Earnings

Brinker Sets Long-Term Focus For Virtual Brand, Reconsiders Marketing Amid Pandemic

Brinker Sets Long-Term Focus For Virtual Brand, Reconsiders Marketing Amid Pandemic

Brinker International reported Wednesday (Oct. 28) as part of its first quarter 2021 earnings that Chili's comp sales dropped 7.2 percent, while Maggiano’s comp sales plunged 38.6 percent amid a difficult environment for dine-in restaurants that are adjusting to the pandemic by focusing on quick-service restaurant (QSR)-style, off-premise offerings.

“Plus casual is obviously a more challenged segment that's facing greater headwinds, but the Maggiano's team is doing a great job managing their cost structure and flow through,” CEO, President and Non-Independent Director Wyman T. Roberts said on an earnings call with analysts.

However, Roberts noted that the Chili's brand “continues to exceed expectations from both a relative and an absolute perspective.”

In terms of the company’s It’s Just Wings virtual brand, which the company unveiled in June, Roberts noted that the company is committed to the brand for the long term.

“There are barriers to entry in doing virtual brands well, and Brinker is uniquely positioned to do it right,” Roberts said. “We have the scale, the asset ownership, available capacity in our well-equipped kitchens, the right technology and unbelievably strong operators who can focus and deliver consistently.”

Roberts noted that the brand is garnering high satisfaction ratings and formidable repeat business.

“It's really resonating with consumers, which we know is critical to the health and long-term success of any brand,” he said.

The executive noted that the company has been reconsidering its marketing budget. It has sizably decreased its traditional television advertising to allow it to invest more strongly in electronic and direct channels, such as My Chili's Rewards.

As for its overall results, Brinker International reported net income per diluted share outside of special items of 28 cents on revenues of $740.1 million. The results exceeded analyst expectations of a loss of 19 cents per share on revenues of $728.16 million.

The company reported $82.8 million in net cash provided by operating activities in Q1 FY 2021, while $46.6 million in net repayments were made on the revolving credit facility in Q1 FY 2021.

Dallas, Texas-based Brinker International owned, operated or franchised 1,660 eateries under the Maggiano's Little Italy and Chili's Grill & Bar brands as of Sept. 23.

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