Brinker International, Inc.’s EAT sales-building efforts, Chili’s turn-around strategies, expansion plans and remodeling initiatives bode well. Evidently, the stock has gained 11% in the past three months against the industry’s 10.1% decline. Let’s delve deeper.
Brinker remains steadfast in its goal to drive traffic and revenues through a range of sales-building initiatives such as streamlining of menu and its innovation, strengthening its value proposition, better food presentation, advertising campaigns, kitchen system optimization and introduction of better service platform. Particularly emphasizing on menu innovation to propel revenues, the company launched a strategic plan — Vision 2020 — focusing on menu innovation in Chili's, continuous improvement in service and atmosphere to differentiate the brand and gain market traction to achieve long-term earnings per share growth target of 10-15%.
Moreover, in the trailing four quarters, Chili’s turn-around strategies yielded results with traffic and sales moving in the positive direction. Chili’s comps grew 2.9% in first-quarter fiscal 2020. The company is of the opinion that the positive momentum is likely to continue in fiscal 2020 as well. It is focused on simplifying Chili’s core menu by improving recipes and strengthening value proposition, with some higher-quality ingredients and new cooking techniques to deliver better food at even more compelling price points.
The company is also focusing on expansion strategy. In fiscal 2018, Brinker had opened 34 restaurants. In fiscal 2019, the company expects to open 27 restaurants globally, which will include the new markets like Asia, with focus on China and Vietnam.
Over the past few quarters, this Zacks Rank #2 (Buy) company’s remodeling efforts have gained momentum leading to improvement in sales. In fact, Brinker continues to invest in a brand-wide reimage program that will drive traffic and comps over the next three years. The company’s remodeling initiative is thus expected to continue to invigorate its potential as a brand and augment guests’ experience. Brinker expects its reimage program to cover 140 and 160 restaurants in fiscal 2020.
Other Key Picks
Other top-ranked stocks that warrant a look in the same space include Dunkin' Brands Group, Inc. DNKN, Chipotle Mexican Grill, Inc CMG and El Pollo Loco Holdings, Inc. LOCO, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dunkin' Brands Group has an impressive long-term earnings growth rate of 9.8%.
Chipotle Mexican Grill has reported better-than-expected earnings in each of the trailing four quarters, the average being 16.1%.
Shares of El Pollo Loco Holdings have gained 47.3% in the past three months.
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