasury stock 0.2  (2.2) (2.0)
Issuances of treasury stock (7.8) 7.8   
Retirement of common stock(1.0) (306.1)307.1   
Balances at September 28, 2022$6.0 $688.0 $(484.7)$(499.6)$(6.3)$(296.6)
Thirteen Week Period Ended September 29, 2021
Common StockAdditional
Paid-In
Capital
Accumulated DeficitTreasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Balances at June 30, 2021$7.0 $685.4 $(266.1)$(724.9)$(4.7)$(303.3)
Net income  13.2   13.2 
Other comprehensive loss    (0.4)(0.4)
Dividends   0.0   0.0 
Stock-based compensation 4.3    4.3 
Purchases of treasury stock (2.0) (37.6) (39.6)
Issuances of treasury stock (8.3) 8.6  0.3 
Balances at September 29, 2021$7.0 $679.4 $(252.9)$(753.9)$(5.1)$(325.5)
Retirement of Common Stock
During the thirteen week period ended September 28, 2022, the Board of Directors approved the retirement of 10.0 million shares of Treasury stock for a weighted average price per share of $30.71. As of September 28, 2022, 16.3 million shares remain in treasury.
Share Repurchases
Our share repurchase program is used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. We evaluate potential share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, proceeds from divestitures, borrowings and planned investment and financing needs. Repurchased shares are reflected as an increase in Treasury stock within Shareholders’ deficit in the Consolidated Balance Sheets (Unaudited).
In August 2021, our Board of Directors reinstated our share repurchase program, allowing for a total available repurchase authority of $300.0 million. In the thirteen week period ended September 28, 2022, we repurchased 0.1 million shares of our common stock for $2.0 million, all of which were purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares. As of September 28, 2022, approximately $204.0 million was available under our share repurchase authorizations.

16

Table of Contents
Footnote Index
Stock-based Compensation
The following table presents the restricted share awards granted and related weighted average fair value per share amounts.
Thirteen Week Periods Ended
September 28,
2022
September 29,
2021
Restricted share awards
Restricted share awards granted0.5 0.4 
Weighted average fair value per share$28.42 $53.76 
Dividends
In the fourth quarter of fiscal 2020, our Board of Directors voted to suspend the quarterly cash dividend in response to liquidity needs created by the COVID-19 pandemic. In the thirteen week periods ended September 28, 2022 and September 29, 2021, dividends paid were solely related to the accrued dividends for restricted share awards that were granted prior to the suspension and vested in the period. Restricted share award dividends are accrued in Other accrued liabilities for the current portion to vest within 12 months, and Other liabilities for the portion that will vest after one year.
12. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes and interest is as follows:
Thirteen Week Periods Ended
September 28,
2022
September 29,
2021
Income taxes, net
$1.1 $1.9 
Interest, net of amounts capitalized3.9 3.1 
Non-cash operating, investing and financing activities are as follows:
Thirteen Week Periods Ended
September 28,
2022
September 29,
2021
Operating lease additions(1)
$23.6 $60.0 
Finance lease additions0.2 8.9 
Accrued capital expenditures20.3 6.2 
Retirement of fully depreciated assets10.3 7.9 
(1)The thirteen week period ended September 29, 2021 primarily included operating lease additions associated with the 23 restaurants purchased from a former franchisee. Refer to Note 14 - Fiscal 2022 Chili’s Restaurant Acquisitions for further details.
13. CONTINGENCIES
Lease Commitments
We have, in certain cases, divested brands or sold restaurants to franchisees and have not been released from lease guarantees for the related restaurants. As of September 28, 2022 and June 29, 2022, we have outstanding lease guarantees or are secondarily liable for an estimated $24.6 million and $26.3 million, respectively. These amounts represent the maximum known potential liability of rent payments under the leases. These leases have been assigned to the buyers and expire at the end of the respective lease terms, which range from fiscal 2023 through fiscal 2032.
We have received notices of default and have been named a party in lawsuits pertaining to some of these leases in circumstances where the current lessee did not pay its rent obligations. In the event of default under a lease by a

17

Table of Contents
Footnote Index
franchisee or owner of a divested brand, the indemnity and default clauses in our agreements with such third parties and applicable laws govern our ability to pursue and recover amounts we may pay on behalf of such parties. As of September 28, 2022, we have contingent liabilities of $2.0 million for our estimated exposure of the lease defaults related to these lease guarantees. These contingent liabilities are classified within Other accrued liabilities in the Consolidated Balance Sheets (Unaudited).
Letters of Credit
We provide letters of credit to various insurers to collateralize obligations for outstanding claims. As of September 28, 2022, we had $5.8 million in undrawn standby letters of credit outstanding. All standby letters of credit are renewable within the next 12 months.
Cyber Security Litigation
In fiscal 2018, we discovered malware at certain Chili’s restaurants that may have resulted in unauthorized access or acquisition of customer payment card data. We settled all claims from payment card companies related to this incident and do not expect material claims from payment card companies in the future. In connection with this event, the Company was also named as a defendant in a putative class action lawsuit in the United States District Court for the Middle District of Florida (the “Litigation”) relating to this incident. In the Litigation, plaintiffs assert various claims at the Company’s Chili’s restaurants involving customer payment card information and seek monetary damages in excess of $5.0 million, injunctive and declaratory relief, and attorney’s fees and costs.
Oral argument of our appeal of the district court’s class certification order was held before the Eleventh Circuit Court of Appeals on June 8, 2022 in Jacksonville, Florida. We await the court’s ruling. In the interim, all matters at the district court have been stayed. We believe we have defenses and intend to continue defending the Litigation. As such, as of September 28, 2022, we have concluded that a loss, or range of loss, from this matter is not determinable, therefore, we have not recorded a liability related to the Litigation. We will continue to evaluate this matter based on new information as it becomes available.
Legal Proceedings
Evaluating contingencies related to litigation is a process involving judgment on the potential outcome of future events, and the ultimate resolution of litigated claims may differ from our current analysis. Accordingly, we review the adequacy of accruals and disclosures pertaining to litigated matters each quarter in consultation with legal counsel and we assess the probability and range of possible losses associated with contingencies for potential accrual in the Consolidated Financial Statements.
We are engaged in various legal proceedings and have certain unresolved claims pending. Liabilities have been established based on our best estimates of our potential liability in certain of these matters. Based upon consultation with legal counsel, management is of the opinion that there are no matters pending or threatened which are expected to have a material adverse effect, individually or in the aggregate, on the consolidated financial condition or results of operations.
14. FISCAL 2022 CHILI’S RESTAURANT ACQUISITIONS
During fiscal 2022, we completed three acquisitions of certain assets and liabilities related to previously franchised Chili’s locations, as follows:
Mid-Atlantic Region Acquisition - On September 2, 2021, we acquired 23 previously franchised Chili’s restaurants located in the Mid-Atlantic region of the United States for a total purchase price of $47.7 million, including post-closing adjustments. The acquisition was funded with borrowings from our existing credit facility and proceeds from a sale leaseback transaction completed simultaneously with the acquisition.
Great Lakes Region Acquisition - On October 31, 2021, we acquired 37 previously franchised Chili’s restaurants located in the Great Lakes and Northeast region of the United States for a total purchase price of $57.1 million, including post-closing adjustments, funded with borrowings from our existing credit facility.

18

Table of Contents
Footnote Index
Northwest Region Acquisition - On February 1, 2022, we acquired six previously franchised Chili’s restaurants and on May 5, 2022, we acquired two additional previously franchised Chili’s restaurants located in the Northwest region of the United States for a total purchase price of $2.0 million, including post-closing adjustments, funded with borrowings from our existing credit facility.
Pro-forma financial information for these acquisitions are not presented due to the immaterial impact of the financial results of the acquired restaurants in the Consolidated Financial Statements (Unaudited). We accounted for each of these acquisitions as a business combination.
The assets and liabilities of the acquired restaurants were recorded at their fair values. The results of operations, and assets and liabilities, of these restaurants are included in the Consolidated Financial Statements (Unaudited) from the acquisition dates.
The fair values of tangible and intangible assets acquired were primarily based on significant inputs not observable in an active market, including estimates of replacement costs, future cash flows and discount rates. These inputs represent Level 3 fair value measurements as defined under GAAP. The amounts recorded for the fair value of acquired assets and liabilities at the acquisition dates for the material acquisitions are as follows:
Mid-Atlantic RegionGreat Lakes Region
Fair Value September 2, 2021Fair Value October 31, 2021
Current assets$1.4 $2.1 
Property and equipment46.2 43.6 
Operating lease assets23.6 47.8 
Reacquired franchise rights(1)
4.7 4.6 
Goodwill(2)
 7.2 
Current liabilities(1.4)(1.4)
Finance lease liabilities, less current portion(3.7) 
Operating lease liabilities, less current portion(23.1)(46.8)
Net assets acquired(3)
$47.7 $57.1 
(1)Reacquired franchise rights related to the Mid-Atlantic Region acquisition and Great Lakes Region acquisition both have weighted average amortization periods of approximately 15 years.
(2)Goodwill is expected to be deductible for tax purposes. The portion of the purchase price attributable to goodwill represents the benefits expected as a result of the acquisition, including sales and unit growth opportunities, and the benefit of the assembled workforce of the acquired restaurants.
(3)Net assets acquired at fair value related to the Mid-Atlantic Region acquisition are equal to the total purchase price of $