Despite Weak 2Q Sales, Brinker Benefits From Leaner Cost Structure; Trend Likely to Continue

Brinker International's EAT second-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 related to technology updates and the transformation of kitchen processes. Results were in line with our expectations, and we are maintaining our fair value estimate.