DALLAS — After experiencing modest growth in restaurant sales in the third quarter through March 8, Brinker International, Inc. sustained a plunge in sales in the final 17 days of the quarter. On the positive side, the company’s off-premises business has been strong and “grown each week” since the start of the coronavirus (COVID-19) pandemic, Brinker said.
Net income at Brinker in the third quarter ended March 25 was $30.8 million, equal to 83¢ per share on the common stock, down 38% from $49.8 million, or $1.33 per share, in the same period a year ago. Revenues in the third quarter of fiscal 2020 were $860 million, up 2.5% from $839.3 million in the third quarter of fiscal 2019. Sales in the 2020 quarter included business at 116 Chili’s restaurants acquired during the first quarter, and more than offset the decline in business because of the COVID-19 pandemic.
In trading April 29 on the New York Stock Exchange shares of Brinker International surged as much as 37% to $26.18, up $6.77, closing at $24.84.
“Before the crisis hit, Brinker’s strategies were working extremely well and the third quarter was shaping up to be very strong,” said Wyman Roberts, chief executive office of Brinker International. “Since COVID-19, we have focused on the safety and health of our team members and guests while shifting to a to-go and delivery only model. We have supported our team members with a relief fund of more than $15 million, and worked hard to keep as many employees as possible. Our absolute and relative sales growth is a testament to the strength of the strategies we have been working on the past few years and will ensure our continued strength post COVID-19.”
During the quarter, Brinker subsidiaries Chili’s and Maggiano’s experienced sales increases of 3.3% and 0.6%, respectively, through March 8. Economic fallout from the pandemic completely erased these gains by March 25, with Chili’s sales declining 5.3% and Maggiano’s sales declining 9.9% for the third quarter.
The COVID-19 pandemic has necessitated Chili’s and Maggiano’s to operate in an exclusively off-premises model. Brinker’s sales have grown steadily since the start of the pandemic, providing some cushion against its decline in foot traffic. Each week since March 8, off-premises sales have increased, thus far capturing 57% of prior-year total restaurant sales during the week that ended April 22, adjusted to exclude the Midwest region acquisition that occurred in the first quarter of 2020. Chili’s and Maggiano’s total restaurant sales have increased from a combined $23.9 million on April 1 to $34.3 million on April 22.
The company said delivery sales accounted for 20% of revenues in the four weeks ended April 22, with online ordering accounting for about 70% of all off-premises orders during this period.
Prior to the pandemic, off-premises sales of Chili’s and Maggiano’s restaurants had been increasing as a share of total sales, reaching approximately 20% of sales (14% from to-go sales and 6% from delivery) by March 8. Brinker said this has eased the transition to the 100% off-premises model.
“Our strategic decision to enhance our off-premise business over the last few years, including online ordering, mobile app, curbside service and third-party delivery, has enabled us to conveniently serve a significantly higher volume of off-premise guests during this pandemic,” the company said.
In the first nine months of fiscal 2020, Brinker net income was $73.6 million, or $1.97 per share, down 32% from $108.2 million, or $2.80 per share, in the same period in fiscal 2019. Revenues in the first nine months of fiscal 2020 were $2.52 billion, up 5.2% from $2.38 billion during the same period last year.