Brinker International Inc., parent to the Chili’s Grill & Bar and Maggiano’s Little Italy restaurants, plans to continue its television advertising push, which it returned to last year, to offset traffic slippage in January, executives said Wednesday.
Kevin Hochman, Brinker’s CEO and president, said the Dallas-based company, which also owns the It’s Just Wings virtual brand and released earnings Wednesday for the second quarter ended Dec. 27, planned to continue emphasizing its “3 for Me” value platform, priced at $10.99, $14.99 and $16.99.
“That's resonating with the consumer,” Hochman said. “When we turn this messaging on, we are seeing noticeable lifts in traffic.”
Chili’s saw improved traffic trends in October when it turned on television advertising after a three-year hiatus, Hochman said.
“We are encouraged to see the campaign starting to build our longer term KPIs [key performance indexes] too,” he said. “Chili's unaided awareness, which is the ability for a consumer to recall the brand without the prompt of advertising, has increased 9% over the past year.”
Hochman said Chili’s plans to test “new ways to talk about our offerings as well as bringing new food news to the ‘3 for Me’ platform to keep that messaging fresh for our customers.”
The brand did notice some trade-down by customers during the quarter, he added.
Chili’s introduced a new menu on Tuesday that removed images for lower-priced appetizer items like quesadillas and wings.
“Some guests order these items as their entrees,” Hochman said. “We dropped a new menu yesterday that we believe will help reverse some of this negative mix trend.”
Chili’s in the second quarter, and especially into a weather-impacted January, “did see a lower level of add-ons to alcohol and trade-up” so “we may be seeing a more conservative consumer,” Hochman said.
Brinker had budgeted about 27 weeks of advertising total in the fiscal year, which started in July 2023, Hochman said. “We have 11 weeks that we have not spent yet, the bulk of that will be in from the months of March and May. …. None of this has changed our plans and we feel very confident about where we are.” The company has about $20 million to spend on television ads for the remainder of the year, executives said.
Joe Taylor, Brinker’s chief financial officer, said the company was still experiencing year-over-year impact from the de-emphasis of virtual brands, which included the discontinuation of the Maggiano’s Italian Classics platform in 2023 and reduced promotion for the It’s Just Wing brand.
The “reduced virtual brand activity negatively impacted Chili's traffic by approximately 2.5%,” Taylor said. “Excluding the traffic decline from virtual brands, Chili's-based business traffic for the quarter was a 1.9% increase — a great indication the traffic driving aspects of our strategy are resonating and attracting many new guests.”
Hochman said management turnover showed improvements in the first half of the fiscal year, but the company was addressing hourly turnover rates.
“We're moving more toward more side-by-side training and less virtual training,” he said. “We're going to get them off to a faster start. The second thing I think is going to help with hourly is the continued tweaking of the labor model to make sure that each hourly employee understands specifically their areas of responsibility.”
For the second quarter ended Dec. 27, Brinker reported net income of $42.1 million, or 94 cents a share, up from $27.9 million, or 62 cents a share, in the same period last year. Revenues were $1.074 billion in the second quarter, up from $1.019 billion in the prior-year period.
Same-store sales in the second quarter were up 5.2% systemwide with increases of 5% at Chili’s and 6.7% at Maggiano’s.
Brinker International, founded in 1975, owns, operates and franchises more than 1,600 restaurants in the United States and 29 other countries and two U.S. territories.
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