Brinker: 4Q earnings rise on reimaging

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Brinker International Inc.'s fourth-quarter earnings rose 12.1 percent as the parent of the Chili’s Grill & Bar and Maggiano’s Little Italy chains saw traffic increase even with menu price increases.

Executives at the casual-dining company expect those positive trends to continue as they continue to work on a Chili’s kitchen retrofit program, expected for completion this year, and an ongoing Chili’s reimaging program, they said on an earnings conference call with analysts Thursday.

For the quarter ended June 27, Dallas-based Brinker reported profit of $47 million, or 61 cents a share, an increase from $41.9 million, or 49 cents a share, in the prior-year period. Revenue increased 1.5 percent to $728.4 million.

Same-store sales increased at Chili's Grill & Bar for a fifth consecutive quarter, up 2.2 percent, as customer traffic rose 1.2 percent. At Maggiano's, same-store sales grew 1.9 percent.

“We’ve thrown a lot at our operators in the past two years,” said Wyman Roberts, president of the Chili’s division. “We’ve given them a whole new kitchen, a whole new service model, a new point-of-sale and back-of-house system, new menu items to execute and deliver and 155 reimaged restaurants.” Roberts said Chili’s is now focused on simplifying the operators’ systems.

The new kitchen equipment is allowing Chili’s to expand its menu platforms, the executives said.

Guy Constant, chief financial officer, said, “Currently the new kitchen equipment is in about 620 Chili’s restaurants. We project completion of all company-owned Chili’s restaurants installations by the end of December, and completion of all franchised restaurant locations by the end of March.”

Chili’s this year also plans to expand its national television advertising. Roberts said the brand is filling some planned hiatus weeks, adding five more weeks of national television advertising this year, with the bulk in the first quarter. That will boost Chili’s national television from 43 to 48 weeks.

Chili’s fourth quarter revenues of $614.6 million were a 1.8 percent increase from $603.9 million in the prior year period driven by increased menu prices and improved guest traffic, the company said.

Maggiano’s fourth quarter revenues of $97.7 million increased 1.7 percent, driven by increased menu prices. Doug Brooks, president, chief executive and chairman of Brinker, said, as in earlier calls, that Brinker is “actively looking for real estate sites” to grow the Maggiano’s chain.

Brinker’s loyalty and franchise revenues totaled $16.1 million in the fourth quarter, a decrease of 8 percent over the prior year driven primarily by a one-time development fee refund of about $1 million related to the company's decision to discontinue Maggiano's international development. The company has one licensed international Maggiano’s unit.

“The drivers of our global business continue to be Mexico and the Middle East, which are important components of our long-term strategy,” Brooks said. Brinker has expanded in Latin America as well, opening in Brazil in the past year and planning to enter Colombia and Costa Rica.

Brinker has 1,581 units with 1,279 domestic Chili’s, 44 Maggiano’s and 258 international units (all but one Chili’s).

Contact Ron Ruggless at ronald.ruggless@penton.com.
Follow him on Twitter: @RonRuggless