Brinker International Inc. (EAT - Analyst Report), recently unveiled its Chili’s Grill & Bar restaurant in San José, Costa Rica. This marks the company’s debut in the Costa Rican market. Located in the Centro Comercial Multiplaza in San José, the 230-seater new unit was developed by franchisee, CRB Restaurants, a privately held company.
Brinker, the parent company of Chili’s Grill & Bar and Maggiano’s Little Italy, had entered into a deal with CRB Restaurants that enjoys considerable local market knowledge. Per the deal, CRB Restaurants will develop seven more Chili's restaurants in Costa Rica over the next five years. Both parties plan to unveil the second unit of Chili's in December 2012.
The above mentioned deal affirms management’s intent to make Costa Rica one of the prime markets for Brinker’s expansion. Brinker believes that the population in Costa Rica has an inclination towards renowned dining brands, which makes the region a potential market for new openings. Further, a huge section of American retirees reside in that country. Dallas-based Brinker seeks to tap this opportunity in full.
The company will revamp Chili's menu in San José, incorporating various location specific ingredients like Lomito, a traditional Costa Rican cut of beef, and Patacones, a staple treat made of fried plantains to enhance the brand’s appeal. However, other signature offerings of Chili’s along with a variety of non-alcoholic and alcoholic beverages will also be available.
Brinker has been on an expansion spree for quite some time. Besides spreading its wings in the home country, the company also aims to explore the opportunities in the foreign lands. Hence, it is emphasizing on global expansion in both new and existing markets through development agreements with new and existing franchisees as well as joint venture partners.
The burgeoning middle income population in emerging countries encourages the company to shift its spotlight from the somewhat saturated domestic market, where the bar and grill segment is hyper-competitive. Brinker currently has 260 chili’s restaurants in 32 countries and two territories outside the U.S.
The company is also in a joint venture to extend its footprint in Brazil. As part of this venture, Brinker made its Brazilian debut in the first quarter of 2012. The company’s presence in Mexico and the Middle East remained strong.
Additionally, it plans to further penetrate into Latin America. With a focus on BRIC market, Brinker anticipates to add 30 or more locations in fiscal 2013. Its long-term goal includes the opening of 420 Chili's restaurants globally by fiscal 2015.
Brinker, which competes with Kona Grill Inc. (KONA - Snapshot Report) and BJ's Restaurants Inc. (BJRI - Analyst Report), currently retains a Zacks #2 Rank, which translates into a short-term ‘Buy’ rating. We are maintaining our long-term ‘Outperform’ recommendation on the stock.
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