Before you dig into that next Awesome Blossom fried onion appetizer, you may want to learn why shareholders in Chili's parent Brinker International
With comps rising by just 3% for the month of November, Brinker now expects fiscal second-quarter profits between $0.54 and $0.56 a share before stock-based compensation expenses. Just last month, Brinker was confident that it would earn as much as $0.58 per share.
Brinker doesn't just own Chili's. It also has Romano's Macaroni Grill, On The Border, and Maggiano's Little Italy. It's an eclectic mix, but that's the way most of the larger chain operators are. Darden
Diversification makes sense for Brinker, allowing it to cover its bases in case dining patterns change. Strategically speaking, it also allows the company to corner the market in some areas by placing a few of its competing concepts side-by-side. Think of your nearest Macaroni Grill, and there's a fair chance that a Chili's isn't too far away.
It's a sound strategy, but investors shouldn't necessarily approach this dip as a buying opportunity. Not included in the company's guidance is a stock option expensing hit of $0.10 a share for the December quarter. With companies finally beginning to expense stock-based compensation appropriately, the sum may seem a bit steep for a company that just let investors down and has five-year earnings growth below that of some other multi-concept operators like Darden and CBRL Group
I hadn't eaten at a Chili's in a while, so I stopped by to get my fix with an Awesome Blossom and a thick chocolate shake last week. I was shocked to see both items off the menu at this particular location (in the Bayside waterfront shopping district next to the Miami Heat arena) but was relieved to learn that it was just an omission at this particular tourist-laden unit. Then again, I probably felt then like investors do now: disappointed to learn that I wasn't going to get what I was expecting.
Comps rose a mere 1% in October, but the company's sticking by its ambitious bottom-line guidiance, clearly expecting better performance from its units in the final two months of the quarter. Here's to a heartier December -- and more Awesome Blossoms.
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Longtime Fool contributor Rick Munarriz has eaten at all four of the Brinker concepts, but he does not own shares in the company. He does own stock in CBRL Group. The Fool has a disclosure policy. He is also part of the Motley Fool Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.