These are not salad days for casual dining. From March 2006 to June 2007, Brinker International
As bad as that is, it's worse at Brinker's 230-unit Macaroni Grill chain, which has been suffering weak comps since 2004. In August, Brinker announced it would look for a buyer for the chain, and earlier today, the company said that it expects to close a deal by the end of the fiscal year next June.
No end in sight
But in the meantime, the troubles likely will continue. With housing difficulties weighing heavily on a slowing economy, consumers are staying home more, or trading down to cheaper options like fast food. Comps for the U.S. market rose 5.1% in the latest quarter at McDonald's
The decline in traffic at Brinker's chains has not been drastic enough to hit systemwide sales yet. Today, the company reported a 3% rise in revenue for the first quarter, but this came largely from a net expansion.
Income from continuing operations fell almost 4%, because of higher commodity prices and labor costs. But on a per-share basis, it rose to $0.35 from $0.32 due to share buybacks.
Brinker isn't alone in its woes. Ruby Tuesday
Brinker management said it's making efforts to capitalize on the Chili's brand by offering catering services, better take-out operations, and even grocery items, but I'd wait before sampling any of these shares.
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