UPDATE 2-Chili's parent Brinker's profit rises on lower costs

Tue Apr 23, 2013 11:53am EDT

* Third-quarter earnings per share $0.72 vs est $0.69
    * Chili's restaurant sales slightly softer than expected
    * Shares down almost 4 percent


    April 23 (Reuters) - Brinker International Inc 
reported quarterly profit that topped Wall Street's expectations
on cost controls and a lower-than-expected tax rate, but shares
fell 3.6 percent due to soft sales at its mainstay Chili's
restaurants.
    The results from Dallas-based Brinker come at a time when it
and other full-service restaurant operators are fighting hard to
win the business of frugal diners. Brinker is also working to
turnaround business at Chili's, which accounts for most of its
sales.
    The company, which also owns the Maggiano's Little Italy
chain, said restaurant operating margins rose 70 basis points to
17.9 percent in the third quarter ended March 27 - helped by
waste reduction efforts, lower seafood prices and new kitchen
equipment that reduced labor costs.
    Net income rose to $52.0 million, or 71 cents per share,
from $44.9 million, or 56 cents per share, a year earlier.
 
    Excluding one-time items, Brinker earned 72 cents per share.
Analysts on average were looking for a profit of 69 cents per
share, according to Thomson Reuters I/B/E/S.
    Total revenue, including sales and franchise revenue, rose
0.1 percent to $742.8 million, above market estimates of $742.0
million.
    Sales at restaurants open at least 18 months fell 1.1
percent at Chili's and rose 0.4 percent at Maggiano's during the
quarter. Eighteen analysts polled by Consensus Metrix were
looking for a 0.9 percent fall at Chili's and a gain of 0.7
percent at Maggiano's.
    Overall same-restaurant sales fell 0.9 percent at Brinker
during the quarter, less than the overall industry's 1.2 percent
decline. Nevertheless, Brinker's March restaurant sales
suggested a deteriorating trend versus its peers, Bernstein
Research analyst Sara Senatore said in a client note.
    Brinker has rolled out pizzas and flatbread at its Chili's
bar and grill restaurants, a move analysts are watching closely.
    "I think it can be a (sales) driver for them. But it's not
immediate because Chili's is not really known for pizza,"
Sterne, Agee & Leach analyst Lynne Collier said.
    Shares in Brinker were down $1.41 at $37.42 in midday
trading on the Nasdaq, just off all-time highs.
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