Brinker International, Inc.
EAT
recently announced a partnership with a global online food delivery marketplace — Grubhub — to expand its brand’s presence. The agreement highlights expanding the presence of the company’s Chili’s Grill & Bar, It’s Just Wings (Chili’s virtual brand) and Maggiano’s Little Italy brands on the Grubhub Marketplace.
The company announced the availability of Chili’s Grill & Bar and It’s Just Wings locations on Grubhub. It has a pipeline of 2,500 locations on the Grubhub Marketplace. It will also add Maggiano’s Little Italy locations in the near term.
Concerning the collaboration, Michael Breed, Chili’s senior vice president of marketing, stated, “Our partnership with Grubhub allows us to work toward a frictionless guest experience that ensures we’re providing them with the ease, convenience and flexibility they seek in an increasingly digital world.”
The company emphasized on the importance of off-premise dining as part of Chili’s and Maggiano’s business. During the fiscal third quarter of 2022, the company reported more than 35% of sales coming from outside the restaurant (and 11% from delivery) for the Chilli’s segment. It stated that off-premise sales remain elevated (at more than 200% from pre-pandemic levels) owing to strength in the delivery business. The company reported solid off-premise sales for Maggiano’s, with businesses up 180% from pre-pandemic levels. Backed by the solid performance of this business model, the company intends to focus on sales channel expansion and brand-building awareness to drive growth in the upcoming periods.
Price Performance
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Shares of Brinker have declined 36.1% so far this year compared with the
industry
’s fall of 19.8%. The dismal performance was mainly due to the coronavirus crisis. During the fiscal third quarter, the company’s operations were affected by the Omicron-induced staffing challenges. Although most dining services are open, traffic is still low compared with pre-pandemic levels. The company intends to monitor the situation regularly to gauge the impacts of COVID-19.
Also, elevated inflationary pressures remain a concern. The company anticipates high single-digit inflation for food and beverage as well as wage rates through the remainder of fiscal 2022. Meanwhile, earnings estimates for fiscal 2022 have declined in the past 30 days, depicting analysts’ concern regarding the stock’s growth potential.
Zacks Rank & Key Picks
Brinker currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the Zacks
Retail-Wholesale
sector are
Dollar Tree Inc.
DLTR
,
BBQ Holdings, Inc.
BBQ
and
Arcos Dorados Holdings Inc.
ARCO
.
Dollar Tree sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 13.1%, on average. Shares of the company have gained 58% in the past year. You can see
the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dollar Tree’s 2022 sales and EPS suggests growth of 6.7% and 40.5%, respectively, from the year-ago period’s levels.
BBQ Holdings carries a Zacks Rank #2 (Buy). BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have decreased 34.3% in the past year.
The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and EPS suggests growth of 46.1% and 67.6%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2. Arcos Dorados has a long-term earnings growth of 34.4%. Shares of the company have risen 17.1% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 16.6% and 83.3%, respectively, from the year-ago period’s levels.
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