Chili's 2008 Annual Report Download - page 39

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REVENUES
Revenues for fiscal 2008 decreased to $4,235.2 million, a 3.2% decrease from the $4,376.9 million
generated for fiscal 2007. The decrease in revenue was primarily attributable to declines in capacity at
company-owned restaurants as well as a decrease in comparable restaurant sales as follows:
Fiscal Year Ended June 25, 2008
Comparable Price
Capacity Sales Increase Mix Shift
Brinker International ................ (4.3)% (0.5)% 2.9% 0.5%
Chili’s .......................... (5.9)% 0.8% 3.1% 0.8%
On The Border ................... 5.5% (3.3)% 2.5% (0.2)%
Maggiano’s ...................... 6.4% 0.4% 2.8% (1.9)%
Macaroni Grill ................... (4.8)% (4.4)% 2.2% 1.1%
Our capacity decreased 4.3% in fiscal 2008 (as measured by average-weighted sales weeks). The
reduction in capacity is primarily due to the sale of 95 Chili’s restaurants to Pepper Dining, Inc. on June 27,
2007 as well as the sale of 76 Chili’s restaurants to ERJ Dining IV, LLC during fiscal 2008. The reduction in
capacity is also due to other restaurant closures at Macaroni Grill, Chili’s and On The Border, partially
offset by the development of new company-owned restaurants. Including the impact of restaurant sales to
franchisees, we experienced a net decrease of 47 company-owned restaurants since June 27, 2007.
Comparable restaurant sales decreased 0.5% in fiscal 2008 compared to fiscal 2007. The decrease in
comparable restaurant sales resulted from a decline in customer traffic at all brands and unfavorable
product mix shifts at On The Border and Maggiano’s. These decreases were partially offset by an increase
in menu prices at all brands and favorable mix shifts at Chili’s and Macaroni Grill.
Revenues for fiscal 2007 increased to $4,376.9 million, 5.4% over the $4,151.3 million generated for
fiscal 2006. The increase in revenues was primarily attributable to capacity growth, partially offset by a
decrease in comparable restaurant sales.
Fiscal Year Ended June 27, 2007
Comparable Price
Capacity Sales Increase Mix Shift
Brinker International ................ 8.2% (2.7)% 1.6% 0.1%
Chili’s .......................... 10.9% (2.4)% 1.7% (0.3)%
On The Border ................... 5.8% (4.1)% 1.1% 2.0%
Maggiano’s ...................... 8.4% (1.7)% 1.5% (0.7)%
Macaroni Grill ................... (0.8)% (3.2)% 1.6% 0.6%
We increased our capacity 8.2% in fiscal 2007 primarily due to a net increase of 117 company-owned
restaurants since June 28, 2006 (excluding the impact of the sale of 95 Chili’s restaurants to Pepper
Dining, Inc. on June 27, 2007). Comparable restaurant sales decreased 2.7% in fiscal 2007 compared to
fiscal 2006. The decrease in comparable restaurant sales resulted from a decline in customer traffic at all
brands and unfavorable product mix shifts at Chili’s and Maggiano’s. These decreases were partially offset
by an increase in menu prices at all brands and favorable mix shifts at On The Border and Macaroni Grill.
F-5