Brinker Plans To Double International Restaurants By 2014

With the U.S. casual dining industry weathering a prolonged slump that's being amplified by a glut of stores, Brinker International Inc. (EAT) is looking overseas to grow with plans to more than double its international presence over the next five years.

The operator of Chili's Grill & Bar, On the Border and other restaurants plans to add at least 300 new units overseas by 2014 to its current international count of 197.

It is targeting at least 50 new restaurants in 2009, the largest single-year push into other countries ever for Brinker, John Reale, president of Brinker's global business development, told Dow Jones Newswires on Friday.

Brinker expects to open most of its international locations in Mexico and the Middle East this year, as well as its first India location in May. From there, it will look to enter the Brazil and Russia markets within the next two years and China after that.

With casual dining a "mature brand" in the U.S., Brinker has set its sights on the global market for growth, where the sit-down American restaurant chains still are a novelty, Reale said.

Sales in Brinker's international division are outpacing those in the U.S., although they have seen a slowdown as the worldwide economic slump slows demand for eating out. Positive same-store sales also mean that Brinker's overseas locations aren't turning to traffic-driving discounts like they are in the U.S.

"When sales are positive, why would you discount?" Reale said.

Brinker is currently in 27 countries and two U.S. territories, a smaller number of markets than some other restaurant chains are expanding in, Reale said, as the company hopes to establish a large enough footprint in each country that it can advertise and purchase ingredients more effectively.

Some analysts still see Brinker as having a ways to go. In a research note Friday, Morgan Stanley's John Glass, while upgrading Brinker's stock to equal-weight from underweight, wrote that he is, "not yet willing to give the company credit for its emerging international expansion, which has yet to penetrate a scalable market."

Brinker's shares have rallied more than 40% in the past month, as executives at the casual-dining giant expressed optimism that margins could continue to improve as the company cuts costs.

In recent trading, shares were up 13 cents, or 0.9%, at $15.48, compared with a roughly 1.5% decline in the both the S&P 500 and Dow Jones Industrial Average indexes.

-By Paul Ziobro, Dow Jones Newswires; 201-938-2046; [e-mail]