Financing

Chili's sells a lot of tequila and other takeaways from the Global Restaurant Leadership Conference

Danny Meyer's big regret. Why so many economic headlines are contradictory. And don't forget to reallocate your AI labor savings.
Todd Penegor Kevin Hochman
Brinker International CEO Kevin Hochman, right, and Wendy's CEO Todd Penegor at GRLC. | Photo by W. Scott Mitchell Photography.

We attended the recently concluded Global Restaurant Leadership Conference in Miami, a three-day event that featured a high-powered group of restaurant executives from around the world. They discussed issues including international development, technology and leadership. Here are a few takeaways from the event.

Tequila country

Chili’s apparently does a lot of business in tequila.

The casual dining chain does huge business in margaritas. It is the top seller of margaritas in the U.S. And the company considers the beverage part of its “core four” of menu items, along with burgers, fajitas and Chicken Crispers.

Those margaritas need a lot of tequila. “If Chili’s were a country, we’d be the third-largest buyer of tequila,” CEO Kevin Hochman said at the Global Restaurant Leadership Conference (GRLC) on Tuesday, “The U.S. Mexico. Chili’s.”

That’s not the only point. Hochman noted that the company is working on a formula in which it focuses on its core menu items, works on operations as consumers grow choosy during the pandemic, and emphasizes the fun of dining at a casual dining concept.

“We look at the players that have won in full-service restaurants and their formula is pretty simple,” Hochman said. “It’s getting back to the basics of why people go out for a casual-dining experience.”

Which, in Chili’s case, is about tequila.

Danny Meyer’s big regret

In his book “Setting the Table,” restaurateur Danny Meyer boasted that he’d never closed a restaurant.

He apparently regrets the boast. “I feel badly that I wrote that,” he said. “As if not closing a restaurant is something to be proud of.”

Meyer then mentioned Tabla, an Indian restaurant he owned for 12 years before he closed it in 2010. It was the first restaurant he’d closed.

But he doesn’t consider that a failure. “I hate to say Tabla was a failure,” he said. “If you’re not taking risks, you’re not succeeding.”

In fact, Meyer said, he wished he’d closed it sooner. “I kept Tabla open two years longer than I should have,” he said. “I was so concerned about laying people off. I was holding people hostage for two years. Nobody was getting a raise. Nobody was getting a promotion.”

But the people at the restaurant, he said, went to “happy places,” either by starting their own restaurants or working elsewhere in the company. “I would never write that again,” he said.

A contradictory economy

Shari Bower, a regional executive with the U.S. Federal Reserve, posted a PowerPoint slide showing several different headlines from the Wall Street Journal, all showing contradictory signs on the economy.

There’s a good reason for that: The data itself is in disagreement. One minute consumer sales look wonderful. Another minute the jobs report is weak. Another minute the GDP is growing at nearly 5%.

“It’s a very confusing time to be an economics forecaster, because the data is very wonky,” she said.

That uncertainty will remain, apparently. Household debt is historically high. And more people are falling behind on their debt payments. But inflation is showing signs of easing and wages are growing.

That uncertainty, by the way, itself is causing businesses to slow spending.

“A lot of businesses are holding out on investments,” Bower said. “There is so much uncertainty. They don’t know what the impact is going to be. That is also causing businesses to wait and see for a while.”

Don't forget the ROI

OK, so you have that shiny new AI drive-thru that promises to reallocate labor in your restaurants.

Don’t forget to do that.

“A lot of use cases are built on a [return on investment] of reallocating labor,” said Karl Goodhew, chief technology officer with BurgerFi. “Make sure that actually happens, that you’re reallocating or removing labor. If you don’t, then you have your compute bill plus a labor bill and you’ve got executives looking at you, ‘How did we get here?’”

BurgerFi rolled out voice AI to all its locations. It has a 90% success rate. “That sounds fantastic,” Goodhew said, “But you’re still disappointing 10% of your customers.”

The solution? “You have to have an escape route” when it doesn’t work.

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