Brinker International, Inc. (EAT), Darden Restaurants, Inc. (DRI), Buffalo Wild Wings (BWLD): A Recovery You Can EAT

Buffalo Wild Wings (NASDAQ:BWLD) and Panera Bread were the strongest performers of this peer group, with both companies reporting that same-store sales increased by 3.8%. On the other end of the spectrum, Darden Restaurants, Inc. (NYSE:DRI) reported that comps were down at its three largest chains. In the middle of the pack was Brinker, which reported Chili’s domestic comps were down 0.3%, while international comps were up 2.3%. The company also saw a 0.2% increase in comps at Maggiano’s.

Brinker did offer some color about how its traffic was doing rather than just reporting overall sales. Last year, the company’s domestic traffic at the larger Chili’s chain was up 1.5%, but this year, Chili’s has been struggling with decreased traffic.

However, in the last three months, the company saw traffic decline 2.5% in April, 2% in May, and 1.7% in June. While the company still has a long road ahead, it seems clear that the trend is improving. If Chili’s can continue to improve its domestic traffic trends, this will help the company’s already prodigious cash flow.

Cashing in
If you want one reason to buy Brinker International, Inc. (NYSE:EAT), consider the company’s peer-crushing free cash flow. Using core free cash flow (net income plus depreciation minus capital expenditures) per dollar of sales gives us an apples-to-apples comparison between Brinker and its peers.

By this measure, Brinker is unequaled, with $0.22 of core free cash flow per dollar of sales in the last quarter. Panera Bread Co (NASDAQ:PNRA) comes in a distant second with $0.06 of free cash flow. Buffalo Wild Wings (NASDAQ:BWLD) might be expected to grow faster, but the company’s $0.03 of free cash flow per dollar of sales means investors might not see much from this growth. Darden Restaurants, Inc. (NYSE:DRI) is struggling with a huge debt burden, and generated just $0.01 of free cash flow per dollar of sales.

Considering Brinker’s better valuation, improving traffic trends, and huge free cash flow, this growth story seems far from over. The company is expanding internationally, and has just scratched the surface of its potential overseas. If this looks like a company you may want to sink your teeth into, head over to Fool.com and get EAT on your Watchlist today.

Fool contributor Chad Henage has no position in any stocks mentioned. The Motley Fool recommends Buffalo Wild Wings and Panera Bread. The Motley Fool owns shares of Buffalo Wild Wings, Darden Restaurants, and Panera Bread. 

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