GO
Loading...

Chili's new items bring back diners, boost Brinker sales

Brinker International reported better-than-expected quarterly results as same-restaurant sales at its Chili's chain rose for the first time in a year, driven by new menu items.

Brinker shares rose as much as 8.7 percent to a life-high of $50.74.

Same-restaurant sales at Chili's outlets open for at least 18 months rose 0.7 percent in the second quarter ended Dec. 25 as customers were won over by a new Southwestern-style menu, Pretzel Roll sandwiches and stuffed pastas.

Source: Chili's

Analysts polled by Consensus Metrix had expected Chili's same-restaurant sales to fall 0.3 percent in the holiday quarter.

Increased restaurant capacity and a 10 percent rise in advertising spending also helped to attract diners.

"Brinker's primary drivers (in the quarter) are a double-digit increase in marketing, ongoing remodels and Mexican launch," Goldman Sachs analyst Michael Kelter said.

(Read more: McD's resolves standoff with lingering elderly)

Brinker's comparable sales were "encouraging" despite an unusually cold December, Bernstein Research analyst Sara Senatore said.

Overall same-restaurant sales rose 0.8 percent, beating Consensus Metrix's estimate of a 1 percent fall.

Chili's also recently expanded its Mexican menu items to include enchiladas, fresh Mex bowls, tostadas and crispy tacos.

"We believe these new items will appeal to the core Chili's consumer better than the pizza platform that launched about a year ago," KeyBanc analyst Christopher O'Cull said.

Many U.S. full-service restaurant chains, including Chili's and Darden Restaurant's Olive Garden, have been fighting to boost sales amid intense competition from chains such as Chipotle Mexican Grill andPanera Bread, which offer high-quality meals at lower prices.

(Read more: Taco Bell's future: It's in the cup)

The full-service restaurant category, also known as casual dining, has been aggressively offering deals, but success has been limited.

Brinker's net income rose 7 percent to $39.7 million, or 58 cents per share, in the second quarter ended Dec. 25, from $37.2 million, or 50 cents per share, a year earlier.

Excluding items, Brinker earned 59 cents per share.

Total revenue rose 2 percent to $704.4 million in the second quarter ended Dec. 25.

(Watch: Earnings to ruin the rally?)

Analysts on average were expecting the company to earn 58 cents per share on revenue of $699.2 million, according to Thomson Reuters.

Dallas-based Brinker's shares were up 5.8 percent at $49.34 on the New York Stock Exchange in afternoon trading on Wednesday. The stock gained more than 40 percent in the 12 months up to Tuesday's close.

—Reuters

Contact Earnings

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More