BRINKER INTERNATIONAL, INC [EAT] Filings

10-Q 1 eat-20230329.htm 10-Q eat-20230329

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 29, 2023

Commission File Number 1-10275

BRINKER INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

75-1914582

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

3000 Olympus Blvd

Dallas

75019

(Address of principal executive offices)

(Zip Code)

(972)

980-9917

(Registrant’s telephone number, including area code)

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock, $0.10 par value

EAT

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of April 28, 2023: 44,296,817 shares

BRINKER INTERNATIONAL, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION			3
Item 1. Financial Statements			3
Consolidated Statements of Comprehensive Income (Unaudited) - Thirteen and Thirty-Nine Week Periods Ended March 29, 2023 and March 30, 2022			3
Consolidated Balance Sheets - March 2 9 , 202 3 (Unaudited) and June 29, 2022			4
Consolidated Statements of Cash Flows (Unaudited) - Thirty-Nine Week Periods Ended March 29, 2023 and March 30, 2022			5
Consolidated Statements of Shareholders’ Deficit (Unaudited) - Thirty-Nine Week Periods Ended March 29, 2023 and March 30, 2022			6
Notes to Consolidated Financial Statements (Unaudited)			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			36
Item 4. Controls and Procedures			36
PART II. OTHER INFORMATION			37
Item 1. Legal Proceedings			37
Item 1A. Risk Factors			37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			38
Item 5. Other Information			38
Item 6. Exhibits			39
SIGNATURES			39

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BRINKER INTERNATIONAL, INC.

Consolidated Statements of Comprehensive Income (Unaudited)

(In millions, except per share amounts)


	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
	March 29, 2023		March 30, 2022		March 29, 2023		March 30, 2022
Revenues
Company sales	$	1,072.9	$	970.9	$	3,028.4	$	2,752.3
Franchise revenues	10.3		9.5		29.3		30.3
Total revenues	1,083.2		980.4		3,057.7		2,782.6
Operating costs and expenses
Food and beverage costs	287.5		270.3		866.4		757.4
Restaurant labor	361.2		329.1		1,026.4		949.4
Restaurant expenses	280.9		244.1		818.1		712.1
Depreciation and amortization	42.5		42.2		126.2		123.1
General and administrative	40.6		39.2		115.7		108.8
Other (gains) and charges	6.3		6.1		19.8		17.0
Total operating costs and expenses	1,019.0		931.0		2,972.6		2,667.8
Operating income	64.2		49.4		85.1		114.8
Interest expenses	14.2		11.1		40.4		34.8
Other income, net	(0.6)		(0.4)		(1.3)		(1.2)
Income before income taxes	50.6		38.7		46.0		81.2
(Benefit) Provision for income taxes	(0.1)		2.1		(2.4)		3.8
Net income	$	50.7	$	36.6	$	48.4	$	77.4

Basic net income per share	$	1.15	$	0.82	$	1.10	$	1.71

Diluted net income per share	$	1.12	$	0.81	$	1.08	$	1.68

Basic weighted average shares outstanding	44.1		44.4		44.0		45.2

Diluted weighted average shares outstanding	45.1		45.1		44.8		46.0

Other comprehensive income (loss)
Foreign currency translation adjustment	$	0.1	$	0.4	$	(0.8)	$	(0.1)
Other comprehensive income (loss)	0.1		0.4		(0.8)		(0.1)
Comprehensive income	$	50.8	$	37.0	$	47.6	$	77.3

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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BRINKER INTERNATIONAL, INC.

Consolidated Balance Sheets

(In millions, except per share amounts)


	Unaudited
	March 29, 2023		June 29, 2022
ASSETS
Current assets
Cash and cash equivalents	$	13.8	$	13.5
Accounts receivable, net	72.6		66.4
Inventories	34.1		35.6
Restaurant supplies	55.7		55.5
Prepaid expenses	37.2		25.7
Income taxes receivable, net	—		4.5
Total current assets	213.4		201.2
Property and equipment, at cost
Land	44.2		43.4
Buildings and leasehold improvements	1,639.8		1,603.9
Furniture and equipment	764.3		793.0
Construction-in-progress	39.8		33.6
	2,488.1		2,473.9
Less accumulated depreciation and amortization	(1,668.3)		(1,657.2)
Net property and equipment	819.8		816.7
Other assets
Operating lease assets	1,124.9		1,160.5
Goodwill	194.8		195.1
Deferred income taxes, net	81.3		62.5
Intangibles, net	25.1		27.4
Other	18.8		21.0
Total other assets	1,444.9		1,466.5
Total assets	$	2,478.1	$	2,484.4
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	163.7	$	134.3
Gift card liability	78.9		83.9
Accrued payroll	103.0		111.0
Operating lease liabilities	112.3		112.7
Other accrued liabilities	126.9		116.1
Income taxes payable, net	0.9		—
Total current liabilities	585.7		558.0
Long-term debt and finance leases, less current installments	930.7		989.1
Long-term operating lease liabilities, less current portion	1,113.8		1,151.1
Other liabilities	58.2		54.3
Commitments and contingencies (Note 13)
Shareholders’ deficit
Common stock (250.0 million authorized shares; $0.10 par value; 60.3 million shares issued and 44.1 million shares outstanding at March 29, 2023, and 70.3 million shares issued and 43.8 million shares outstanding at June 29, 2022)	6.0		7.0
Additional paid-in capital	692.3		690.9
Accumulated other comprehensive loss	(6.1)		(5.3)
Accumulated deficit	(406.1)		(148.4)
Treasury stock, at cost (16.2 million shares at March 29, 2023, and 26.5 million shares at June 29, 2022)	(496.4)		(812.3)
Total shareholders’ deficit	(210.3)		(268.1)
Total liabilities and shareholders’ deficit	$	2,478.1	$	2,484.4

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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BRINKER INTERNATIONAL, INC.

Consolidated Statements of Cash Flows (Unaudited)

(In millions)


	Thirty-Nine Week Periods Ended
	March 29, 2023		March 30, 2022
Cash flows from operating activities
Net income	$	48.4	$	77.4
Adjustments to reconcile Net income to Net cash provided by operating activities:
Depreciation and amortization	126.2		123.1
Stock-based compensation	10.3		15.2
Restructure and impairment charges	12.2		8.7
Net loss on disposal of assets	2.9		2.3
Other	1.3		2.6
Changes in assets and liabilities, net of the impact of acquisitions:
Accounts receivable, net	(10.0)		8.0
Inventories	0.5		(3.4)
Restaurant supplies	(0.7)		(1.1)
Prepaid expenses	(11.8)		(6.9)
Operating lease assets, net of liabilities	(2.2)		5.2
Deferred income taxes, net	(18.9)		(3.5)
Other assets	(0.1)		0.2
Accounts payable	30.2		4.9
Gift card liability	(4.9)		(2.6)
Accrued payroll	(9.5)		(14.3)
Other accrued liabilities	14.6		3.5
Current income taxes	9.2		19.6
Other liabilities	3.1		(27.3)
Net cash provided by operating activities	200.8		211.6
Cash flows from investing activities
Payments for property and equipment	(136.6)		(109.0)
Proceeds from note receivable	3.3		1.0
Payments for franchise restaurant acquisitions	—		(106.0)
Proceeds from sale leaseback transactions, net of related expenses	—		20.5
Proceeds from sale of assets	—		0.1

Net cash used in investing activities	(133.3)		(193.4)
Cash flows from financing activities
Borrowings on revolving credit facility	375.0		595.5
Payments on revolving credit facility	(425.0)		(502.5)
Payments on long-term debt	(16.7)		(17.6)
Purchases of treasury stock	(2.2)		(100.8)
Payments of dividends	(0.4)		(1.1)
Payments for debt issuance costs	—		(3.1)
Proceeds from issuance of treasury stock	2.1		0.4
Net cash used in financing activities	(67.2)		(29.2)
Net change in cash and cash equivalents	0.3		(11.0)
Cash and cash equivalents at beginning of period	13.5		23.9
Cash and cash equivalents at end of period	$	13.8	$	12.9

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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BRINKER INTERNATIONAL, INC.

Consolidated Statements of Shareholders’ Deficit (Unaudited)

(In millions)


	Thirty-Nine Week Period Ended March 29, 2023
	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Loss		Total
Balances at June 29, 2022	$	7.0	$	690.9	$	(148.4)	$	(812.3)	$	(5.3)	$	(268.1)
Net loss	—		—		(30.2)		—		—		(30.2)
Other comprehensive loss	—		—		—		—		(1.0)		(1.0)
Dividends	—		—		0.0		—		—		0.0
Stock-based compensation	—		4.7		—		—		—		4.7
Purchases of treasury stock	—		0.2		—		(2.2)		—		(2.0)
Issuances of treasury stock	—		(7.8)		—		7.8		—		—
Retirement of stock	(1.0)		—		(306.1)		307.1		—		—
Balances at September 28, 2022	$	6.0	$	688.0	$	(484.7)	$	(499.6)	$	(6.3)	$	(296.6)
Net income	—		—		27.9		—		—		27.9
Other comprehensive income	—		—		—		—		0.1		0.1
Dividends	—		—		—		—		—		—
Stock-based compensation	—		1.2		—		—		—		1.2
Purchases of treasury stock	—		0.0		—		(0.1)		—		(0.1)
Issuances of treasury stock	—		(0.5)		—		0.5		—		0.0

Balances at December 28, 2022	$	6.0	$	688.7	$	(456.8)	$	(499.2)	$	(6.2)	$	(267.5)
Net income	—		—		50.7		—		—		50.7
Other comprehensive income	—		—		—		—		0.1		0.1
Dividends	—		—		—		—		—		—
Stock-based compensation	—		4.4		—		—		—		4.4
Purchases of treasury stock	—		—		—		(0.1)		—		(0.1)
Issuances of treasury stock	—		(0.8)		—		2.9		—		2.1
Balances at March 29, 2023	$	6.0	$	692.3	$	(406.1)	$	(496.4)	$	(6.1)	$	(210.3)

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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	Thirty-Nine Week Period Ended March 30, 2022
	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Treasury Stock		Accumulated Other Comprehensive Loss		Total
Balances at June 30, 2021	$	7.0	$	685.4	$	(266.1)	$	(724.9)	$	(4.7)	$	(303.3)

Net income	—		—		13.2		—		—		13.2
Other comprehensive loss	—		—		—		—		(0.4)		(0.4)
Dividends	—		—		0.0		—		—		0.0
Stock-based compensation	—		4.3		—		—		—		4.3
Purchases of treasury stock	—		(2.0)		—		(37.6)		—		(39.6)
Issuances of treasury stock	—		(8.3)		—		8.6		—		0.3
Balances at September 29, 2021	$	7.0	$	679.4	$	(252.9)	$	(753.9)	$	(5.1)	$	(325.5)
Net income	—		—		27.6		—		—		27.6
Other comprehensive loss	—		—		—		—		(0.1)		(0.1)
Dividends	—		—		0.0		—		—		0.0
Stock-based compensation	—		5.6		—		—		—		5.6
Purchases of treasury stock	—		0.0		—		(35.1)		—		(35.1)
Issuances of treasury stock	—		(1.3)		—		1.4		—		0.1

Balances at December 29, 2021	$	7.0	$	683.7	$	(225.3)	$	(787.6)	$	(5.2)	$	(327.4)
Net income	—		—		36.6		—		—		36.6
Other comprehensive income	—		—		—		—		0.4		0.4
Dividends	—		—		0.0		—		—		0.0
Stock-based compensation	—		5.3		—		—		—		5.3
Purchases of treasury stock	—		0.0		—		(26.1)		—		(26.1)
Issuances of treasury stock	—		(1.2)		—		1.2		—		—
Balances at March 30, 2022	$	7.0	$	687.8	$	(188.7)	$	(812.5)	$	(4.8)	$	(311.2)

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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Footnote Index

BRINKER INTERNATIONAL, INC.

Notes to Consolidated Financial Statements (Unaudited)

Footnote Index

Note #

Description

Page

Note 1

Basis of Presentation

Note 2

Revenue Recognition

Note 3

Other Gains and Charges

Income Taxes

Net Income Per Share

Segment Information

Fair Value Measurements

Leases

Debt

Accrued Liabilities

Shareholders’ Deficit

Note 12

Supplemental Cash Flow Information

Note 13

Contingencies

Note 14

Fiscal 2022 Chili’s Restaurant Acquisitions

Note 15

Subsequent Events

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Footnote Index

1. BASIS OF PRESENTATION

References to “Brinker,” the “Company,” “we,” “us,” and “our” in this Form 10-Q refer to Brinker International, Inc. and its subsidiaries and any predecessor companies of Brinker International, Inc. Our Consolidated Financial Statements (Unaudited) as of March 29, 2023 and June 29, 2022, and for the thirteen and thirty-nine week periods ended March 29, 2023 and March 30, 2022, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Effective for the first quarter of fiscal 2023, we are presenting certain revenue streams related to gift cards, digital entertainment, Maggiano’s banquet service charges and delivery fees within Company sales to better align with the presentation used within the casual dining industry. Our presentation of Franchise revenues will now include only revenues related to the ongoing franchise-operated restaurants. Comparative figures in prior years have been adjusted to conform to the current year’s presentation. These reclassifications have no effect on Total revenues or Net income previously reported.

We are principally engaged in the ownership, operation, development and franchising of the Chili’s® Grill & Bar (“Chili’s”) and Maggiano’s Little Italy® (“Maggiano’s”) restaurant brands. As of March 29, 2023, we owned, operated or franchised 1,654 restaurants, consisting of 1,184 Company-owned restaurants and 470 franchised restaurants, located in the United States, 28 countries and two United States territories.

Use of Estimates

The preparation of the Consolidated Financial Statements (Unaudited) is in conformity with generally accepted accounting principles in the United States (“GAAP”) and requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements (Unaudited), and the reported amounts of revenues and costs and expenses in the reporting periods. Actual results could differ from those estimates.

The information furnished herein reflects all adjustments (consisting only of normal recurring accruals and adjustments) which are, in our opinion, necessary to fairly state the interim operating results, financial position and cash flows for the respective periods. However, these operating results are not necessarily indicative of the results expected for the full fiscal year. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with GAAP, have been omitted pursuant to SEC rules and regulations. The Notes to Consolidated Financial Statements (Unaudited) should be read in conjunction with the Notes to Consolidated Financial Statements contained in our June 29, 2022 Form 10-K. We believe the disclosures are sufficient for interim financial reporting purposes. All amounts in the Notes to Consolidated Financial Statements (Unaudited) are presented in millions unless otherwise specified.

Foreign Currency Translation

The foreign currency translation adjustment included in Comprehensive income in the Consolidated Statements of Comprehensive Income (Unaudited) represents the unrealized impact of translating the financial statements of our Canadian restaurants from Canadian dollars to United States dollars. This amount is not included in Net income and would only be realized upon disposition of our Canadian restaurants. The related Accumulated other comprehensive loss is presented in the Consolidated Balance Sheets (Unaudited).

COVID-19 Pandemic and Other Impacts to Our Operating Environment

During fiscal 2022, increasing COVID-19 cases in the United States, including the Omicron variant, significantly impacted our guest traffic and sales. 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. During 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. The ongoing effects of COVID-19 and its variants, along with other geopolitical and macroeconomic events could lead to further capacity restrictions, mask and vaccine mandates, 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

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Footnote Index

negatively affect consumer spending potentially reducing guest traffic and/or reducing the average amount guests spend in our restaurants.

New Accounting Standards Implemented in Fiscal 2023

We reviewed accounting pronouncements that became effective for our fiscal 2023 and determined that either they were not applicable or they did not have a material impact on the Consolidated Financial Statements (Unaudited). We also reviewed recently issued accounting pronouncements to be adopted in future periods and determined that they are not expected to have a material impact on the Consolidated Financial Statements (Unaudited).

2. REVENUE RECOGNITION

Deferred Franchise and Development Fees

Our deferred franchise and development fees consist of the unrecognized fees received from franchisees. Recognition of these fees in subsequent periods is based on satisfaction of the contractual performance obligations of our active contracts with franchisees. We also expect to earn subsequent period royalties and advertising fees related to our franchise contracts; however, due to the variability and uncertainty of these future revenues based upon a sales-based measure, these future revenues are not yet estimable as the performance obligations remain unsatisfied.

Deferred franchise and development fees are classified within Other accrued liabilities for the current portion expected to be recognized within the next 12 months, and Other liabilities for the long-term portion in the Consolidated Balance Sheets (Unaudited).

The following table reflects the changes in deferred franchise and development fees between June 29, 2022 and March 29, 2023:


	Deferred Franchise and Development Fees

Balance as of June 29, 2022	$	10.1
Additions	1.8

Amount recognized to Franchise revenues	(0.7)

Balance as of March 29, 2023	$	11.2

The following table illustrates franchise and development fees expected to be recognized in the future related to performance obligations that were unsatisfied or partially unsatisfied as of March 29, 2023:


Fiscal Year	Franchise and Development Fees Revenue Recognition
Remainder of 2023	$	0.2
2024	0.9
2025	0.9
2026	0.8
2027	0.8
Thereafter	7.6
	$	11.2

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Footnote Index

Deferred Gift Card Revenues

Deferred revenues related to our gift cards include the full value of unredeemed gift card balances less recognized breakage and the unamortized portion of third party fees. The following table reflects the changes in the Gift card liability between June 29, 2022 and March 29, 2023:


	Gift Card Liability

Balance as of June 29, 2022	$	83.9
Gift card sales	99.4
Gift card redemptions recognized to Company sales	(93.1)
Gift card breakage recognized to Company sales	(10.8)
Other	(0.5)
Balance as of March 29, 2023	$	78.9

3. OTHER GAINS AND CHARGES

Other (gains) and charges in the Consolidated Statements of Comprehensive Income (Unaudited) consist of the following:


	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
	March 29, 2023		March 30, 2022		March 29, 2023		March 30, 2022
Lease contingencies	$	2.0	$	—	$	2.0	$	2.9
Restaurant closure charges	1.8		1.2		6.6		1.7
Enterprise system implementation costs	1.3		0.5		3.3		1.4
Severance and other benefit charges	1.0		—		3.9		—
Remodel-related costs	0.1		0.9		1.1		4.0
Acquisition-related costs, net	—		0.6		0.2		1.5
Loss from natural disasters, net of (insurance recoveries)	(0.1)		—		0.8		0.8

Other	0.2		2.9		1.9		4.7
	$	6.3	$	6.1	$	19.8	$	17.0

•Lease contingencies includes expenses related to lease guarantees and certain sublease receivables for divested brands when we have determined it is probable that the current lessee will default on the lease obligation. Refer to Note 13 - Contingencies for additional information about our secondarily liable lease guarantees.

•Restaurant closure charges includes costs associated with the closure of certain Chili’s and Maggiano’s restaurants.

•Enterprise system implementation costs primarily consists of software subscription fees, certain consulting fees and contract labor associated with the ongoing enterprise system implementation that are not capitalized.

•Severance and other benefit charges relates to changes in our management team and organizational structure.

•Remodel-related costs relates to assets that are removed or discarded in connection with Chili’s and Maggiano’s remodel projects.

•Acquisition-related costs, net in the prior year relates to the 68 restaurants acquired from former franchisees. Refer to Note 14 - Fiscal 2022 Chili’s Restaurant Acquisitions for further details.

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Footnote Index

•Loss from natural disasters, net of (insurance recoveries) primarily relates to Hurricane Ian in September 2022 and the Winter Storm in December 2022.

4. INCOME TAXES


	Thirteen Week Periods Ended				Thirty-Nine Week Periods Ended
	March 29, 2023		March 30, 2022		March 29, 2023		March 30, 2022
Effective income tax rate	(0.2)	%	5.4	%	(5.2)	%	4.7	%

The federal statutory tax rate was 21.0% for the thirteen and thirty-nine week periods ended March 29, 2023 and March 30, 2022.

The change in the effective income tax rate in the thirty-nine week period ended March 29, 2023 to the thirty-nine week period ended March 30, 2022, is primarily due to lower Income before income taxes and leverage of the FICA tip credit, partially offset by the excess tax shortfalls associated with stock-based compensation.

5. NET INCOME PER SHARE

Basic net income per share is computed by dividing Net income by the Basic weighted average shares outstanding for the reporting period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of Diluted net income per share, the Basic weighted average shares outstanding is increased by the dilutive effect of stock options and restricted share awards. Stock options and restricted share awards with an anti-dilutive effect are not included in the Diluted net income per share calculation. Basic weighted average shares outstanding are reconciled to Diluted weighted average shares outstanding as follows:


	Thirteen Week Periods Ended		Thirty-Nine Week Periods Ended
	March 29, 2023	March 30, 2022	March 29, 2023	March 30, 2022
Basic weighted average shares outstanding	44.1	44.4	44.0	45.2
Dilutive stock options	0.1	0.1	0.0	0.2
Dilutive restricted shares	0.9	0.6	0.8	0.6
Total dilutive impact	1.0	0.7	0.8	0.8
Diluted weighted average shares outstanding	45.1	45.1	44.8	46.0

Awards excluded due to anti-dilutive effect	0.8	1.1	1.4	0.7

6. SEGMENT INFORMATION

Our operating segments are Chili’s and Maggiano’s. The Chili’s segment includes the results of our Company-owned Chili’s restaurants, which are principally located in the United States, within the full-service casual dining segment of the industry. The Chili’s segment also has Company-owned restaurants in Canada, and franchised locations in the United States, 28 countries and two United States territories. The Maggiano’s segment includes the results of our Company-owned Maggiano’s restaurants in the United States as well as the results from our domestic franchise business. The Other segment includes costs related to our restaurant support teams for the Chili’s and Maggiano’s brands, including operations, finance, franchise, marketing, human resources and culinary innovation. The Other segment also includes costs related to the common and shared infrastructure, including accounting, information technology, purchasing, guest relations, legal and restaurant development.

Company sales for each segment 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 for each operating segment include royalties, franchise advertising fees, franchise and development fees and gift card equalization.

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Footnote Index

We do not rely on any major customers as a source of sales, and the customers and long-lived assets of our operating segments are predominantly located in the United States. There were no material transactions amongst our operating segments.

Our chief operating decision maker uses Operating income as the measure for assessing performance of our segments. Operating income includes revenues and expenses directly attributable to segment-level results of operations. Restaurant expenses during the periods presented primarily includes restaurant rent, supplies, repair and maintenance expenses, utilities, delivery fees, advertising, credit card processing fees, and property taxes.

The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:


	Thirteen Week Period Ended March 29, 2023
	Chili’s		Maggiano's		Corporate		Consolidated
Company sales	$	953.2	$	119.7	$	—	$	1,072.9
Franchise revenues	10.2		0.1		—		10.3
Total revenues	963.4		119.8		—		1,083.2

Food and beverage costs	257.9		29.6		—		287.5
Restaurant labor	322.0		39.2		—		361.2
Restaurant expenses	247.5		33.1		0.3		280.9
Depreciation and amortization	36.7		3.3		2.5		42.5
General and administrative	8.8		2.0		29.8		40.6
Other (gains) and charges	2.2		0.4		3.7		6.3
Total operating costs and expenses	875.1		107.6		36.3		1,019.0
Operating income (loss)	88.3		12.2		(36.3)		64.2
Interest expenses	1.0		—		13.2		14.2
Other income, net	—		—		(0.6)		(0.6)
Income (loss) before income taxes	$	87.3	$	12.2	$	(48.9)	$	50.6


	Thirteen Week Period Ended March 30, 2022
	Chili's(1)		Maggiano's		Corporate		Consolidated
Company sales(2)	$	870.2	$	100.7	$	—	$	970.9
Franchise revenues(2)	9.4		0.1		—		9.5
Total revenues	879.6		100.8		—		980.4

Food and beverage costs	245.6		24.7		—		270.3
Restaurant labor	295.0		34.1		—		329.1
Restaurant expenses	215.2