Why this 50-year old restaurant chain has a stock that’s smoking Nvidia’s

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Why this 50-year old restaurant chain has a stock that’s smoking Nvidia’s

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Brinker International (EAT) CEO Kevin Hochman won’t agree with me to put an item called Nvidia (NVDA) chips and guac on the menu — but maybe he should.

The

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is leading one of the hottest restaurant chains on the planet in Chili’s, an old school sit-down eatery that was born in 1975. It’s long claim to fame has been saucy ribs, sizzling fajitas, and gigantic burger patties — hardly revolutionary stuff.

“Of course I have been surprised [by the results],” Hochman told me on Yahoo Finance’s Opening Bid podcast (video above; listen in below). “I knew we were doing the right things and I knew over time we would get better and get stronger and get good results.”

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Brinker’s stock has served up a savory 348% gain over the past year, outperforming Nvidia’s meager 99% advance. The stock price has also outperformed every other major restaurant chain.

Yahoo Finance data shows Brinker now sports a market cap of $8.1 billion, lightyears ahead of the paltry $468 million afforded struggling Dine Brands (DIN) — its long-time rival that operates Applebee’s and IHOP.

How great has the performance of the 1,500 locations chain been? Pretty damn great, considering sit down restaurants are battling mobile ordering, salad-loving 20 somethings, Ozempic shots, higher costs for labor and food, and perhaps a dozen other headwinds.

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31.4% year over year in the most recent quarter. The gain was propped up by an eye-opening 19.9% increase in customer visits.

The results come following a series of double-digit quarterly sales gains for Chili’s.

Hochman credits a few items for the chain’s comeback.

First, a steady stream of value marketing to a customer base that often views eating out as a weekly or monthly luxury. And two, investments in higher quality food. Hochman has swapped chicken trimmings in some items for “whole lobe” chicken. Bacon is coming out of the kitchen crispier. Guacamole is being made fresh daily instead of using “day two” guac.

“The flywheel of better food, service, atmosphere, and marketing translating into sales is in full effect, with Chili’s posting comp growth we’ve never seen from a mature brand (ex-COVID). There’s little evidence to suggest this strength should fade with management pointing to sales momentum carrying into fiscal third quarter, a pipeline of new product news and store-level initiatives (oven replacement, remodels) providing duration to the sales story,” Citi restaurant analyst Jon Tower said in a client note.

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Hochman also didn’t bite on a suggestion to put DeepSeek Dippers on the menu, but has other things in the works to keep the sales momentum going.

He tells Yahoo Finance a reinvention of Chili’s ribs to include more smoke and better sauce will drop soon. Fajitas will get softer shells (Hochman says his team has been working to reboot fajitas for two years).

A new surprise menu item is coming, too (the Street thinks it’s a chicken sandwich — Hochman declined to comment). And Turbochef ovens in the back of the house to replace tired old conveyor belt cookers (should help get the food out quicker) are being installed.

“So the key question for our team is what’s the next three years of the turnaround? And I would tell you there is way more changes ahead of us than we’ve actually completed,” Hochman says.

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