Jim Cramer stated on the September 18 episode of Mad Money that he prefers Brinker International (NYSE: EAT) over Darden Restaurants (NYSE: DRI) ahead of Darden's upcoming earnings release. Cramer cited Brinker's stronger game plan and the success of its '3 for Me' value platform, specifically referencing the $11 special, as key factors in his bullish stance on EAT relative to DRI.

Market Context

The comparison comes as Darden Restaurants prepares to report results on September 24. While Darden generated $13.21 billion in fiscal 2026 sales, an increase of 9.4%, its largest brand, Olive Garden, saw comparable sales growth slow significantly. Olive Garden's comparable sales rose 4% for the full year but decelerated to 2.4% in the fourth quarter, lagging behind LongHorn Steakhouse, which posted 9.5% growth in the same period. In contrast, Brinker International reported fiscal 2026 company comparable sales up 8.1%, with Chili's specifically up 9.2% for the year and 5.6% in the fourth quarter.

Analysis

Cramer's preference for Brinker is underpinned by divergent brand performance and valuation narratives. Brinker CEO Kevin Hochman highlighted that Chili's has completed five consecutive years of same-store sales growth, with a cumulative increase of 71%. The company also noted that Chili's momentum accelerated in July, driven by menu pricing and higher traffic. Conversely, Darden's outlook faces headwinds from Olive Garden's deceleration. Darden's guidance for comparable sales of 2.5% to 3.5% is closely aligned with Olive Garden's recent 2.4% increase, making the brand's performance critical to hitting targets. Additionally, Darden carries approximately $2.14 billion in long-term debt as of May 31, adding a leverage component to the bear case.

Key Numbers

- Darden Restaurants (DRI): Fiscal 2026 sales of $13.21 billion (up 9.4%); Olive Garden Q4 comp sales +2.4%; LongHorn Q4 comp sales +9.5%.

- Darden Guidance: Fiscal 2027 sales of $13.60 billion to $13.75 billion; diluted EPS from continuing operations of $11.10 to $11.35.

- Brinker International (EAT): Fiscal 2026 company comp sales +8.1%; Chili's Q4 comp sales +5.6%; Chili's operating margin increased to 18.6% from 18.2%.

- Brinker Guidance: Fiscal 2027 revenue of $6.15 billion to $6.27 billion; adjusted EPS of $12.60 to $13.40.

- Darden Debt: Approximately $2.14 billion in long-term debt as of May 31.

- Brinker Value Offer: '3 for Me' platform starts at $10.99.

What to Watch

Traders will focus on Darden's September 24 earnings report for the first quarterly update against its fiscal 2027 outlook. Key metrics to monitor include Olive Garden's ability to stabilize or reverse its decelerating comp sales trend and whether Darden can maintain its guidance amidst rising leverage. For Brinker, the market will watch for confirmation that the July acceleration in Chili's traffic and pricing power persists into the new fiscal year, supporting the higher adjusted EPS guidance.