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The resignation of CFO Chuck Sonsteby was surprising to me but it does not spell disaster for Brinker.

Last night, news of Sonsteby’s departure hit the tape.  While I expected him to stay at the company for a few more years, his leaving for Michaels Stores probably offers him some significant monetary upside – particularly if he gets cheap equity and leads the charge on an initial public offering of the private company.  Furthermore, the Bar & Grill industry is a difficult area in this current environment, and while the operational initiatives at Chili’s will generate rewards for the company, Michaels Stores may have provided a more appealing experience (with a possible big IPO payday).

While I am yet to speak with anyone at the company, I do not think this implies any major issues within Brinker.  If anything, it may shorten the odds of a take-out – something I did not think was likely prior to Sonsteby’s resignation.  I will follow up with further details shortly.

EAT: UNEXPECTED DEPARTURE - chuck share price

Howard Penney

Managing Director