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Investing.com -- Moody’s Ratings has upgraded Brinker International, Inc.’s corporate family rating to Ba2 from Ba3, while maintaining a positive outlook for the restaurant operator.
The upgrade reflects Brinker’s strong operating performance and cash flow, combined with significant debt reduction that has resulted in improved credit metrics and strong liquidity position. For the fiscal year ended June 2025, Brinker’s Moody’s adjusted debt/EBITDA ratio decreased to approximately 1.9x, while its EBIT/Interest ratio improved to over 4.5x.
Brinker, which owns the Chili’s and Maggiano’s restaurant chains, has successfully completed its three-year turnaround plan for Chili’s, achieving notable operational improvements. The company’s same-store sales and traffic growth have outperformed the broader U.S. restaurant industry over the past year, despite challenging consumer spending conditions and a higher cost environment.
The positive outlook indicates Moody’s expectation that Brinker will maintain its operating performance and credit metrics, along with strong liquidity, even as it faces a difficult consumer environment and challenging year-over-year performance comparisons.
Moody’s also upgraded Brinker’s probability of default rating to Ba2-PD from Ba3-PD and its backed senior unsecured notes rating to Ba3 from B1. The company’s speculative grade liquidity rating remains unchanged at SGL-1.
According to Moody’s, Brinker’s rating benefits from high brand awareness, significant scale, a good product pipeline, and technology and operational improvement initiatives. These factors are expected to drive additional customer traffic and help mitigate cost pressures over the long term.
Limiting factors include Brinker’s earnings concentration in the Chili’s brand and concerns about consumer spending on dining out in the current economic environment.
For a future upgrade, Brinker would need to maintain a balanced growth strategy with consistent positive performance at Chili’s, while supporting solid credit metrics and very good liquidity. Specifically, this would require maintaining Moody’s adjusted debt/EBITDA below 3.0x and EBITA/interest over 4.0x.
Conversely, ratings could be downgraded if operating performance significantly declines, financial policies become more aggressive, or liquidity substantially deteriorates. This would be indicated by Moody’s adjusted debt/EBITDA sustained above 4.0x and EBITA/interest below 2.75x.
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