Despite Weak Sales, We Think Brinker Can Benefit From a Leaner Cost Structure

Brinker International's EAT first-quarter results affirm our thesis that it will be difficult to wean consumers off previously introduced promotional combos, as they have become accustomed to discounting. However, the operating margin improved significantly as the firm benefited from efficiency gains from technology updates and the transformation of kitchen processes. Results were in line with our expectations, and we are maintaining our fair value estimate.