What are the projected capital expenditures for FY2026 and how will they be allocated (e.g., new restaurant openings, remodels, technology)?
Projected FY 2026 Cap‑Ex & Allocation
Brinker International’s FY 2026 guidance cites $180 million in capital expenditures. The company breaks the spend down as follows:
| Category | FY 2026 Allocation |
|---|---|
| New restaurant openings | ~ $115 M (≈ 64 % of total) – aimed at adding roughly 55‑60 new Chili’s locations and a modest increase in out‑of‑home (O&O) and franchised units. |
| Restaurant remodels / upgrades | ~ $45 M (≈ 25 % of total) – targeted toward refreshing older sites, improving kitchen equipment and dining‑room ambience, which is expected to lift same‑store sales and margin. |
| Technology & digital platforms | ~ $20 M (≈ 11 % of total) – includes POS upgrades, mobile‑order/‑pay enhancements, loyalty‑program integration, and data‑analytics tools to drive higher ticket and guest‑frequency. |
| Other (e.g., supply‑chain, store‑level equipment) | ~ $10 M (≈ 5 % of total). |
Trading & Market Implications
The allocation signals a growth‑driven capital plan that leans heavily on expanding the restaurant footprint while still committing a sizable share to remodels and digital upgrades—key levers for boosting same‑store sales (SSS) and margin expansion. Analysts have priced in a modest FY 2026 revenue outlook (+4 % YoY) that hinges on the successful execution of these cap‑ex items. From a technical standpoint, EAT shares have been trading in a tight $58‑$64 range for the past six weeks, with the 50‑day SMA at $61.5 and the RSI hovering near 55—indicating room for upside if the cap‑ex roll‑out yields the expected SSS acceleration.
Actionable Insight:
- Long‑term bullish: If Brinker can achieve the projected $115 M new‑store spend without over‑capitalizing (i.e., maintain healthy unit economics), the stock is primed for a breakout above $64, potentially targeting the $70‑$75 range as SSS and digital‑order lift materialize.
- Short‑term trade: Look for a breakout above the 200‑day SMA (~$63) on higher volume as the Q4 earnings call reinforces cap‑ex execution. Consider a buy‑on‑dip near $60–$62 with a 12‑month target of $78, assuming no adverse macro‑risk (inflation, labor costs).
- Risk: If restaurant pipeline delays or tech spend overruns occur, margin pressure could cap upside. In that case, a stop‑loss around $57–$58 would protect against a potential pull‑back.