Brinker expands value strategy at Chili's

A Heard on the Call report following second quarter earnings

Brinker International Inc. said Tuesday the company is expanding the “everyday value” strategy at its Chili’s Grill & Bar brand in a call with analysts discussing second quarter earnings.

The 1,574-unit casual-dining company reported earnings fell 4.8 percent on special charges in the second quarter, but revenue, same-store sales and traffic all rose at Chili’s and its Maggiano’s Little Italy brand.

Brinker reported profits of $35.7 million for the second quarter ended Dec. 28, down from $37.5 million the previous year. Earnings per share rose to 44 cents from 41 cents because of fewer outstanding shares in the most recent quarter.

Backing out gains and charges, earnings rose to 47 cents a share from 38 cents. Revenue rose 1.5 percent to $681.9 million from $671.9 million a year ago.

Chili's same-store sales rose 1.4 percent and customer traffic increased 1.1 percent in the quarter. Maggiano’s same-store sales increased 2.8 percent, and customer traffic increased 0.6 percent. The company offered guidance of a 2-percent same-store sales increase for the full year.

Doug Brooks, Brinker’s chairman and chief executive, credited the same-store sales gains to the “everyday value” strategy that includes Chili’s 2-for-$20 dinner and lunch combos, and Maggiano’s Classic Pasta and “Marcos Meal for Two” offerings.

Chili’s rolled out a menu last week that includes a new value steak offering and price-competitive upgrades with a 10-ounce top sirloin and a 12-ounce ribeye.

“Steak makes up a major menu category in [the] bar and grill [segment],” said Wyman Roberts, president of the Chili’s division, “and we’ve historically under-penetrated that category.”

Chili’s also has added a 6-ounce sirloin at about $10, depending on the location, Roberts said. The steak is being touted as a limited-time offer on Chili’s “2-for-$20” menu. “Early results are very encouraging,” Roberts said.

Watch a commercial for Chili’s new menu offerings; story continues on next page

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