Chili’s and its parent company Brinker International, Inc. are making innovations this year, updating restaurant kitchens and adding in-table tablets. Despite these innovations, revenue, net income, and costs of operation are all relatively the same as they were this quarter last year.
While kitchen innovations decreased costs in the last quarter, operating costs this quarter were up by 0.32 percent or $2.05 million this quarter over that of this quarter last year. This year, operation costs were $634.9 million compared to $636,963 the year before.
Similarly, operation operatingincome and net income both increased slightly. Operating income was $46,544 last year and $49,013 this year, constituting an increase of 5.3 percent or $2,469.
Net income was $29.2 million this quarter compared to $27.8 million this quarter last year. That is an increase of $1.3 million or 2.9 percent.
While there is little change in these figures, earnings per share did increase significantly, rising 16 percent above this quarter last year. The EPS this quarter this year was $0.43 compared to $0.36 in the fiscal 2013 first quarter. However, the number of shares outstanding fell from 73.9 million to 66.7 million, constituting a decrease of 9.7 percent.
These results suggest Brinker is operating steadily. Although the company may appear stagnant, that could be a reflection on the industry as a whole rather than solely on Brinker.
CEO and President Wyman Roberts notes that Chili’s and Maggiano’s Little Italy have been performing well in the context of the casual dining industry.
“The numbers we’ve seen in the category didn’t let up this quarter,” Roberts said, in an earnings call to discuss this quarter’s results. “Consumer confidence is guarded at best.”
Roberts cites a shift in consumer spending away from casual dining and toward major purchases.
“We believe this is a temporary phenomenon—but one that has certainly impacted casual dining here in the last short term,” he said.
Traffic to Chili’s decreased by 3.3 percent from the first quarter of 2013, according to Roberts.
Guy Constant, Brinker’s chief financial officer, also commented on the quarter’s lackluster results.
“As Wyman mentioned, this year is off to a challenging start, as evidenced by our first quarter results,” Constant said.
In an attempt to set itself above the rest of casual dining restaurants, Chili’s and Brinker will rely on innovations and specialization.
The chain is adding new fryer technology and advanced kitchens. It will also focus on what it does best: the fajita.
“We’ll enhance the platform that today serves as a point of differentiation for Chili’s versus our peers,” Roberts said. “And that’s Mexican food.”