Brinker International, Inc.’s EAT robust earnings trend, sales-building initiatives, consistent expansion and operational initiatives as well as remodeling initiatives bode well. However, higher costs and declining comps at Chili’s franchised restaurants remain a concern.
Let’s delve deeper into the factors substantiating for driving growth.
Sales-Building Efforts — A Key Growth Driver
Brinker remains steadfast in its goal to drive traffic and revenues through a range of sales-building initiatives. Particularly emphasizing on menu innovation to propel revenues, the company introduced a plan — Vision 2020 — in 2016. This plan is likely to help Brinker gain market traction to achieve long-term earnings growth target of 10-15%.
Coming to the expansion initiatives, Brinker, which shares space with BJ's Restaurants, Inc. BJRI, Chipotle Mexican Grill, Inc. CMG and Dunkin' Brands Group, Inc. DNKN, is one of the fast-casual restaurant chains. The company has been gearing up for international expansion, especially in the fast-growing emerging markets. Though it is experiencing some headwinds in the Middle East, the company’s Latin American business has been performing impressively.
In fiscal 2018, the company had opened 34 restaurants. It has already opened 14 restaurants in fiscal 2019. Internationally, Brinker expects to open 34-40 restaurants in the same time period, which will include new markets like Asia, with focus on China and Vietnam.
Over the past few quarters, Brinker’s remodeling efforts have gained momentum, leading to an improvement in sales. In fact, the company continues to invest in a brand-wide reimage program that is likely to drive traffic and comps over the next three years. The initiative is expected to consistently invigorate its potential as a brand and augment guests’ experience. The company expects its reimage program to cover 140 and 160 restaurants in fiscal 2020.
Digital Expansion
Brinker is also investing heavily in technology-driven initiatives, like online ordering, to augment sales and boost guest services.
Moreover, Brinker effectively uses social media platforms and email database to drive customer awareness and boost traffic. These initiatives will contribute significantly to Brinker’s business in the near future. Meanwhile, the To-Go platform has been the fastest-growing segment of the company. At Chili's, Brinker’s To-Go business has been performing well. Brinker also gains from integrating its My Chili's Reward program, with Plenti — a rewards program by American Express.
These apart, Brinker launched a digital curbside platform in its company-owned restaurants. Now, take-out guests can order, pay, and get their food conveniently, all through the Chili's app. With about half of the company’s online guests using it, the service is ensuring a simpler, faster, effortless experience for take-out guests, resulting in higher check. This should boost sales in the future.
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