Chili's Sales Still Climb as Costs Rise-Has EAT's Bull Case Really Changed?

Chili's 4% comp and the EPS raise keep the bull case alive

Chili's still looks like a functioning growth story. Even after an unusual year, the brand posted Chili's comps up 4%, and management raised FY26 EPS guidance to $10.45-$10.85. That guidance raise came after a $0.15 headwind from Winter Storm Fern and following management's comment that demand recovered quickly after significant January weather disruption. For investors, that is the core of the bullish case: the brand is still driving demand well enough for management to stay constructive on earnings.

The debate has simply shifted. The question is no longer whether Chili's is working at all. It is whether that demand can keep translating into earnings as the comp base gets harder and costs remain a factor.

Chili's slowdown looks more like normalization than failure

The trend has cooled, but it is still positive

The early viral spark may have faded, but the underlying trend is still healthy. Chili's posted its 20th consecutive quarter of same-store sales growth, and the late-winter run rate looked better than the headline quarter suggested: February and March comps both increased 5.9% with positive traffic. That matters because it shows the brand did not simply stall after the initial buzz.

The prior quarter also helps put things in context. Chili's delivered industry-leading growth of +9% in the earlier quarter, while management highlighted 19 consecutive quarters of same-store sales growth. Taken together, that points to a business still compounding, just at a more sustainable pace than the viral peak.

Value messaging and operations still seem to be working

Management continues to credit everyday value, while the earlier quarter emphasized competitive pricing, menu enhancements, and improved restaurant operations. By the simplest test-whether guests are still showing up-Chili's still appears to have a credible value proposition.

A full parking lot is not enough, but it is a useful first check. What matters is whether that traffic can keep converting into profitable sales as comparisons tighten.

Margins still support the case for discipline

Chili's also still looks more than just busy. In the earlier quarter, it was protecting margins (+40bps), and management said leveraging higher sales, the Company improved margins at Chili's. That combination matters because it suggests the value strategy is not coming at the expense of basic operating discipline.

EAT's next test is consistency, not another viral spike

After raising FY26 EPS guidance to $10.45-$10.85 despite a $0.15 headwind from Winter Storm Fern, management has already made its opening argument. The next step is to show that Chili's more normalized sales pace can keep supporting earnings as year-over-year comparisons get tougher.

What investors should watch next

• Chili's keeps the momentum going from the recent 4% quarter and continues to report positive traffic.
• Management holds or beats the current FY26 EPS guidance of $10.45-$10.85.
• Chili's continues to improve margins at Chili's while investing in the business.

Other catalysts and risks

• The next earnings report is the clearest test of whether Chili's momentum can persist.
• Any update on the Back to Maggiano's strategy matters, because Maggiano's still looks like the weaker link in the portfolio.
• Capital allocation remains relevant, including repurchased $108.0 million of the Company's common stock, especially if earnings stay firm.

The key risk is straightforward: if sales slow again while margins slip, the bull case gets much harder to defend. For now, though, EAT still reads less like a broken story than a business that has moved from novelty to execution.