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What changed in BRINKER INTERNATIONAL, INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BRINKER INTERNATIONAL, INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+187 added−212 removedSource: 10-K (2024-08-21) vs 10-K (2023-08-23)

Top changes in BRINKER INTERNATIONAL, INC's 2024 10-K

187 paragraphs added · 212 removed · 152 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe operating results for virtual brands are included in the results of our Chili’s and Maggiano’s brands, based on the restaurants that prepared and processed the food orders. 4 Table of Contents Business Strategy We are committed to strategies and a Company culture that we believe will grow sales, increase profits, bring back guests and engage team members.
Biggest changeBusiness Strategy We are committed to strategies and a Company culture that we believe will grow sales, increase profits, bring back guests and engage team members. Our strategies and culture are intended to strengthen our position in casual dining and grow our core business over time.
Our strategic plan is targeted to support our long-term growth objectives, with a focus on continued development of those restaurant locations that have the greatest return potential for the Company and our shareholders. Franchise Development We also pursue expansion through the development of our franchisees.
Our strategic plan is targeted to support our long-term growth objectives, with a focus on continued development of those restaurant locations that have the greatest return potential for the Company and our shareholders. Franchise Development We pursue expansion through the development of our franchisees.
Restaurant Management Our Chili’s and Maggiano’s brands have separate designated teams who support each brand, including operations, finance, franchise, marketing, human resources and culinary. We believe these strategic, brand-focused teams foster the identities of the individual and uniquely positioned brands.
Restaurant Management Our Chili’s and Maggiano’s brands have separate designated teams who support each brand, including operations, finance, marketing, human resources and culinary. We believe these strategic, brand-focused teams foster the identities of the individual and uniquely positioned brands.
We are currently investing in new enterprise resource planning ("ERP") and human capital management to provide our restaurant management and restaurant support teams with the tools necessary to enhance our ability to record and track data, make more effective real-time decisions, and drive process efficiencies. We plan to implement these new systems over the next year.
We are currently investing in new enterprise resource planning (“ERP”) and human capital management to provide our restaurant management and restaurant support teams with the tools necessary to enhance our ability to record and track data, make more effective real-time decisions, and drive process efficiencies. We plan to implement these new systems over the next year.
Information Technology and Cyber Security We pride ourselves on being innovators in our field, striving to create and procure cutting edge technology to improve the guest experience and create operational efficiencies. We have created and implemented technologies to facilitate a contactless guest experience through apps, tabletop and handheld devices and QR code payment.
Information Technology We pride ourselves on being innovators in our field, striving to create and procure cutting edge technology to improve the guest experience and create operational efficiencies. We have created and implemented technologies to facilitate a contactless guest experience through apps, tabletop and handheld devices and QR code payment.
Our executive officers have an average of more than 17 years of experience in the restaurant industry. Culture and Wellbeing For decades, our culture has been built on our passion for making people feel special, and that starts with our team members.
Our executive officers have an average of more than 19 years of experience in the restaurant industry. Culture and Wellbeing For decades, our culture has been built on our passion for making people feel special, and that starts with our team members.
Our process evaluates a variety of factors, including: • Trade area demographics, such as target population density and household income levels; • Physical site characteristics, such as visibility, accessibility and traffic volume; • Relative proximity to activity centers, such as shopping centers, hotel and entertainment complexes and office buildings; and • Supply and demand trends, such as proposed infrastructure improvements, new developments and existing and potential competition.
Our process evaluates a variety of factors, including: • Trade area demographics, such as target population density and household income levels; • Physical site characteristics, such as visibility, accessibility and traffic volume; 5 Table of Contents • Relative proximity to activity centers, such as shopping centers, hotel and entertainment complexes and office buildings; and • Supply and demand trends, such as proposed infrastructure improvements, new developments and existing and potential competition.
In addition, you may view and obtain, free of charge, at our website, copies of our corporate governance materials, including: Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter, Governance and Nominating Committee Charter, Code of Conduct for the Board of Directors, Brinker International Inc.
In addition, you may view and obtain, free of charge, at our website, copies of our corporate governance materials, including: Audit Committee Charter, Talent and Compensation Committee Charter, Governance and Nominating Committee Charter, Code of Conduct for the Board of Directors, Brinker International Inc.
Our 10 Table of Contents restaurant operators utilize our back office systems for inventory control, curbside management, forecasting, demand preparation and productivity. Our service desk supports the needs of both our restaurant support center and each of our restaurants. Our data centers are geographically dispersed, which helps support continuity of our operations and systems.
Our restaurant operators utilize our back office systems for inventory control, curbside management, forecasting, demand preparation and productivity. Our service desk supports the needs of both our restaurant support center and each of our restaurants. Our data centers are geographically dispersed, which helps support continuity of our operations and systems.
Routine restaurant visits by Regional Management and brand and executive leadership enforce strict adherence to our overall brand standards and operating procedures and also create an opportunity to capture and act on feedback so we continue to improve. Each brand is responsible for maintaining their operational training program.
Routine restaurant visits by Regional Management and brand and executive leadership enforce strict adherence to our overall brand standards and operating procedures and also create an opportunity to capture and act on feedback so we continue to improve. Each brand is responsible for maintaining their operational training 7 Table of Contents program.
The following table illustrates the franchise-operated restaurants opened during fiscal 2023 and the projected openings for fiscal 2024. The fiscal 2024 projected openings remain subject to change.
The following table illustrates the franchise-operated restaurants opened during fiscal 2024 and the projected openings for fiscal 2025. The fiscal 2025 projected openings remain subject to change.
You may obtain at our website, free of charge, copies of our reports filed with, or furnished to, the Securities and Exchange Commission (the “SEC”) on Forms 10-K, 10-Q and 8-K. The SEC also maintains a website, with the address of www.sec.gov, which contains reports, proxy and information statements, and other information filed electronically or furnished to the SEC.
You may obtain at our website, free of charge, copies of our reports filed with, or furnished to, the SEC on Forms 10-K, 10-Q and 8-K. The SEC also maintains a website, with the address of www.sec.gov, which contains reports, proxy and information statements, and other information filed electronically or furnished to the SEC.
Our Board’s Governance and Nominating Committee oversees and provides input on the sustainability strategic framework, goals and initiatives, as well as reviews ESG metrics and results. For more information, please review our Sustainability report on our Sustainability page on our website at www.brinker.com .
Our Board’s Governance and Nominating Committee oversees and provides input on the sustainability strategic framework, 8 Table of Contents goals and initiatives, as well as reviews ESG metrics and results. For more information, please review our Sustainability report on our Sustainability page on our website at www.brinker.com .
Beginning in fiscal 2024 this program is available to all team members on their first day of employment. Brinker cares about the health and wellbeing of all team members and provides resources and opportunities to help team members be their best, while at work and at home with their family, with our Be Well program.
During fiscal 2024 this program was available to all team members on their first day of employment. Brinker cares about the health and wellbeing of all team members and provides resources and opportunities to help team members be their best, while at work and at home with their family, with our Be Well program.
We celebrate the differences that make us stronger. We are committed to a workplace environment where every team member feels that they belong and where every team member can succeed. Our Board’s Talent and Compensation Committee provides oversight for aspects of our culture, equity, and inclusion, in addition to quarterly and annual reviews by our Board of Directors.
We are committed to a workplace environment where every team member feels that they belong and where every team member can succeed. Our Board’s Talent and Compensation Committee provides oversight for aspects of our culture, equity, and inclusion, in addition to quarterly and annual reviews by our Board of Directors.
We are working to strengthen the foundation of our culture of inclusion and to build greater diverse leadership at Brinker through the following programs and initiatives: • Journey Groups – Opportunities for team members to connect with other team members interested in taking steps on their personal journey to learn and discuss anti-racism, allyship and equality in a safe space focused on a supporting book, video, podcast, etc. • Women Taking the Lead – Development, mentoring and resources to help professionally develop female leaders. • Leaders Leading Through Diversity – A development program to increase diverse representation among restaurant operations leadership. • DE&I Training – Online learning paths on topics such as conscious and unconscious bias, as well as additional mandatory training programs for certain operations leaders. • Communities of Interest – Six resource groups providing safe spaces for underrepresented groups and allies to develop connections, share ideas and encourage diversity of thought in the organization. • Culture of Inclusion Series – Events to help educate team members about inclusion and different cultures. • TM Highlights – Opportunities for team members to share their personal stories, experiences, and what inclusion and allyship means to them. • Serving it Forward – allows us to go out and support, learn and impact communities to help create a better more-inclusive tomorrow partnering with non-profits that align with our giveback pillars of education, kids and hunger.
We are working to strengthen the foundation of our culture of inclusion and to build greater diverse leadership at Brinker through the following programs and initiatives: 9 Table of Contents • Women Taking the Lead – Development, mentoring and resources to help professionally develop female leaders. • Leaders Leading Through Diversity – A development program to increase diverse representation among restaurant operations leadership. • DE&I Training – Online learning paths on topics such as conscious and unconscious bias, as well as additional mandatory training programs for certain operations leaders. • Communities of Interest – Six resource groups providing safe spaces for underrepresented groups and allies to develop connections, share ideas and encourage diversity of thought in the organization. • Culture of Inclusion Activation Series – Events to help educate team members about inclusion and different cultures. • TM Highlights – Opportunities for team members to share their personal stories, experiences, and what inclusion and allyship means to them. • Serving it Forward – Allowing us to go out and support, learn and impact communities to help create a better more-inclusive tomorrow partnering with non-profits that align with our giveback pillars of education, kids and hunger.
As of June 28, 2023, we have 18 active development arrangements. During fiscal 2023, we opened 18 new locations, and entered into three new arrangements, both with existing and new franchise partners. We plan to strategically pursue expansion of Chili’s internationally in areas where we see the most growth opportunities.
As of June 26, 2024, we have 17 active development arrangements. During fiscal 2024, we opened 20 new locations, and entered into three new development arrangements, both with existing and new franchise partners. We plan to strategically pursue expansion of Chili’s internationally in areas where we see the most growth opportunities.
Sales from events at our banquet facilities made up 14.5% and 12.5% of Maggiano’s Company sales in fiscal 2023 and 2022, respectively. Food and non-alcoholic beverage sales accounted for 87.6% of Maggiano’s Company sales for fiscal 2023 with alcoholic beverage sales accounting for the remainder.
Sales from events at our banquet facilities made up 14.9% and 14.5% of Maggiano’s Company sales in fiscal 2024 and 2023, respectively. Food and non-alcoholic beverage sales accounted for 87.8% of Maggiano’s Company sales for fiscal 2024 with alcoholic beverage sales accounting for the remainder.
Of our hourly team members, approximately 27% are full-time and 73% are part-time employees. As of June 28, 2023, approximately 52% of our employees are women and approximately 56% of our employees (who self-identified as a race or ethnicity) are racially or ethnically diverse. Our team members are not covered by any collective bargaining agreements.
Of our hourly team members, approximately 28% are full-time and 72% are part-time employees. As of June 26, 2024, approximately 52% of our employees are women and approximately 58% of our employees (who self-identified as a race or ethnicity) are racially or ethnically diverse. Our team members are not covered by any collective bargaining agreements.
Our average annual net sales per Company-owned Chili’s restaurant during fiscal 2023 was $3.4 million, and the average revenue per meal, including alcoholic beverages, was approximately $18.76 per guest. Food and non-alcoholic beverage sales accounted for 89.3% of Chili’s Company sales in fiscal 2023 with alcoholic beverage sales accounting for the remainder.
Our average annual net sales per Company-owned Chili’s restaurant during fiscal 2024 was $3.6 million, and the average revenue per meal, including alcoholic beverages, was approximately $20.28 per guest. Food and non-alcoholic beverage sales accounted for 89.7% of Chili’s Company sales in fiscal 2024 with alcoholic beverage sales accounting for the remainder.
We offer a full range of lunch and dinner options, complimented by a premium wine list and handcrafted cocktails. In fiscal 2023, entrée selections ranged in menu price from $9.99 to $44.99. Our average annual sales per Maggiano’s restaurant in fiscal 2023 was $9.5 million and the average revenue per meal, including alcoholic beverages, was approximately $32.28 per guest.
We offer a full range of lunch and dinner options, complimented by a premium wine list and handcrafted cocktails. In fiscal 2024, entrée selections ranged in menu price from $13.50 to $48.99. Our average annual sales per Maggiano’s restaurant in fiscal 2024 was $9.8 million and the average revenue per meal, including alcoholic beverages, was approximately $35.65 per guest.
Whether domestic or international, or franchised, Chili’s is dedicated to delivering delicious and craveable food with value-centric offerings such as “3 for Me” starting at only $10.99, as well as dining experiences in a vibrant atmosphere that make guests feel special.
Whether domestic, international, or franchised, Chili’s is dedicated to delivering delicious food & drink with value-centric offerings such as “3 for Me ® ” starting at only $10.99, as well as dining experiences in a vibrant atmosphere intended to make everyone feel special.
The contents of the Sustainability report and our website are not incorporated by reference into this Form 10-K. Human Capital Management Our employee base as of June 28, 2023, consisted of 64,323 team members, including 538 restaurant support center team members, 5,070 restaurant management team members, with the remainder being hourly team members.
The contents of the Sustainability report and our website are not incorporated by reference into this Form 10-K. Human Capital Management Our employee base as of June 26, 2024, consisted of 68,852 team members, including 562 restaurant support center team members, 5,010 restaurant management team members, with the remainder being hourly team members.
Fiscal 2023 Fiscal 2024 Fiscal Year Openings Projected Openings Franchise-operated restaurants Chili’s domestic 2 0-1 Chili’s international 18 19-24 Maggiano’s domestic — — Total openings 20 19-25 The following table illustrates the percentages of franchise-operated restaurants out of the total Company-owned and franchise-operated restaurants as of June 28, 2023, by restaurant brand: Percentage of Franchise-Operated Restaurants Domestic (1) International (2) Overall (3) Brinker 8 % 99 % 28 % Chili’s 8 % 99 % 29 % Maggiano’s 4 % — % 4 % (1) Domestic franchise-operated restaurants as a percentage of total domestic restaurants.
Fiscal 2024 Fiscal 2025 Fiscal Year Openings Projected Openings Franchise-operated restaurants Chili’s domestic — 2-4 Chili’s international 20 19-24 Maggiano’s domestic — 1 Total openings 20 22-29 6 Table of Contents The following table illustrates the percentages of domestic, international and overall franchise-operated restaurants in relation to the total Company-owned and franchise operated restaurants as of June 26, 2024, by restaurant brand: Percentage of Franchise-Operated Restaurants Domestic (1) International (2) Overall (3) Chili’s 8 % 99 % 28 % Maggiano’s 4 % — % 4 % (1) Domestic franchise-operated restaurants as a percentage of total domestic restaurants.
We believe our shift in focusing on four core equities, simplifying our menu, being intentional about our fun laid-back Chilihead culture, and maintaining our strong hospitality standards allow Chili’s to differentiate its high-quality food and service from other casual dining restaurants. In fiscal 2023, entrée selections at our Company-owned restaurants ranged in menu price from $8.29 to $23.17.
We believe our focus on these four core equities, simplifying our menu, being intentional about our fun laid-back Chilihead culture, and maintaining our strong Chilihead hospitality allow Chili’s to differentiate its high-quality food and service from other casual dining restaurants. In fiscal 2024, entrée selections at our Company-owned restaurants ranged in average menu price from $10.19 to $24.06.
Our ability to sustainably deliver profits to shareholders is built on a foundation of investing in and caring for all of our team members, safely serving great quality food to our guests and acting responsibly in all that we do.
Sustainability Building sustainable value for all of our stakeholders has always been a key part of our business strategy. Our ability to sustainably deliver profits to shareholders is built on a foundation of investing in and caring for all of our team members, safely serving great quality food to our guests and acting responsibly in all that we do.
Our restaurants also have banquet rooms to host large party events and we have a begun to renovate these banquet rooms in certain restaurants to provide a better experience for this profitable revenue channel, particularly during the holiday season in the second and third quarters of the fiscal year. 5 Table of Contents Company Development During fiscal 2023, we continued to develop our restaurant brands domestically through the opening of new Company-owned restaurants in strategically desirable markets.
Our restaurants also have banquet rooms to host large party events and we have begun to renovate these banquet rooms in certain restaurants to provide a better experience for this profitable revenue channel, particularly during the holiday season in the second and third quarters of the fiscal year.
Our menu features bold, Southwest inspired American favorites and Chili’s has built a reputation for big mouth burgers, full-on sizzling fajitas, crispy Chicken Crispers ® and hand-shaken margaritas. As part of our new strategy, we’re improving and innovating on these four core food and drink offerings.
Our menu features bold, Southwest inspired American favorites and Chili’s has built a reputation for big mouth burgers, full-on sizzling fajitas, crispy Chicken Crispers ® and hand-shaken margaritas.
ITEM 1. BUSINESS General References to “Brinker,” the “Company,” “we,” “us,” and “our” in this Form 10-K refer to Brinker International, Inc. and its subsidiaries and any predecessor companies of Brinker International, Inc.
ITEM 1. BUSINESS General References to “Brinker,” the “Company,” “we,” “us,” and “our” in this Form 10-K refer to Brinker International, Inc. and its subsidiaries and any predecessor companies of Brinker International, Inc. We own, develop, operate and franchise the Chili’s ® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy ® (“Maggiano’s”) restaurant brands.
We concentrate on the development within certain identified markets that we believe are most likely to improve our competitive position and achieve the desired level of market share potential, profitability and return on invested capital.
Company Development During fiscal 2024, we continued to develop our restaurant brands domestically through the opening of new Company-owned restaurants in strategically desirable markets. We concentrate on the development within certain identified markets that we believe are most likely to improve our competitive position and achieve the desired level of market share potential, profitability and return on invested capital.
Domestic Franchises As of June 28, 2023, no domestic development arrangement existed, however, certain of our domestic partners have opened new domestic franchised locations. Similar to our international agreements, a typical domestic franchise agreement provides for initial franchise fees revenues in addition to subsequent royalty and advertising fee revenues based on the gross sales of each restaurant.
Domestic Franchises As of June 26, 2024, no active domestic development arrangements existed. Similar to our international agreements, a typical domestic franchise agreement provides for initial franchise fees revenues in addition to subsequent royalty and advertising fee revenues based on the gross sales of each restaurant. We remain committed to supporting the growth of our franchisees in existing territories.
The fiscal 2024 projected openings remain subject to change: Fiscal 2023 Fiscal 2024 Fiscal Year Openings Projected Openings Company-owned restaurants Chili’s domestic 14 12 Chili’s international — — Maggiano’s domestic — — Total Company-owned new openings 14 12 Company-owned relocations Chili’s domestic 1 — We periodically evaluate the financial performance of Company-owned restaurants to assess whether performance has fallen below our minimum standards.
The following table illustrates the Company-owned restaurants opened during fiscal 2024 and the projected openings for fiscal 2025. The fiscal 2025 projected openings remain subject to change: Fiscal 2024 Fiscal 2025 Fiscal Year Openings Projected Openings Chili’s domestic 9 7 We periodically evaluate the financial performance of Company-owned restaurants to assess whether performance has fallen below our minimum standards.
Code of Conduct - Making People Feel Special and Policy Governing the Improper Use of Materials. The information contained on our website is not a part of this Annual Report on Form 10-K.
The information contained on our website is not a part of this Annual Report on Form 10-K.
Our executive management team reviews the results of these surveys with our Board of Directors and strives to incorporate this feedback into future strategies. Diversity, Equity and Inclusion (“DE&I”) Our restaurants are built on the foundation of a culture of inclusion. Our team members are diverse in gender, race, ethnicity, sexual orientation, disability, religion, age, cultural background and life experiences.
Diversity, Equity and Inclusion (“DE&I”) Our restaurants are built on the foundation of a culture of inclusion. Our team members are diverse in gender, race, ethnicity, sexual orientation, disability, religion, age, cultural background and life experiences. We celebrate the differences that make us stronger.
We believe that every team member should feel valued and respected and know that their work is meaningful and makes a difference in our brands and our communities. We ask all of our team members to take a survey semi-annually, which includes meaningful feedback on how our team members feel about their overall work experience, their manager and our culture.
We believe that every team member should feel valued and respected and know that their work is meaningful and makes a difference in our brands and our communities. We ask the team members to take a survey either as a new hire or after termination.
Maggiano’s, as a “polished casual” restaurant with 52 Company-owned and franchise-operated locations, primarily targets guests from affluent households who live and work around the higher-end malls where the majority of Maggiano’s restaurants are located. Maggiano’s relies on digital marketing, direct marketing, social media and word of mouth to advertise.
Maggiano’s primarily targets guests from affluent households who live and work around the higher-end malls where the majority of Maggiano’s restaurants are located. Maggiano’s relies on digital marketing, direct marketing, social media and word of mouth to advertise. Seasonality Our business has historically been seasonal and experienced fluctuation in sales volume during the fiscal year.
These young families represent a significant 8 Table of Contents percentage of our guest base today and, we believe, will only grow in importance in the years ahead. We rely on digital marketing, direct marketing, social media and word of mouth to advertise.
These young families represent a significant percentage of our guest base today and, we believe, will only grow in importance in the years ahead. In order to reach that market we updated our strategy in fiscal 2023 to include significant investments in television, streaming, digital video and social media.
We have a flexible platform of value offerings at both lunch and dinner that we believe is compelling to our guests. Our “3 for Me” platform allows guests to enjoy a non-alcoholic drink, an appetizer and certain entrées starting at just $10.99.
Our “3 for Me” platform allows guests to enjoy a non-alcoholic drink, an appetizer and certain entrées starting at just $10.99. We believe our value offerings will continue to be an important traffic driver in the current economic circumstances and we will continue to highlight this value in our marketing efforts.
Members of each brand’s executive team inspect, review, and approve each restaurant site prior to its leasing or acquisition for that brand.
The restaurant site selection process is critical, and we devote significant effort to the investigation of new locations utilizing a variety of sophisticated analytical techniques. Members of each brand’s executive team inspect, review, and approve each restaurant site prior to its leasing or acquisition for that brand.
The Company was organized under the laws of the State of Delaware in September 1983 to succeed to the business operated by Chili’s, Inc., a Texas corporation, which was organized in August 1977.
The Company was organized under the laws of the State of Delaware in 1983 to succeed to the business operated by Chili’s, Inc., a Texas corporation, which was organized in 1977. We completed the acquisition of Maggiano’s in 1995. 3 Table of Contents References to “fiscal” or “fiscal year” are to the fiscal year ended of the applicable year.
Beginning in fiscal 2024, our hourly team members identified for potential leadership positions will be immediately elevated to assistant managers and we have discontinued the CSL program. 9 Table of Contents Our no-cost education program, Best You EDU ™ , provides foundational learning, ESL, citizenship preparation courses, GED, associate degree programs and other educational benefits, such as Spanish and standard tuition reimbursement.
During fiscal 2024, approximately 95% of our new general managers were promoted from our existing team members. Our no-cost education program, Best You EDU ™ , provides foundational learning, ESL, citizenship preparation courses, GED, associate degree programs and other educational benefits, such as Spanish and standard tuition reimbursement.
We believe our information systems are sufficient to support our business and we continually seek to improve our processes based on the strategic and financial priorities of the business. Our existing cyber security policy includes continuous monitoring and detection programs, network security precautions, encryption of critical data, in depth security assessment of vendors and incident response guidelines.
We believe our information systems are sufficient to support our business and we continually seek to improve our processes based on the strategic and financial priorities of the business.
We are making work at Chili’s easier, more fun and more rewarding for our team members so that they are more engaged and provide a better experience for our guests. One way we have done this is by eliminating tasks that were unnecessary and did not add value to our guests.
Chili’s Our strategy is to make everyone feel special through a fun atmosphere, delicious food and drinks and our Chili’s hospitality. We are making work at Chili’s easier, more fun and more rewarding for our team members so that they are more engaged and provide a better experience for our guests.
Restaurant Brands Chili’s Grill & Bar Chili’s is a recognized leader in the casual dining industry and the flagship brand of Dallas-based Brinker International, Inc. Chili’s has been operating restaurants for over 48 years and enjoys a global presence with restaurants in the United States, 29 other countries and two United States territories.
Chili’s has been operating restaurants for over 49 years and enjoys a global presence with restaurants in the United States, 27 other countries and two United States territories.
We are improving our hospitality by scheduling more team members per shift to serve our guests and by improving systems and technology that can help with our order accuracy and guest experience. Another priority is having clean and well-maintained restaurants that provide an inviting atmosphere for team members to work and guests to dine.
Our team members can make our core menu items better and more consistently because we have fewer menu items that need to be perfected. We are improving our hospitality by scheduling more team members per shift to serve our guests and by improving systems and technology that can help with our order accuracy and guest experience.
In some cases, the brand considers relocation to a proximate, more desirable site, or evaluates closing the restaurant if the brand’s measurement criteria, such as cash flow and area demographic trends, do not support relocation. 6 Table of Contents During fiscal 2023, excluding temporary closures, we permanently closed 16 Company-owned Chili’s, including one relocation closure and two Company-owned Maggiano’s restaurants that were performing below our standards and were near or at the expiration of their lease terms.
In some cases, the brand considers relocation to a proximate, more desirable site, or evaluates closing the restaurant if the brand’s measurement criteria, such as cash flow and area demographic trends, do not support relocation.
We have also simplified our menu to focus on core equities we believe can help grow sales—burgers, fajitas, Chicken Crispers, and margaritas, as well as other classic favorites. Our team members can make our core menu items better and more consistently because we have fewer menu items that need to be perfected.
One way we have done this is by eliminating tasks that were unnecessary and did not add value to our guests. We have also simplified our menu to focus on core equities we believe can help grow sales—burgers, fajitas, Chicken Crispers, and margaritas, as well as other classic 4 Table of Contents favorites.
While our dining rooms support the majority of our business, we have focused on increasing our carry-out and delivery business in recent years, including through partnerships with delivery service providers that have made our restaurants more accessible to guests and helped create an additional significant revenue channel.
This warm and generous hospitality creates an environment where guests come together to celebrate birthdays, weddings and many more special occasions. While our dining rooms support the majority of our business, we also offer carry-out and delivery options through partnerships with delivery service providers that have made our restaurants more accessible to guests.
In fiscal 2023, we returned to advertising on television with a campaign that highlighted our “3 for Me” value offering. Our domestic Chili’s franchise agreements generally require advertising contributions to us by the franchisees.
In fiscal 2024, we have continued various advertising campaigns in several platforms that highlights our different value offerings. Our domestic Chili’s franchise agreements generally require advertising contributions to us by the franchisees.
Moreover, factors such as inclement weather conditions, natural disasters, and timing of holidays tend to impact this seasonality by region. Sustainability Building sustainable value for all of our stakeholders has always been a key part of our business strategy.
The highest sales are generally observed during the winter and the spring months, whereas the summer and the fall months are accompanied with lower sales. Moreover, factors such as inclement weather conditions, natural disasters, and timing of holidays tend to impact this seasonality by region.
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We own, develop, operate and franchise the Chili’s ® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy ® (“Maggiano’s”) restaurant brands, as well as a virtual brand, It’s Just Wings ® .
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For example, fiscal 2024 refers to the fiscal year ended June 26, 2024. Restaurant Brands Chili’s Grill & Bar Chili’s is a recognized leader in the casual dining industry and the flagship brand of Dallas-based Brinker International, Inc.
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We completed the acquisition of Maggiano’s in August 1995. 3 Table of Contents References to “fiscal” or “fiscal year” are to the fiscal year ended of the applicable year. For example, fiscal 2023 refers to the fiscal year ended June 28, 2023.
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Another priority is having clean and well-maintained restaurants that provide an inviting atmosphere for team members to work and guests to dine. We have a flexible platform of value offerings at both lunch and dinner that we believe is compelling to our guests.
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Virtual Brands Our virtual brand, It’s Just Wings, provides restaurant-like menu offerings that are only available for purchase digitally. It’s Just Wings primarily offers chicken wings available with a variety of different sauces and rubs. It’s Just Wings is available for purchase through our third-party service providers and a brand specific website, itsjustwings.com.
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Our It’s Just Wings ® offering is available through the website, itsjustwings.com. The operating results for this virtual brand are included in the results of our Chili’s brand, based on the restaurants that prepared and processed the food orders.
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Maggiano’s Italian Classics, which offered a select group of items inspired by the menu at Maggiano’s Little Italy, was phased out by the end of fiscal 2023 so we can focus on the Chili’s strategies discussed below.
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During fiscal 2024, we permanently closed 23 Company-owned Chili’s, including one international Chili’s sold to a franchisee, that were performing below our standards or we were unable to negotiate additional lease terms for such location.
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Our strategies and culture are intended to strengthen our position in casual dining and grow our core business over time. Chili’s Our strategy is to make everyone feel special through a fun atmosphere, delicious food and drinks and our Chili’s hospitality.
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These surveys allow us to gather more in the moment and real time feedback through a new hire survey or exit survey. The goal is that these Team Members provide meaningful feedback on how they felt about their overall experience, management, training, and the culture.
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In fiscal 2023, we returned to advertising on television with a campaign that highlighted this incredible value and we believe our value offerings will continue to be an important traffic driver in the current economic circumstances.
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Code of Conduct - Making People Feel Special, Brinker Reporting and Whistleblower Policy, Foreign Corrupt Practices Act and Anti-Corruption Policy, Policy Governing the Improper Use of Material Nonpublic Information and Trading in Brinker’s 10 Table of Contents Securities, Code of Conduct for the Board of Directors, Supplier Code of Conduct, Policy Regarding Shareholder Meetings, and Human Rights Policy.
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This warm and generous hospitality creates an environment where guests come together to celebrate birthdays, weddings and many more special occasions.
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For smaller market areas, we have developed a smaller Chili’s building prototype that allows us to expand into these markets and serve our guests while maintaining a focus on profitability and return on invested capital. The restaurant site selection process is critical, and we devote significant effort to the investigation of new locations utilizing a variety of sophisticated analytical techniques.
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The following table illustrates the Company-owned restaurants opened during fiscal 2023 and the projected openings for fiscal 2024.
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We have from time to time purchased restaurants from our franchisees in order to support our growth objectives in certain markets. In fiscal 2022, we purchased 68 Chili’s restaurants from three former franchisees located in the Mid-Atlantic, Great Lakes and Northwest regions of the United States.
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We 7 Table of Contents believe these acquisitions represent an opportunity to create value for our shareholders and to generate additional earnings and cash flow growth. We remain committed to supporting the growth of our existing franchisees.
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Seasonality Our business has historically been seasonal and experienced fluctuation in sales volume during the fiscal year. The highest sales are generally observed during the winter and the spring months, whereas the summer and the fall months are accompanied with lower sales.
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Approximately 90% of our new general managers are promoted from our existing team members. In fiscal 2023, our certified shift leader (“CSL”) apprenticeship program provided hourly team members the first step into the path to management.
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We continue to invest and innovate around the areas of protection of systems, sensitive data, technology and processes using third-party and in-house tools and resources.
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We remain vigilant in staying ahead of new and emerging risks utilizing our tools and security teams and continue to review and make strategic continued investments in our systems to keep the Company, our guests and our team members data secure.
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We subscribe to multiple feeds and associations that discuss and monitor risks of any technology compromise or risks at our business partners where relevant. Relevant restaurant level personnel and employees at the restaurant support center receive annual training on information security best practices.
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Additionally, we provide annual credit card handling training following Payment Card Industry guidelines to team members that handle guest payment information. We maintain a disaster recovery plan and protect against business interruption by backing up our major systems.
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In addition, we periodically scan our environment for any vulnerability, perform penetration testing and engage third parties to assess effectiveness of our data security practices. A third-party conducts regular network security reviews, scans and audits.
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The Audit Committee of the Board of Directors has oversight responsibility for our data security practices and we believe the committee has the requisite skills and visibility into the design and operation of our data security practices, to fulfill this responsibility effectively.
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Management reporting on the effectiveness of these practices is provided to the Board of Directors, including the Audit Committee, on a quarterly basis or as needed.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeHowever, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support field operations and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operation and exposure to administrative and other legal claims. 17 Table of Contents Financial Risks Downgrades in our credit ratings could impact our ability to access capital and materially adversely affect our business, financial condition and results of operations.
Biggest changeHowever, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate functions, loss of productivity, tardiness in required reporting and compliance, failures to adequately 17 Table of Contents support field operations and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operation and exposure to administrative and other legal claims.
As privacy and information security laws and regulations change or cyber risks evolve pertaining to data, we may incur significant additional costs in technology, third-party services and personnel to maintain systems designed to anticipate and prevent cyber-attacks. For example, the Company experienced a cyber security incident at some Chili’s locations in fiscal 2018.
As privacy and information security laws and regulations change, or cyber risks evolve pertaining to data, we may incur significant additional costs in technology, third-party services and personnel to maintain systems designed to anticipate and prevent cyber-attacks. For example, the Company experienced a cybersecurity incident at some Chili’s locations in fiscal 2018.
If the third-party aggregators that we utilize for delivery cease or curtail their operations, fail to maintain sufficient labor force to satisfy demand, materially change fees, access or visibility to our products or give greater priority or promotions on their platforms to our competitors, our business may be negatively impacted.
If the third-party aggregators that we utilize for delivery cease or curtail their operations, fail to maintain sufficient a labor force to satisfy demand, materially change fees, access or visibility to our products or give greater priority or promotions on their platforms to our competitors, our business may be negatively impacted.
General economic conditions, including inflation and fluctuations in energy costs, may continue to increase our operating expenses. We have in the past, and are currently experiencing the impacts of economic conditions, including inflation and fluctuations in utility and energy costs. Inflation has caused added food, labor and benefits costs and increased our operating expenses.
General economic conditions, including inflation and fluctuations in energy costs, may continue to increase our operating expenses. We have in the past experienced, and are currently experiencing, the impacts of economic conditions, including inflation and fluctuations in utility and energy costs. Inflation has caused added food, labor and benefits costs and increased our operating expenses.
Our inability to effectively manage supply chain risk could increase our costs or reduce revenues and limit the availability of products critical to our restaurant operations. 16 Table of Contents Information and Technology Related Risks We are exposed to risks related to cyber security and protection of confidential information, and failure to protect the integrity and security of payment card or individually identifiable information of our guests and teammates or confidential and proprietary information of the Company could damage our reputation and expose us to loss of revenues, increased costs and litigation.
Our inability to effectively manage supply chain risk could increase our costs or reduce revenues and limit the availability of products critical to our restaurant operations. 16 Table of Contents Information and Technology Related Risks We are exposed to risks related to cybersecurity and protection of confidential information, and failure to protect the integrity and security of payment card or individually identifiable information of our guests and teammates or confidential and proprietary information of the Company could damage our reputation and expose us to loss of revenues, increased costs and litigation.
Our reputation and financial results may be negatively impacted by: franchisee defaults in their obligations to us; limitations on our ability to enforce franchise obligations due to bankruptcy proceedings or differences in legal remedies in international markets; franchisee failures to participate in business strategy changes due to financial constraints; franchisee failures to meet obligations to pay employees; and franchisees’ failure to comply with food quality and preparation requirements.
Our reputation and financial results may be negatively impacted by: franchisee defaults in their obligations to us; limitations on our ability to enforce franchise obligations due to bankruptcy proceedings or differences in legal remedies in international markets; franchisee failures to participate in business strategy changes due to financial constraints; franchisee failures to meet obligations to pay employees; and franchisee failures to comply with food quality and preparation requirements.
Interim goodwill impairment tests are also required when events or circumstances change between annual tests that would more likely than not reduce the fair value of our reporting units below their carrying value. We performed our annual goodwill impairment test in the second quarter of fiscal 2023 and no indicators of impairment were identified.
Interim goodwill impairment tests are also required when events or circumstances change between annual tests that would more likely than not reduce the fair value of our reporting units below their carrying value. We performed our annual goodwill impairment test in the second quarter of fiscal 2024 and no indicators of impairment were identified.
Additionally, no indicators of impairment were identified through the end of fiscal 2023. This assessment is predicated on our ability to continue to operate dining and banquet rooms and generate off-premise sales at our restaurants. We will continue to monitor and evaluate our results and evaluate the likelihood of any potential impairment charges at our reporting units.
Additionally, no indicators of impairment were identified through the end of fiscal 2024. This assessment is predicated on our ability to continue to operate dining and banquet rooms and generate off-premise sales at our restaurants. We will continue to monitor and evaluate our results and evaluate the likelihood of any potential impairment charges at our reporting units.
The restaurant industry is dependent upon consumer discretionary spending, which is negatively affected by global and domestic economic conditions, such as: fluctuations in disposable income and changes in consumer confidence, the price of gasoline, slow or negative growth, unemployment, credit conditions and availability, volatility in financial markets, inflationary pressures, weakness in the housing market, tariffs and trade barriers, wars or conflict in certain regions, pandemics or public health concerns, and changes in government and central bank monetary policies.
The restaurant industry is dependent upon consumer discretionary spending, which is negatively affected by global and domestic economic conditions, such as: fluctuations in disposable income and changes in consumer confidence, 15 Table of Contents the price of gasoline, slow or negative growth, unemployment, credit conditions and availability, volatility in financial markets, inflationary pressures, weakness in the housing market, tariffs and trade barriers, wars or conflict in certain regions, pandemics or public health concerns, and changes in government and central bank monetary policies.
If our technology systems, or those of third-party services providers we rely upon, are compromised as a result of a cyber-attack (including whether from circumvention of security systems, denial-of-service attacks, hacking, “phishing” attacks, computer viruses, ransomware, malware, or social engineering) or other external or internal method, it could result in an adverse and material impact on our reputation, operations, and financial condition.
If our technology systems, or those of third-party services providers we rely upon, are compromised as a result of a cyber-attack (including whether from circumvention of security systems, denial-of-service attacks, hacking, use of artificial intelligence, “phishing” attacks, computer viruses, ransomware, malware, or social engineering) or other external or internal method, it could result in an adverse and material impact on our reputation, operations, and financial condition.
Our technology systems contain personal, financial and other information that is entrusted to us by our guests and team members, as well as financial, proprietary and other confidential information related to our business, and a significant portion of our restaurant sales are by credit or debit cards.
Our technology systems contain personal, financial and other information that is entrusted to us by our guests and team members, as well as financial, proprietary and other confidential information related to our business. In addition, a significant portion of our restaurant sales are by credit or debit cards.
If we fail to achieve any goals, targets, or objectives we may set with respect to ESG matters, if we do not meet or comply with new regulations or evolving consumer, investor, industry, or stakeholder expectations and standards, including those related to reporting, or if we are perceived to have not responded appropriately to the growing concern for ESG matters, we may face legal or regulatory actions, the imposition of fines, penalties, or other sanctions, adverse publicity, and decreased demand from consumers, or the price of our common shares could decline, any of which could materially harm our reputation or have a material adverse effect on our business, financial condition, or operating results.
If we fail to achieve any goals, targets, or objectives we may set with respect to ESG matters, if we do not meet or comply with new regulations or evolving consumer, investor, industry, or stakeholder expectations and standards (which are not uniform), including those related to reporting, or if we are perceived to have not responded appropriately to the growing concern for ESG matters, we may face legal or regulatory actions, the imposition of fines, penalties, or other sanctions, adverse publicity, decreased demand from 14 Table of Contents consumers, or a decline in the price of our common shares, any of which could materially harm our reputation or have a material adverse effect on our business, financial condition, or operating results.
Any significant increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters could have a material adverse impact on our financial results. 20 Table of Contents Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price .
Any significant increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters could have a material adverse impact on our financial results. Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price .
Macroeconomic and Industry Risks Competition may adversely affect our operations and financial results. The restaurant business is highly competitive as to price, service, restaurant location, convenience, and type and quality of food. We compete within each market with locally-owned restaurants as well as national and regional 15 Table of Contents restaurant chains.
Macroeconomic and Industry Risks Competition may adversely affect our operations and financial results. The restaurant business is highly competitive as to price, service, restaurant location, convenience, and type and quality of food. We compete within each market with locally-owned restaurants as well as national and regional restaurant chains.
Even instances of food-borne illness, food tampering or food contamination occurring solely at restaurants of our competitors could result in negative publicity about the restaurant industry in general and adversely affect our sales or cause us to incur additional costs to implement food safety protocols beyond industry standards.
Even instances of food-borne illness, food tampering or food contamination occurring solely at restaurants of our competitors could result in negative publicity 11 Table of Contents about the restaurant industry in general and adversely affect our sales or cause us to incur additional costs to implement food safety protocols beyond industry standards.
We are subject to various federal, state and local employment and labor laws and regulations that govern employment and labor matters, including, employment discrimination, minimum wages, work scheduling, overtime, tip credits, tax reporting, working conditions, safety standards, employment of minors, family leave and immigration status.
We are subject to various federal, state and local employment and labor laws and regulations that govern employment and labor matters, including, employment discrimination, minimum wages, work scheduling, overtime, 19 Table of Contents tip credits, tax reporting, working conditions, safety standards, employment of minors, family leave and immigration status.
In addition, our suppliers may be affected by higher 19 Table of Contents minimum wage standards or availability of labor, which may increase the price of goods and services they supply to us. There are no assurances that a combination of cost management and price increases can offset all of the costs associated with compliance.
In addition, our suppliers may be affected by higher minimum wage standards or availability of labor, which may increase the price of goods and services they supply to us. There are no assurances that a combination of cost management and price increases can offset costs associated with compliance.
Negative publicity, local economic conditions, health epidemics or pandemics (such as COVID-19), local strikes, energy shortages or extreme fluctuations in energy prices, droughts, earthquakes, fires or other natural disasters in regions where our restaurants are highly concentrated could have a material adverse effect on our business and operations.
Negative publicity, local economic conditions, health epidemics or pandemics, local strikes, energy shortages or extreme fluctuations in energy prices, droughts, earthquakes, fires or other natural disasters in regions where our restaurants are highly concentrated could have a material adverse effect on our business and operations.
These measures may discourage investment in our common stock and may delay or discourage acquisitions that would result in our stockholders receiving a premium for their shares over the then-current market price. Employment and labor laws and regulations may increase the cost of labor for our restaurants.
These measures may discourage investment in our common stock and may delay or discourage acquisitions that would result in our stockholders receiving a premium for their shares over the then-current market price. Employment and labor laws and regulations have increased, and in the future may further increase, the cost of labor for our restaurants.
Our guests may be dissatisfied and our sales may decline if we fail to recruit, train and retain managers and team members that effectively implement our business strategy and provide high quality guest service. There is active 13 Table of Contents competition for quality management personnel and hourly team members.
Our guests may be dissatisfied and our sales may decline if we fail to recruit, train and retain managers and team members that effectively implement our business strategy and provide high quality guest service. There is active competition for quality management personnel and hourly team members.
Our ability to meet our business strategy plan is dependent upon, among other things, our and our franchisees’ ability to: • Increase gross sales and operating profits at existing restaurants with food and beverage options desired by our guests; • Evolve our marketing and branding strategies in order to appeal to guests; • Innovate and implement technology initiatives that provide a unique digital guest experience; • Identify adequate sources of capital to fund and finance strategic initiatives, including reimaging existing restaurants, new restaurant development and new restaurant equipment; • Grow and expand operations, including identifying available, suitable and economically viable locations for new restaurants, or making strategic acquisitions; and • Improve the speed and quality of our service.
Our ability to meet our business strategy plan is dependent upon, among other things, our and our franchisees’ ability to: • Increase gross sales and operating profits at existing restaurants with food and beverage options desired by our guests; • Evolve our marketing and branding strategies in order to appeal to guests and drive traffic and sales; • Innovate and implement technology initiatives that provide an engaging digital guest experience; • Identify adequate sources of capital to fund and finance strategic initiatives, including re-imaging existing restaurants, new restaurant development and new restaurant equipment; • Grow and expand operations, including identifying available, suitable and economically viable locations for new restaurants, or making strategic acquisitions; and • Improve the speed and quality of our service by simplifying operations.
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. Strategic and Operational Risks If we are unable to successfully design and execute a business strategy plan, our gross sales and profitability may be adversely affected.
It is not possible to identify all risk factors. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations. Strategic and Operational Risks If we are unable to successfully design and execute a business strategy plan, our gross sales and profitability may be adversely affected.
For example, in fiscal 2023, we recognized 18 Table of Contents $12.0 million of long-lived asset and lease asset impairment charges as a result of decreased cash flows, and it is possible that we may incur similar charges in greater amounts in the future.
For example, in fiscal 2024, we recognized $12.2 million of long-lived asset and lease asset impairment charges as a result of decreased cash flows, and it is possible that we may incur similar charges in greater amounts in the future.
These risks include: • Difficulties in achieving consistency of product quality and service as compared to domestic operations; • Changes to recipes and menu offerings to meet cultural norms; • Challenges to obtain adequate and reliable supplies necessary to provide menu items and maintain food quality; and • Differences, changes or uncertainties in economic, regulatory, legal, cultural, social and political conditions. 14 Table of Contents Failure to protect our service marks or other intellectual property could harm our business.
These risks include: • Difficulties in achieving consistency of product quality and service as compared to domestic operations; 13 Table of Contents • Changes to recipes and menu offerings to meet cultural norms; • Challenges to obtain adequate and reliable supplies necessary to provide menu items and maintain food quality; and • Differences, changes or uncertainties in economic, regulatory, legal, cultural, social and political conditions.
A high concentration of our Company-owned restaurants are located in Texas, Florida and California comprising 18.7%, 11.6% and 9.5%, respectively, as of June 28, 2023. As a result, we are particularly susceptible to adverse trends and economic conditions in those states.
A high concentration of our Company-owned restaurants are located in Texas, Florida and California comprising 18.8%, 11.8% and 9.2%, respectively, as of June 26, 2024. As a result, we are particularly susceptible to adverse trends and economic conditions in those states.
Fluctuations and increases in utility and energy costs have also increased our operating expenses on regional and national levels, including through suppliers putting pressure on margins by passing on higher prices for petroleum-based fuels.
Fluctuations and increases in utility and energy costs have also increased our operating expenses at regional and national levels, including through suppliers increasing prices due to higher prices for petroleum-based fuels, and as a result, putting pressure on margins.
We regard our Chili’s ® and Maggiano’s ® service marks, and other service marks and trademarks related to our restaurant businesses, as having significant value and being important to our marketing efforts.
Failure to protect our service marks or other intellectual property could harm our business. We regard our Chili’s ® and Maggiano’s ® service marks, and other service marks and trademarks related to our restaurant businesses, as having significant value and being important to our marketing efforts.
In addition to the information contained elsewhere in this report and other filings that we make with the SEC, the risk factors described below could have a material impact on 11 Table of Contents our business, financial condition, results of operation, cash flows or the trading price of our common stock. It is not possible to identify all risk factors.
ITEM 1A. RISK FACTORS Various risks and uncertainties could affect our business. In addition to the information contained elsewhere in this report and other filings that we make with the SEC, the risk factors described below could have a material impact on our business, financial condition, results of operation, cash flows or the trading price of our common stock.
Unfavorable publicity relating to one or more of our restaurants in a particular brand may affect public perception of the brand. 12 Table of Contents Multi-unit restaurant businesses can be adversely affected by publicity resulting from poor food quality, customer complaints, litigation, illness or health concerns or other issues stemming from one or a limited number of restaurants, regardless of whether such events have a factual basis.
Multi-unit restaurant businesses can be adversely affected by publicity resulting from poor food quality, customer complaints, litigation, illness or health concerns or other issues stemming from one or a limited number of restaurants, regardless of whether such events have a factual basis.
If we are unable to attract and retain sufficiently experienced and capable key management personnel, our business and financial results may suffer. Failure to recruit, train and retain high-quality restaurant management and team members may result in lower guest satisfaction and lower sales and profitability. Our restaurant-level management and team members are largely responsible for the quality of our service.
Failure to recruit, train and retain high-quality restaurant management and team members may result in lower guest satisfaction and lower sales and profitability. Our restaurant-level management and team members are largely responsible for the quality of our service.
Failure to comply with the laws and regulatory requirements of federal, state, local, and international authorities could result in, among other things, revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability. Compliance with these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings.
Failure to comply with the laws and regulatory requirements of federal, state, local, and international authorities could result in, among other things, revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability.
The failure of these systems to operate effectively, problems with maintenance, upgrading or transitioning to replacement systems or a breach in security of these systems could cause delays in customer service and reduce efficiency in our operations. Additionally, our corporate systems and processes and corporate support for our restaurant operations are handled primarily at our restaurant support center.
The failure of these systems to operate effectively, problems with maintenance, larger scale outages, upgrading or transitioning to replacement systems or a breach in security of these systems could cause delays in customer service and reduce efficiency in our operations.
New information or changes in dietary, nutritional or health insurance guidelines, whether issued by government agencies, academic studies, advocacy organizations or similar groups, may cause consumers to select foods other than those that are offered by our restaurants.
The food service industry as a whole depends on consumer preferences at the local, regional, national and international levels. New information or changes in dietary, nutritional or health insurance guidelines, whether issued by government agencies, academic studies, advocacy organizations or similar groups, may cause consumers to select foods other than those that are offered by our restaurants.
The cyber risks we face range from cyber-attacks common to most industries, to attacks that target us due to the confidential consumer information we obtain through our electronic processing of credit and debit card transactions. Such security breaches could also result in litigation or governmental investigation against us, as well as the imposition of penalties.
The cyber risks we face range from cyber-attacks common to most industries, to attacks that target us due to the confidential consumer information we obtain through our electronic processing of credit and debit card transactions.
Changes in tax laws and unanticipated tax liabilities could adversely affect the taxes we pay and our profitability. We are subject to income and other taxes in the United States and foreign jurisdictions, and our operations, plans and results are affected by tax and other initiatives around the world.
We are subject to income and other taxes in the United States and foreign jurisdictions, and our operations, plans and results are affected by tax and other initiatives around the world. In particular, we are affected by the impact of changes to tax laws or policy or related authoritative interpretations.
The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, resulting in higher costs and lower margins.
The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, resulting in higher costs and lower margins. Unfavorable publicity relating to one or more of our restaurants in a particular brand may affect public perception of the brand.
Loss of key management personnel could hurt our business and limit our ability to operate and grow successfully. Our success depends, to a significant extent, on our leadership team and other key management personnel. These personnel serve to maintain a corporate vision for our Company, execute our business strategy, and maintain consistency in the operating standards of our restaurants.
Loss of key management personnel could hurt our business and limit our ability to operate and grow successfully. Our success depends, to a significant extent, on our leadership team and other key management personnel.
Changes in consumer preferences may decrease demand for food at our restaurants. Changing health or dietary preferences may cause consumers to avoid our products in favor of alternative foods. The food service industry as a whole depends on consumer preferences at the local, regional, national and international levels.
Changes in consumer preferences may decrease demand for food at our restaurants. Changing health or dietary preferences and current and new medical treatments may cause consumers to avoid our products in favor of alternative foods and/or to consume less of our products.
Changes to estimates related to our property and equipment, or operating results that are lower than our current estimates at certain restaurant locations, may cause us to incur impairment charges on certain long-lived assets.
If we were required to write down a portion of our goodwill and record related non-cash impairment charges, our financial position and results of operations would be adversely affected. 18 Table of Contents Changes to estimates related to our property and equipment, or operating results that are lower than our current estimates at certain restaurant locations, may cause us to incur impairment charges on certain long-lived assets.
Although we may implement a number of business strategies, the success of new products, initiatives and overall strategies is highly difficult to predict. If we are unable to compete effectively, our gross sales, guest traffic and profitability may decline.
A key component of our corporate strategy involves our value platform as it relates to our competition; failure to maintain the customer perception of brand value could negatively impact our sales. If we are unable to compete effectively, our gross sales, guest traffic and profitability may decline.
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ITEM 1A. RISK FACTORS Various risks and uncertainties could affect our business.
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These personnel serve to maintain a corporate vision for our Company, execute our business strategy, and maintain 12 Table of Contents consistency in the operating standards of our restaurants. If we are unable to attract and retain sufficiently experienced and capable key management personnel, our business and financial results may suffer.
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If we were required to write down a portion of our goodwill and record related non-cash impairment charges, our financial position and results of operations would be adversely affected.
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At the same time, stakeholders and regulators have increasingly expressed or pursued opposing views, legislation and investment expectations with respect to sustainability initiatives, including the enactment or proposal of "Anti-ESG" legislation or policies.
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In particular, we are affected by the impact of changes to tax laws or policy or related authoritative interpretations.
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A failure to identify and execute innovative marketing and guest engagement tactics, ineffective or improper use of other marketing initiatives, and increased advertising and marketing costs could adversely affect our results of operations. Our ability to reach consumers and drive results is heavily influenced by brand marketing and advertising and our ability to adapt to evolving consumer preferences.
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We rely on identifying trends and data analytics to create successful advertising programs, including customer relationship management, social media, television and other digital marketing efforts. Increased costs in advertising may limit the amount of coverage we are able to achieve with any given campaign.
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Our marketing and advertising programs may not be as successful as intended, and thus, may adversely affect our reputation, business, our growth prospects and the strength of our brand. A failure to sufficiently innovate, develop guest relationship initiatives, or maintain adequate and effective advertising could inhibit our ability to maintain brand relevance or awareness and drive increased sales.
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Our business could be adversely affected by our inability to respond to or effectively manage social media. As part of our marketing strategy, we utilize social media platforms to promote our concepts and attract, engage and retain guests. Our strategy may not be successful, resulting in expenses incurred without improvement in guest traffic or brand relevance.
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In addition, a variety of risks are associated with the use of social media, including negative comments about us, exposure of personally identifiable information, fraud, dissemination of false information, and copyright and trademark risks.
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The inappropriate use of social media vehicles by our guests or employees could increase our costs, lead to litigation or result in negative publicity that could damage our reputation and adversely affect our results of operations. Given the marked increase in the use of social media platforms, individuals have access to a broad audience of consumers and other interested persons.
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The availability of information on social media platforms is virtually immediate as is its impact. Many social media platforms immediately publish the content their subscribers and participants post (which may include influencers with large audiences), often without filters or checks on the accuracy of the content posted. Information concerning our Company may be posted on such platforms at any time.
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If we are unable to quickly and effectively respond to such reports, we may suffer declines in guest traffic. The impact may be immediate without affording us an opportunity for redress or correction. These factors could have a material adverse impact on our business.
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The rapid evolution and increased adoption of artificial intelligence technologies may also heighten our cybersecurity risks by making cyber-attacks more difficult to detect, contain, and mitigate. Such security breaches could also result in litigation or governmental investigation against us, as well as the imposition of penalties.
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Furthermore, as we continue to incorporate technology increasingly into our guests’ experiences, disruptions or performance issues with guest facing technology or systems could negatively impact the guest experience and counteract the intended benefits of such systems. Additionally, our corporate systems and processes and corporate support for our restaurant operations are handled primarily at our restaurant support center.
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Financial Risks Downgrades in our credit ratings could impact our ability to access capital and materially adversely affect our business, financial condition and results of operations.
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For example, in September 2023, California passed legislation setting the minimum wage for fast food restaurant employees at $20 per hour effective April 1, 2024 and establishing a council to set future wage increases and to make recommendations to state agencies for other sector-wide workplace standards.
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Compliance with these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings. 20 Table of Contents Changes in tax laws and unanticipated tax liabilities could adversely affect the taxes we pay and our profitability.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe related book value of these owned restaurant locations as of June 28, 2023 includes Land of $41.6 million and the net book value of Buildings and improvements totaling $12.6 million. In fiscal 2023, we sold Land related to three closed restaurants, with a combined book value of $1.8 million. The remaining 1,135 Company-owned restaurant locations are leased.
Biggest changeDuring fiscal 2024, we sold Land related to one closed restaurant, with a book value of $1.2 million and we purchased the Land and Buildings for one restaurant that was previously leased. As of June 26, 2024, the net book value of our owned restaurant locations includes Land of $41.6 million and Buildings of $13.7 million.
These leased restaurant locations can be categorized as follows: 777 ground leases (where we lease land only, but construct the building and leasehold improvements) and 358 retail leases (where we lease the land/retail space and building, but construct the leasehold improvements).
These leased restaurant locations can be categorized as follows: 771 ground leases (where we lease land only, but construct the building and leasehold improvements) and 350 retail leases (where we lease the land/retail space and building, but construct the leasehold improvements).
We and our franchisees also have Chili’s restaurants in two United States territories, Guam and Puerto Rico, and 29 other countries: Bahrain, Canada, Chile, China, Costa Rica, the Dominican Republic, Ecuador, Egypt, Germany, Guatemala, Honduras, India, Japan, Kuwait, Lebanon, Malaysia, Mexico, Morocco, Oman, Pakistan, Peru, 21 Table of Contents Philippines, Qatar, Saudi Arabia, South Korea, Sri Lanka, Taiwan, Tunisia, and the United Arab Emirates.
We and our franchisees also have Chili’s restaurants in two United States territories, Guam and Puerto Rico, and 27 other countries: Bahrain, Canada, Chile, China, Costa Rica, the Dominican Republic, Ecuador, Egypt, Germany, Guatemala, Honduras, India, Japan, Kuwait, Lebanon, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Qatar, Saudi Arabia, South Korea, Sri Lanka, Taiwan, and Tunisia.
ITEM 2. PROPERTIES Restaurant Locations As of June 28, 2023, our system of Company-owned and franchise-operated restaurants included 1,657 restaurants.
ITEM 2. PROPERTIES Restaurant Locations As of June 26, 2024, our system of Company-owned and franchise-operated restaurants included 1,614 restaurants.
Our Maggiano’s Company-owned and franchise-operated restaurants are located in 22 states and Washington, D.C.
Our Chili’s domestic Company-owned and franchise-operated restaurants are located in 49 states.
Other Properties We lease an office building in Dallas, Texas containing approximately 216,300 square feet which we use for our corporate headquarters and menu development activities. As of June 28, 2023, we have also acquired land for a future Company-owned restaurant location with a value of $0.8 million.
Other Properties We lease an office building in Dallas, Texas containing approximately 216,300 square feet which we use for our corporate headquarters and menu development activities.
The below table contains a breakdown of our portfolio of restaurants: June 28, 2023 Domestic International Total Chili’s Company-owned 1,130 5 1,135 Franchise 101 369 470 1,231 374 1,605 Maggiano’s Company-owned 50 — 50 Franchise 2 — 2 52 — 52 System-wide 1,283 374 1,657 Our Chili’s domestic Company-owned and franchise-operated restaurants are located in 49 states.
The below table contains a breakdown of our portfolio of restaurants: June 26, 2024 Domestic International Total Chili’s Company-owned 1,117 4 1,121 Franchise 97 344 441 1,214 348 1,562 Maggiano’s Company-owned 50 — 50 Franchise 2 — 2 52 — 52 System-wide 1,266 348 1,614 The square footage of our Company-owned Chili’s and Maggiano’s restaurants ranges between 3,200 to 8,000 square feet and 8,200 to 23,300 square feet, respectively.
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Restaurant Property Information The following table illustrates the approximate dining room capacity for a prototypical restaurant of each of our brands: Chili’s Maggiano’s Square feet 3,200-8,000 8,200-23,300 Dining seats 140-340 250-760 Dining tables 20-70 40-130 As of June 28, 2023, we own 50 properties of the 1,185 Company-owned restaurant locations.
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Our Maggiano’s Company-owned and franchise-operated restaurants are located in 22 states and Washington, D.C. As of June 26, 2024, 1,121 of the 1,171 Company-owned restaurant locations are leased.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS This information is set forth within Part II, Item 8 - Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 9 - Commitments and Contingencies of this Annual Report on Form 10-K is incorporated herein by reference.
Biggest changeITEM 3. LEGAL PROCEEDINGS This information is set forth within Part II, Item 8 - Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 8 - Commitments and Contingencies of this Annual Report on Form 10-K is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Company did not repurchase any shares under the repurchase program in fiscal 2023. 23 Table of Contents During the thirteen week period ended June 28, 2023, we repurchased shares as follows (in millions, except per share amounts, unless otherwise noted): Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value that May Yet be Purchased Under the Program (2) March 30, 2023 through May 3, 2023 0.0 $ 38.62 — $ 204.0 May 4, 2023 through May 31, 2023 — — — 204.0 June 1, 2023 through June 28, 2023 0.1 38.83 — $ 204.0 Total 0.1 $ 38.81 — (1) These amounts include shares purchased as part of our publicly announced programs and shares owned and tendered by team members to satisfy tax withholding obligations on the vesting of restricted share awards, which are not deducted from shares available to be purchased under publicly announced programs.
Biggest changeThe Company did not repurchase any shares under the repurchase program in fiscal 2023, and the Company repurchased 2.3 million shares of our common stock for $96.0 million in fiscal 2022. 24 Table of Contents During the thirteen week period ended June 26, 2024, we repurchased shares as follows (in millions, except per share amounts, unless otherwise noted): Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value that May Yet be Purchased Under the Program (2) March 28, 2024 through May 1, 2024 0.003 $ 49.45 — $ 183.0 May 2, 2024 through May 29, 2024 — — — 183.0 May 30, 2024 through June 26, 2024 — — — $ 183.0 Total 0.003 $ 49.45 — (1) These amounts include shares purchased as part of our publicly announced programs and shares owned and tendered by team members to satisfy tax withholding obligations on the vesting of restricted share awards, which are not deducted from shares available to be purchased under publicly announced programs.
The graph is based on $100 invested as of June 27, 2018 in the Company’s common stock and each index, including the reinvestment of all dividends. The values shown below are neither indicative nor determinative of future performance.
The graph is based on $100 invested as of June 26, 2019 in the Company’s common stock and each index, including the reinvestment of all dividends. The values shown below are neither indicative nor determinative of future performance.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “EAT”, and as of August 18, 2023, there were 430 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “EAT”, and as of August 16, 2024, there were 345 holders of record of our common stock.
Comparison of Five Year Cumulative Total Return The graph below presents Brinker International, Inc.’s cumulative 5-Year total shareholder return on common stock relative to the cumulative total returns of the S&P 500 index and the S&P Restaurants index for the period of June 27, 2018 through June 28, 2023.
Comparison of Five Year Cumulative Total Return The graph below presents Brinker International, Inc.’s cumulative 5-Year total shareholder return on common stock relative to the cumulative total returns of the S&P 500 index and the S&P Restaurants index for the period of June 26, 2019 through June 26, 2024.
Future decisions to reinstate the dividend program to pay, or to increase or decrease dividends, are at the discretion of the Board of Directors and will be dependent on our operating performance, financial condition, capital expenditure requirements, limitations on cash distributions pursuant to the terms and conditions of our revolving credit facility and applicable law, and such other factors that the Board of Directors considers relevant.
The Company’s decision to pay dividends in the future is at the discretion of the Board of Directors and will be dependent on our operating performance, financial condition, capital expenditure requirements, limitations on cash distributions pursuant to the terms and conditions of our revolving credit facility and applicable law, and such other factors that the Board of Directors considers relevant.
Shares owned and tendered by team members to satisfy tax withholding obligations were purchased at the average of the high and low prices of the Company’s shares on the date of vesting. In the fourth quarter of fiscal 2023, 70,401 shares were tendered by team members at an average price of $38.81.
Shares owned and tendered by team members to satisfy tax withholding obligations were purchased at the average of the high and low prices of the Company’s shares on the date of vesting. In the fourth quarter of fiscal 2024, 3,316 shares were tendered by team members at an average price of $49.45.
Brands, Inc. Share Repurchase Program In fiscal 2022, our Board of Directors approved a $300.0 million share repurchase program, and the Company repurchased 2.3 million shares of our common stock for $96.0 million.
Brands, Inc. Share Repurchase Program Our Board of Directors approved a $300.0 million share repurchase program in August 2021. The Company repurchased 0.7 million shares of our common stock for $21.0 million in fiscal 2024.
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Fiscal 2018 Fiscal 2019 Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2023 Brinker International, Inc. $ 100.00 $ 79.93 $ 50.61 $ 133.03 $ 48.20 $ 77.86 S&P 500 $ 100.00 $ 110.42 $ 118.70 $ 167.13 $ 149.39 $ 178.66 S&P Restaurants (1) $ 100.00 $ 148.08 $ 134.90 $ 189.26 $ 172.52 $ 223.43 (1) The S&P Restaurants Index is comprised of Chipotle Mexican Grill, Inc., Darden Restaurants, Inc., Domino’s Pizza Inc., McDonald’s Corp., Starbucks Corp., and Yum!
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Fiscal 2019 Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2023 Fiscal 2024 Brinker International, Inc. $ 100.00 $ 63.32 $ 166.44 $ 60.30 $ 97.41 $ 196.09 S&P 500 $ 100.00 $ 107.51 $ 151.36 $ 135.29 $ 161.80 $ 201.54 S&P Restaurants (1) $ 100.00 $ 91.10 $ 127.82 $ 116.51 $ 150.89 $ 145.24 (1) The S&P Restaurants Index is comprised of Chipotle Mexican Grill, Inc., Darden Restaurants, Inc., Domino’s Pizza Inc., McDonald’s Corp., Starbucks Corp., and Yum!
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(2) The final amount shown is as of June 28, 2023. Dividend Program In the fourth quarter of fiscal 2020, our Board of Directors voted to suspend the quarterly cash dividend due to uncertainty surrounding the duration of closures of our dining rooms and other restrictions mandated by state and local governments in response to the COVID-19 pandemic.
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(2) The final amount shown is as of June 26, 2024. ITEM 6. RESERVED

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeChili’s Depreciation and amortization increased $5.5 million as follows: Depreciation and Amortization Fiscal year ended June 29, 2022 $ 139.8 Change from: Additions for new and existing restaurant assets 20.3 Acquisition of Chili’s restaurants (1) 3.2 Finance leases (3.0) Retirements and fully depreciated restaurant assets (14.7) Other (0.3) Fiscal year ended June 28, 2023 $ 145.3 (1) Represents the incremental depreciation and amortization of the assets and finance leases related to the 68 Chili’s restaurants acquired in fiscal 2022. 31 Table of Contents Chili’s General and administrative increased $2.2 million as follows: General and Administrative Fiscal year ended June 29, 2022 $ 33.3 Change from: Performance-based compensation 2.0 Payroll expenses 0.9 Defined contribution plan employer expenses and other benefits 0.7 Stock-based compensation (1.2) Other (0.2) Fiscal year ended June 28, 2023 $ 35.5 Chili’s Other (gains) and charges consisted of the following (for further details, refer to Note 14 - Other Gains and Charges): Fiscal Years Ended June 28, 2023 June 29, 2022 Restaurant level impairment charges $ 12.1 $ 8.3 Restaurant closure asset write-offs and charges 7.3 3.6 Severance and other benefit charges 1.9 — Remodel-related asset write-off 1.1 4.8 Loss from natural disasters, net of (insurance recoveries) 0.8 1.1 Gain on sale of assets, net (3.7) — Other 2.5 5.5 $ 22.0 $ 23.3 32 Table of Contents Maggiano’s Segment Fiscal Years Ended Favorable (Unfavorable) Variance June 28, 2023 June 29, 2022 Dollars % Company sales $ 486.5 $ 424.0 $ 62.5 14.7 % Franchise revenues 0.6 0.5 0.1 20.0 % Total revenues $ 487.1 $ 424.5 $ 62.6 14.7 % Maggiano’s Total revenues increased 14.7% primarily due to increased menu pricing, favorable menu item mix and higher traffic.
Biggest changeChili’s Other (gains) and charges consisted of the following (for further details, refer to Note 13 - Other Gains and Charges): Fiscal Years Ended June 26, 2024 June 28, 2023 Restaurant level impairment charges $ 11.9 $ 12.1 Restaurant closure asset write-offs and charges 10.1 7.3 Litigation & claims, net 6.2 2.0 Remodel-related asset write-offs — 1.1 Severance 0.1 1.9 Gain on sale of assets, net (2.6) (3.7) Other 1.2 1.3 $ 26.9 $ 22.0 32 Table of Contents Maggiano’s Segment Fiscal Years Ended Favorable (Unfavorable) Variance June 26, 2024 June 28, 2023 Dollars % Company sales $ 495.1 $ 486.5 $ 8.6 1.8 % Franchise revenues 0.7 0.6 0.1 16.7 % Total revenues $ 495.8 $ 487.1 $ 8.7 1.8 % Maggiano’s Total revenues increased 1.8% primarily due to favorable comparable restaurant sales driven by increased menu pricing partially offset by lower traffic.
Step one includes comparing the operating cash flows of each restaurant over its remaining service life to the carrying value of the asset group. If the cash flows exceed the carrying value, then the asset group is not impaired, and no further evaluation is required.
Step one includes comparing the operating cash flows of each restaurant (asset group) over its remaining service life to the carrying value of the asset group. If the cash flows exceed the carrying value, then the asset group is not impaired, and no further evaluation is required.
As a result of uncertainties in the near-term macro environment, including supply chain challenges, and commodity and labor inflation, we continue to focus on cash flow generation and maintaining a solid and flexible financial position to execute our long-term strategy of investing in our business.
Cash Flow Outlook As a result of uncertainties in the near-term macro environment, including supply chain challenges, and commodity and labor inflation, we continue to focus on cash flow generation and maintaining a solid and flexible financial position to execute our long-term strategy of investing in our business.
We continue to monitor the macro environment and will adjust our overall approach to capital allocation, including share repurchases, as events and macroeconomic trends unfolds. 37 Table of Contents Based on the current level of operations, we believe that our current cash and cash equivalents, coupled with cash generated from operations and availability under our existing revolving credit facility will be adequate to meet our capital expenditure and working capital needs for at least the next twelve months, including the repayment of current debt obligations.
We continue to monitor the macro environment and will adjust our overall approach to capital allocation, including share repurchases, as events and macroeconomic trends unfolds. 35 Table of Contents Based on the current level of operations, we believe that our current cash and cash equivalents, coupled with cash generated from operations and availability under our existing revolving credit facility will be adequate to meet our capital expenditure and working capital needs for at least the next twelve months, including the repayment of current debt obligations.
Changing our breakage-rate assumption used to record breakage attributable to gift cards sold in fiscal 2023 by 50 basis points would result in an impact to the Consolidated Statements of Comprehensive Income of approximately $0.6 million on the current year.
Changing our breakage-rate assumption used to record breakage attributable to gift cards sold in fiscal 2024 by 50 basis points would result in an impact to the Consolidated Statements of Comprehensive Income of approximately $0.6 million on the current year.
Breakage income represents the value associated with the portion of gift cards sold that will most likely never be redeemed and is estimated based on our historical gift card redemption patterns and actuarial estimates. Breakage revenues are recognized proportionate to the pattern of related gift card 33 Table of Contents redemptions.
Breakage income represents the value associated with the portion of gift cards sold that will most likely never be redeemed and is estimated based on our historical gift card redemption patterns and actuarial estimates. Breakage revenues are recognized proportionate to the pattern of related gift card redemptions.
We recognize breakage income in Franchise revenues in the Consolidated Statements of Comprehensive Income. We update our breakage rate estimate periodically and, if necessary, adjust the deferred revenues balance accordingly. If actual redemption patterns vary from our estimate, actual gift card breakage income may differ from the amounts recorded.
We recognize breakage income in Franchise revenues in the Consolidated Statements of Comprehensive Income. We update our breakage rate estimate periodically and, if necessary, adjust the deferred revenues balance accordingly. If actual redemption patterns vary from our estimate, actual gift card breakage income may differ from 33 Table of Contents the amounts recorded.
Our MD&A consists of the following sections: • Overview - a brief description of our business and a discussion on the financial impact of COVID-19 and other trends impacting our business; • Results of Operations - an analysis of the Consolidated Statements of Comprehensive Income included in the Consolidated Financial Statements; • Liquidity and Capital Resources - an analysis of cash flows, including capital expenditures, aggregate contractual obligations, financing activity, and known trends that may impact liquidity, including off-balance sheet arrangements; and 24 Table of Contents • Critical Accounting Estimates - a discussion of accounting policies that require critical judgments and estimates, including recent accounting pronouncements.
Our MD&A consists of the following sections: • Overview - a brief description of our business and a discussion on the external trends impacting our business; • Results of Operations - an analysis of the Consolidated Statements of Comprehensive Income included in the Consolidated Financial Statements; • Liquidity and Capital Resources - an analysis of cash flows, including capital expenditures, aggregate contractual obligations, financing activity, and known trends that may impact liquidity, including off-balance sheet arrangements; and • Critical Accounting Estimates - a discussion of accounting policies that require critical judgments and estimates, including recent accounting pronouncements.
Off -Balance Sheet Arrangements We have entered into certain pre-commencement leases as disclosed in Note 7 - Leases and have obligations for guarantees on certain lease agreements and letters of credit as disclosed in Note 9 - Commitments and Contingencies included within Part II, Item 8 - Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements of this Annual Report on Form 10-K. 38 Table of Contents
Off -Balance Sheet Arrangements We have entered into certain pre-commencement leases as disclosed in Note 6 - Leases and have obligations for guarantees on certain lease agreements and letters of credit as disclosed in Note 8 - Commitments and Contingencies included within Part II, Item 8 - Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.
The following MD&A includes a discussion comparing our results in fiscal 2023 to fiscal 2022.
The following MD&A includes a discussion comparing our results in fiscal 2024 to fiscal 2023.
Refer to Part I, Item 1 - Business of this document for additional information about our business and operational strategies. External impacts to Our Operating Environment During both 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.
Refer to Part I, Item 1 - Business of this document for additional information about our business and operational strategies. External Impacts to Our Operating Environment During the recent years, our operating results were impacted by geopolitical and other macroeconomic events, leading to higher than usual inflation on wages and food and beverage costs.
For a discussion comparing our results from fiscal 2022 to fiscal 2021, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 29, 2022, filed with the SEC on August 26, 2022.
For a discussion comparing our results from fiscal 2023 to fiscal 2022, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended June 28, 2023, filed with the SEC on August 23, 2023.
We utilize a 13 week accounting period for quarterly reporting purposes, except in years containing 53 weeks when the fourth quarter contains 14 weeks. Fiscal 2023 and Fiscal 2022, which ended on June 28, 2023 and June 29, 2022, respectively, each contained 52 weeks. Fiscal 2021, which ended on June 30, 2021, contained 53 weeks.
We utilize a 13 week accounting period for quarterly reporting purposes, 25 Table of Contents except in years containing 53 weeks when the fourth quarter contains 14 weeks. Fiscal 2024, Fiscal 2023 and Fiscal 2022 which ended on June 26, 2024, June 28, 2023 and June 29, 2022 respectively, each contained 52 weeks.
The $900.0 million revolving credit facility, as amended, matures on August 18, 2026 and bears interest of SOFR 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.
Our $900.0 million revolving credit facility, as amended, matures on August 18, 2026 and bears interest at a rate of SOFR plus an applicable margin of 1.60% to 2.35% and an undrawn commitment fee of 0.25% to 0.35%, both based on a function of our debt-to-cash-flow ratio.
No adjustments have been made to capacity for temporary closures. (4) Chili’s and Maggiano’s franchise sales generated by franchisees are not included in Total revenues in the Consolidated Statements of Comprehensive Income; however, we generate royalty revenues and advertising fees based on franchisee revenues, where applicable.
(3) Restaurant Capacity is measured by sales weeks and is calculated based on comparable periods year-over-year. No adjustments have been made to capacity for temporary closures. (4) Franchise sales generated by franchisees are not included in Total revenues in the Consolidated Statements of Comprehensive Income; however, we generate royalty revenues and advertising fees based on franchisee revenues, where applicable.
Future decisions to reinstate the dividend program to pay, or to increase or decrease dividends, are at the discretion of the Board of Directors and will be dependent on our operating performance, financial condition, capital expenditure requirements, limitations on cash distributions pursuant to the terms and conditions of our revolving credit facility and applicable law, and such other factors that the Board of Directors considers relevant.
The Company’s decision to pay dividends in the future is at the discretion of the Board of Directors and will be dependent on our operating performance, financial condition, capital expenditure requirements, limitations on cash distributions pursuant to the terms and conditions of our revolving credit facility and applicable law, and such other factors that the Board of Directors considers relevant.
The table below presents the percentage change in comparable restaurant sales and restaurant capacity for fiscal 2023 compared to fiscal 2022: Comparable Sales (1) Price Impact Mix-Shift Impact (2) Traffic Impact Restaurant Capacity (3) Company-owned 8.1 % 9.0 % 4.4 % (5.3) % 1.7 % Chili’s 7.0 % 9.2 % 4.7 % (6.9) % 1.8 % Maggiano’s 17.3 % 7.9 % 2.8 % 6.6 % (2.1) % Franchise (4) 9.6 % U.S. 3.3 % International 13.3 % Chili’s domestic (5) 6.5 % System-wide (6) 8.4 % (1) Comparable Restaurant Sales include all restaurants that have been in operation for more than 18 full months.
Our Chili’s and Maggiano’s franchisees generated sales of approximately $856.2 million and $11.8 million respectively in fiscal 2024 compared to $876.0 million and $10.6 million respectively in fiscal 2023. 27 Table of Contents The table below presents the percentage change in comparable restaurant sales and restaurant capacity for fiscal 2024 compared to fiscal 2023: Comparable Sales (1) Price Impact Mix-Shift Impact (2) Traffic Impact Restaurant Capacity (3) Company-owned 7.0 % 7.6 % 0.6 % (1.2) % (0.6) % Chili’s 7.4 % 7.4 % 0.6 % (0.6) % (0.6) % Maggiano’s 3.5 % 9.4 % 0.6 % (6.5) % (1.8) % Franchise (4) 1.2 % U.S. 7.1 % International (2.0) % Chili’s domestic (5) 7.4 % System-wide (6) 6.1 % (1) Comparable Restaurant Sales include all restaurants that have been in operation for more than 18 full months.
The following is a summary of the changes in Maggiano’s operating costs and expenses: Fiscal Years Ended Favorable (Unfavorable) Variance June 28, 2023 June 29, 2022 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 123.4 25.3 % $ 102.6 24.2 % $ (20.8) (1.1) % Restaurant labor 157.0 32.3 % 141.6 33.4 % (15.4) 1.1 % Restaurant expenses 130.4 26.8 % 117.9 27.8 % (12.5) 1.0 % Depreciation and amortization 13.0 13.4 0.4 General and administrative 7.8 8.0 0.2 Other (gains) and charges 1.4 — (1.4) As a percentage of Company sales: • Maggiano’s Food and beverage costs increased 1.1%, including 2.1% of unfavorable commodity pricing and 0.2% of unfavorable menu item mix, partially offset by 1.2% of favorable menu pricing. • Maggiano’s Restaurant labor decreased 1.1%, including 4.2% of sales leverage, 0.2% of lower manager bonus and 0.1% of other restaurant labor, partially offset by 2.8% of higher restaurant hourly wages and 0.6% of higher manager salaries. • Maggiano’s Restaurant expenses decreased 1.0%, driven by 2.5% of sales leverage, partially offset by 0.5% of higher delivery fees and to-go supplies, 0.4% of higher repairs and maintenance, 0.2% of higher workers’ compensation and general liability insurance and 0.4% of higher other restaurant expenses.
The following is a summary of the changes in Maggiano’s operating costs and expenses: Fiscal Years Ended Favorable (Unfavorable) Variance June 26, 2024 June 28, 2023 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 116.9 23.6 % $ 123.4 25.3 % $ 6.5 1.7 % Restaurant labor 158.3 32.0 % 157.0 32.3 % (1.3) 0.3 % Restaurant expenses 139.2 28.1 % 130.4 26.8 % (8.8) (1.3) % Depreciation and amortization 13.1 13.0 (0.1) General and administrative 10.2 7.8 (2.4) Other (gains) and charges 0.6 1.4 0.8 As a percentage of Company sales: • Maggiano’s Food and beverage costs were favorable 1.7%, due to 1.7% from increased menu pricing and 0.2% of favorable commodity pricing partially offset by 0.2% of unfavorable menu item mix. • Maggiano’s Restaurant labor was favorable 0.3%, due to 0.4% of sales leverage and 0.1% of lower other restaurant labor costs, partially offset by 0.2% of higher manager bonus. • Maggiano’s Restaurant expenses were unfavorable 1.3%, due to 0.8% of higher repairs and maintenance, 0.4% of higher supplies, 0.2% of higher workers’ compensation and general liability insurance, 0.2% of higher advertising, and 0.4% of higher other restaurant expenses partially offset by 0.4% of sales leverage and 0.3% of lower delivery fees and to-go supplies.
Refer to the “Revenues” section above for further details about Chili’s revenues changes. 30 Table of Contents The following is a summary of the changes in Chili’s operating costs and expenses: Fiscal Years Ended Favorable (Unfavorable) Variance June 28, 2023 June 29, 2022 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 1,022.9 28.3 % $ 945.9 28.4 % $ (77.0) 0.1 % Restaurant labor 1,232.3 34.2 % 1,146.5 34.3 % (85.8) 0.1 % Restaurant expenses 966.2 26.8 % 849.8 25.4 % (116.4) (1.4) % Depreciation and amortization 145.3 139.8 (5.5) General and administrative 35.5 33.3 (2.2) Other (gains) and charges 22.0 23.3 1.3 As a percentage of Company sales: • Chili’s Food and beverage costs decreased 0.1%, including 2.5% of favorable menu pricing and 1.0% of favorable menu item mix, partially offset by 3.4% of higher poultry, meat, produce and other commodity costs resulting from inflationary pressures. • Chili’s Restaurant labor decreased 0.1%, including 2.4% of sales leverage and 0.1% of lower other restaurant labor, partially offset by 1.2% of higher restaurant hourly wages and 1.2% of higher manager salaries and bonus expenses. • Chili’s Restaurant expenses increased 1.4%, driven by 0.8% of higher repairs and maintenance, 0.6% of higher advertising, 0.3% of higher workers’ compensation and general liability insurance, 0.2% of higher utilities, 0.2% of higher rent, and 0.5% of higher other restaurant expense.
Refer to the “Revenues” section above for further details about Chili’s revenues changes. 30 Table of Contents The following is a summary of the changes in Chili’s operating costs and expenses: Fiscal Years Ended Favorable (Unfavorable) Variance June 26, 2024 June 28, 2023 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 990.7 25.5 % $ 1,022.9 28.3 % $ 32.2 2.8 % Restaurant labor 1,309.0 33.8 % 1,232.3 34.2 % (76.7) 0.4 % Restaurant expenses 1,073.2 27.7 % 966.2 26.8 % (107.0) (0.9) % Depreciation and amortization 147.7 145.3 (2.4) General and administrative 42.8 35.5 (7.3) Other (gains) and charges 26.9 22.0 (4.9) As a percentage of Company sales: • Chili’s Food and beverage costs were favorable 2.8%, due to 2.2% from increased menu pricing, 0.4% of lower commodity costs driven by poultry and meat, and 0.2% of favorable menu item mix. • Chili’s Restaurant labor was favorable 0.4%, due to 2.2% of sales leverage and 0.3% of lower other restaurant labor costs, partially offset by 1.3% of higher restaurant hourly labor driven by both wage rates and staffing levels and 0.5% of higher manager salaries and 0.3% of higher manager bonus expenses. • Chili’s Restaurant expenses were unfavorable 0.9%, due to 2.0% of higher advertising, 0.7% of higher repairs and maintenance, 0.2% of higher workers’ compensation and general liability insurance, and 0.2% of higher other restaurant expense, partially offset by 1.4% of sales leverage and 0.8% of lower delivery fees and to-go supplies.
Costs and Expenses The following is a summary of the changes in Costs and Expenses: Fiscal Years Ended Favorable (Unfavorable) Variance June 28, 2023 June 29, 2022 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 1,146.3 28.0 % $ 1,048.5 27.9 % $ (97.8) (0.1) % Restaurant labor 1,389.3 34.0 % 1,288.1 34.2 % (101.2) 0.2 % Restaurant expenses 1,097.5 26.8 % 968.3 25.7 % (129.2) (1.1) % Depreciation and amortization 168.5 164.4 (4.1) General and administrative 154.5 144.1 (10.4) Other (gains) and charges 32.7 31.2 (1.5) Interest expenses 54.9 46.1 (8.8) Other income, net (1.3) (1.8) (0.5) As a percentage of Company sales: • Food and beverage costs increased 0.1%, including 3.3% of higher poultry, meat, produce and other commodity costs resulting from inflationary pressures, partially offset by 2.4% of favorable menu pricing and 0.8% of favorable menu item mix. • Restaurant labor decreased 0.2%, including 2.5% of sales leverage and 0.2% of lower other restaurant labor, partially offset by 1.4% of higher hourly restaurant wages due to increased staffing levels and higher wage rates and 1.1% of higher manager salaries and bonus expenses. • Restaurant expenses increased 1.1%, driven by 0.8% of higher repairs and maintenance, 0.5% of higher advertising, 0.3% of higher utilities, 0.3% of higher workers’ compensation and general liability insurance, 0.2% of higher rent and 0.5% of higher other restaurant expenses.
Costs and Expenses The following is a summary of the changes in Costs and Expenses: Fiscal Years Ended Favorable (Unfavorable) Variance June 26, 2024 June 28, 2023 Dollars % of Company Sales Dollars % of Company Sales Dollars % of Company Sales Food and beverage costs $ 1,107.6 25.3 % $ 1,146.3 28.0 % $ 38.7 2.7 % Restaurant labor 1,467.3 33.6 % 1,389.3 34.0 % (78.0) 0.4 % Restaurant expenses 1,212.9 27.8 % 1,097.5 26.8 % (115.4) (1.0) % Depreciation and amortization 170.8 168.5 (2.3) General and administrative 183.7 154.5 (29.2) Other (gains) and charges 43.2 32.7 (10.5) Interest expenses 65.0 54.9 (10.1) Other income, net (0.3) (1.3) (1.0) As a percentage of Company sales: 28 Table of Contents • Food and beverage costs were favorable 2.7%, due to 2.1% from increased menu pricing, 0.4% of favorable commodity costs driven by lower poultry and meat costs, and 0.2% of favorable menu item mix. • Restaurant labor was favorable 0.4%, due to 1.9% of sales leverage and 0.3% of lower other restaurant labor costs, partially offset by 1.1% of higher hourly labor driven by both wage rates and staffing levels, 0.4% of increased manager salaries, and 0.3% of higher manager bonus expense. • Restaurant expenses were unfavorable 1.0%, due to 1.7% of higher advertising, 0.7% of higher repairs and maintenance, 0.2% of higher workers’ compensation and general liability insurance, and 0.5% of higher other restaurant expenses, partially offset by 1.3% of sales leverage and 0.8% of lower delivery fees and to-go supplies.
Maggiano’s Other (gains) and charges primarily consisted of restaurant closure asset write offs and charges, refer to Note 14 - Other Gains and Charges) CRITICAL ACCOUNTING ESTIMATES Our significant accounting policies are disclosed in Note 1 - Nature of Operations and Summary of Significant Accounting Policies in Part II, Item 8 - Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements.
CRITICAL ACCOUNTING ESTIMATES Our significant accounting policies are disclosed in Note 1 - Nature of Operations and Summary of Significant Accounting Policies in Part II, Item 8 - Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements.
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. 25 Table of Contents RESULTS OF OPERATIONS The following table sets forth selected operating data: Fiscal Years Ended June 28, 2023 June 29, 2022 Dollars As a percentage (1) Dollars As a percentage (1) Revenues Company sales $ 4,093.2 99.0 % $ 3,764.5 99.0 % Franchise revenues 40.0 1.0 % 39.6 1.0 % Total revenues 4,133.2 100.0 % 3,804.1 100.0 % Operating costs and expenses Food and beverage costs 1,146.3 28.0 % 1,048.5 27.9 % Restaurant labor 1,389.3 34.0 % 1,288.1 34.2 % Restaurant expenses 1,097.5 26.8 % 968.3 25.7 % Depreciation and amortization 168.5 4.1 % 164.4 4.3 % General and administrative 154.5 3.7 % 144.1 3.8 % Other (gains) and charges 32.7 0.8 % 31.2 0.8 % Total operating costs and expenses 3,988.8 96.5 % 3,644.6 95.8 % Operating income 144.4 3.5 % 159.5 4.2 % Interest expenses 54.9 1.3 % 46.1 1.2 % Other income, net (1.3) 0.0 % (1.8) 0.0 % Income before income taxes 90.8 2.2 % 115.2 3.0 % (Benefit) Provision for income taxes (11.8) (0.3) % (2.4) (0.1) % Net income $ 102.6 2.5 % $ 117.6 3.1 % (1) Food and beverage costs, Restaurant labor and Restaurant expenses are calculated based on a percentage of Company sales.
RESULTS OF OPERATIONS The following table sets forth selected operating data: Fiscal Years Ended June 26, 2024 June 28, 2023 Dollars As a percentage (1) Dollars As a percentage (1) Revenues Company sales $ 4,371.1 99.0 % $ 4,093.2 99.0 % Franchise revenues 44.0 1.0 % 40.0 1.0 % Total revenues 4,415.1 100.0 % 4,133.2 100.0 % Operating costs and expenses Food and beverage costs 1,107.6 25.3 % 1,146.3 28.0 % Restaurant labor 1,467.3 33.6 % 1,389.3 34.0 % Restaurant expenses 1,212.9 27.8 % 1,097.5 26.8 % Depreciation and amortization 170.8 3.9 % 168.5 4.1 % General and administrative 183.7 4.2 % 154.5 3.7 % Other (gains) and charges 43.2 1.0 % 32.7 0.8 % Total operating costs and expenses 4,185.5 94.8 % 3,988.8 96.5 % Operating income 229.6 5.2 % 144.4 3.5 % Interest expenses 65.0 1.5 % 54.9 1.3 % Other income, net (0.3) 0.0 % (1.3) 0.0 % Income before income taxes 164.9 3.7 % 90.8 2.2 % Provision (benefit) for income taxes 9.6 0.2 % (11.8) (0.3) % Net income $ 155.3 3.5 % $ 102.6 2.5 % (1) Food and beverage costs, Restaurant labor and Restaurant expenses are calculated based on a percentage of Company sales.
(3) Finance leases and Operating leases total future lease payments represent the contractual obligations due under the lease agreements, including cancellable option periods where we are reasonably assured to exercise the options. As of June 28, 2023, these total future lease payments included non-cancelable lease commitments of $63.6 million for finance leases and $1,067.6 million for operating leases.
(3) Finance leases and Operating leases total future lease payments represent the contractual obligations due under the lease agreements, including cancellable option periods where we are reasonably assured to exercise the options.
Segment Results Chili’s Segment Fiscal Years Ended Favorable (Unfavorable) Variance June 28, 2023 June 29, 2022 Dollars % Company sales $ 3,606.7 $ 3,340.5 $ 266.2 8.0 % Franchise and other revenues 39.4 39.1 0.3 0.8 % Total revenues $ 3,646.1 $ 3,379.6 $ 266.5 7.9 % Chili’s Total revenues increased 7.9% primarily due to increased menu pricing, favorable menu item mix and the acquisition of 68 Chili’s restaurants from three former franchisees, partially offset by lower traffic.
Segment Results Chili’s Segment Fiscal Years Ended Favorable (Unfavorable) Variance June 26, 2024 June 28, 2023 Dollars % Company sales $ 3,876.0 $ 3,606.7 $ 269.3 7.5 % Franchise revenues 43.3 39.4 3.9 9.9 % Total revenues $ 3,919.3 $ 3,646.1 $ 273.2 7.5 % Chili’s Total revenues increased 7.5% primarily due to favorable comparable restaurant sales driven by increased menu pricing and favorable menu item mix, partially offset by lower traffic.
Restaurants temporarily closed 14 days or more are excluded from Comparable Restaurant Sales. Percentage amounts are calculated based on the comparable periods year-over-year.
Restaurants temporarily closed 14 days or more are excluded from Comparable Restaurant Sales. Percentage amounts are calculated based on the comparable periods year-over-year. (2) Mix-Shift is calculated as the year-over-year percentage change in Company sales resulting from the change in menu items ordered by guests.
Geopolitical and other macroeconomic events could lead to 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.
Geopolitical and other macroeconomic events have led, and in the future may lead to, 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.
The Company did not repurchase any shares under the repurchase program in fiscal 2023. 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.
Share Repurchase Program Our Board of Directors approved a $300.0 million share repurchase program in August 2021. 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.
Future Commitments and Contractual Obligations Payments due under our contractual obligations for outstanding indebtedness, leases and purchase obligations as of June 28, 2023 are as follows: Payments Due by Period Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Total Long-term debt (1) $ — $ 350.0 $ 161.3 $ 350.0 $ 861.3 Interest (2) 44.9 88.9 59.2 72.2 265.2 Finance leases (3) 13.7 20.4 15.1 40.1 89.3 Operating leases (3) 179.4 342.4 277.0 944.5 1,743.3 Purchase obligations (4) 30.0 38.3 2.5 — 70.8 (1) Long-term debt consists of principal amounts owed on the 5.000% and 8.250% notes and the revolving credit facility.
Future Commitments and Contractual Obligations Payments due under our contractual obligations for outstanding indebtedness, leases and purchase obligations as of June 26, 2024 are as follows: Payments Due by Period Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Total Long-term debt (1) $ 350.0 $ — $ — $ 350.0 $ 700.0 Interest (2) 55.6 85.8 57.8 43.3 242.5 Finance leases (3) 19.8 45.7 31.3 33.4 130.2 Operating leases (3) 180.7 332.4 267.9 917.0 1,698.0 Purchase obligations (4) 33.4 49.7 8.5 — 91.6 (1) Long-term debt consists of principal amounts owed on the 5.000% and 8.250% notes and the revolving credit facility.
We evaluate potential share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, proceeds from divestitures, borrowings and planned investment and financing needs. Repurchased shares are reflected as an increase in Treasury stock within Shareholders’ deficit in the Consolidated Balance Sheets.
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. The Company repurchased 0.7 million shares of our common stock for $21.0 million in fiscal 2024. The Company did not repurchase any shares under the repurchase program in fiscal 2023.
On June 28, 2023, we had $204.0 million of authorized repurchases remaining under the share repurchase program.
On June 26, 2024, we had $183.0 million of authorized repurchases remaining under the share repurchase program. Dividend Program There were no dividends declared in fiscal 2024 or fiscal 2023.
As of June 28, 2023, we were in compliance with our covenants pursuant to the $900.0 million revolving credit facility and under the terms of the indentures governing our 2024 Notes and 2030 Notes.
As of June 26, 2024, we were in compliance with our covenants pursuant to the $900.0 million revolving credit facility and under the terms of the indentures governing our 5.000% and 8.250% notes. Refer to Note 7 - Debt within Part II, Item 8 - Financial Statements and Supplementary Data for further information about our notes and revolving credit facility.
Revenues Revenues are presented in two separate captions in the Consolidated Statements of Comprehensive Income to provide more clarity around Company-owned restaurant revenues and operating expenses trends: • Company sales include revenues generated by the operation of Company-owned restaurants including food and beverage sales, net of discounts, gift card breakage, Maggiano’s banquet service charge income, delivery, digital entertainment revenues, merchandise income and gift card discount costs from third-party gift card sales. • Franchise revenues include royalties, franchise advertising fees, gift card equalization, and franchise and development fees. 26 Table of Contents The following is a summary of the change in Total revenues: Total Revenues Chili’s Maggiano’s Total Revenues Fiscal year ended June 29, 2022 $ 3,379.6 $ 424.5 $ 3,804.1 Change from: Comparable restaurant sales (1) 220.3 68.3 288.6 Restaurant acquisitions (2) 52.6 — 52.6 Restaurant openings 27.7 — 27.7 Maggiano's banquet income — 4.3 4.3 Gift card discount costs 0.9 0.2 1.1 Gift card breakage (3) (17.2) (2.4) (19.6) Merchandise income 0.2 — 0.2 Digital entertainment revenues 2.7 — 2.7 Delivery service fee income (3.1) 0.6 (2.5) Restaurant closures (17.9) (8.5) (26.4) Company sales 266.2 62.5 328.7 Franchise revenues (4) 0.3 0.1 0.4 Fiscal year ended June 28, 2023 $ 3,646.1 $ 487.1 $ 4,133.2 (1) Comparable restaurant sales increased due to menu price increases and favorable menu item mix, partially offset by lower traffic.
The following is a summary of the change in Total revenues: Total Revenues Chili’s Maggiano’s Total Revenues Fiscal year ended June 28, 2023 $ 3,646.1 $ 487.1 $ 4,133.2 Change from: Comparable restaurant sales (1) 264.2 16.4 280.6 Restaurant openings 45.8 — 45.8 Restaurant acquisitions 0.6 — 0.6 Gift card discounts 0.4 0.2 0.6 Maggiano's banquet income — 0.2 0.2 Delivery service fee income (0.5) 0.4 (0.1) Merchandise income (0.1) (0.1) (0.2) Digital entertainment revenues (0.4) — (0.4) Gift card breakage (2) (4.7) (0.7) (5.4) Restaurant closures (36.0) (7.8) (43.8) Company sales 269.3 8.6 277.9 Franchise revenues (3) 3.9 0.1 4.0 Fiscal year ended June 26, 2024 $ 3,919.3 $ 495.8 $ 4,415.1 (1) Comparable restaurant sales increased due to menu price increases and favorable menu item mix, partially offset by lower traffic.
General and administrative expenses increased $10.4 million as follows: General and Administrative Fiscal year ended June 29, 2022 $ 144.1 Change from: Performance-based compensation (1) 7.3 Defined contribution plan employer expenses and other benefits 2.4 Payroll expenses 1.5 Travel and entertainment expenses 0.4 Stock-based compensation (2) (4.4) Other (3) 3.2 Fiscal year ended June 28, 2023 $ 154.5 (1) Performance-based compensation increased in fiscal 2023 due to higher business performance metrics compared to targets.
Chili’s Depreciation and amortization increased $2.4 million as follows: Depreciation and Amortization Fiscal year ended June 28, 2023 $ 145.3 Change from: Additions for new and existing restaurant assets 23.2 Finance leases (5.5) Retirements and fully depreciated restaurant assets (15.6) Other 0.3 Fiscal year ended June 26, 2024 $ 147.7 31 Table of Contents Chili’s General and administrative increased $7.3 million as follows: General and Administrative Fiscal year ended June 28, 2023 $ 35.5 Change from: Performance-based compensation (1) 3.6 Stock-based compensation 1.9 Defined contribution plan employer expenses and other benefits 1.7 Payroll expenses 0.8 Recruiting (1.0) Other 0.3 Fiscal year ended June 26, 2024 $ 42.8 (1) Performance-based compensation increased in fiscal 2024 due to higher business performance compared to targets in the current fiscal year.
(3) Other increased primarily due to an increase in professional consulting fees and costs related to IT initiatives. 29 Table of Contents Other (gains) and charges consisted of the following (for further details, refer to Note 14 - Other Gains and Charges): Fiscal Years Ended June 28, 2023 June 29, 2022 Restaurant level impairment charges $ 12.1 $ 8.5 Restaurant closure asset write-offs and charges 8.3 3.7 Enterprise system implementation costs 4.7 2.4 Severance and other benefit charges 3.7 — Lease contingencies 2.0 3.1 Remodel-related asset write-off 1.1 4.9 Loss from natural disasters, net of (insurance recoveries) 0.8 1.1 Gain on sale of assets, net (3.7) — Other 3.7 7.5 $ 32.7 $ 31.2 Interest expenses increased $8.8 million primarily due to higher interest rates and average borrowing balances on our revolving credit facility in fiscal 2023.
The cumulative expense for this grant was reversed in fiscal 2023 based on forecasted business performance being well below the minimum target. 29 Table of Contents Other (gains) and charges consisted of the following (for further details refer to Note 13 - Other Gains and Charges): Fiscal Years Ended June 26, 2024 June 28, 2023 Enterprise system implementation costs $ 14.0 $ 4.7 Restaurant level impairment charges 12.3 12.1 Restaurant closure asset write-offs and charges 10.1 8.3 Litigation & claims, net 6.6 2.5 Lease contingencies 0.8 2.0 Severance 0.5 3.7 Remodel-related asset write-offs 0.5 1.1 Gain on sale of assets, net (2.7) (3.7) Other 1.1 2.0 $ 43.2 $ 32.7 Interest expenses increased $10.1 million primarily due to a higher interest rate on the 8.250% notes issued on June 27, 2023 , compared to the interest rate on the 3.875% notes which matured and were repaid on May 15, 2023, partially offset by the lower average revolver balance during fiscal 2024.
On May 15, 2023, our $300.0 million 3.875% notes matured and the payoff was funded with borrowings from our revolving credit facility. On June 27, 2023, we issued $350.0 million of 8.250% senior notes due July 15, 2030 and used $340.0 million of the proceeds to reduce outstanding borrowings on the revolver.
Additionally in fiscal 2023, proceeds from issuance of the $350.0 million 8.250% notes were partially offset by the payoff of the $300.0 million 3.875% notes. Debt On June 27, 2023, we issued $350.0 million of 8.250% senior notes due July 15, 2030 . The 2030 Notes require semi-annual interest payments in arrears, on each January 15 and July 15.
As of June 28, 2023, $738.7 million of credit is available under the revolving credit facility. The revolving credit facility is due in August 2026. (2) Interest consists of remaining interest payments on the 5.000% and 8.250% notes totaling $230.2 million and remaining interest payments on the revolver totaling $35.0 million.
(2) Interest consists of remaining interest payments on the 5.000% and 8.250% fixed rate notes totaling $196.5 million and remaining interest payments on the variable rate revolver totaling $46.0 million.
These increases were partially offset by 1.5% of sales leverage. 28 Table of Contents Depreciation and amortization increased $4.1 million as follows: Depreciation and Amortization Fiscal year ended June 29, 2022 $ 164.4 Change from: Additions for existing and new restaurant assets 22.0 Acquisition of Chili’s restaurants (1) 3.2 Corporate assets 1.8 Finance leases (3.2) Retirements and fully depreciated restaurant assets (19.2) Other (0.5) Fiscal year ended June 28, 2023 $ 168.5 (1) Represents the incremental depreciation and amortization of the assets and finance leases related to the 68 Chili’s restaurants acquired in fiscal 2022.
Depreciation and amortization increased $2.3 million as follows: Depreciation and Amortization Fiscal year ended June 28, 2023 $ 168.5 Change from: Additions for existing and new restaurant assets 26.3 Corporate assets 2.7 Finance leases (5.5) Retirements and fully depreciated restaurant assets (21.2) Fiscal year ended June 26, 2024 $ 170.8 General and administrative expenses increased $29.2 million as follows: General and Administrative Fiscal year ended June 28, 2023 $ 154.5 Change from: Performance-based compensation (1) 13.0 Stock-based compensation (2) 11.7 Payroll expenses 2.5 Corporate technology initiatives 1.8 Recruiting (1.6) Other 1.8 Fiscal year ended June 26, 2024 $ 183.7 (1) Performance-based compensation increased in fiscal 2024 due to higher business performance compared to targets in the current fiscal year.
We have assumed that the revolver balance carried will be $161.3 million until the maturity date of August 18, 2026 using the interest rate of 6.952%, which is the total of SOFR plus our applicable margin as of June 28, 2023.
We have assumed that there will be no outstanding balance on the revolver until October 1, 2024 when the 5.000% notes will be paid using availability under the revolver, increasing the outstanding balance to $350.0 million until the maturity date of August 18, 2026 using our variable interest rate of 6.94% as of June 26, 2024.
(2) Stock-based compensation decreased primarily due to the reversal in the second quarter of fiscal 2023 of performance-based award expense as certain performance targets are no longer expected to be achieved.
(2) Stock-based compensation increased primarily due to an increase in expense related to the fiscal 2023 performance share grant, as business performance is expected to exceed the plan target.
Cash Flows from Financing Activities Fiscal Years Ended Favorable (Unfavorable) Variance June 28, 2023 June 29, 2022 Cash flows from financing activities Borrowings on revolving credit facility $ 765.0 $ 720.5 $ 44.5 Payments on revolving credit facility (875.0) (620.5) (254.5) Proceeds from issuance of long-term debt 350.0 — 350.0 Payments on long-term debt (322.1) (23.7) (298.4) Purchases of treasury stock (5.0) (100.9) 95.9 Proceeds from issuance of treasury stock 12.5 0.4 12.1 Payments for debt issuance costs (5.3) (3.1) (2.2) Payments of dividends (0.6) (1.1) 0.5 Net cash used in financing activities $ (80.5) $ (28.4) $ (52.1) Net cash used in financing activities increased primarily due to the payoff of the $300.0 million 3.875% notes and $110.0 million of net repayment activity in fiscal 2023 compared to $100.0 million of net borrowing activity in fiscal 2022 on the revolving credit facility, partially offset by proceeds from issuance of the $350.0 million 8.250% notes (the “2030 Notes”), a decrease in share repurchases and an increase in proceeds from employee stock option exercises.
Increased spend on Chili’s capital maintenance, new equipment purchases and Maggiano’s remodels were partially offset by decreased spend on Chili’s remodels and construction of new restaurants. 34 Table of Contents Cash Flows from Financing Activities Fiscal Years Ended Favorable (Unfavorable) Variance June 26, 2024 June 28, 2023 Net cash used in financing activities $ (180.2) $ (80.5) $ (99.7) Net cash used in financing activities increased primarily due to $161.3 million of net repayment activity in fiscal 2024 compared to $110.0 million of net repayment activity in fiscal 2023 on the revolving credit facility.
The higher tax benefit in fiscal 2023 is primarily due to an increased leverage of the FICA tip tax credit against a lower Income before incomes taxes compared to fiscal 2022.
Income Taxes Fiscal Years Ended June 26, 2024 June 28, 2023 Effective income tax rate 5.8 % (13.0) % The change in the effective income tax rate from fiscal 2023 to fiscal 2024 is primarily due to higher Income before income taxes and the resulting deleverage of the FICA tip tax credit, which did not change significantly in fiscal 2024 compared to fiscal 2023.
Total banquet income increased $4.3 million in fiscal 2023 compared to fiscal 2022 as our banquet business recovered from the effects of the COVID-19 pandemic. Refer to the “Revenues” section above for further details about Maggiano’s revenues changes.
Refer to the “Revenues” section above for further details about Maggiano’s revenues changes.
LIQUIDITY AND CAPITAL RESOURCES Cash Flows Cash Flows from Operating Activities Fiscal Years Ended Favorable (Unfavorable) Variance June 28, 2023 June 29, 2022 Net cash provided by operating activities $ 256.3 $ 252.2 $ 4.1 Net cash provided by operating activities increased due to a decrease in payments of performance-based compensation in the current year and the timing of operational receipts and payments, partially offset by an increase in income tax payments, net of refunds received and a decrease in operating income. 35 Table of Contents Cash Flows from Investing Activities Fiscal Years Ended Favorable (Unfavorable) Variance June 28, 2023 June 29, 2022 Cash flows from investing activities Payments for property and equipment $ (184.9) $ (150.3) $ (34.6) Payments for franchise restaurant acquisitions — (106.6) 106.6 Proceeds from sale leaseback transactions, net of related expenses — 20.5 (20.5) Proceeds from note receivable 4.5 2.1 2.4 Proceeds from sale of assets 5.5 0.1 5.4 Insurance recoveries 0.7 — 0.7 Net cash used in investing activities $ (174.2) $ (234.2) $ 60.0 Net cash used in investing activities decreased primarily due to $106.6 million of cash consideration paid for the purchase of 68 Chili’s restaurants in fiscal 2022, partially offset by proceeds of $20.5 million received from the sale leaseback transactions on six of the acquired restaurants in fiscal 2022.
Cash Flows from Operating Activities Fiscal Years Ended Favorable (Unfavorable) Variance June 26, 2024 June 28, 2023 Net cash provided by operating activities $ 421.9 $ 256.3 $ 165.6 Net cash provided by operating activities increased due to an increase in operating income and the timing of other operational receipts and payments, partially offset by an increase in the payment of income taxes in the current year.
Removed
During fiscal 2023, all our domestic Company-owned and franchise restaurants operated with no restrictions. During fiscal 2022, the continuing spread of COVID-19 cases (particularly the Omicron variant), significantly impacted our guest traffic and sales.
Added
Such events could also negatively affect consumer spending potentially reducing guest traffic and/or reducing the average amount guests spend in our restaurants.
Removed
All others are calculated as a percentage of Total revenues.
Added
All others are calculated as a percentage of Total revenues. 26 Table of Contents Revenues Revenues are presented in two separate captions in the Consolidated Statements of Comprehensive Income to provide more clarity around Company-owned restaurant revenues and operating expenses trends: • Company sales 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, digital entertainment revenues, merchandise income and are net of gift card discount costs from third-party gift card sales. • Franchise revenues include royalties, franchise advertising fees, franchise and development fees and gift card equalization.
Removed
(2) We acquired 68 Chili’s restaurants from three former franchisees in fiscal 2022. Restaurant acquisitions includes revenues of acquired restaurants until the restaurant has been in operation for more than 18 months. (3) Gift card breakage decreased primarily due to a prior year change in estimate to increase the breakage rate on certain aged sales years.
Added
(2) Gift card breakage decreased primarily due to a change in estimate related to a higher forecasted gift card redemption rates. (3) Franchise revenues increased primarily due to higher franchise advertising fees.
Removed
(4) Our Chili’s and Maggiano’s franchisees generated sales of approximately $876.0 million and $10.6 million respectively in fiscal 2023 compared to $806.2 million and $8.5 million respectively in fiscal 2022.
Added
Additionally, incremental expenses were incurred in fiscal 2024 related to the fiscal 2022 performance share grant as business performance above expectations resulted in achievement of the minimum performance target for the grant.
Removed
(2) Mix-Shift is calculated as the year-over-year percentage change in Company sales resulting from the change in menu items ordered by guests. 27 Table of Contents (3) Restaurant Capacity is measured by sales weeks and is calculated based on comparable periods year-over-year, including the effect of the acquisitions completed during fiscal 2022.
Added
Refer to Note 9 - Income Taxes for more information.
Removed
Income Taxes Fiscal Years Ended June 28, 2023 June 29, 2022 Effective income tax rate (13.0) % (2.1) % The federal statutory tax rate was 21.0% for both fiscal 2023 and 2022.
Added
LIQUIDITY AND CAPITAL RESOURCES Our principal sources of liquidity are net cash provided by operating activities and borrowings if any, under our $900.0 million revolving credit facility as further discussed below. Our main requirements for liquidity are to support our working capital, capital expenditures for new and existing restaurants, obligations under our operating leases, and interest payments on our debt.
Removed
Our effective income tax rates for fiscal 2023 and 2022 were lower than the federal statutory tax rate primarily due to the leverage of the FICA tip tax credit relative to Income before income taxes.
Added
Our operations have typically not required significant working capital. Substantially all of our sales are tendered in cash and cash equivalents, which are received before related trade payables for food and beverage products, supplies, labor and services become due. Changes in our cash flows from operating, investing and financing activities during fiscal 2024 compared to fiscal 2023 are outlined below.
Removed
These increases were partially offset by 1.2% of sales leverage.
Added
Cash Flows from Investing Activities Fiscal Years Ended Favorable (Unfavorable) Variance June 26, 2024 June 28, 2023 Net cash used in investing activities $ (192.2) $ (174.2) $ (18.0) Net cash used in investing activities increased compared to the prior year.
Removed
Leases At the inception of each lease, we evaluate the lease agreement to determine whether it is an operating or finance lease. The evaluation requires significant judgments in determining the fair value of the lease asset and the lease liability and the appropriate reasonably certain lease term.
Added
As of June 26, 2024, there was $900.0 million of borrowing capacity under the revolving credit facility. On October 1, 2024, our $350.0 million of 5.000% senior notes will mature.
Removed
Given that our lease agreements generally do not provide an implicit interest rate, we estimate our fully collateralized incremental borrowing rate corresponding with the lease terms for the purposes of determining the fair value of initial liability for each lease. We also estimate the reasonably certain lease term at inception.
Added
As a result of our intent and ability to refinance these notes through our existing revolving credit facility, the notes are classified as long-term debt in the Consolidated Balance Sheets on June 26, 2024.
Removed
The lease term commences on the date when the lessor makes the underlying property available, irrespective of the contractual lease payments schedule. When determining the length of the lease term at commencement, we consider both termination and renewal option periods available.
Added
The $350.0 million 5.000% notes mature on October 1, 2024, and the $350.0 million 8.250% notes mature on July 15, 2030. As of June 26, 2024, there was no outstanding balance on the $900.0 million credit facility.
Removed
The renewal periods included in the lease term at the inception are those during which failure to renew the lease imposes a significant penalty on us. Lease accounting requires the application of significant judgements by management.
Removed
Variation in judgements applied could result in a change of lease classification and materially different expenses such as rent, depreciation and amortization in a given reporting period; fair value of lease asset and lease liability at inception; or reasonably certain lease terms at inception.
Removed
Income Taxes We make certain estimates and judgments in the calculation of tax expenses, the resulting tax liabilities, and in the recoverability of deferred tax assets that arise from temporary differences between the tax and financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Removed
When considered necessary, we record a valuation allowance to reduce deferred tax assets to a balance that is more likely than not to be recognized. We use an estimate of our annual effective tax rate at each interim period based on the facts and circumstances available at that time while the actual effective tax rate is calculated at year-end.
Removed
We have recorded deferred tax assets reflecting the benefit of income tax credits and state loss carryforwards, which expire in varying amounts. Realization is dependent on generating sufficient taxable income in the relevant jurisdiction prior to expiration of the income tax credits and state loss carryforwards.
Removed
Although realization is not assured, management believes it is more likely than not that the recognized deferred tax assets will be realized.
Removed
The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income in the carryforward period are reduced. 34 Table of Contents We record a liability for unrecognized tax benefits resulting from tax positions taken, or expected to be taken, in an income tax return.
Removed
We recognize any interest and penalties related to unrecognized tax benefits in (Benefit) Provision for income taxes. Significant judgment is required in assessing, among other factors, the timing and amounts of deductible and taxable items. Tax reserves are evaluated and adjusted as appropriate, while taking into account the progress of audits of various taxing jurisdictions.
Removed
In addition to the risks related to the effective tax rate described above, the effective tax rate reflected in forward-looking statements is based on current tax law. Any significant changes in the tax laws could affect these estimates. Insurance Reserves We are self-insured for certain losses related to health, general liability and workers’ compensation.
Removed
We maintain stop loss coverage with third-party insurers to limit our total exposure. We record a liability for all unresolved claims and for an estimate of incurred but not reported claims at the anticipated cost that falls below our specified retention levels or per-claim deductible amounts.
Removed
This liability represents an estimate of the ultimate cost of claims incurred and unpaid as of the balance sheet date. In establishing our reserves, we consider certain actuarial assumptions and judgments regarding economic conditions, the frequency and severity of claims and claim development history and settlement practices.
Removed
The estimated liability is not discounted and is established based upon analysis of historical data and actuarial estimates and is reviewed on a quarterly basis to ensure that the liability is appropriate. If actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material.
Removed
Additionally, capital expenditures increased in fiscal 2023 primarily for construction of new restaurants, new equipment purchases, and increased capital maintenance, partially offset by the reduction in scope of the Chili’s remodel initiative and reduced technology spend.
Removed
Revolving Credit Facility On May 2, 2023, we amended our $800.0 million revolving credit facility to increase the capacity to $900.0 million and to adopt SOFR as the new benchmark rate, replacing LIBOR.
Removed
During fiscal 2023, we incurred and capitalized $0.5 million of debt issuance costs associated with the revolving credit facility, which are included in Other assets in the Consolidated Balance Sheets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe impact on our annual results of operations of a hypothetical 100 basis points interest rate change on the outstanding balance of this variable rate financial instrument as of June 28, 2023 would be approximately $1.6 million. Commodity Price Risk We purchase food and other commodities for use in our operations based on market prices established with our suppliers.
Biggest changeAs of June 26, 2024, there were no 36 Table of Contents outstanding borrowings under the revolving credit facility which is our only debt instrument with a variable interest rate. Commodity Price Risk We purchase food and other commodities for use in our operations based on market prices established with our suppliers.
Additionally, if there is a time lag between the increasing commodity prices and our ability to increase menu prices or if we believe the commodity price increase to be short in duration and we choose not to pass on the cost increases, our short-term financial results could be negatively affected. 39 Table of Contents
Additionally, if there is a time lag between the increasing commodity prices and our ability to increase menu prices or if we believe the commodity price increase to be short in duration and we choose not to pass on the cost increases, our short-term financial results could be negatively affected. 37 Table of Contents
While our purchasing commitments partially mitigate the risk of such fluctuations, there is no assurance that supply and demand factors such as disease, inclement weather or recent geopolitical unrest, will not cause the prices of the commodities used in our restaurant operations to fluctuate. The aggregate impact of these and other factors have contributed to significant cost inflation.
While our purchasing commitments partially mitigate the risk of such fluctuations, there is no assurance that supply and demand factors such as disease, inclement weather or recent geopolitical unrest, will not cause the prices of the commodities used in our restaurant operations to fluctuate. The aggregate impact of these and other factors contributed to cost inflation in recent years.
Interest Rate Risk The terms of our revolving credit facility require us to pay interest on outstanding borrowings at SOFR plus an applicable margin based on a function of our debt-to-cash-flow ratio. As of June 28, 2023, $161.3 million was outstanding under the revolving credit facility.
Interest Rate Risk The terms of our revolving credit facility require us to pay interest on outstanding borrowings at SOFR plus an applicable margin based on a function of our debt-to-cash-flow ratio.

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