Brinker International SWOT & PESTLE Analysis

Strength

1. Huge restaurant franchise across multiple countries: Brinker with its two casual dining restaurant brands Chili’s® Grill & Bar and Maggiano’s Little Italy®, has established a vast portfolio of franchise across 28 countries including two territories from US. A total portfolio of 1665 hotels serve about 1 million customers per day. The Chili’s has in total over 65K workers worldwide running about 1612 restaurants with about 350 restaurants in the US. On the other hand Maggiano’s Little Italy has 53 working restaurants as of 2021. In 2019, Brinker added additional 116 Chili’s restaurants to the portfolio by acquiring ERJ dinning franchise. At the global level, Brinker offers food courts in malls, and airports ranging from 100 to 400 square meters shops. With franchise model, Brinker is able to expand and reduce its restaurants quickly and generate steady cash flow.

2. Strong financial performance compared to peers in the restaurant industry: Brinker has managed to financially outperform the restaurant industry during Covid-19 pandemic. The franchise model has helped Brinker to serve guests during pandemic due to efficient use of technology, trainings, and online mobile app-based order systems. About 50% revenue generated during pandemic was from off-premises sales. Brinker has higher interest coverage ratio at 0.62 than industries -1.43, suggesting that Brinker’s ability to meet its interest payments and any debts is significantly higher than other restaurant franchises. Effect of Covid-19 on revenue year on year growth was minimal to 4.33% with a revenue of USD 3,079 millions in 2020. Comparing to the restaurant industry, Brinker is rated higher and financial condition is better than half of the companies in the food business. The company has achieved a consistent growth in EPS with EPS standing at $3.93 at the end of FY19 with a 13% CAGR over the decade.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

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Legal

1. Government trade and subsidies will change food industry dynamics: Global agricultural industry is going though monumental changes in recent years, with government introducing policies and subsidies for trade, influenced by trade war, which is changing import and export dynamics of food. Increased export tariffs from the US government will increase domestic supply; However countries outside the US, will procure agricultural products from different countries, with rise in imports from African countries as they are more viable for agricultural production. Africa may emerge as a major exporter in the world. The trade war with China has increased commodity costs for exporters while huge subsidies has created heaven for local producers and suppliers. These changes will affect how the restaurant industry procures its raw materials. With Brinker having more than 400 restaurant of Chili’s across the US, it is highly dependent on local suppliers. Increased cost of raw materials and procurement will most likely spiral operational cost.

Environmental

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