Menu innovation, including pizza, propel third-quarter income at Brinker

by Eric Schroeder
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DALLAS — Driven by operational efficiencies, menu innovation and strong value platforms, earnings at Brinker International increased 16% during the third quarter of fiscal 2013.

For the quarter ended March 27, the company posted income of $51,951,000, equal to 73c per share on the common stock, up from $44,933,000, or 58c per share, during the same quarter of the previous year. Revenue for the quarter was $742,759,000, up narrowly from $742,045,000.

Comparable restaurant sales at Chili’s company-owned locations decreased 1.1% in the third quarter, while sales rose 0.4% at Maggiano’s during the quarter.

For the nine months ended March 27, the company had income of $116,992,000, or $1.61 per share, up 12% from $104,228,000, or $1.31 per share, during the same period of the previous year. Revenue for the nine months was $2,116,030,000, up 1% from $2,092,351,000.

In an April 23 conference call with analysts, Wyman Roberts, president and chief executive officer, expressed excitement with the potential for the pizza category, as well as the future roll-out of flatbreads. He said Brinker sees the potential for the pizza and flatbread category to deliver mix up to 10% of the restaurant chain’s menu by the end of the fiscal fourth quarter.

“I think pizza can do some good things for us, but it is really a combination of pizzas and flatbreads that gets us to the scale that we need to have a message that we think is going to be compelling to drive some traffic,” he said.

Asked how Brinker arrived at the 10% mix number for pizza and flatbread, Mr. Roberts responded, “a lot of extensive testing.”

“We don’t just kind of wing it,” he said. “We go through a pretty elaborate process to understand how it is going to mix and how our guest satisfaction scores are on these products. So we have gone through that process in multiple restaurants over the last few months as we have prepared to roll out the product. That is how we establish what we think the mix potential is.”
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