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Casual-dining restaurants are still finding plenty of fat to trim as the industry cuts expansion plans, manages labor expenses and sees other costs fall, all of which could help companies post higher profits despite continued sales declines.

Combined with slightly improved sales outlooks for the sector, some analysts say companies could offer rosier-than-expected earnings reports in the coming weeks, even though sales in the industry continue to remain sluggish.

After the market closed Tuesday, Ruby Tuesday Inc. (RT) reported third-quarter earnings ahead of Wall Street estimates on improving same-store sales trends helped by a bevy of promotions.

The struggling casual-dining operator also posted margins that were wider than some analysts expected, as the company kept a tighter lid on costs, including a new scheduling system that reduces hourly wage costs at the restaurant level.

"It's a sign that there are opportunities for cost controls across a lot of these brands," said Brad Ludington, restaurant analyst at KeyBanc Capital Markets Inc. "In spite of lower same-store sales, you're probably going to see a lot of earnings beats."

Ruby Tuesday, which also raised its outlook for the year, saw its shares spike Wednesday. In recent trading, shares were up $2.14, or 55%, to $6.03.

Earlier this week, Brinker International Inc. (EAT) pre-announced third-quarter earnings ahead of expectations despite disappointing sales. The operator of Chili's Grill & Bar and other chains, though, said it was able to grow margins as food costs fell and the company saved money by cutting back expansion.

Also, Brinker told analysts that it's saving money by keeping employee turnover low, a trend echoed by Ruby Tuesday and fellow casual dining giant Darden Restaurant Inc. (DRI) last month. With workers reluctant to leave their jobs, restaurants have to devote less time and money to hiring new employees and training them.

"It's less training expenses, less hiring, less costs involved with any travel," Raymond James restaurant analyst Bryan Elliott said. "All in all, much less drag."

Falling prices for commodities like meat and dairy and utility costs could also provide opportunities for margin growth in the tough sales environment, analysts say.

Robert W. Baird analyst David Tarantino said Wednesday that cost containment could emerge as a theme in the upcoming earnings season. He raised the price target on a number of restaurant companies, including Buffalo Wild Wings Inc. (BWLD), California Pizza Kitchen Inc. (CPKI) and Chipotle Mexican Grill Inc. (CMG), on expectations that companies could either meet or exceed already muted earnings estimates in the upcoming quarter due to better traffic.

While restaurants cut costs, the big question is how long the margin improvements are sustainable. Same-store sales are improving from earlier lows, but they are still decidedly negative, even though many are up against easy year-ago comparisons.

"At the end of the day, you need same-store sales growth to generate sustained margin recovery in this business," Elliott said.

-By Paul Ziobro, Dow Jones Newswires; 201-938-2046; paul.ziobro@dowjones.com