The casual-dining chain had been testing delivery and will begin offering it permanently in more than a quarter of its 1,552 units, executives of parent company Brinker International Inc. told analysts during a call to discuss first-quarter earnings.
“We’re offering guests speed, convenience and value with a new delivery service,” said Wyman Roberts, Brinker’s chief executive and president, saying the company had experience with the delivery format at , where it was started several years ago.
“We actually kicked it off when I was heading Maggiano’s. We had really tremendous success with that program,” Roberts noted.
Chili’s is running the program itself and not relying on a third-party company, he explained, and employees will use their own automobiles.
“Obviously, the dynamics and business model are a little different with the Chili’s product,” Roberts said. “What we have already identified is that it’s not necessarily appropriate for every restaurant we own, but we have filters that we feel very comfortable with to identify where the demand is and where we can provide a service that’s going to be appreciated.”
Incremental expense to Chili’s is slight, he added. “We’re not buying vehicles,” he said. “We’re leveraging assets that we already have. … It doesn’t take a whole lot of incremental sales to make this a nice-returning piece of business for us.”
Roberts added that delivery hours “tend to be those off-peak hours,” such as prior to peak periods at lunch.
Brinker is making these delivery moves at Chili’s after coming out of an admittedly “rough” fiscal first quarter.
The company reported that net income rose 4.9 percent for the Sept. 25-ended quarter, to $29.2 million, or 42 cents per share, compared with $27.9 million, or 36 cents per share, in the prior-year period. Revenue was essentially flat at $683.9 million.
Same-store sales at domestic Chili's restaurants open at least a year fell 1.9 percent, pulled down by a 2.6-percent drop at franchised restaurants. Same-store sales at Chili’s international restaurants rose 2.7 percent. At Maggiano's, restaurants open at least a year saw sales increase 0.6 percent.
Roberts said Chili’s would continue to introduce new menu items, such as the flatbreads and pizzas that debuted earlier this year, even though the sales and traffic lift had not met expectations.
“With the flatbreads and pizzas … we didn’t get quite as much of a pop on the top side as we had anticipated with that product offering,” Roberts said, adding that the new items did help margins.
The company plans to amp up television advertising to support new menu items, he said, and Chili’s would rely on its Mexican roots.
“Our research has shown that we can build upon our current credibility with tacos, fajitas, quesadillas, chips and salsas to further strengthen this platform,” Roberts said.
Of recent menu introductions, he said, the best-selling sandwich on the menu is now the Bacon Avocado Chicken Sandwich on a popular pretzel bun. The company is also added a new pumpkin spice molten dessert, he said.
Some of the new items will also be promoted on the tabletop media that that the company is rolling out, which allows for some ordering of sides, drinks and the payment of checks without summoning a server.
Roberts said Chili’s would continue to rely on new products and value and to place less emphasis on limited-time offers.
“A lot of the promotional efforts that people are trying to throw on top of what they have already been doing aren’t showing as much impact as you would have thought,” he said.
While the first quarter was a challenge, Roberts said, “Our primary focus for fiscal ’14 is growing sales. We’ll be driving that result from multiple angles.”
Those angles include menu innovation, increased marketing spend, reimaged restaurants, and the to-go and delivery platforms.
Dallas-based Brinker owns and franchises 1,596 restaurants, including 1,552 Chili’s locations and 44 Maggiano’s units.
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