Stories that CONNECT US

leading the company through this new era.

good news is that more people around the world are dining out. In fact, the demand for casual dining in our international markets today is on par with the fervor that made Chili’s an American icon in the 1980s. Yet, domestically, we are keenly aware that competition has skyrocketed since we opened our doors. Thirty years ago, there was roughly one restaurant for every 1,000 people in the nation. Compare that with one for every 526 people in 2007. (Source: The NPD Group/ReCount) In addition, many fast-casual and quick-service restaurants now offer higher quality food and greater variety, making their menus especially appealing to cost-conscious guests whose fuel costs and utility bills have been on the rise. In short, our guests’ needs are shifting. And we are confident in our strategies for meeting those needs.

In much the same way that casual dining redefined the restaurant industry years ago, Brinker International is leading

the charge to reignite guests’ passion for this segment. More than ever, we’re focusing on the competitive advantages that resonate with our guests, and choice remains high on the list. Every time they choose Chili’s Grill & Bar^®, Romano’s Macaroni Grill^®, On The Border Mexican Grill & Cantina^®, or Maggiano’s Little Italy^®, they’re also choosing Brinker International. In addition to the wide variety of food and atmospheres our restaurants offer, we’re also working to enhance value, convenience, and speed for our guests. These are three key factors driving our guests’ dining decisions today. And of these, value may be our most important differentiator. After all, value isn’t just about the price of the food – it’s about the total experience.

As restaurateur and author Danny Meyer explains in his book Setting the Table: The Transforming Power of

Hospitality in Business, service is something that happens to you, while hospitality is something that happens for you. Successful brands are experts at both. As important as it is to provide great service by keeping drinks filled and offering delicious food, it’s equally important to serve with genuine hospitality. We’ve always been committed to delivering both the technical and emotional elements of a great dining experience, and now our challenge is to ensure exceptional consistency across the board.

To further enhance the guest experience, we’ve implemented a hiring tool that tests prospective team members for

their service skills as well as their hospitality quotient – a move that has already resulted in a significant drop in turnover. We’ve also gathered considerable feedback from guests and team members alike to measure satisfaction and loyalty,
and we’ve begun to make changes based on this invaluable insight. Moving forward, we know we must give our team members the appropriate autonomy to provide the highest level of hospitality, making our guests feel special whenever they dine with us.

Brinker continued to return value to shareholders in fiscal year 2007 through significant repurchases of our stock

and a three-for-two stock split. We also leveraged our economies of scale to further strengthen the business. For example, we've centralized our training functions through the Brinker Learning Center to provide a single world-class training solution for our entire portfolio of brands. We've consolidated our technology systems to standardize and streamline our support functions. And we've implemented a shared recruiting team to eliminate redundancies from brand to brand, enabling us to cut hiring costs by 30 percent while improving staffing levels and attracting more highly qualified team members.

The global marketplace holds tremendous potential for a number of reasons. To start with, the international thirst

for Western brands remains strong, and competition in the casual dining segment is not well developed in many parts of the world. In addition, many foreign markets have cost advantages in terms of food, facilities, and labor, making these regions especially attractive to Brinker International as well as our global franchise partners.

Brinker is already one of the top companies in casual dining outside the United States, and we have a number of

advantages over our competitors going forward. While other key global contenders have only one brand to offer potential franchise partners, Brinker has many. We also have lower price points than many direct competitors, making our casual
dining brands accessible to a broader segment of the population. Perhaps more important, however, we have the most experienced international team in casual dining, with global-minded professionals who collectively speak 10 languages, have lived in 18 countries, and have decades of experience.

We are excited about the additions and promotions at our corporate office in 2007, including the appointment of

Greg Walther, an 11-year veteran with Outback International, as our new President of Global Business Development. We also appointed Valerie Davisson our Chief PeopleWorks Officer in recognition of her work in transforming the department formerly known as Human Resources into the Brinker PeopleWorks team. In addition, we had a notable change on our board, as Robert Gates resigned his position to serve the country as Secretary of Defense. Although we were sorry to lose him, we’re thrilled to welcome John Mims, whose strong international experience and in-depth knowledge of portfolio management adds a valuable perspective to our corporate governance.