Brinker International’s Same-Store Sales Growth Expectations



Same-store sales growth

With Brinker International’s earnings per share (or EPS) expected to grow by about 20% year-over-year, there is an expectation of stronger year-over-year same-store sales growth to be announced in the upcoming earnings call.

Analysts estimate a 2.3% year-over-year same-store sales growth for Brinker International’s (EAT) Chili’s Grill & Bar in 3Q15, compared with 0.7% in 3Q14. Maggiano’s Little Italy same-store sales growth is estimated to come in at 1.6% year-over-year, compared with 0.2% in 3Q14. If Maggiano’s meets this growth expectation, it will be the 21st consecutive quarter of positive same-store sales growth in the restaurant.

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Brinker International added a lighter menu to Maggiano Little Italy’s offerings, which the company notes has produced stronger same-store sales growth. We hope to see this initiative continue to reap benefits in the upcoming quarterly release. About 27% of Brinker International’s restaurants in the system are franchises.

Other factors affecting same-store sales growth

Micro and macro factors can affect a restaurant’s same-store sales growth. For example, lower fuel prices can result in higher drive-through traffic. To learn more about the macro factors, please read our series Analyzing Key Restaurant Indicators for February.

Recently McDonald’s (MCD) cited competition as one of the reasons for its weak performance. Naturally, when customers decide to go to other restaurants that compete with Chili’s or Maggiano Little Italy’s, this decision impacts their sales.

Among these competing restaurants, Olive Garden, under the umbrella of Darden Restaurants (DRI), has 1,500 restaurants in the system; the Cheesecake Factory (CAKE) has 189 restaurants; and Texas Roadhouse (TXRH) has 451 restaurants in the system. These are a few of the restaurants held by the ETF Consumer Discretionary Select Sector SPDR Fund (XLY). XLY holds about 4% of Darden Restaurants.

Next, we will look at some initiatives toward unit growth.


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