Can Brinker International’s Same-Store Sales Growth Rise in 3Q16?



Same-store sales growth

Same-store sales growth (or SSSG), which is expressed as a percentage, measures the increase in revenue from existing restaurants over a certain period. Same-store sales growth is driven by ticket size and traffic.

Same-store sales growth is an important metric for investors to monitor, as it increases a company’s revenues without increasing capital investment. It is a direct reflection of how much traffic each location is driving without simply adding more stores.

Will the Brinker International’s Same-Store Sales Growth Turn Green in 3Q16?

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Chili’s same-store sales growth

To arrest the decline of traffic and SSSG in the first six months of 2016, Brinker International (EAT) has taken several steps:

Brinker International developed its strategic plan, Vision 2020, which could help in differentiating its brands through product innovation, service, and atmosphere. This, in turn, is expected to increase its market share and growth in earnings.

To strengthen its Fresh Tex Fresh Mex positioning, the company has launched a sizzling steak menu item. EAT believes this addition will kick off the renovation to Chili’s existing steak offerings.

To expand its business, Brinker International has partnered with Olo, which provides digital ordering services. The new service is also expected to improve its customer experience.

EAT is integrating its My Chili’s Reward program into Plenti, a coalition of major national brands. This could allow EAT to recalibrate its reward programs to increase its traffic and profitability. Through Plenti, EAT will be able to access a larger group of members, much more than its 4.4 million current members.

However, analysts are expecting Chili’s to report a fiscal 3Q16 SSSG of -0.9%. We believe that analysts are expecting the steps adopted by Brinker to take some time before they contribute to the company’s growth same-store sales. Analysts expect the SSSG to improve from fiscal 4Q16 onward, with Brinker expected to post same-store sales growth of 1.4% in fiscal 4Q16 and 1.6% for fiscal 2017.

Brinker International (EAT) forms 0.18% of the holdings of the SPDR S&P Midcap 400 ETF (MDY). During fiscal 3Q16, Brinker’s peers, Texas Roadhouse (TXRH), Buffalo Wild Wings (BWLD), and The Cheesecake Factory (CAKE) are expected to post SSSG of 4.4%, 2.3%, and 1.3%, respectively.

Will the Brinker International’s Same-Store Sales Growth Turn Green in 3Q16?

Maggiano’s same-store sales growth

Maggiano’s Little Italy, which specializes in Italian-American cuisine, is expected to deliver same-store sales growth of 0.17%, compared with 0.1% in fiscal 3Q15. For fiscal 4Q16, analysts are expecting Maggiano’s to post SSSG of 0.17% and 1.7% for fiscal 2017.


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