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Casual-dining rebound hasn't pulled Chili’s along

Sales and traffic comps remained negative for the big brand in Brinker’s portfolio.

The traffic gains lifting the same-store sales of other big casual brands continued to elude Chili’s in the quarter ended March 28, with the 945-store powerhouse posting a 0.4% slip in comps for company stores on a 2.1% decline in guest counts.

Sister brand Maggiano’s Little Italy, with 52 stores, finished in positive territory for the third quarter with a 0.5% gain in comps, despite a 1.4% slide in traffic.

Executives blamed the decline in Chili’s comps largely on bad weather, and noted that its guest counts represented an improvement from the same period of the prior year, when traffic fell 6.2%.

“Adjusting for weather, our comps would have been positive,” said Wyman Roberts, CEO of parent company Brinker International.

He noted that the weather during the quarter was particularly bad in areas where franchised stores are located, a major reason why comps for those units were down 3.2%.

Roberts assured financial analysts that Chili’s continued to gain momentum during Q3 on its strategy to reverse declining traffic, despite dipping below the segment-wide gauges compiled by researcher Black Box Intelligence. That rebound strategy calls for simplifying kitchen and restaurant operations, providing more value and focusing on better execution of a handful of signature items.

Roberts noted that both brands continued to increase their sales for off-premise consumption at a rapid clip. Online ordering for takeout and delivery was up 30% during the quarter, raising Brinker’s overall off-premise sales to 11% of the company’s total, he revealed.

Most of that came from Brinker’s revamped carside delivery service, in which customers’ remotely placed takeout orders are brought to their cars.

Overall, Brinker’s net income rose 10.7%, to $46.9 million, on essentially flat revenues of $812.5 million.

CFO Joe Taylor revealed that the company intends to look at the sale of assets to bolster shareholder value, but declined to divulge details. Financial analysts took his comments to mean a possible sale-leaseback of the real estate under as many as 190 restaurants, but Taylor said that such a maneuver may not be the only move explored. 

The casual giant reported results in the wake of more positive postings by rivals such as Outback Steakhouse, Carrabba’s Italian Grill, The Cheesecake Factory and Texas Roadhouse, all of which generated January-through-March comp sales ranging from 2.2% to 4.9%.

Roberts acknowledged that “there did seem to be some strengthening through quarter” in casual dining, and suggested that the improvements were coming at the expense of independents. “It bodes well for some of the big brands,” he said. “That’s encouraging for a brand like Chili’s that gets to leverage its size and scale.”

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