Brinker International said it’s thrilled with the early performance of its digital chicken-wing brand, It’s Just Wings, so much so that the company could create an analog version.
Speaking on their fiscal first-quarter earnings call on Wednesday, executives with the parent company of Chili’s and Maggiano’s sure seemed to suggest—without providing details—that they are considering non-virtual options for the heretofore virtual brand.
“It’s Just Wings started as a virtual brand, but as we wire in execution and growth, it may take different trajectories,” CEO Wyman Roberts said on the company’s fiscal first-quarter earnings call. “We’re evaluating internal and external opportunities to increase awareness levels and expand access to consumers.
He called it “just phase one for It’s Just Wings.”
“We’re excited about the potential to do other things with this brand,” CFO Joseph Taylor said. “It’s a very strong brand. It’s getting great consumer acceptance and appeal.”
It may also be proving to be a difference-maker for Chili’s. The bar and grill concept said Wednesday that its same-store sales declined 7.2% for the company’s fiscal first-quarter ended Sept. 23—a far more normalized rate of decline that has helped it shift back into profitability mode.
It could also provide some much-needed sales and profits for Maggiano’s, the polished casual brand that remains deep in a pandemic slump: Same-store sales declined 38.6% in the quarter.
Still, parent company Brinker generated net income of 23 cents per share in the period even as total revenues declined 5.8% to $740 million.
The company launched It’s Just Wings in June coming out of the pandemic, running the delivery-only brand in 1,000 Chili’s and Maggiano’s locations almost overnight. In August, Brinker said It’s Just Wings was generating sales at a rate of $150 million per year. Company executives reiterated that pace of sales on Wednesday.
While the company wouldn’t provide how much that is contributing to the chains’ same-store sales, the comments imply the brand is adding at least 4% to Chili’s comparable-store sales.
Company executives insist the numbers are incremental, and that it’s leveraging existing labor and kitchen capacity, which is helping the company generate profits. But executives also stressed that the brand is a long-term concept.
“It’s Just Wings is not a disposable vehicle,” Roberts said. “We’re committed to this brand for the long haul.”
Perhaps not surprisingly, Brinker wants more of this sort of thing. “We believe we have the capacity to expand our virtual brand portfolio,” Roberts said, saying later that the company could do as many as three virtual brands, though how many depends on how much business the brands do. “We’re testing a few ideas to better understand consumer demand and ensure that we can execute at a high level.”
Virtual brands have become quite popular in recent months, both among chains and independents, as companies seek to leverage existing capacity with a relatively low-risk delivery-only concept. Some tens of thousands of virtual brands exist explicitly for delivery-focused customers.
A fair percentage of those are chicken wing concepts as casual dining brands seek to get a piece of the market currently owned by the takeout focused Wingstop and its casual dining rival Buffalo Wild Wings.
Executives dismissed concerns about competition, noting that the industry is competitive generally and noting that the company has long-term plans for its newly created wing concept.
“I think the scale matters,” Roberts said. “It’s points of distribution. To put out 1,000 Its Just Wings restaurants overnight, that’s what really makes this a big idea. And that’s unique to us. People just don’t have that many restaurants that they own, that can generate the kind of sales that flows through incrementally and creates the kind of potential for profit.”
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