Jim Cramer stated on the September 18 episode of Mad Money that he prefers Brinker International, Inc. (NYSE: EAT) over Darden Restaurants, Inc. (NYSE: DRI) as Darden prepares to report its latest quarterly results on September 24. The host cited Brinker's stronger game plan and specific menu offerings as key factors in his assessment, despite acknowledging that Darden's Olive Garden business is a gold mine.
Darden Restaurants generated $13.21 billion in fiscal 2026 sales, representing a 9.4% increase, while consolidated same-restaurant sales rose 4.5%. Performance varied significantly across its brands; Olive Garden's comparable sales grew 4% for the full year but slowed to 2.4% in the fourth quarter. In contrast, LongHorn Steakhouse achieved 9.5% growth in the same period. The company has guided for fiscal 2027 sales between $13.60 billion and $13.75 billion, with diluted EPS from continuing operations expected to range from $11.10 to $11.35.
Brinker International reported faster comparable-sales growth, with company-wide figures increasing 8.1% in fiscal 2026 and Chili's rising 9.2%. Fourth-quarter Chili's comparable sales climbed 5.6%, driven by menu pricing and higher traffic according to the company. Brinker projects fiscal 2027 revenue of $6.15 billion to $6.27 billion and adjusted EPS of $12.60 to $13.40.
Cramer specifically referenced Chili's 3 for Me platform, which starts at $10.99, as a reason for his preference. CEO Kevin Hochman noted that Chili's has completed five consecutive years of same-store sales growth, totaling a cumulative increase of 71%. The company reported that Chili's restaurant operating margin expanded to 18.6% in the fourth quarter, up from 18.2% in the prior year period.
A structural difference exists between the two companies' revenue concentrations. Brinker's reliance on Chili's is pronounced, with the brand generating $1.41 billion of the company's $1.52 billion in fourth-quarter sales. Maggiano's comparable sales declined 3.9% during fiscal 2026. As of June 24, Brinker reported $419.7 million in long-term debt and finance leases against $110 million in cash.
Darden's guidance for comparable sales of 2.5% to 3.5% aligns closely with Olive Garden's recent 2.4% growth, making performance at its largest brand critical to meeting outlooks. The company held approximately $2.14 billion in long-term debt as of May 31.
Investor positioning reflects differing levels of interest in the two stocks. Insider Monkey recorded a drop in Darden hedge fund holders from 39 in Q1 to 32 in Q2, while Brinker's holder count decreased slightly from 49 to 48 over the same period. Short interest levels also diverge, with Darden's short interest at approximately 5.9% of the float and Brinker's at roughly 13.5%.