Brinker International Inc. will apply part of its expected tax-change benefits toward reimaging its restaurants and boosting bonuses and education benefits for its employees, the company said in releasing second-quarter earnings Tuesday.
Joe Taylor, Brinker chief financial officer, said U.S. tax law changes, signed into law Dec. 22, would benefit Dallas-based Brinker, which is the parent to the Chili’s Grill & Bar and Maggiano’s Little Italy casual-dining brands.
“While a lower tax rate will help our earnings,” Wyman Roberts, Brinker CEO and president, said in an analyst call, “we will also invest back into the business by accelerating our reimage project and will invest in retaining and attracting top talent with performance-based bonus incentives and new benefits like our advanced education program.”
Taylor said the U.S. statutory rate decreased from 35 percent to 21 percent, effective Jan. 1, but Brinker would be able to take advantage of part of the reduction because of its July-June fiscal year.
“Now, for June 2018 fiscal year taxpayers, such as Brinker, the statutory rate for our current fiscal year is a blended 28 percent, basically, half the year at 35 percent and half at 21 percent,” Taylor explained.
Taylor said Brinker’s effective tax rate for this fiscal year will be between 20 percent and 22 percent down from the company’s previous guidance of 27 percent to 29 percent.
Brinker earlier this month announced a no-cost education program for employees that would provide opportunities ranging from English-as-a-second-language training to an associates’ degree.
Roberts said the planned reimaging program would begin with company-owned restaurant in the first fiscal quarter of 2019.
“That's when we'll actually start building them out,” Roberts said. “Right now we're permitting and getting ready, but we're excited about the look. We're excited about the returns we've seen and the ability to keep the brand relevant and keep reinvesting back into the Chili's to stay competitive.
Roberts said franchisees have stayed aware of the remodeling program. “We haven't yet mapped out the rollout for them.”
Robert said the reimaging will impact every restaurant over the next three years. Taylor added that the initial remodeling push will be primarily in the New England area.
In the second quarter, Brinker reported net income of $25.4 million, or 54 cents a share, compared to $34.6 million, or 69 cents a share, in the same period last year. Revenue in the quarter was $766.4 million compared to $771 million in the year-ago period.
Chili's company-owned same-store sales declined 1.5 percent in the second quarter. Chili's U.S. franchise comparable restaurant sales fell 1.7 percent in the quarter.
As of Dec. 27, Brinker owned and franchised 1,682 restaurants, including 1,630 Chili’s and 52 Maggiano’s.
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