DALLAS Brinker International Inc. said last week it will focus on improvements for its Chili’s Grill & Bar chain, including a $100 million kitchen re-engineering program, set to increase speed of service and food quality, as well as improve restaurant margins.
The 1,499-unit Chili’s, now one of just two brands at Brinker, following the company’s deal to sell On the Border Mexican Grill & Cantina, also will be targeted for restaurant renovations and increased international expansion.
“Chili’s hasn’t turned the corner yet. This is a work in progress,” said the chain’s president Wyman Roberts. “It’s a crowded playing field. Why is it crowded? Because that’s where the game is, that’s where the opportunity is. Bar and grill fills a category, a need, that people have.”
Roberts was addressing securities analysts on Friday at Dallas-based Brinker’s annual analyst day.
On the menu for Chili’s over the next few years will be new technologies, a three-year kitchen renovation plan and global development.
New kitchens
Carin Stutz, Brinker’s senior vice president of strategic operations, is leading a team to re-engineer Chili’s kitchens and operating systems.
“It’s about making that bull’s-eye bigger,” she said. “In our industry, we don’t often talk about how we really run two distinct businesses within each of our restaurants: It is a retail business and a manufacturing business.”
The new kitchen systems at Chili’s are expected to reduce ticket times by an average of five minutes and should be completed by 2013. New point-of-sale and back-office systems are expected by the second quarter of 2011, she said.
“Brinker has maintained a proprietary system at our restaurants for years,” Stutz said. “At the time that decision was made, the available alternatives really couldn’t handle the complexity and required functionality for casual dining. But what we know now, currently, is that off-the-shelf products do easily handle the challenges of our casual-dining menu."
"And the vendors of these products have proven they can adapt quickly and nimbly to the every-changing marketplace," she said. "As a result, it no longer makes sense for us here at Brinker to incur the ongoing expenses of developing and managing our own proprietary system.”
Stutz said she anticipated minimal disruption for the kitchen re-engineering, with each restaurant closed for less than a day.
Restaurant redesign
Chili’s also is working to complete a major store refurbishment program, as 40 percent of its restaurants are 10 years or older. The first unit will be up and running by summer, with a targeted $300,000 remodeling budget.
“We think for that we can make a big statement that will really change perceptions, align this brand with where we are trying to go,” chain president Roberts said.
Putting the planned changes and investments into perspective, Brinker chairman and chief executive Doug Brooks said the moves will be vital to Chili’s success.
“We realized a few years ago that the world was shifting beneath us,” he said. “And we decided to make some fundamental changes in our business strategy and our people so that in this new world we don’t [just] survive we’ll thrive.”
International expansion also on the menu
Brooks also told analysts that Brinker intends to double its presence outside the United States by the end of fiscal 2014, taking the total to 425 restaurants.
Brooks said, “We’re doubling the size of our international presence through equity investments and franchise partnerships, which will allow us to take advantage of demographic and eating trends that will only accelerate in the rest of the world over the next decade.”
Currently, Brinker has 218 joint-venture or franchise restaurants open in 28 countries and two territories, with the largest concentrations in Mexico, with 72 units, and the Middle East, with 68 restaurants. This past year, Brinker opened two Chili’s restaurants in India.
According to John Reale, Brinker’s president of global business development, the international casual-dining market “is where the domestic market was about 15 to 20 years ago.”
Countries primed for international expansion, he said, “are those experiencing economic growth and an emerging middle-class,” which produces a need for convenience, sophisticated buying patterns and a search for quality experiences.
Target areas for Brinker’s growth include Brazil, Russia, India and China – also known as the BRIC countries – which hold a growing numbers of consumers with time pressures, Reale said, which opens the door for casual dining.
“It’s not just about opening restaurants and planting flags in new countries,” he said, “but creating depth in a market that gives us operating efficiencies and healthy profit levels. We also only pursue markets that can sustain five or more restaurants.”
Brinker recently signed development agreements with partners in India and Russia to open 25 restaurants in each country, he said. Two franchised locations are already open in India, Bangalore and Mumbai. Brinker plans to open its first unit in Russia in fiscal 2011.
In fiscal 2010, Brinker plans to open 36 to 40 restaurants abroad. In fiscal 2011 and 2012, it plans for 95 to 105 units. The company also plans to increase the number of countries in which it is doing business from 28 to 35.
Contact Ron Ruggless at [email protected].
