The parent company of Chili's restaurants, Brinker International, said Tuesday that its profit rose 16 percent in its fiscal third-quarter as lower costs offset a decline in a key sales figure.
The Dallas-based company, which has nearly 1,600 locations when including its Maggiano's Little Italy chain, saw customer traffic fall at both its brands during the period.
After years of growth, the broader casual dining industry has been struggling as customers increasingly head to cheaper, more convenient eateries such as Chipotle and Panera Bread. Rival Darden Restaurants Inc., which owns Olive Garden and Red Lobster, has also been struggling to revive the image of its chains and recently noted that its traffic is down almost 8 percent since 2008.
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For the first three months of the year, Brinker said revenue at company-owned Chili's restaurants open at least a year fell 1.1 percent, as price hikes failed to offset a 3.2 percent decline in traffic. The company noted that the figure turned positive in March, after falling in January and February.
Profit margin for the period improved, however, as a result of higher prices and a more favorable sales mix including shrimp, ribs and fajita meat. New kitchen equipment and smaller bonuses for managers also helped lower labor costs.
At Maggiano's, its smaller Italian chain, sales at restaurants open at least a year edged up 0.4 percent on higher prices. Traffic was down 1 percent.
Sales at established franchise-owned restaurants rose 1.3 percent, as strong international growth offset a dip at home.
For the period ended March 27, the company said it earned $52 million, or 71 cents per share. That's compared with $44.9 million, or 56 cents per share, in the 2012 third quarter.
Excluding one-time items, the company said it earned 72 cents per share.
Sales edged up slightly to $742.8 million.
Analysts, on average, expected a profit of 69 cents per share on sales of $741.97 million, according to Thomson Reuters.
Shares of Brinker International Inc. were down 65 cents, or almost 2 percent, at $38.25 in premarket trading. The stock closed Monday at $38.83, up 25 percent since the start of the year.