• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

In this environment changes of this magnitude are not meaningless!

After the close on Friday, EAT announced that after 28 years Todd Diener was stepping down “immediately.”  Todd is being replaced by Wyman Roberts as president of the Chili’s Grill & Bar and On the Border Mexican Grill & Cantina.

So why would Todd be stepping down so suddenly (appears sudden at least to an outsider) right when the organization needs him most?  Over three months ago Brinker announced a sweeping overhaul of the Chili’s brand. 

Here are some of my initial thoughts and possible scenarios:

(1)    Todd is tired – Turning Chili’s around is going to take a lot of work – 28 years is a long time and he would rather be playing golf.

(2)    He was not happy about internal changes.  If it was his decision to leave, he must not be happy about the new direction of the Chili’s brand. 

(3)    This last point would lead you to believe that the cost to fix the brand is going to be much higher than management initially thought. 

(4)    If it was not his decision to leave, I can only guess that current business trends are not seeing much of an improvement (under his direction).

Even without having all of the details, the timing of Todd’s departure is odd.  It’s very hard to come up with a scenario in which this departure is good news for EAT (Management must have realized this which might explain the timing of the release).  Not to take anything away from Wyman Roberts, but dislocation within the Chili’s system due to Todd’s departure should not be underestimated.