Simplification has helped Chili’s Grill & Bar maintain sales in a challenging consumer environment, executives said Wednesday.
“The simplification and investments we’ve been layering into the business over the past two years have put us in a position to win in a market where customers want great food, great service at a great value,” said Keven Hochman, president and CEO of parent Brinker International Inc., which released its first-quarter earnings Wednesday.
The Dallas-based parent to the Chili’s and Maggiano’s Little Italy casual-dining brands posted same-store sales were up 13% systemwide and 14.1% at Chili’s and 4.2% at Maggiano’s.
“Over the past 2.5 years, we’ve removed around a quarter of our menu to focus on our core four offerings: burgers, crispers, fajitas and margaritas, which now represent 47% of our business,” Hochman said.
Hochman said the Big Smasher burger, a centerpiece of its 3 for Me campaign, has been successful.
“We’ve only seen a 1% increase in 3 for Me mix since last quarter,” he said, “and nearly half of those guests are still choosing the more premium 3 for Me tiers at $14.99 and $16.99.”
The Triple Dipper introduction is skewing toward a little younger customer than the 3 for Me, Hochman said, which might be a function of placing the ads in more traditional television.
But the effect is to introduce the younger consumers to Chili’s, he noted.
“Essentially, we feel like we’re introducing a whole new generation of Chili’s,” Hochman said. “And so that’s good.”
Brinker is extending the simplification to its 50-unit Maggiano’s Little Italy concept as well, Hochman said.
“We’re applying lessons from the Chili’s turnaround to our Maggiano’s brand to strengthen the four-wall economics and help build more relevance back into the brand, what our Maggiano’s President Dominique Bertolone calls bringing the magic back,” Hochman said. “Dom has spent the past six months deep in the field listening to Maggiano’s teammates to understand what’s working and what needs to change to improve the brand’s experience.”
Part of the simplification will be to remove the $6 take-house pasta officers by the end of the year, Hochman said.
“We estimate that exiting this business in December will be a 1% drag on Maggiano’s top line and traffic assumption, but will have minimal impact on profitability,” he said. “The time, attention, and investment we are putting toward $6 take-home pastas will now be redeployed to elevating and accelerating the business.”
Chili’s has also launched a 2030 Heart of the House project to look at the equipment used in the kitchens. The company is testing TurboChef units as replacements for the Impinger and CTX conveyor belt ovens.
“When they go down, they’re very expensive to repair,” Hochman said. “The TurboChefs are much faster, they make a much more consistent product. The teams actually rave about them. So that’s an example where potentially making that investment in that move would certainly create more capacity and deliver a better food experience for the guest.”
For the first quarter ended Sept. 25, Brinker’s net income was $38.5 million, or 84 cents a share, compared to $7.2 million, or 16 cents a share, in the same period a year ago. Revenues were $1.139 billion, compared to $1.012 billion in the prior-year quarter.
Brinker International, founded in 1975, has more than 1,600 restaurants in the United States and 28 other countries and two U.S. territories.
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