Chili's Restaurant Chain Mired in Slump

Brinker International Inc. tumbled as much as 7.5 percent in New York trading after posting a sales decline at its flagship Chili’s chain, a sign the company is losing ground to newer restaurants.

Source: Chili’s Grill & Bar

Comparable sales at company-owned Chili’s restaurants decreased 4.1 percent last quarter, Brinker said on Tuesday. Analysts tracked by Consensus Metrix had projected a 1.3 percent drop. Franchise restaurants, both overseas and in the U.S., also declined in the period.

Chili’s is fighting an uphill battle against fast-casual rivals such as Panera Bread Co., which tout their fresh ingredients and don’t rely on wait staff. Many of the older casual-dining chains, which thrived in the 1990s and early 2000s, are finding it harder to appeal to the next generation of diners.

“We are disappointed in our recent sales performance,” Brinker Chief Executive Officer Wyman Roberts said in a statement. “Our focus going forward is to more aggressively invest in our brands to grow comp sales and capture market share.”

Brinker’s total revenue rose 5.2 percent to $824.6 million last quarter, well short of the $842.9 million analysts had predicted. Earnings of $1 a share topped analysts’ estimates, though they were helped by tax benefits.

Brinker shares fell as low as $44.05 after the results were released, marking the biggest intraday drop in three months. The tumble followed a 19 percent decline over the past 12 months.

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