After Chili’s Grill & Bar’s trimmed nearly half the items from its menu in September, the casual-dining brand has seen ticket times decline by 12 percent, company executives said Wednesday.
Wyman Roberts, president and CEO of Chili’s parent Brinker International Inc., said the company is six weeks into the new reduced menu, and preferences for its signature entrees of fajitas, burgers and ribs are up nearly 40 percent.
“More importantly, tickets longer than 15 minutes — and those are ones that generate the greatest number of guest complaints — have dropped 40 percent, and those guests are now much more likely to return,” Roberts said.
“And with many of our guests choosing burgers, ribs and fajitas our operators can focus on delivering faster, hotter foods. Our teams are guided by the principle that nothing matters except that the guest returns,” he said during a first-quarter earnings call.
Chili’s, along with other casual-dining brands, has seen traffic decline over the past several quarters. In the fiscal first quarter ended Sept. 27, Chili’s reported traffic at its more than 950 company-owned units was down 8.7 percent. In the same quarter last year, it fell 4.1 percent.
To address that, the Dallas-based brand in September slashed its menu and focused on its signature categories of fajitas, ribs and burgers.
“We also established a solid value foundation,” Roberts said, by offering a cheeseburger with fries for $6.99 all day every day.
Lapsed customers are returning, he added. “We are seeing an increase in guests that haven't been to Chili's in a while, which is encouraging to us and exciting from the standpoint of getting to introduce some folks that haven't been in for a while to the new menu and faster, hotter food,” he said.
“The industry remains highly competitive when it comes to value and we're turning up the dial on our value strategy,” Roberts added. “Now that we have the right foundation and menu in place, the team is working hard to strengthen the value proposition for our target consumers beyond the $6.99 half-pound burger and fries.”
Roberts said Chili’s will be more aggressive in dayparts, products and price points to drive traffic.
“We're also improving the quality of our atmosphere with the reimage program that makes the brand more relevant and appealing,” he said.
Chili’s is also testing hand-held waiter tablets at all its California restaurants, he said, and the company will assess how those can improve the guest experience as well as reduce labor costs.
“We've continued to make these investments because we do see opportunity especially in high-wage states,” he said.
Joe Taylor, interim chief financial officer and vice president for investor relations, said Brinker did see significant impact from Hurricanes Harvey in Texas and Irma in Florida.
“During the course of the two storms, 202 restaurants were impacted, resulting in almost 850 closed days of operations,” Taylor said. “We estimate Brinker's comp sales for the quarter were reduced by 70 basis points due to the storms, with Chili's and Maggiano's impacted by approximately 60 and 130 basis points, respectively.”
For the first quarter, Brinker’s net income fell 57.5 percent to $9.9 million, or 20 cents a share, from $23.2 million, or 42 cents a share, in the prior-year period. Revenues fell 2.5 percent to $739.4 million from $758.5 million in the same quarter a year ago.
Chili's company-owned same-store sales decreased 3.4 percent in the first quarter, and U.S. franchise same-store sales decreased 1.7 percent. Maggiano's Little Italy’s same-store sales decreased 2.6 percent.
As of Sept. 27, Brinker owned, operated or franchised 1,682 restaurants, including 1,630 Chili’s and 52 Maggiano’s.
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