Brinker International Inc. plans to maintain its barbell pricing strategy, which was effective in increasing traffic in the fourth quarter, and to continue simplifying operations more, executives at the parent of Chili’s Grill & Bar said Wednesday.
Dallas-based Brinker, which also owns the Maggiano’s Little Italy brand, assessed its two-year Chili’s turnaround and the impact of the $10.99-starting “3 for Me” platform after releasing earnings for the fourth quarter ended June 26.
“The past two years of our Chili's turnaround was all about improving the guest experience and creating a traffic-driving model to build sustainable momentum in our business,” said Kevin Hochman, Brinker CEO and president, during Wednesday’s earnings call.
“The next two years will be continuing more of the same, driving our differentiated brand with advertising, superior value, and food innovation with barbell pricing strategy, simplifying the operation, and removing friction to improve the guest experience,” he said.
Hochman said that over the past two fiscal years, Chili’s had grown its restaurant average unit volumes by $440,000, to $3.6 million.
“On the operations front, we conducted listening sessions with our field restaurant leaders all over the country to better understand what we could do to reduce or eliminate to make our restaurant jobs easier and more rewarding,” he said.
As a result, Chili's menu currently has 22% fewer items than it did two years ago, he added.
In addition, Chili’s also recently rolled out artificial -intelligence labor forecasting, “which is reducing the amount of time our general managers need to write labor schedules, as well as making their forecasts more accurate,” Hochman said.
Among barbell promotions, Chili’s had success with the Big Smasher burger on the $10.99 3 for Me menu, he added.
“An almost half-pound burger, bottomless chips and salsa, and bottomless drink at $10.99 continues to be an industry-leading value that we believe it to be, and it continues to work,” Hochman said.
Mika Ware, Brinker’s chief financial officer, added that only 17.7% of guests were at the $10.99 tier. It goes up to $14.99 and $16.99 with more premium products.
“We still have the majority of our guests coming in for the value, but then seeing the great menu and all the other options and abilities to trade up,” she said. “We still have over 80% of the people eating on a full-price menu.”
Chili’s also plans to relaunch its fajitas platform, which is currently a $200 million business.
“The new fajita lineup will feature improved chicken, guacamole, and pico de gallo recipes, and upgraded soft tortillas,” Hochman said. “We're also incorporating new dippable add-ons and a completely new menu merchandising designed to drive bigger fajita bundles.”
Chili’s also plans to streamline its operational systems by “eliminating curbside to remove friction for team members, and improving packaging to ensure our food arrives hot and fresh,” he said.
The first of these changes, curbside removal, will roll out by the end of first quarter.
For the fourth quarter ended June 26, Brinker reported net income of $57.3 million, or $1.24 a share, compared to $54.2 million, or $1.19 a share, in the same period last year. Revenues were $1.208 billion compared to $1.075 billion in the prior-year quarter.
Same-store sales were up 13.5% in the quarter with increases of 14.8% at Chili’s and 2.5% at Maggiano’s.
Brinker International, founded in 1975, has 1,614 restaurants in the United States and 27 other countries and two U.S. territories.
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