By Evie Liu

Brinker International stock tumbled 14% on Tuesday even as the parent company of Chili's restaurant reported better-than-expected third-quarter earnings and revenue. It could be a sign of the market's increasing uneasiness about consumer spending trends.

For the fiscal third quarter ended in March, Brinker posted adjusted earnings per share of $2.66, up 115% from the same quarter a year ago and beating analyst estimates of $2.49. Revenue rose 27% year-over-year to $1.43 billion, also surpassing expectations of $1.37 billion.

Comparable restaurant sales increased 28% across the company, with Chili's seeing a 32% jump thanks to rising foot traffic. "Our continued progress on the fundamentals of great food, great service in a fun, friendly atmosphere is clearly winning with guests," said CEO Kevin Hochman in a statement.

The company expects revenue for fiscal 2025, which ends June, in the range of $5.33 billion to $5.35 billion. Adjusted earnings per share is expected between $8.50 and $8.75. Both are above Wall Street estimates.

Still, the stock's decline on Tuesday is on pace for the largest daily percent decrease since March 7, 2022. Investors might feel uneasy about whether Brinker could continue to grow at its current pace if the economy were to take a turn for the worse.

Brinker shares have been on a tear in 2025, gaining 21.5% year to date -- before Tuesday's fall -- even as stocks in most of its restaurant peers are in the red as consumers pull back from dining out amid inflation pressure and recession fear.

Brinker has a different story, however. As consumers complain about high prices of eating out, Chili's -- a casual dining restaurant -- has simplified its menu to focus on value-oriented offerings that are sometimes even cheaper than fast-food chains.

The brand's social media campaigns have resonated with younger audiences, while its investment in kitchen technology helped improve food quality and reduce preparation times, leading to a better dining experience.

On a year-over-year basis, revenue have increased by a double-digit percentage for three quarters in a row.

Uncertainties surrounding President Donald Trump administration's tariff policies, however, have triggered fears of a potential recession. Consumer sentiment has sunk to the lowest level since the Covid-19 pandemic, making Wall Street worried about lower spending.

The potential tariffs on imported goods could also raise input costs and hurt Brinker's margins. On the earnings call, the firm said roughly 20% of its food and beverage purchases are imports, but noted that it could absorb the higher costs and keep its value deals on the menu.

Analysts polled by Wall Street expect Brinker's total revenue to grow 4.6% in fiscal 2026, sharply down from the 19% estimated growth for fiscal 2025. Earnings are expected to increase 12% in fiscal 2026 after more than doubling in fiscal 2025.

Write to Evie Liu at evie.liu@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 29, 2025 13:22 ET (17:22 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.