The fiscal year that ended June 26 for Brinker International was a time of transition for the parent of Chili’s Grill & Bar and Maggiano’s Little Italy, according to CEO Wyman Roberts, who asserted to investors that the changes have set the concepts on a course of future growth.
Part of the redirection, he said in reporting fourth quarter and full year results, was discontinuing some of the practices that have long been followed by the company and its casual-dining rivals.
Among the standard operating procedures that were dropped:
At Chili’s, “we didn't do an LTO, no promotional activity, no new initiatives,” Roberts said. Instead, casual dining’s second-largest chain focused on simplifying operations and improving service. Said Roberts, “We let our operators really run their systems and get much more comfortable at running the day-to-day business, and that paid a lot of dividends for us both from a guest perspective and from an operations perspective.”
2 for $20 deals
The offer—two entrees and an appetizer or dessert for splitting, all priced at $20—was the staple casual-dining offer early in the decade, when chains in the sector were losing value-conscious customers to fast-casual upstarts. Roberts boasted that Chili’s had been a leader in wielding that marketing come-on, but declared it dead for Chili’s purposes. “We needed to refresh that proposition,” he said. “We wanted a more flexible platform that would work across both dayparts. And we've got that now.”
Chili’s new lure is the 3 for $10 deal, which allows dine-in patrons to choose a nonalcoholic beverage, appetizer and entree for a bundled price of $10. The offer delivers a profit and doesn’t overtax operations, he told the financial analysts, hinting that the platform might be tweaked to promote particular menu sections going forward.
A no-go on small-order delivery
After Chili’s long refusal to partner with third-party deliverer services, Roberts spoke effusively about the opportunities now facing the chain under the exclusive deal it recently announced with DoorDash. “We've already seen significant incremental off-premise growth that's accretive to margins, and now we're investing to grow our scale,” he said.
“It is delivering incrementality at very high levels, right in line with what our test shows,” said CFO Joe Taylor. “It's delivering a better check and it's delivering a better PPA (per-person average).” He pegged the incrementality at 80%.
Maggiano’s conventional growth strategy
Brinker is looking at “how we can take Maggiano's to new locations, both traditional and nontraditional,” Roberts said of the company’s secondary, 52-unit chain. He noted that the Italian concept recently opened its first restaurant in an unconventional setting: an airport.
Roberts noted that the company is already reaping some of the benefits from the changes, which he said were part of the strategy adopted by Brinker 1.5 years ago. Chili’s domestic same-store sales rose 1.3% for the fourth quarter and 2.2% for the year, while Maggiano’s comps slipped 0.2% for Q4 but inched upward 0.6% for fiscal 2019. Net income for the 12 months hit $154.9 million on revenues of $3.22 billion.
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