Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 28, 2022 | Jan. 27, 2023 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Period End Date | Dec. 28, 2022 | |
Entity File Number | 1-10275 | |
Entity Registrant Name | BRINKER INTERNATIONAL, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 75-1914582 | |
Entity Address, Address Line One | 3000 Olympus Blvd | |
Entity Address, City or Town | Dallas | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75019 | |
City Area Code | (972) | |
Local Phone Number | 980-9917 | |
Title of 12(b) Security | Common Stock, $0.10 par value | |
Trading Symbol | EAT | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0000703351 | |
Current Fiscal Year End Date | --06-28 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Common Stock, Shares Outstanding | 44,062,888 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Dec. 28, 2022 | Dec. 29, 2021 | Dec. 28, 2022 | Dec. 29, 2021 | |||
Total revenues | $ 1,019 | $ 925.8 | $ 1,974.5 | $ 1,802.2 | ||
Operating costs and expenses | ||||||
Food and beverage costs | 289.4 | 252.8 | 578.9 | 487.1 | ||
Restaurant labor | 334.6 | 315.4 | 665.2 | 620.3 | ||
Restaurant expenses | 268.4 | 236.7 | 537.2 | 468 | ||
Depreciation and amortization | 41.8 | 41.6 | 83.7 | 80.9 | ||
General and administrative | 35.6 | 33.1 | 75.1 | 69.6 | ||
Other (gains) and charges | 8.5 | 6.4 | 13.5 | 10.9 | ||
Total operating costs and expenses | 978.3 | 886 | 1,953.6 | 1,736.8 | ||
Operating income | 40.7 | 39.8 | 20.9 | 65.4 | ||
Interest expenses | 13.9 | 11.2 | 26.2 | 23.7 | ||
Other income, net | (0.3) | (0.5) | (0.7) | (0.8) | ||
(Loss) Income before income taxes | 27.1 | 29.1 | (4.6) | 42.5 | ||
(Benefit) Provision for income taxes | (0.8) | 1.5 | (2.3) | 1.7 | ||
Net (loss) income | $ 27.9 | $ 27.6 | $ (2.3) | $ 40.8 | ||
Basic net (loss) income per share | $ 0.63 | $ 0.61 | $ (0.05) | $ 0.90 | ||
Diluted net (loss) income per share | $ 0.62 | $ 0.60 | $ (0.05) | $ 0.88 | ||
Basic weighted average shares outstanding | 44 | 45.1 | 44 | 45.5 | ||
Diluted weighted average shares outstanding | 44.8 | 45.9 | 44 | 46.4 | ||
Other comprehensive income (loss) | ||||||
Foreign currency translation adjustment | $ 0.1 | $ (0.1) | $ (0.9) | $ (0.5) | ||
Other comprehensive income (loss) | 0.1 | (0.1) | (0.9) | (0.5) | ||
Comprehensive (loss) income | 28 | 27.5 | (3.2) | 40.3 | ||
Company sales [Member] | ||||||
Revenues | 1,009.4 | 915.8 | [1] | 1,955.5 | 1,781.4 | [1] |
Franchise revenues [Member] | ||||||
Revenues | $ 9.6 | $ 10 | [1] | $ 19 | $ 20.8 | [1] |
[1]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. |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) shares in Millions, $ in Millions | Dec. 28, 2022 | Jun. 29, 2022 |
Current assets | ||
Cash and cash equivalents | $ 14.7 | $ 13.5 |
Accounts receivable, net | 92 | 66.4 |
Inventories | 36.9 | 35.6 |
Restaurant supplies | 55.6 | 55.5 |
Prepaid expenses | 34.7 | 25.7 |
Income taxes receivable, net | 3.3 | 4.5 |
Total current assets | 237.2 | 201.2 |
Property and equipment, at cost | ||
Land | 44.2 | 43.4 |
Buildings and leasehold improvements | 1,623.4 | 1,603.9 |
Furniture and equipment | 750.6 | 793 |
Construction-in-progress | 50.5 | 33.6 |
Gross property and equipment | 2,468.7 | 2,473.9 |
Less accumulated depreciation and amortization | (1,641.8) | (1,657.2) |
Net property and equipment | 826.9 | 816.7 |
Other assets | ||
Operating lease assets | 1,142.9 | 1,160.5 |
Goodwill | 194.8 | 195.1 |
Deferred income taxes, net | 72.6 | 62.5 |
Intangibles, net | 25.9 | 27.4 |
Other | 19.3 | 21 |
Total other assets | 1,455.5 | 1,466.5 |
Total assets | 2,519.6 | 2,484.4 |
Current liabilities | ||
Accounts payable | 142.2 | 134.3 |
Gift card liability | 105.8 | 83.9 |
Accrued payroll | 91.3 | 111 |
Operating lease liabilities | 112.2 | 112.7 |
Other accrued liabilities | 122 | 116.1 |
Total current liabilities | 573.5 | 558 |
Long-term debt and finance leases, less current installments | 1,023.3 | 989.1 |
Long-term operating lease liabilities, less current portion | 1,133.1 | 1,151.1 |
Other liabilities | 57.2 | 54.3 |
Commitments and contingencies (Note 13) | ||
Shareholders’ deficit | ||
Common stock, shares authorized | 250 | |
Common stock, par value per share | $ 0.10 | |
Common stock, shares issued | 60.3 | 70.3 |
Common stock, shares outstanding | 44 | 43.8 |
Common stock (250.0 million authorized shares; $0.10 par value; 60.3 million shares issued and 44.0 million shares outstanding at December 28, 2022, and 70.3 million shares issued and 43.8 million shares outstanding at June 29, 2022) | $ 6 | $ 7 |
Additional paid-in capital | 688.7 | 690.9 |
Accumulated other comprehensive loss | (6.2) | (5.3) |
Accumulated deficit | $ (456.8) | $ (148.4) |
Treasury stock, shares | 16.3 | 26.5 |
Treasury stock, at cost (16.3 million shares at December 28, 2022, and 26.5 million shares at June 29, 2022) | $ (499.2) | $ (812.3) |
Total shareholders’ deficit | (267.5) | (268.1) |
Total liabilities and shareholders’ deficit | $ 2,519.6 | $ 2,484.4 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Dec. 28, 2022 | Dec. 29, 2021 | |
Cash flows from operating activities | ||
Net (loss) income | $ (2.3) | $ 40.8 |
Adjustments to reconcile Net (loss) income to Net cash provided by operating activities: | ||
Depreciation and amortization | 83.7 | 80.9 |
Stock-based compensation | 5.9 | 9.9 |
Restructure and impairment charges | 7.2 | 5.4 |
Net loss on disposal of assets | 2.1 | 1.6 |
Other | 0.9 | 2.1 |
Changes in assets and liabilities, net of the impact of acquisitions: | ||
Accounts receivable, net | (28.4) | (24.6) |
Inventories | (2) | (2.7) |
Restaurant supplies | (0.4) | (0.5) |
Prepaid expenses | (9.2) | (5) |
Operating lease assets, net of liabilities | (1.5) | 6.4 |
Deferred income taxes, net | (10.3) | (2.8) |
Other assets | (0.1) | (0.1) |
Accounts payable | 5 | (5.7) |
Gift card liability | 22 | 28 |
Accrued payroll | (20.2) | (49) |
Other accrued liabilities | 9.3 | 6.3 |
Current income taxes | 4 | 16.4 |
Other liabilities | 2.3 | 0 |
Net cash provided by operating activities | 68 | 107.4 |
Cash flows from investing activities | ||
Payments for property and equipment | (95.3) | (74.1) |
Proceeds from note receivable | 2.1 | 0 |
Payments for franchise restaurant acquisitions | 0 | (104.5) |
Proceeds from sale leaseback transactions, net of related expenses | 0 | 20.5 |
Net cash used in investing activities | (93.2) | (158.1) |
Cash flows from financing activities | ||
Borrowings on revolving credit facility | 280 | 487.5 |
Payments on revolving credit facility | (240) | (355) |
Payments on long-term debt | (11.3) | (11.7) |
Purchases of treasury stock | (2.1) | (74.7) |
Payments of dividends | (0.2) | (1) |
Payments for debt issuance costs | 0 | (3.1) |
Proceeds from issuance of treasury stock | 0 | 0.4 |
Net cash provided by financing activities | 26.4 | 42.4 |
Net change in cash and cash equivalents | 1.2 | (8.3) |
Cash and cash equivalents at beginning of period | 13.5 | 23.9 |
Cash and cash equivalents at end of period | $ 14.7 | $ 15.6 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Deficit (Unaudited) - USD ($) $ in Millions | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Loss [Member] |
Beginning balance at Jun. 30, 2021 | $ (303.3) | $ 7 | $ 685.4 | $ (266.1) | $ (724.9) | $ (4.7) |
Net (loss) income | 13.2 | 0 | 0 | 13.2 | 0 | 0 |
Other comprehensive income (loss) | (0.4) | 0 | 0 | 0 | 0 | (0.4) |
Dividends | 0 | 0 | 0 | 0 | 0 | 0 |
Stock-based compensation | 4.3 | 0 | 4.3 | 0 | 0 | 0 |
Purchases of treasury stock | (39.6) | 0 | (2) | 0 | (37.6) | 0 |
Issuances of treasury stock | 0.3 | 0 | (8.3) | 0 | 8.6 | 0 |
Ending balance at Sep. 29, 2021 | (325.5) | 7 | 679.4 | (252.9) | (753.9) | (5.1) |
Beginning balance at Jun. 30, 2021 | (303.3) | 7 | 685.4 | (266.1) | (724.9) | (4.7) |
Net (loss) income | 40.8 | |||||
Other comprehensive income (loss) | (0.5) | |||||
Ending balance at Dec. 29, 2021 | (327.4) | 7 | 683.7 | (225.3) | (787.6) | (5.2) |
Beginning balance at Sep. 29, 2021 | (325.5) | 7 | 679.4 | (252.9) | (753.9) | (5.1) |
Net (loss) income | 27.6 | 0 | 0 | 27.6 | 0 | 0 |
Other comprehensive income (loss) | (0.1) | 0 | 0 | 0 | 0 | (0.1) |
Dividends | 0 | 0 | 0 | 0 | 0 | 0 |
Stock-based compensation | 5.6 | 0 | 5.6 | 0 | 0 | 0 |
Purchases of treasury stock | (35.1) | 0 | 0 | 0 | (35.1) | 0 |
Issuances of treasury stock | 0.1 | 0 | (1.3) | 0 | 1.4 | 0 |
Ending balance at Dec. 29, 2021 | (327.4) | 7 | 683.7 | (225.3) | (787.6) | (5.2) |
Beginning balance at Jun. 29, 2022 | (268.1) | 7 | 690.9 | (148.4) | (812.3) | (5.3) |
Net (loss) income | (30.2) | 0 | 0 | (30.2) | 0 | 0 |
Other comprehensive income (loss) | (1) | 0 | 0 | 0 | 0 | (1) |
Dividends | 0 | 0 | 0 | 0 | 0 | 0 |
Stock-based compensation | 4.7 | 0 | 4.7 | 0 | 0 | 0 |
Purchases of treasury stock | (2) | 0 | 0.2 | 0 | (2.2) | 0 |
Issuances of treasury stock | 0 | 0 | (7.8) | 0 | 7.8 | 0 |
Retirement of stock | 0 | (1) | 0 | (306.1) | 307.1 | 0 |
Ending balance at Sep. 28, 2022 | (296.6) | 6 | 688 | (484.7) | (499.6) | (6.3) |
Beginning balance at Jun. 29, 2022 | (268.1) | 7 | 690.9 | (148.4) | (812.3) | (5.3) |
Net (loss) income | (2.3) | |||||
Other comprehensive income (loss) | (0.9) | |||||
Ending balance at Dec. 28, 2022 | (267.5) | 6 | 688.7 | (456.8) | (499.2) | (6.2) |
Beginning balance at Sep. 28, 2022 | (296.6) | 6 | 688 | (484.7) | (499.6) | (6.3) |
Net (loss) income | 27.9 | 0 | 0 | 27.9 | 0 | 0 |
Other comprehensive income (loss) | 0.1 | 0 | 0 | 0 | 0 | 0.1 |
Dividends | 0 | 0 | 0 | 0 | 0 | 0 |
Stock-based compensation | 1.2 | 0 | 1.2 | 0 | 0 | 0 |
Purchases of treasury stock | (0.1) | 0 | 0 | 0 | (0.1) | 0 |
Issuances of treasury stock | 0 | 0 | (0.5) | 0 | 0.5 | 0 |
Ending balance at Dec. 28, 2022 | $ (267.5) | $ 6 | $ 688.7 | $ (456.8) | $ (499.2) | $ (6.2) |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 6 Months Ended |
Dec. 28, 2022 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Cash paid for income taxes and interest is as follows: Twenty-Six Week Periods Ended December 28, December 29, Income taxes, net $ 4.4 $ (11.2) Interest, net of amounts capitalized 23.6 20.7 Non-cash operating, investing and financing activities are as follows: Twenty-Six Week Periods Ended December 28, December 29, Operating lease additions (1) $ 45.5 $ 141.8 Finance lease additions 0.2 11.9 Accrued capital expenditures 17.9 5.6 Retirement of fully depreciated assets 84.5 14.5 (1) The twenty-six week period ended December 29, 2021 primarily included operating lease additions associated with the 60 restaurants purchased from two former franchisees. Refer to Note 14 - Fiscal 2022 Chili’s Restaurant Acquisitions for further details. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Dec. 28, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 December 28, 2022 and June 29, 2022, and for the thirteen and twenty-six week periods ended December 28, 2022 and December 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 December 28, 2022, we owned, operated or franchised 1,648 restaurants, consisting of 1,182 Company-owned restaurants and 466 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). COVID-19 Pandemic and Other Impacts to Our Operating Environment During fiscal 2022, increasing COVID-19 cases in the United States, including the Omicron variant, significantly impacted our guest traffic and sales. Many of our restaurants had face mask requirements and some of our restaurants had proof of vaccination requirements, for our customers, team members or both. During fiscal 2022 and fiscal 2023, our operating results were impacted by geopolitical and other macroeconomic events, leading to higher than usual inflation on wages and food and beverage costs. The ongoing effects of COVID-19 and its variants, along with other geopolitical and macroeconomic events could lead to further capacity restrictions, mask and vaccine mandates, wage inflation, staffing challenges, product cost inflation and disruptions in the supply chain that impact our restaurants’ ability to obtain the products needed to support their operation. Such events could also negatively affect consumer spending potentially reducing guest traffic and/or reducing the average amount guests spend in our restaurants. 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). |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Dec. 28, 2022 | |
Revenue from Contract with Customer [Abstract] | |
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 December 28, 2022: Deferred Franchise and Development Fees Balance as of June 29, 2022 $ 10.1 Additions 1.7 Amount recognized to Franchise revenues (0.5) Balance as of December 28, 2022 $ 11.3 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 December 28, 2022: Fiscal Year Franchise and Development Fees Revenue Recognition Remainder of 2023 $ 0.4 2024 0.9 2025 0.8 2026 0.8 2027 0.7 Thereafter 7.7 $ 11.3 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 December 28, 2022: Gift Card Liability Balance as of June 29, 2022 $ 83.9 Gift card sales 80.3 Gift card redemptions recognized to Company sales (50.2) Gift card breakage recognized to Company sales (6.6) Other (1.6) Balance as of December 28, 2022 $ 105.8 |
OTHER GAINS AND CHARGES
OTHER GAINS AND CHARGES | 6 Months Ended |
Dec. 28, 2022 | |
Other Gains and Charges [Abstract] | |
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 Twenty-Six Week Periods Ended December 28, December 29, December 28, December 29, Restaurant closure charges $ 3.3 $ 0.3 $ 4.8 $ 0.5 Severance and other benefit charges 2.4 — 2.9 — Loss from natural disasters, net of (insurance recoveries) 1.1 0.2 0.9 0.8 Enterprise system implementation costs 1.0 0.3 2.0 0.9 Remodel-related costs 0.2 1.6 1.0 3.1 Lease contingencies — 2.9 — 2.9 Other 0.5 1.1 1.9 2.7 $ 8.5 $ 6.4 $ 13.5 $ 10.9 • Restaurant closure charges relates to closure costs and leases associated with certain closed Chili’s restaurants for all periods presented and one closed Maggiano’s in the first quarter of fiscal 2023. • Severance and other benefit charges relates to changes in our management team and organizational structure. • Loss from natural disasters, net of (insurance recoveries) in the current year primarily consists of costs incurred related to Hurricane Ian and the Winter Storm in December 2022. • Enterprise system implementation costs primarily consists of consulting fees and subscription fees related to the ongoing enterprise system implementation for all periods presented. • Remodel-related costs relates to existing fixed asset write-offs associated with the ongoing Chili’s and Maggiano’s remodel projects for all periods presented. • Lease contingencies in the prior year were recorded for potential lease defaults on certain lease guarantees and subleases. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Dec. 28, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Thirteen Week Periods Ended Twenty-Six Week Periods Ended December 28, December 29, December 28, December 29, Effective income tax rate (3.0) % 5.2 % 50.0 % 4.0 % The federal statutory tax rate was 21.0% for the thirteen and twenty-six week periods ended December 28, 2022 and December 29, 2021. |
NET INCOME PER SHARE
NET INCOME PER SHARE | 6 Months Ended |
Dec. 28, 2022 | |
Earnings Per Share [Abstract] | |
Net 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 Twenty-Six Week Periods Ended December 28, December 29, December 28, December 29, Basic weighted average shares outstanding 44.0 45.1 44.0 45.5 Dilutive stock options (1) 0.0 0.2 — 0.3 Dilutive restricted shares (1) 0.8 0.6 — 0.6 Total dilutive impact 0.8 0.8 — 0.9 Diluted weighted average shares outstanding 44.8 45.9 44.0 46.4 Awards excluded due to anti-dilutive effect 1.4 0.9 2.8 0.5 (1) Due to the net loss for the twenty-six week period ended December 28, 2022, zero incremental shares are included because the effect would be anti-dilutive. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Dec. 28, 2022 | |
Segment Reporting [Abstract] | |
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. 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 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, supplies, repair and maintenance expenses, delivery fees, utilities, credit card processing fees, property taxes, and workers’ compensation and general liability expenses. The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP: Thirteen Week Period Ended December 28, 2022 Chili’s Maggiano's Corporate Consolidated Company sales $ 869.3 $ 140.1 $ — $ 1,009.4 Franchise revenues 9.4 0.2 — 9.6 Total revenues 878.7 140.3 — 1,019.0 Food and beverage costs 253.7 35.7 — 289.4 Restaurant labor 292.3 42.3 — 334.6 Restaurant expenses 234.1 34.2 0.1 268.4 Depreciation and amortization 36.0 3.3 2.5 41.8 General and administrative 8.5 1.5 25.6 35.6 Other (gains) and charges 5.7 0.3 2.5 8.5 Total operating costs and expenses 830.3 117.3 30.7 978.3 Operating income (loss) 48.4 23.0 (30.7) 40.7 Interest expenses 0.9 0.1 12.9 13.9 Other income, net — — (0.3) (0.3) Income (loss) before income taxes $ 47.5 $ 22.9 $ (43.3) $ 27.1 Thirteen Week Period Ended December 29, 2021 Chili's (1) Maggiano's Corporate Consolidated Company sales (2) $ 798.4 $ 117.4 $ — $ 915.8 Franchise revenues (2) 9.8 0.2 — 10.0 Total revenues 808.2 117.6 — 925.8 Food and beverage costs 224.8 28.0 — 252.8 Restaurant labor 277.6 37.8 — 315.4 Restaurant expenses 205.0 31.5 0.2 236.7 Depreciation and amortization 35.4 3.4 2.8 41.6 General and administrative 7.2 1.9 24.0 33.1 Other (gains) and charges 2.2 — 4.2 6.4 Total operating costs and expenses 752.2 102.6 31.2 886.0 Operating income (loss) 56.0 15.0 (31.2) 39.8 Interest expenses 1.4 0.1 9.7 11.2 Other income, net (0.2) — (0.3) (0.5) Income (loss) before income taxes $ 54.8 $ 14.9 $ (40.6) $ 29.1 Twenty-Six Week Period Ended December 28, 2022 Chili’s Maggiano's Corporate Consolidated Company sales $ 1,709.9 $ 245.6 $ — $ 1,955.5 Franchise revenues 18.7 0.3 — 19.0 Total revenues 1,728.6 245.9 — 1,974.5 Food and beverage costs 514.6 64.3 — 578.9 Restaurant labor 586.7 78.5 — 665.2 Restaurant expenses 471.0 65.9 0.3 537.2 Depreciation and amortization 72.0 6.5 5.2 83.7 General and administrative 18.0 4.0 53.1 75.1 Other (gains) and charges 8.7 0.8 4.0 13.5 Total operating costs and expenses 1,671.0 220.0 62.6 1,953.6 Operating income (loss) 57.6 25.9 (62.6) 20.9 Interest expenses 1.9 0.2 24.1 26.2 Other income, net — — (0.7) (0.7) Income (loss) before income taxes $ 55.7 $ 25.7 $ (86.0) $ (4.6) Segment assets $ 2,128.5 $ 230.0 $ 161.1 $ 2,519.6 Segment goodwill 156.4 38.4 — 194.8 Payments for property and equipment 85.1 6.1 4.1 95.3 Twenty-Six Week Period Ended December 29, 2021 Chili’s (1) Maggiano's Corporate Consolidated Company sales (2) $ 1,575.3 $ 206.1 $ — $ 1,781.4 Franchise revenues (2) 20.5 0.3 — 20.8 Total revenues 1,595.8 206.4 — 1,802.2 Food and beverage costs 438.2 48.9 — 487.1 Restaurant labor 551.1 69.2 — 620.3 Restaurant expenses 409.6 58.1 0.3 468.0 Depreciation and amortization 68.4 6.8 5.7 80.9 General and administrative 15.2 3.9 50.5 69.6 Other (gains) and charges 5.0 0.2 5.7 10.9 Total operating costs and expenses 1,487.5 187.1 62.2 1,736.8 Operating income (loss) 108.3 19.3 (62.2) 65.4 Interest expenses 2.8 0.2 20.7 23.7 Other income, net (0.3) — (0.5) (0.8) Income (loss) before income taxes $ 105.8 $ 19.1 $ (82.4) $ 42.5 Payments for property and equipment $ 65.4 $ 5.0 $ 3.7 $ 74.1 (1) Chili’s segment information includes the results of operations and the fair values of assets related to the 68 restaurants purchased from three former franchisees subsequent to the various acquisition dates during fiscal 2022. 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. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Dec. 28, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair value is the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date under market conditions. Fair value measurements are categorized in three levels based on the types of significant inputs used, as follows: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than quoted prices in active markets for identical assets or liabilities Level 3 Unobservable inputs that cannot be corroborated by observable market data 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. 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: December 28, 2022 June 29, 2022 Carrying Amount Fair Value Carrying Amount Fair Value 3.875% notes $ 299.9 $ 296.4 $ 299.7 $ 295.4 5.000% notes 348.6 338.9 348.2 329.0 Non-Financial Assets 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. The fair values of other non-financial assets are determined based on appraisals, sales prices of comparable assets or estimates of discounted cash flow and are categorized as Level 3. We review the carrying amounts of non-financial assets, primarily long-lived property and equipment, finance lease assets, operating lease assets, reacquired franchise rights, goodwill 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. Any impairment charges are included in Other (gains) and charges in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited). During the thirteen and twenty-six week periods ended December 28, 2022 and December 29, 2021, no indicators of impairment were identified. 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. Accumulated amortization associated with definite-lived intangible assets at December 28, 2022 and June 29, 2022, was $13.9 million and $12.6 million, respectively. 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. |
LEASES
LEASES | 6 Months Ended |
Dec. 28, 2022 | |
Leases [Abstract] | |
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. The components of lease expenses included in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited) were as follows: Thirteen Week Periods Ended Twenty-Six Week Periods Ended December 28, December 29, December 28, December 29, Operating lease cost $ 45.1 $ 43.2 $ 90.2 $ 84.6 Variable lease cost 15.2 15.1 30.8 30.2 Finance lease amortization 4.9 6.1 10.1 11.7 Finance lease interest 1.0 1.4 2.1 3.0 Short-term lease cost 0.1 0.2 0.2 0.3 Sublease income (0.6) (1.3) (1.5) (2.4) Total lease costs, net $ 65.7 $ 64.7 $ 131.9 $ 127.4 |
DEBT
DEBT | 6 Months Ended |
Dec. 28, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Long-term debt consists of the following: December 28, June 29, Revolving credit facility $ 311.3 $ 271.3 5.000% notes 350.0 350.0 3.875% notes (1) 300.0 300.0 Finance lease obligations 78.9 90.2 Total long-term debt and finance leases 1,040.2 1,011.5 Less: unamortized debt issuance costs and discounts (1.5) (2.1) Total long-term debt, less unamortized debt issuance costs and discounts 1,038.7 1,009.4 Less: current installments of long-term debt and finance leases (2) (15.4) (20.3) Long-term debt and finance leases, less current installments $ 1,023.3 $ 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 Liabilities for further details. Revolving Credit Facility In the twenty-six week period ended December 28, 2022, net borrowings of $40.0 million were drawn on our revolving credit facility. As of December 28, 2022, $488.7 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 December 28, 2022, our interest rate was 6.438% consisting of LIBOR of 4.438% plus the applicable margin of 2.000%. |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 6 Months Ended |
Dec. 28, 2022 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Other accrued liabilities consist of the following: December 28, June 29, Property tax $ 25.3 $ 23.3 Insurance 24.8 23.5 Sales tax 20.5 14.4 Current installments of long-term debt and finance leases 15.4 20.3 Utilities and services 10.3 9.6 Interest 7.2 6.5 Other 18.5 18.5 $ 122.0 $ 116.1 |
SHAREHOLDERS' DEFICIT
SHAREHOLDERS' DEFICIT | 6 Months Ended |
Dec. 28, 2022 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Deficit | Retirement of Common Stock During the first quarter of fiscal 2023, 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 December 28, 2022, 16.3 million shares remain in treasury. Share Repurchases Our Board of Directors approved a $300.0 million share repurchase program during fiscal 2022. 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. In the twenty-six week period ended December 28, 2022, we repurchased 0.1 million shares of our common stock for $2.1 million, all of which were purchased from team members to satisfy tax withholding obligations on the vesting of restricted shares. These withheld shares of common stock are not considered common stock repurchases under our authorized common stock repurchase plan. As of December 28, 2022, approximately $204.0 million of share repurchase authorization remains under the current share repurchase program. Stock-based Compensation The following table presents the restricted share awards granted and related weighted average fair value per share amounts. Twenty-Six Week Periods Ended December 28, December 29, Restricted share awards Restricted share awards granted 0.7 0.4 Weighted average fair value per share $ 29.48 $ 53.27 |
CONTINGENCIES
CONTINGENCIES | 6 Months Ended |
Dec. 28, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
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 December 28, 2022 and June 29, 2022, we have outstanding lease guarantees or are secondarily liable for an estimated $22.8 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 2028. 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 an 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 December 28, 2022, we have contingent liabilities of $1.1 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 December 28, 2022, we had $5.8 million in undrawn standby letters of credit outstanding. All standby letters of credit are renewable within the next 10 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 December 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. |
CHILI'S RESTAURANT ACQUISITIONS
CHILI'S RESTAURANT ACQUISITIONS | 6 Months Ended |
Dec. 28, 2022 | |
Business Combinations [Abstract] | |
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. • 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 Region Great Lakes Region Fair Value September 2, 2021 Fair Value October 31, 2021 Current assets $ 1.4 $ 2.1 Property and equipment 46.2 43.6 Operating lease assets 23.6 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 $48.0 million, less $0.3 million of closing adjustments. Net assets acquired at fair value related to the Great Lakes Region acquisition are equal to the total purchase price of $56.0 million, plus $1.1 million of closing adjustments. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Dec. 28, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Reclassifications | 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. |
Use of Estimates | 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 | 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). |
COVID-19 Pandemic and Other Impacts to Our Operating Environment | COVID-19 Pandemic and Other Impacts to Our Operating Environment During fiscal 2022, increasing COVID-19 cases in the United States, including the Omicron variant, significantly impacted our guest traffic and sales. Many of our restaurants had face mask requirements and some of our restaurants had proof of vaccination requirements, for our customers, team members or both. During fiscal 2022 and fiscal 2023, our operating results were impacted by geopolitical and other macroeconomic events, leading to higher than usual inflation on wages and food and beverage costs. The ongoing effects of COVID-19 and its variants, along with other geopolitical and macroeconomic events could lead to further capacity restrictions, mask and |
New Accounting Standards Implemented in Fiscal 2023 | 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). |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Changes in Deferred Franchise and Development Fees | The following table reflects the changes in deferred franchise and development fees between June 29, 2022 and December 28, 2022: Deferred Franchise and Development Fees Balance as of June 29, 2022 $ 10.1 Additions 1.7 Amount recognized to Franchise revenues (0.5) Balance as of December 28, 2022 $ 11.3 |
Remaining Deferred Franchise and Development Fees to be Recognized | 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 December 28, 2022: Fiscal Year Franchise and Development Fees Revenue Recognition Remainder of 2023 $ 0.4 2024 0.9 2025 0.8 2026 0.8 2027 0.7 Thereafter 7.7 $ 11.3 |
Changes in the Gift Card Liability | The following table reflects the changes in the Gift card liability between June 29, 2022 and December 28, 2022: Gift Card Liability Balance as of June 29, 2022 $ 83.9 Gift card sales 80.3 Gift card redemptions recognized to Company sales (50.2) Gift card breakage recognized to Company sales (6.6) Other (1.6) Balance as of December 28, 2022 $ 105.8 |
OTHER GAINS AND CHARGES (Tables
OTHER GAINS AND CHARGES (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Other Gains and Charges [Abstract] | |
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 Twenty-Six Week Periods Ended December 28, December 29, December 28, December 29, Restaurant closure charges $ 3.3 $ 0.3 $ 4.8 $ 0.5 Severance and other benefit charges 2.4 — 2.9 — Loss from natural disasters, net of (insurance recoveries) 1.1 0.2 0.9 0.8 Enterprise system implementation costs 1.0 0.3 2.0 0.9 Remodel-related costs 0.2 1.6 1.0 3.1 Lease contingencies — 2.9 — 2.9 Other 0.5 1.1 1.9 2.7 $ 8.5 $ 6.4 $ 13.5 $ 10.9 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Income Tax Disclosure [Abstract] | |
Effective Income Tax Rate Schedule | Thirteen Week Periods Ended Twenty-Six Week Periods Ended December 28, December 29, December 28, December 29, Effective income tax rate (3.0) % 5.2 % 50.0 % 4.0 % |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Earnings Per Share [Abstract] | |
Basic to Diluted Weighted Average Number of Shares Reconciliation | Basic weighted average shares outstanding are reconciled to Diluted weighted average shares outstanding as follows: Thirteen Week Periods Ended Twenty-Six Week Periods Ended December 28, December 29, December 28, December 29, Basic weighted average shares outstanding 44.0 45.1 44.0 45.5 Dilutive stock options (1) 0.0 0.2 — 0.3 Dilutive restricted shares (1) 0.8 0.6 — 0.6 Total dilutive impact 0.8 0.8 — 0.9 Diluted weighted average shares outstanding 44.8 45.9 44.0 46.4 Awards excluded due to anti-dilutive effect 1.4 0.9 2.8 0.5 (1) Due to the net loss for the twenty-six week period ended December 28, 2022, zero incremental shares are included because the effect would be anti-dilutive. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Segment Reporting [Abstract] | |
Segment Information Tables | The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP: Thirteen Week Period Ended December 28, 2022 Chili’s Maggiano's Corporate Consolidated Company sales $ 869.3 $ 140.1 $ — $ 1,009.4 Franchise revenues 9.4 0.2 — 9.6 Total revenues 878.7 140.3 — 1,019.0 Food and beverage costs 253.7 35.7 — 289.4 Restaurant labor 292.3 42.3 — 334.6 Restaurant expenses 234.1 34.2 0.1 268.4 Depreciation and amortization 36.0 3.3 2.5 41.8 General and administrative 8.5 1.5 25.6 35.6 Other (gains) and charges 5.7 0.3 2.5 8.5 Total operating costs and expenses 830.3 117.3 30.7 978.3 Operating income (loss) 48.4 23.0 (30.7) 40.7 Interest expenses 0.9 0.1 12.9 13.9 Other income, net — — (0.3) (0.3) Income (loss) before income taxes $ 47.5 $ 22.9 $ (43.3) $ 27.1 Thirteen Week Period Ended December 29, 2021 Chili's (1) Maggiano's Corporate Consolidated Company sales (2) $ 798.4 $ 117.4 $ — $ 915.8 Franchise revenues (2) 9.8 0.2 — 10.0 Total revenues 808.2 117.6 — 925.8 Food and beverage costs 224.8 28.0 — 252.8 Restaurant labor 277.6 37.8 — 315.4 Restaurant expenses 205.0 31.5 0.2 236.7 Depreciation and amortization 35.4 3.4 2.8 41.6 General and administrative 7.2 1.9 24.0 33.1 Other (gains) and charges 2.2 — 4.2 6.4 Total operating costs and expenses 752.2 102.6 31.2 886.0 Operating income (loss) 56.0 15.0 (31.2) 39.8 Interest expenses 1.4 0.1 9.7 11.2 Other income, net (0.2) — (0.3) (0.5) Income (loss) before income taxes $ 54.8 $ 14.9 $ (40.6) $ 29.1 Twenty-Six Week Period Ended December 28, 2022 Chili’s Maggiano's Corporate Consolidated Company sales $ 1,709.9 $ 245.6 $ — $ 1,955.5 Franchise revenues 18.7 0.3 — 19.0 Total revenues 1,728.6 245.9 — 1,974.5 Food and beverage costs 514.6 64.3 — 578.9 Restaurant labor 586.7 78.5 — 665.2 Restaurant expenses 471.0 65.9 0.3 537.2 Depreciation and amortization 72.0 6.5 5.2 83.7 General and administrative 18.0 4.0 53.1 75.1 Other (gains) and charges 8.7 0.8 4.0 13.5 Total operating costs and expenses 1,671.0 220.0 62.6 1,953.6 Operating income (loss) 57.6 25.9 (62.6) 20.9 Interest expenses 1.9 0.2 24.1 26.2 Other income, net — — (0.7) (0.7) Income (loss) before income taxes $ 55.7 $ 25.7 $ (86.0) $ (4.6) Segment assets $ 2,128.5 $ 230.0 $ 161.1 $ 2,519.6 Segment goodwill 156.4 38.4 — 194.8 Payments for property and equipment 85.1 6.1 4.1 95.3 Twenty-Six Week Period Ended December 29, 2021 Chili’s (1) Maggiano's Corporate Consolidated Company sales (2) $ 1,575.3 $ 206.1 $ — $ 1,781.4 Franchise revenues (2) 20.5 0.3 — 20.8 Total revenues 1,595.8 206.4 — 1,802.2 Food and beverage costs 438.2 48.9 — 487.1 Restaurant labor 551.1 69.2 — 620.3 Restaurant expenses 409.6 58.1 0.3 468.0 Depreciation and amortization 68.4 6.8 5.7 80.9 General and administrative 15.2 3.9 50.5 69.6 Other (gains) and charges 5.0 0.2 5.7 10.9 Total operating costs and expenses 1,487.5 187.1 62.2 1,736.8 Operating income (loss) 108.3 19.3 (62.2) 65.4 Interest expenses 2.8 0.2 20.7 23.7 Other income, net (0.3) — (0.5) (0.8) Income (loss) before income taxes $ 105.8 $ 19.1 $ (82.4) $ 42.5 Payments for property and equipment $ 65.4 $ 5.0 $ 3.7 $ 74.1 (1) Chili’s segment information includes the results of operations and the fair values of assets related to the 68 restaurants purchased from three former franchisees subsequent to the various acquisition dates during fiscal 2022. 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. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Fair Value Disclosures [Abstract] | |
Debt Instruments - Carrying Values and Estimated Fair Values Schedule | 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: December 28, 2022 June 29, 2022 Carrying Amount Fair Value Carrying Amount Fair Value 3.875% notes $ 299.9 $ 296.4 $ 299.7 $ 295.4 5.000% notes 348.6 338.9 348.2 329.0 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Leases [Abstract] | |
Lease Expenses Included in the Consolidated Statements of Comprehensive Income | The components of lease expenses included in the Consolidated Statements of Comprehensive (Loss) Income (Unaudited) were as follows: Thirteen Week Periods Ended Twenty-Six Week Periods Ended December 28, December 29, December 28, December 29, Operating lease cost $ 45.1 $ 43.2 $ 90.2 $ 84.6 Variable lease cost 15.2 15.1 30.8 30.2 Finance lease amortization 4.9 6.1 10.1 11.7 Finance lease interest 1.0 1.4 2.1 3.0 Short-term lease cost 0.1 0.2 0.2 0.3 Sublease income (0.6) (1.3) (1.5) (2.4) Total lease costs, net $ 65.7 $ 64.7 $ 131.9 $ 127.4 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Debt Disclosure [Abstract] | |
Long-term Debt Schedule | Long-term debt consists of the following: December 28, June 29, Revolving credit facility $ 311.3 $ 271.3 5.000% notes 350.0 350.0 3.875% notes (1) 300.0 300.0 Finance lease obligations 78.9 90.2 Total long-term debt and finance leases 1,040.2 1,011.5 Less: unamortized debt issuance costs and discounts (1.5) (2.1) Total long-term debt, less unamortized debt issuance costs and discounts 1,038.7 1,009.4 Less: current installments of long-term debt and finance leases (2) (15.4) (20.3) Long-term debt and finance leases, less current installments $ 1,023.3 $ 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 Liabilities for further details. |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Payables and Accruals [Abstract] | |
Other Accrued Liabilities Schedule | Other accrued liabilities consist of the following: December 28, June 29, Property tax $ 25.3 $ 23.3 Insurance 24.8 23.5 Sales tax 20.5 14.4 Current installments of long-term debt and finance leases 15.4 20.3 Utilities and services 10.3 9.6 Interest 7.2 6.5 Other 18.5 18.5 $ 122.0 $ 116.1 |
SHAREHOLDERS' DEFICIT (Tables)
SHAREHOLDERS' DEFICIT (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Stockholders' Equity Note [Abstract] | |
Stock-based Compensation Schedule | The following table presents the restricted share awards granted and related weighted average fair value per share amounts. Twenty-Six Week Periods Ended December 28, December 29, Restricted share awards Restricted share awards granted 0.7 0.4 Weighted average fair value per share $ 29.48 $ 53.27 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Supplemental Cash Flow Information [Abstract] | |
Cash Paid for Income Taxes and Interest Schedule | Cash paid for income taxes and interest is as follows: Twenty-Six Week Periods Ended December 28, December 29, Income taxes, net $ 4.4 $ (11.2) Interest, net of amounts capitalized 23.6 20.7 |
Non-cash Operating, Investing and Financing Activities Schedule | Non-cash operating, investing and financing activities are as follows: Twenty-Six Week Periods Ended December 28, December 29, Operating lease additions (1) $ 45.5 $ 141.8 Finance lease additions 0.2 11.9 Accrued capital expenditures 17.9 5.6 Retirement of fully depreciated assets 84.5 14.5 (1) The twenty-six week period ended December 29, 2021 primarily included operating lease additions associated with the 60 restaurants purchased from two former franchisees. Refer to Note 14 - Fiscal 2022 Chili’s Restaurant Acquisitions for further details. |
CHILI'S RESTAURANT ACQUISITIO_2
CHILI'S RESTAURANT ACQUISITIONS (Tables) | 6 Months Ended |
Dec. 28, 2022 | |
Business Combinations [Abstract] | |
Fair Value of Acquired Assets and Liabilities | 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 Region Great Lakes Region Fair Value September 2, 2021 Fair Value October 31, 2021 Current assets $ 1.4 $ 2.1 Property and equipment 46.2 43.6 Operating lease assets 23.6 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 $48.0 million, less $0.3 million of closing adjustments. Net assets acquired at fair value related to the Great Lakes Region acquisition are equal to the total purchase price of $56.0 million, plus $1.1 million of closing adjustments. |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) | Dec. 28, 2022 Restaurants Country territories |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 1,648 |
Chili's Restaurants [Member] | |
Franchisor Disclosure [Line Items] | |
Number of foreign countries in which entity operates | Country | 28 |
Number of U.S. territories in which entity operates | territories | 2 |
Entity Operated Units [Member] | |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 1,182 |
Franchised Units [Member] | |
Franchisor Disclosure [Line Items] | |
Number of restaurants | 466 |
REVENUE RECOGNITION (Deferred F
REVENUE RECOGNITION (Deferred Franchise and Development Fees) (Details) - Deferred Franchise and Development Fees [Member] $ in Millions | 6 Months Ended |
Dec. 28, 2022 USD ($) | |
Changes in deferred franchise and development fees [Line Items] | |
Balance as of June 29, 2022 | $ 10.1 |
Additions | 1.7 |
Amount recognized to Franchise revenues | (0.5) |
Balance as of December 28, 2022 | $ 11.3 |
REVENUE RECOGNITION (Remaining
REVENUE RECOGNITION (Remaining Deferred Franchise and Development Fees to be Recognized) (Details) $ in Millions | Dec. 28, 2022 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining deferred franchise and development fees to be recognized | $ 11.3 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-12-29 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining deferred franchise and development fees to be recognized | $ 0.4 |
Remaining deferred franchise and development fees to be recognized, expected timing of satisfaction in years | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-06-29 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining deferred franchise and development fees to be recognized | $ 0.9 |
Remaining deferred franchise and development fees to be recognized, expected timing of satisfaction in years | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-06-27 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining deferred franchise and development fees to be recognized | $ 0.8 |
Remaining deferred franchise and development fees to be recognized, expected timing of satisfaction in years | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-06-26 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining deferred franchise and development fees to be recognized | $ 0.8 |
Remaining deferred franchise and development fees to be recognized, expected timing of satisfaction in years | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-06-25 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining deferred franchise and development fees to be recognized | $ 0.7 |
Remaining deferred franchise and development fees to be recognized, expected timing of satisfaction in years | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-06-30 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining deferred franchise and development fees to be recognized | $ 7.7 |
Remaining deferred franchise and development fees to be recognized, expected timing of satisfaction in years | 15 years |
REVENUE RECOGNITION (Deferred G
REVENUE RECOGNITION (Deferred Gift Card Revenues) (Details) $ in Millions | 6 Months Ended |
Dec. 28, 2022 USD ($) | |
Deferred Gift Card Revenues [Line Items] | |
Balance as of June 29, 2022 | $ 83.9 |
Balance as of December 28, 2022 | 105.8 |
Gift card sales [Member] | |
Deferred Gift Card Revenues [Line Items] | |
Increase (decrease) in gift card liability | 80.3 |
Gift card redemptions [Member] | |
Deferred Gift Card Revenues [Line Items] | |
Gift card redemptions recognized to Company sales | (50.2) |
Gift card breakage [Member] | |
Deferred Gift Card Revenues [Line Items] | |
Gift card breakage recognized to Company sales | (6.6) |
Gift card other [Member] | |
Deferred Gift Card Revenues [Line Items] | |
Increase (decrease) in gift card liability | $ (1.6) |
OTHER GAINS AND CHARGES (Schedu
OTHER GAINS AND CHARGES (Schedule of Other Gains and Charges) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 28, 2022 | Dec. 29, 2021 | Dec. 28, 2022 | Dec. 29, 2021 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restaurant closure charges | $ 3.3 | $ 0.3 | $ 4.8 | $ 0.5 |
Severance and other benefit charges | 2.4 | 0 | 2.9 | 0 |
Loss from natural disasters, net of (insurance recoveries) | 1.1 | 0.2 | 0.9 | 0.8 |
Enterprise system implementation costs | 1 | 0.3 | 2 | 0.9 |
Remodel-related costs | 0.2 | 1.6 | 1 | 3.1 |
Lease contingencies | 0 | 2.9 | 0 | 2.9 |
Other | 0.5 | 1.1 | 1.9 | 2.7 |
Other (gains) and charges | $ 8.5 | $ 6.4 | $ 13.5 | $ 10.9 |
INCOME TAXES (Effective and Sta
INCOME TAXES (Effective and Statutory Tax Rates) (Details) | 3 Months Ended | 6 Months Ended | ||
Dec. 28, 2022 Rate | Dec. 29, 2021 Rate | Dec. 28, 2022 Rate | Dec. 29, 2021 Rate | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | (3.00%) | 5.20% | 50% | 4% |
Federal Statutory Income Tax Rate, Percent | 21% | 21% | 21% | 21% |
NET INCOME PER SHARE (Details)
NET INCOME PER SHARE (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | |||
Dec. 28, 2022 | Dec. 29, 2021 | Dec. 28, 2022 | Dec. 29, 2021 | ||
Reconciliation of Weighted Average Shares Outstanding [Line Items] | |||||
Basic weighted average shares outstanding | 44 | 45.1 | 44 | 45.5 | |
Total dilutive impact | 0.8 | 0.8 | 0 | 0.9 | |
Diluted weighted average shares outstanding | 44.8 | 45.9 | 44 | 46.4 | |
Awards excluded due to anti-dilutive effect | 1.4 | 0.9 | 2.8 | 0.5 | |
Stock Options [Member] | |||||
Reconciliation of Weighted Average Shares Outstanding [Line Items] | |||||
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 0 | 0.2 | 0 | [1] | 0.3 |
Restricted Share Award [Member] | |||||
Reconciliation of Weighted Average Shares Outstanding [Line Items] | |||||
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 0.8 | 0.6 | 0 | [1] | 0.6 |
[1]Due to the net loss for the twenty-six week period ended December 28, 2022, zero incremental shares are included because the effect would be anti-dilutive. |
SEGMENT INFORMATION (Schedule o
SEGMENT INFORMATION (Schedule of Segment Reporting) (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Dec. 28, 2022 USD ($) Restaurants territories Country | Dec. 29, 2021 USD ($) Restaurants | Dec. 28, 2022 USD ($) Restaurants territories Country | Dec. 29, 2021 USD ($) Restaurants | Jun. 29, 2022 USD ($) Restaurants | |||
Segment Reporting Information [Line Items] | |||||||
Segment Information, disclosure of major customers | We do not rely on any major customers as a source of sales, | ||||||
Total revenues | $ 1,019 | $ 925.8 | $ 1,974.5 | $ 1,802.2 | |||
Food and beverage costs | 289.4 | 252.8 | 578.9 | 487.1 | |||
Restaurant labor | 334.6 | 315.4 | 665.2 | 620.3 | |||
Restaurant expenses | 268.4 | 236.7 | 537.2 | 468 | |||
Depreciation and amortization | 41.8 | 41.6 | 83.7 | 80.9 | |||
General and administrative | 35.6 | 33.1 | 75.1 | 69.6 | |||
Other (gains) and charges | 8.5 | 6.4 | 13.5 | 10.9 | |||
Total operating costs and expenses | 978.3 | 886 | 1,953.6 | 1,736.8 | |||
Operating income (loss) | 40.7 | 39.8 | 20.9 | 65.4 | |||
Interest expenses | 13.9 | 11.2 | 26.2 | 23.7 | |||
Other income, net | (0.3) | (0.5) | (0.7) | (0.8) | |||
(Loss) Income before income taxes | 27.1 | 29.1 | (4.6) | 42.5 | |||
Segment assets | 2,519.6 | 2,519.6 | $ 2,484.4 | ||||
Segment goodwill | $ 194.8 | 194.8 | $ 195.1 | ||||
Payments for property and equipment | $ 95.3 | 74.1 | |||||
Number of restaurants | Restaurants | 1,648 | 1,648 | |||||
Chili's Restaurants [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Number of foreign countries in which entity operates | Country | 28 | 28 | |||||
Number of U.S. territories in which entity operates | territories | 2 | 2 | |||||
Total revenues | $ 878.7 | 808.2 | [1] | $ 1,728.6 | 1,595.8 | [1] | |
Food and beverage costs | 253.7 | 224.8 | [1] | 514.6 | 438.2 | [1] | |
Restaurant labor | 292.3 | 277.6 | [1] | 586.7 | 551.1 | [1] | |
Restaurant expenses | 234.1 | 205 | [1] | 471 | 409.6 | [1] | |
Depreciation and amortization | 36 | 35.4 | [1] | 72 | 68.4 | [1] | |
General and administrative | 8.5 | 7.2 | [1] | 18 | 15.2 | [1] | |
Other (gains) and charges | 5.7 | 2.2 | [1] | 8.7 | 5 | [1] | |
Total operating costs and expenses | 830.3 | 752.2 | [1] | 1,671 | 1,487.5 | [1] | |
Operating income (loss) | 48.4 | 56 | [1] | 57.6 | 108.3 | [1] | |
Interest expenses | 0.9 | 1.4 | [1] | 1.9 | 2.8 | [1] | |
Other income, net | 0 | (0.2) | [1] | 0 | (0.3) | [1] | |
(Loss) Income before income taxes | 47.5 | 54.8 | [1] | 55.7 | 105.8 | [1] | |
Segment assets | 2,128.5 | 2,128.5 | |||||
Segment goodwill | 156.4 | 156.4 | |||||
Payments for property and equipment | 85.1 | 65.4 | [1] | ||||
Maggiano's Restaurants [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Total revenues | 140.3 | 117.6 | 245.9 | 206.4 | |||
Food and beverage costs | 35.7 | 28 | 64.3 | 48.9 | |||
Restaurant labor | 42.3 | 37.8 | 78.5 | 69.2 | |||
Restaurant expenses | 34.2 | 31.5 | 65.9 | 58.1 | |||
Depreciation and amortization | 3.3 | 3.4 | 6.5 | 6.8 | |||
General and administrative | 1.5 | 1.9 | 4 | 3.9 | |||
Other (gains) and charges | 0.3 | 0 | 0.8 | 0.2 | |||
Total operating costs and expenses | 117.3 | 102.6 | 220 | 187.1 | |||
Operating income (loss) | 23 | 15 | 25.9 | 19.3 | |||
Interest expenses | 0.1 | 0.1 | 0.2 | 0.2 | |||
Other income, net | 0 | 0 | 0 | 0 | |||
(Loss) Income before income taxes | 22.9 | 14.9 | 25.7 | 19.1 | |||
Segment assets | 230 | 230 | |||||
Segment goodwill | 38.4 | 38.4 | |||||
Payments for property and equipment | 6.1 | 5 | |||||
Corporate and Other [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Total revenues | 0 | 0 | 0 | 0 | |||
Food and beverage costs | 0 | 0 | 0 | 0 | |||
Restaurant labor | 0 | 0 | 0 | 0 | |||
Restaurant expenses | 0.1 | 0.2 | 0.3 | 0.3 | |||
Depreciation and amortization | 2.5 | 2.8 | 5.2 | 5.7 | |||
General and administrative | 25.6 | 24 | 53.1 | 50.5 | |||
Other (gains) and charges | 2.5 | 4.2 | 4 | 5.7 | |||
Total operating costs and expenses | 30.7 | 31.2 | 62.6 | 62.2 | |||
Operating income (loss) | (30.7) | (31.2) | (62.6) | (62.2) | |||
Interest expenses | 12.9 | 9.7 | 24.1 | 20.7 | |||
Other income, net | (0.3) | (0.3) | (0.7) | (0.5) | |||
(Loss) Income before income taxes | (43.3) | (40.6) | (86) | (82.4) | |||
Segment assets | 161.1 | 161.1 | |||||
Segment goodwill | 0 | 0 | |||||
Payments for property and equipment | 4.1 | 3.7 | |||||
Company sales [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 1,009.4 | 915.8 | [2] | 1,955.5 | 1,781.4 | [2] | |
Company sales [Member] | Chili's Restaurants [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 869.3 | 798.4 | [1],[2] | 1,709.9 | 1,575.3 | [1],[2] | |
Company sales [Member] | Maggiano's Restaurants [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 140.1 | 117.4 | [2] | 245.6 | 206.1 | [2] | |
Company sales [Member] | Corporate and Other [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 0 | 0 | [2] | 0 | 0 | [2] | |
Franchise revenues [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 9.6 | 10 | [2] | 19 | 20.8 | [2] | |
Franchise revenues [Member] | Chili's Restaurants [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 9.4 | 9.8 | [1],[2] | 18.7 | 20.5 | [1],[2] | |
Franchise revenues [Member] | Maggiano's Restaurants [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | 0.2 | 0.2 | [2] | 0.3 | 0.3 | [2] | |
Franchise revenues [Member] | Corporate and Other [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Revenues | $ 0 | $ 0 | [2] | $ 0 | $ 0 | [2] | |
Chili's restaurant acquisitions [Member] | Chili's Restaurants [Member] | |||||||
Segment Reporting Information [Line Items] | |||||||
Number of restaurants | Restaurants | 60 | 60 | 68 | ||||
[1]Chili’s segment information includes the results of operations and the fair values of assets related to the 68 restaurants purchased from three former franchisees subsequent to the various acquisition dates during fiscal 2022. 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. |
FAIR VALUE MEASUREMENTS (Schedu
FAIR VALUE MEASUREMENTS (Schedule of Carrying and Fair Values of Financial Instruments) (Details) - USD ($) $ in Millions | Dec. 28, 2022 | Jun. 29, 2022 |
3.875% notes [Member] | ||
Debt Instrument [Line Items] | ||
Notes, stated percentage interest rate | 3.875% | |
Carrying value of notes | $ 299.9 | $ 299.7 |
Fair value of notes | $ 296.4 | 295.4 |
5.000% notes [Member] | ||
Debt Instrument [Line Items] | ||
Notes, stated percentage interest rate | 5% | |
Carrying value of notes | $ 348.6 | 348.2 |
Fair value of notes | $ 338.9 | $ 329 |
FAIR VALUE MEASUREMENTS (Non-Fi
FAIR VALUE MEASUREMENTS (Non-Financial Assets Measured on a Non-Recurring Basis) (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Dec. 28, 2022 | Dec. 29, 2021 | Jun. 29, 2022 | |
Additional Fair Value Elements [Abstract] | |||
Accumulated amortization associated with definite-lived intangible assets, | $ 13.9 | $ 12.6 | |
Schedule of Impairments [Line Items] | |||
Impairment of definite lived assets | 0 | $ 0 | |
Impairment of goodwill | 0 | 0 | |
Liquor Licenses [Member] | |||
Schedule of Impairments [Line Items] | |||
Impairment of liquor licenses | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS Chili's
FAIR VALUE MEASUREMENTS Chili's Restaurant Acquisitions (Details) - Restaurants | Dec. 28, 2022 | Jun. 29, 2022 | Dec. 29, 2021 |
Fair Value Disclosure, Acquisition [Line Items] | |||
Number of restaurants | 1,648 | ||
Chili's restaurant acquisitions [Member] | Chili's Restaurants [Member] | |||
Fair Value Disclosure, Acquisition [Line Items] | |||
Number of restaurants | 68 | 60 |
LEASES (Disclosure of Lease Exp
LEASES (Disclosure of Lease Expenses) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Dec. 28, 2022 | Dec. 29, 2021 | Dec. 28, 2022 | Dec. 29, 2021 | |
Leases [Abstract] | ||||
Operating lease cost | $ 45.1 | $ 43.2 | $ 90.2 | $ 84.6 |
Variable lease cost | 15.2 | 15.1 | 30.8 | 30.2 |
Finance lease amortization | 4.9 | 6.1 | 10.1 | 11.7 |
Finance lease interest | 1 | 1.4 | 2.1 | 3 |
Short-term lease cost | 0.1 | 0.2 | 0.2 | 0.3 |
Sublease income | (0.6) | (1.3) | (1.5) | (2.4) |
Total lease costs, net | $ 65.7 | $ 64.7 | $ 131.9 | $ 127.4 |
DEBT (Schedule of Long-Term Deb
DEBT (Schedule of Long-Term Debt) (Details) - USD ($) $ in Millions | Dec. 28, 2022 | Jun. 29, 2022 | |
Debt Instrument [Line Items] | |||
Finance lease obligations | $ 78.9 | $ 90.2 | |
Total long-term debt and finance leases | 1,040.2 | 1,011.5 | |
Less: unamortized debt issuance costs and discounts | (1.5) | (2.1) | |
Total long-term debt, less unamortized debt issuance costs and discounts | 1,038.7 | 1,009.4 | |
Less: current installments of long-term debt and finance leases | [1] | (15.4) | (20.3) |
Long-term debt and finance leases, less current installments | 1,023.3 | 989.1 | |
5.000% notes [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes | 350 | 350 | |
3.875% notes [Member] | |||
Debt Instrument [Line Items] | |||
Senior notes | [2] | 300 | 300 |
$800.0M Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Revolving credit facility | $ 311.3 | $ 271.3 | |
[1]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 Liabilities for further details.[2]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. |
DEBT (Additional Information) (
DEBT (Additional Information) (Details) - $800.0M Revolving Credit Facility [Member] $ in Millions | 6 Months Ended |
Dec. 28, 2022 USD ($) | |
Line of Credit Facility [Line Items] | |
Net borrowings | $ 40 |
Revolving credit facility, remaining borrowing capacity | 488.7 |
Revolving credit facility, maximum borrowing capacity | $ 800 |
Revolving credit facility, expiration date | Aug. 18, 2026 |
Basis spread on variable rate | 2% |
Revolving credit facility, interest rate at period end | 6.438% |
Revolving credit facility, covenant compliance | we were in compliance with our covenants pursuant to the $800.0 million revolving credit facility and under the terms of the indentures governing our 3.875% notes and 5.000% notes |
Maximum [Member] | |
Line of Credit Facility [Line Items] | |
Basis spread on variable rate | 2.25% |
Undrawn commitment fee spread | 0.35% |
Minimum [Member] | |
Line of Credit Facility [Line Items] | |
Basis spread on variable rate | 1.50% |
Undrawn commitment fee spread | 0.25% |
London Interbank Offered Rate (LIBOR) [Member] | |
Line of Credit Facility [Line Items] | |
Revolving credit facility, variable rate basis | LIBOR |
Revolving credit facility, interest rate during period | 4.438% |
ACCRUED LIABILITIES (Schedule o
ACCRUED LIABILITIES (Schedule of Other Accrued Liabilities) (Details) - USD ($) $ in Millions | Dec. 28, 2022 | Jun. 29, 2022 |
Other accrued liabilities [Line Items] | ||
Property tax | $ 25.3 | $ 23.3 |
Insurance | 24.8 | 23.5 |
Sales tax | 20.5 | 14.4 |
Current installments of long-term debt and finance leases | 15.4 | 20.3 |
Utilities and services | 10.3 | 9.6 |
Interest | 7.2 | 6.5 |
Other | 18.5 | 18.5 |
Other accrued liabilities | $ 122 | $ 116.1 |
SHAREHOLDERS' DEFICIT (Retireme
SHAREHOLDERS' DEFICIT (Retirement of Common Stock) (Details) - $ / shares shares in Millions | 3 Months Ended | ||
Sep. 28, 2022 | Dec. 28, 2022 | Jun. 29, 2022 | |
Equity [Abstract] | |||
Retirement of treasury stock, shares | 10 | ||
Treasury stock retired average price per share | $ 30.71 | ||
Treasury stock, shares | 16.3 | 26.5 |
SHAREHOLDERS' DEFICIT (Share Re
SHAREHOLDERS' DEFICIT (Share Repurchases) (Details) - USD ($) shares in Millions, $ in Millions | 6 Months Ended | ||
Dec. 28, 2022 | Dec. 29, 2021 | Aug. 16, 2021 | |
Remaining amount of share repurchase authorizations available | $ 204 | $ 300 | |
Purchases of treasury stock | $ 2.1 | $ 74.7 | |
Withheld from Employees [Member] | |||
Number of shares repurchased | 0.1 |
SHAREHOLDERS' DEFICIT (Stock-ba
SHAREHOLDERS' DEFICIT (Stock-based Compensation) (Details) - $ / shares shares in Millions | 6 Months Ended | |
Dec. 28, 2022 | Dec. 29, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted share awards granted | 0.7 | 0.4 |
Weighted average fair value per share | $ 29.48 | $ 53.27 |
SUPPLEMENTAL CASH FLOW INFORM_3
SUPPLEMENTAL CASH FLOW INFORMATION (Cash Paid for Income Taxes and Interest) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Dec. 28, 2022 | Dec. 29, 2021 | |
Income taxes, net | $ 4.4 | $ (11.2) |
Interest, net of amounts capitalized | $ 23.6 | $ 20.7 |
SUPPLEMENTAL CASH FLOW INFORM_4
SUPPLEMENTAL CASH FLOW INFORMATION (Non-Cash Operating, Investing and Financing Activities) (Details) $ in Millions | 6 Months Ended | |||
Dec. 28, 2022 USD ($) Restaurants | Dec. 29, 2021 USD ($) Restaurants | Jun. 29, 2022 Restaurants | ||
Other Significant Noncash Transactions [Line Items] | ||||
Operating lease additions | $ 45.5 | $ 141.8 | [1] | |
Finance lease additions | 0.2 | 11.9 | ||
Accrued capital expenditures | 17.9 | 5.6 | ||
Retirement of fully depreciated assets | $ 84.5 | $ 14.5 | ||
Number of restaurants | Restaurants | 1,648 | |||
Chili's restaurant acquisitions [Member] | Chili's Restaurants [Member] | ||||
Other Significant Noncash Transactions [Line Items] | ||||
Number of restaurants | Restaurants | 60 | 68 | ||
[1]The twenty-six week period ended December 29, 2021 primarily included operating lease additions associated with the 60 restaurants purchased from two former franchisees. Refer to Note 14 - Fiscal 2022 Chili’s Restaurant Acquisitions for further details. |
CONTINGENCIES (Lease Commitment
CONTINGENCIES (Lease Commitments) (Details) - Lease Guarantees And Secondary Obligations [Member] - USD ($) $ in Millions | Dec. 28, 2022 | Jun. 29, 2022 |
Guarantor Obligations [Line Items] | ||
Contingent liability for lease guarantees | $ 1.1 | |
Maximum [Member] | ||
Guarantor Obligations [Line Items] | ||
Loss contingency, estimate of possible loss | $ 22.8 | $ 26.3 |
CONTINGENCIES (Additional Infor
CONTINGENCIES (Additional Information) (Details) $ in Millions | Dec. 28, 2022 USD ($) LegalMatter |
Loss Contingencies [Line Items] | |
Amount of undrawn standby letters of credit outstanding | $ 5.8 |
Number of matters pending or threatened which are expected to have a material adverse effect | LegalMatter | 0 |
Cyber security incident [Member] | |
Loss Contingencies [Line Items] | |
Loss contingency, estimate of possible loss | $ 5 |
CHILI'S RESTAURANT ACQUISITIO_3
CHILI'S RESTAURANT ACQUISITIONS (Details) $ in Millions | 6 Months Ended | |||||||
Oct. 31, 2021 USD ($) Restaurants | Sep. 02, 2021 USD ($) Restaurants | Dec. 29, 2021 Restaurants | Dec. 28, 2022 USD ($) Restaurants | Jun. 29, 2022 USD ($) Restaurants | May 05, 2022 Restaurants | Feb. 01, 2022 USD ($) Restaurants | ||
Business Acquisition [Line Items] | ||||||||
Number of restaurants | Restaurants | 1,648 | |||||||
Goodwill | $ 194.8 | $ 195.1 | ||||||
Chili's Restaurants [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 156.4 | |||||||
Mid-Atlantic Region Acquisition [Member] | Chili's Restaurants [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of restaurants | Restaurants | 23 | |||||||
Purchase price including closing adjustments | $ 47.7 | |||||||
Current assets | 1.4 | |||||||
Property and equipment | 46.2 | |||||||
Operating lease assets | 23.6 | |||||||
Reacquired franchise rights | [1] | 4.7 | ||||||
Goodwill | [2] | 0 | ||||||
Current liabilities | (1.4) | |||||||
Finance lease liabilities, less current portion | (3.7) | |||||||
Operating lease liabilities, less current portion | (23.1) | |||||||
Net assets acquired | [3] | 47.7 | ||||||
Purchase price excluding closing adjustments | 48 | |||||||
Closing adjustments | $ (0.3) | |||||||
Great Lakes Region Acquisition | Chili's Restaurants [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of restaurants | Restaurants | 37 | |||||||
Purchase price including closing adjustments | $ 57.1 | |||||||
Current assets | 2.1 | |||||||
Property and equipment | 43.6 | |||||||
Operating lease assets | 47.8 | |||||||
Reacquired franchise rights | [1] | 4.6 | ||||||
Goodwill | [2] | 7.2 | ||||||
Current liabilities | (1.4) | |||||||
Finance lease liabilities, less current portion | 0 | |||||||
Operating lease liabilities, less current portion | (46.8) | |||||||
Net assets acquired | [3] | 57.1 | ||||||
Purchase price excluding closing adjustments | 56 | |||||||
Closing adjustments | $ 1.1 | |||||||
Northwest Region Acquisition | Chili's Restaurants [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of restaurants | Restaurants | 2 | 6 | ||||||
Purchase price including closing adjustments | $ 2 | |||||||
Chili's restaurant acquisitions [Member] | Chili's Restaurants [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Number of restaurants | Restaurants | 60 | 68 | ||||||
Weighted average amortization period, reacquired franchise rights | 15 years | |||||||
[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 $48.0 million, less $0.3 million of closing adjustments. Net assets acquired at fair value related to the Great Lakes Region acquisition are equal to the total purchase price of $56.0 million, plus $1.1 million of closing adjustments. |