Chili’s owner Brinker International (EAT) is among the few in the sit-down restaurant space to show glimmers of hope that life after COVID-19 will be OK for the sector. It won’t be back to business as usual right away, but OK may be just enough for investors.
For Chili’s, driving the business down a path toward recovery has consisted of reconfiguring the inside of restaurants (think fewer tables to sit at) and also meeting demand for takeout or eating inside the car in the company’s parking lot.
“Since the pandemic, the priority once we started opening dining rooms — similar to the focus we had when we were doing takeout and delivery — has been safety first. So it’s all about observing the guidelines and restrictions we’ve been placed under to keep everybody safe. So when you walk in, everybody is in masks. There is social distancing and sanitation stations throughout the restaurants. And we’re leveraging our technology to make it as touchless an experience as you could possibly want. All of those things are still allowing guests to come in and feel good and have hospitality and great food. And that’s important,” Brinker International CEO Wyman Roberts explained on Yahoo Finance’s The First Trade.
The company now has nearly 900 of its 1,600 restaurants reopened, and consumers have responded to Brinker’s extra efforts around safety and affordable grub.
Brinker told investors earlier this month that same-store sales at Chili’s with reopened interiors fell 11% for the week-ended June 3. That’s a marked improvement — considering we are in a severe recession — from the 16.5% drop for the week-ended April 29. The company said based on third-party data it studies, the Chili’s concept has outpaced competing restaurant same-store sales by 20 percentage points in the past five weeks.
Brinker said it’s generating positive operating cash flow and paying down debt.
“The margin dynamics appear to be better than many investors feared,” wrote Stifel restaurant analyst Chris O’Cull in a June 15 note to clients.
Brinker’s stock has surged 173% in the past three months compared to closest rival Dine Brands (DIN) (owner of Applebee’s and IHOP) 145% gain, per Yahoo Finance Premium data.
“We’re happy with the performance of the business,” Roberts says. “We feel good about our value propositions and the things that we’ve been leveraging going into the pandemic.”