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Brinker cost controls aid 3Q earnings

DALLAS Brinker International Inc., parent to the Chili’s Grill & Bar and other casual-dining chains, said cost controls will offset sales slippage to produce improved third-quarter earnings.

For the quarter ended March 25, Brinker expects to earn between 44 and 45 cents per share, excluding special one-time charges, versus 33 cents per share earned in the same quarter a year ago, also excluding one-time items. Full earnings results will be released April 21.

In the latest quarter, Brinker said it will book lease termination and severance charges totaling 11 cents per share. A year earlier, the company booked charges of 82 cents per share primarily related to the write-down of Macaroni Grill, asset impairments, lease termination charges and severance costs from the company’s decisions to close restaurants and slow future development. In December, Brinker sold an 80-percent stake in Macaroni Grill. 

Including all of these items, Brinker said it will earn between 33 and 34 cents per share for the latest third quarter, compared with a loss of 38 cents per share in the same year-ago quarter. 

The company said increased margins — mostly due to favorable costs of sales, labor, pre-opening and administrative expenses — will help profitability.

“Our continued success in lowering and controlling operating costs in a weak sales environment is evidence of the entire organization’s commitment to improve margins and drive profits over the long term,” Chuck Sonsteby, Brinker’s chief financial officer, said in a statement. “We expect this momentum to continue into fiscal 2010, which will provide additional leverage when sales stabilize in the future.”

Sales trends remain negative, however. Same-store sales fell 5.6 percent across all three of its brands, compared with a 1.1-percent increase in the same quarter last year. 

By brand, same-store sales fell 5.2 percent at Chili’s, compared with a 1.6 percent increase in the prior-year quarter; fell 5 percent at On the Border, compared with a 1.8-percent dip last year; and fell 9.5 percent at Maggiano’s, compared with a decline of 0.4 percent last year.

Brinker operates or franchises 1,478 Chili’s, 156 On The Border Mexican Grill & Cantinas and 45 Maggiano’s Little Italy restaurants. 

 Contact Ron Ruggless at [email protected].

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