After pulling away from traditional advertising during the COVID-19 pandemic, Chili’s Grill & Bar is about to return to the television airwaves as it notices some falloff in traffic among lower-income consumers, executives said Wednesday.
Chili’s parent, Dallas-based Brinker International Inc., plans to promote its popular “3-for-Me” bundle, said Kevin Hochman, Brinker CEO and president, on an earning call after releasing second-quarter earnings. The return to television advertising would be after a three-year hiatus.
“We believe promoting this platform through national media as well as the opportunity to reboot our loyalty offers will help us drive incremental traffic and win market share regardless of the macroeconomic condition,” Hochman said.
Keeping the brand in the consumers’ minds is important, he added.
“It's critically important that Chili's is a part of that consideration set,” Hochman said, “because, if you're not, then you have no chance of actually closing that guest. The top-of-mind awareness is what we're going to be driving for when we think about the advertising we're going to put on TV. That's where we're focused on. We think is a relevant message of abundant-great value at a great price point in addition to making sure that that advertising is unmistakably Chili's.”
The pandemic put a dent in consumer awareness about the brand, he added. “We have seen dramatic declines in top-of-mind awareness throughout the pandemic as we went dark,” Hochman said. “We would expect those trends to start moving in the right direction it takes some time you know for the advertising to take hold.”
Chili’s traffic has been impacted by Brinker’s efforts in the first half of the year to drive unprofitable deals out of its system, he added.
“During the first half of the fiscal year,” Hochman explained, “we reset pricing strategy and reduced the amount of checks on deal as well as the frequency and depth of couponing in order to work some less profitable traffic out of our system.
“Now, with a stronger foundation driving our improved performance,” he said, “we're able to manage our investments more effectively to build incremental traffic into the business this quarter will start reinvesting some of our dollars we saved from less discounting to get back on TV.”
Hochman added that, while he wouldn’t share the length of the advertising “abundant value at a sharp price point” campaign, the Brinker team was “adamant about protecting an opening price point for the guests that would otherwise not be able to afford Chili's or casual dining.
“This is why we protected $10.99 and that's why we're going to be advertising that later this quarter,” he said, adding that a “$10.99 price point for a complete meal with unlimited chips and salsa, full-size entree and a bottomless drink” compares well with even quick-service restaurants.
For the second quarter ended Dec. 28, Brinker’s income was $40.7 million, or 62 cents a share, up from $39.8 million, or 60 cents a share, in the same period last year. Revenues rose to $1.019 billion from $925.8 million in the prior-year quarter.
Brinker’s same-store sales in the second quarter were up 9.7% systemwide with increases of 8% at Chili’s and 21.2% at Maggiano’s Little Italy.
For Maggiano’s, Hochman said, “one of the big drivers of growth during the quarter was the off-premises business, which delivered an 82% increase vs. pre-pandemic levels. Maggiano’s off-premises sales are highly incremental.”
The company said off-premises sales at Chili’s ran at just over 30% in the second quarter and at Maggiano’s they were 27%.
Brinker International, founded in 1975 , owns, operates or franchises more than 1,600 restaurants in 29 countries and two U.S. territories. It also owns the It’s Just Wings and Maggiano’s Italian Classics virtual brands.
Contact Ron Ruggless at [email protected]
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