Chili's Grill & Bar had a good last three months, and it's on track for an even better April.
The chain eked out a positive fiscal third quarter, with domestic same-store sales up 0.6% year over year. Even more encouraging, same-store sales in the first three weeks of April were about 10% higher than they were two years ago, before the pandemic threw a wrench into prior-year comparisons, according to earnings results released Wednesday by Chili's parent Brinker International.
The easing of pandemic restrictions and pent-up diner demand helped, executives said, with many markets now at 75% dining room capacity. But the real difference-maker was the continued success of It's Just Wings, the virtual chicken wing brand Chili's launched in June that had spread to 1,000 locations by March. The off-premise-only concept helped Chili's weather a vicious winter storm in February that cost the chain $10.5 million in revenue.
"The brand is performing as we expected it to perform," said Brinker CEO Wyman Roberts on an earnings call Wednesday, noting that It's Just Wings is on track to generate its targeted $150 million in sales for the fiscal year. "The third quarter was the strongest quarter of the three ... as we kind of learned how to use the brand around some of the major sporting events."
Off-premise in general remained an important channel for Chili's, though it fell from about 40% of overall sales to the mid- to low-30% range as dining rooms expanded their capacities. The company expects to-go business to remain in that 30% range once dining rooms are fully open, Roberts said.
And it will continue to be an area of focus for Brinker. The company has been experimenting with "several" other virtual brands, including one called Maggiano's Classics, as it looks to drive volume and get the most out of its kitchens. Some of its restaurants are running two virtual brands and learning to handle the operational complexities that come with that.
"We are on some busy Saturday nights. I mean, we're setting records right now," Roberts said. "We got some work to do still to just really ensure that [operational complexity] is dealt with and that we're giving operators all the tools they need and the systems in place to execute, and that's what we're doing."
The higher volumes generated by the virtual brands mean those restaurants may be able to add an additional cook who focuses solely on the to-go concepts, he said.
Meanwhile, recovery for Maggiano's has been slower: It's same-store sales for the quarter were down nearly 30% year over year. For the first three weeks of April, sales were down nearly 20% vs. the same period in 2019, but have improved each month this year.
"As you think about Maggiano's in the context of this recovery, upscale casual is playing itself out a little differently," Roberts said. "We're pleased with the significant improvements in the Maggiano's business, especially in their dining rooms. Now it's just a matter of how quickly banquets come back."
Brinker's net income was $33.9 million for the period ended March 24, compared to $30.8 million for the year prior, on revenues of $828.4 million, down 3.7%.
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