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Brinker International Inc. EAT, -2.81% shares fell 2.8% in Wednesday trading after the restaurant operator said it was withdrawing its fiscal second-quarter guidance after a surge in COVID-19 drove dining room closures.
Brinker International chains include Chili’s Grill & Bar and Maggiano’s Little Italy.
“While positive Chili’s traffic in October generated a strong start to the quarter, the recent rise in COVID-19 cases has resulted in dining room closures and capacity limitations that will prevent us from achieving our plans for the second quarter,” said Wyman Roberts, chief executive officer of Brinker International, in a statement.
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Brinker had guided for same-restaurant sales to be in the negative mid-single digit percentage range, and adjusted EPS of 40 cents to 60 cents.
The FactSet consensus is for EPS of 59 cents.
Chili’s has seen its same-restaurant sales worsen later in the second quarter. For the week ending Oct. 28, same-restaurant sales slipped 1%. By Dec. 9, same-restaurant sales were down 13.3%.
Even with this decline, Brinker provided data showing that Chili’s outpaced the casual dining space.
At Maggiano’s, same-restaurant sales were down 34% for the week ending Oct. 28, but had plunged 63.9% by Dec. 9.
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As of Dec. 9, 77% of Chili’s and 69% of Maggiano’s restaurants had dining rooms in operation.
Brinker had $593 million available on its revolving credit and $53 million in cash as of Dec. 11.
The company will make its next earnings announcement on Jan. 27, 2021.
“This reinforces our view that analyst assumptions for sequential improvements in the restaurant industry performance in 4Q20 vs. 3Q20 are at risk,” wrote John Zolidis, president of Quo Vadis Capital.
“Further, we’re not optimistic that the first quarter will be better than the fourth quarter from a demand perspective.”
Brinker stock has gained 27% over the last year while the S&P 500 index SPX, +0.19% is up 16% for the period.
