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Brinker doubles 2Q profit on lower costs

Improved margins and cost cuts help offset slow sales at Chili’s

Brinker International Inc. more than doubled its second-quarter net income with stronger margins and lower costs, though sales at its flagship Chili’s Grill & Bar continued to lag.

Brinker, which also owns Maggiano’s Little Italy, reported net income of $37.5 million, or 41 cents a share, in the quarter ended Dec. 29, compared with year-ago earnings of $18.3 million, or 18 cents a share. After backing out restructuring and restaurant-closing expenses, per-share earnings from continuing operations were 38 cents a share in the second quarter, up from 25 cents in the same quarter last year.

Revenue fell 4.8 percent, to $671.9 million in the second quarter from $705.5 million last year on negative sales trends at Chili’s and fewer corporate restaurants, Brinker said.

Brinker said blended same-store sales at corporate units fell 3.5 percent, consisting of a 4.9-percent decline at Chili’s and a 4.7-percent increase at Maggiano’s. Customer traffic fell 7.1 percent at the 1,514-unit Chili’s but rose 5.7 percent at the 45-unit Maggiano’s.

"Our second quarter results demonstrate progress made on our commitment to double EPS in five years," Doug Brooks, Brinker’s president and chief executive, said in a statement. "We've gained this traction through continued margin expansion at Chili's, top-line growth at Maggiano's, and investments in our business designed to generate profitable and sustainable long term sales growth."

Brinker said margins rose 2.1 percentage points, to 17.4 percent, driven by changes to value offerings and lower commodity prices for chicken, ribs and cheese.

Guy Constant, Brinker’s executive vice president and chief financial officer, said cost-cutting initiatives also are paying off for the company, like a new “team service” approach to serving tables at Chili’s.

Dallas-based Brinker also holds a minority investment in Romano's Macaroni Grill.

Contact Ron Ruggless at [email protected].

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