Brinker International Inc. reported a 31.4% increase in same-store sales for Chili’s Grill & Bar in the Dec. 25-ended second quarter as the company’s casual-dining turnaround plan also increased traffic and allowed it to make operational changes, executives said Wednesday.
The Dallas-based Brinker posted a 27.4% increase in combined same-store sales when it factored in the 1.8% increase at the 53-unit Maggiano’s Little Italy. Increases in Chili’s traffic is leading Brinker to accelerate investments in in its kitchens, including new ovens and streamlined layouts.
“The investments we have been making over the last three years are working,” Kevin Hochman, Brinker’s president and CEO, said in an earnings call with analysts. “Marketing is doing a great job of bringing guests in and putting Chili's back in the culture again. Operations simplification investments in labor and facility improvements are working to get guests to return.”
The quarterly boost in same-store sales and traffic has led the company to speed up some facilities investments, he said.
“We have decided to accelerate the conversion of the balance of our restaurants to Turbo Chefs, which are ovens that use a combination of modern cooking methods to rapidly accelerate cooking vs. conventional ovens today,” Hochman said. “The majority of our system uses conveyor-belt ovens that cook a variety of menu items like ribs, chicken, and quesadillas.”
“We've been testing Turbo Chefs and restaurants and slowly expanding them for the past three years with very positive feedback from the operators,” Hochman said. “They cook the food much faster and much more evenly. They put out less heat, making the kitchen more comfortable for our team members. And they create superior-tasting products like crispier quesadillas and ribs with a delicious crust.”
The ovens also require less kitchen space, which helps with kitchen capacity, and are easier to clean and more reliable than the current conveyor-belt ovens, Hochman said.
“We've been slowly replacing end-of-life conveyor belt ovens when they need repairs and now, with the traffic increases, the time is right to upgrade the balance of our system to a piece of equipment that can properly handle our new increased volumes,” Hochman said.
Chili’s has also continued to trim its menu. To date in this fiscal year, the brand had removed 13 menu items and 12 pantry stock-keeping units, or SKUs, Hochman said. That has reduced preparation steps as well, he said.
The brand had upgraded the quality of its chicken breasts, added steak weights (which reduce cooking time as much as 40%), and is making guacamole fresh in-house, he said. The division plans to upgrade fajitas and ribs later this year as well.
Chili’s has also removed the It’s Just Wings tower, freeing kitchen space and reducing cleaning time, he said.
Hochman said Chili’s has a multi-year head start on competitors is making streamlined improvements and increasing sales, and plans to use the same playbook for its Maggiano’s Little Italy division.
The company also plans to supplant its Triple Dipper appetizer social media campaign, which started in April, by partnering with social media celebrities. Triple Dippers represented about 14% of sales in the second quarter, Hochman said.
“Marketing has done a great job of bringing guests in, but the reason why we're keeping guests is because the experience is really good and it's becoming a part of the rotation and consideration set,” Hochman said.
Mika Ware, Brinker chief financial officer, noted that Chili’s average unit volumes had increased to $4.2 million, up from $3.6 million last year.
“We actually have Chili’s out there that are $8 million and $9 million volume restaurants,” Ware said, “so these are all basically in the same box. We also watch our guest counts our dining guest counts really closely and we know we still have a lot of upside there to continue to grow.”
In the second quarter, Chili's sales growth was driven by a 19.9% increase in traffic.
For the second quarter ended Dec. 25, Brinker’s net income was $118.5 million, or $2.61 a share, compared to $42.1 million, or 94 cents a share, in the prior-year period. Revenues rose to $1.358 billion from $1.074 billion in the same quarter last year.
Brinker International has 1,624 restaurants, including 1,571 Chili’s and 53 Maggiano’s. It also owns the It’s Just Wings virtual brand.
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