Brinker International Inc. is finding demand for off-premise options continuing to display strength as it opens more in-store seats amid easing COVID-19 restrictions, company executives said Wednesday.
“We believe all along, the consumers' increased demand for convenience would continue post pandemic and it's playing out that way,” said Wyman Roberts, CEO of the Dallas-based parent to Chili’s Grill & Bar and Maggiano’s Little Italy. “As our dining room traffic increases, our off-premise business continues to hold strong.
“We expect that when things normalize,” Roberts said on a third-quarter earnings call, “we'll see stronger dining rooms and a takeout and delivery business stronger than it was pre-pandemic.”
Roberts said three-quarters of the Chili’s units are generating “meaningful positive results” as the brand continues to have masked and socially distanced staff and continues to adhere to capacity restraints.
The 54-unit Maggiano’s, a more upscale casual-dining offering, has shown improvements as COVID-19 vaccinations rates increase, Roberts said.
“Now it's just a matter of how quickly banquets come back,” he acknowledged. “We know there's significant pent-up demand and we're well positioned to meet it. We're already seeing signs of social occasions returning, and we feel good about building our corporate business back in time for the important holiday season.”
Roberts said the company has not experienced deep labor shortages.
“We're also benefiting from our decision to keep our managers on board throughout the pandemic as they provide the operational leadership to staff our teams and take care of our guests,” he said. “We're fortunate to be able to leverage our scale, the digital expertise we built and our People Works team to recruit talent in creative ways to keep our cost structure intact and our guests coming back.”
Roberts said the learnings associated with the launch last year of the virtual delivery-only It’s Just Wings brand, which enjoyed a strong third quarter because of sporting events like the Super Bowl. Brinker is testing other virtual brands as well. The company projects the virtual brand will reach at least $150 million in annual sales and is expanding its access beyond the DoorDash third-party platform to a takeout program with Google.
Roberts said the opening of dining rooms was shaving off-premise sales increases, but he expected those to level of in the mid- to low-30s. The percentage was less than 20% before the pandemic.
Brinker said it was planning $20 million in technology investments, including a rollout of handheld devices for servers.
Joseph Taylor, Brinker’s chief financial officer, said, “We've been working on a handheld solution for multiple years. It's been employed in over 100 restaurants. But it wasn't quite ready, and so we've done a lot of work and we've invested a lot of time and energy and capital into getting it right.”
Brinker executives said they were looking to add more new restaurants as the pandemic eases, with some interest in repurposed real estate.
“What we are seeing on the development side of the equation, as we cast that net wider, is more and more opportunities of looking at sites that are closed restaurants from other brands,” Taylor said. “So we're seeing that at a higher rate than we've seen in the past, so another data point there to look at.”
For the third quarter ended March 24, Brinker’s net income was $33.9 million, or 73 cents a share, up from $30.8 million, or 81 cents a share, in the same period last year. Revenues fell 3.7% to $828.4 million from $860 million in the prior-year quarter.
Same-store sales comparisons for domestic Chili’s were up 0.6% from the same quarter in 2020. Maggiano’s same-store sales were down 29.6% from third quarter 2020.
Brinker said Chili's company sales increased primarily because of increased off-premise sales including It's Just Wings, partially offset by lower dining room sales and the impact of Winter Storm Uri, the February weather that especially affected operations in Texas.
For the first four weeks of the fourth quarter, according to Taylor, Brinker’s same-store sales comparisons were up 6.3% for the system driven by a positive 10.1% at Chili’s.
As of March 24, Brinker International had 1,657 casual-dining restaurants, including 1,603 Chili’s and 54 Maggiano’s. It also operates the It’s Just Wings virtual brand, which launched in mid-2020.
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