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Brinker's profit plummets 49% in 4th-Q

DALLAS Brinker International Inc., parent to Chili’s, Romano’s Macaroni Grill and other chains, on Tuesday cited high commodity costs and slowing sales for a 49-percent drop in fourth quarter profit.

The company also said it is now looking to sell a majority interest in the 212-unit Macaroni Grill chain after previously discussing a sale of the entire brand. Analysts said the change would drop expected proceeds from around $350 million in previous estimates to about $155 million. The reduced cash also would trim any expected share repurchases or debt repayment that Brinker might have planned with the sale’s proceeds, analysts said.

Earnings for the fourth quarter ended June 25 fell to $42.6 million, or 41 cents per share, from $83.6 million, or 71 cents per share, in the same period last year. Excluding special items, the company said it earned 50 cents per share, compared with 57 cents per share last year.

Brinker’s results included Macaroni Grill’s operating results, as the chain is no longer earmarked for a full sale.

Revenue in the latest quarter fell 6 percent to $1.07 billion. The drop was driven by the sale of 171 corporate restaurants to franchisees and 44 restaurant closures, including 27 shuttered Macaroni Grill locations.

Quarterly same-store sales rose 3.4 percent at Chili’s, the company’s flagship chain, aided by a 4.6-percent price increase from a year ago. The positive same-store sales result was higher than what most analysts had expected. Same-store sales remained negative at Brinker’s other chains, including drops of 2.3 percent at On the Border Mexican Grill & Cantina, 0.5 percent at Maggiano’s Little Italy and 5.7 percent at Macaroni Grill.

Brinker said costs for beef, ribs, chicken and dairy were much higher in the latest quarter than last year and that wage increases also affected the bottom line. Both cost of sales and restaurant expenses, as a percentage of revenue, rose by 1 percentage point in the latest quarter. Increased menu prices helped offset some of those higher costs, the company said.

For the year, Brinker said income fell 58 percent, to $95.9 million, or 91 cents a share, from $230.1 million, or $1.85 per share, in 2007. Revenue fell 3 percent to $4.24 billion.

In its guidance for fiscal 2009, which excludes the operating results of Macaroni Grill, Brinker said it expects revenue growth between 2.5 and 3.5 percent, aided by a blended same-store sale increase between 1.5 percent and 2.5 percent. Earnings per share are expected to increase between 8 percent and 10 percent, the company reported. Brinker also plans capital expenditures between $175 million and $185 million for 15 new corporate restaurants, a redesign at Chili’s and new kitchen technology, among other items.

As of June 25, Brinker operated or franchised 1,888 restaurants.

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