DALLAS Brinker International Inc., parent of four casual-dining brands including the 1,220-unit Chili’s Grill & Bar, said Thursday that it would explore the sale of its Romano’s Macaroni Grill chain, a 230-unit, Italian-theme chain that, like its sister concepts, has struggled during the past years.
The news came as Brinker reported a 14.6-percent jump in fiscal fourth-quarter earnings to $83.6 million, or 71 cents per share, from $73 million, or 57 cents per share, a year ago. Corporate revenue for the 13 weeks ended June 27 rose 6.5 percent to $1.14 billion. Same-store sales at all chains, including Macaroni Grill, remained negative, declining 1.6 percent at Chili’s, 2.1 percent at Macaroni Grill, 4.7 percent at On the Border Mexican Grill & Cantina and 1.3 percent at Maggiano’s Little Italy.
In a conference call, Brinker officials said the company was in the early stages of talks with some potential investors for Macaroni Grill, but that there was no guarantee Brinker could reach a deal at an appropriate price. The divesture of Macaroni Grill would allow the company to focus on the brands it says could bring more value to shareholders, officials said.
Macaroni Grill, which has 217 corporate restaurant and 13 franchised locations, has not posted a positive same-store sales result in three years, according to research from securities analyst David Palmer at UBS Securities LLC. The chain has suffered from negative consumer traffic counts for more than five years, according to data from CIBC World Markets analyst John Glass.
Brinker recently has worked to sell company stores to franchisees to reduce corporate costs and improve cash flow, and it has returned capital to shareholders through share buybacks and dividends — moves it said it would continue. The company also has slowed its new restaurant development schedule, like many in the casual-dining space.
For the full fiscal 2007, Brinker reported earnings of $230 million, or $1.85 per share, versus $212.4 million, or $1.62 per share. Excluding discontinued operations and special items, earnings would have totaled $219 million, or $1.76 per share in the latest year, the company reported. Fiscal 2007 revenue rose 5.4 percent to $4.38 billion.