Those who doubted Chili's ability to keep this up will have to wait at least one more quarter.
Same-store sales at the casual-dining chain surged 24% in the fourth quarter of the chain’s fiscal year, driven by a 16% traffic increase. The growth came on top of a 15% increase a year ago, putting Chili’s two-year same-store sales growth at an eye-popping 39%.
It was the chain’s fifth straight quarter of double-digit same-store sales growth, continuing an astounding turnaround at the Dallas-based brand that has been fueled by value, marketing and social media as well as improved operations and food. The building blocks of the plan, such as $10.99 value meals, continue to pay dividends, while newer strategies like ribs and frozen margaritas are also taking off. Like a basketball player with a hot hand, Chili’s can’t miss.
The performance has been all the more impressive given the sluggish consumer environment. While other restaurant chains have noted weaker spending, Chili’s customers are feeling good: Mix rose nearly 5% in the period as they ordered pricier items and tacked on appetizers or desserts.
The chain's success has also led competitors such as Applebee's and Red Robin to step up their game. But that hasn't bothered Chili's, either: Its same-store sales growth outpaced the rest of casual dining by a whopping 1,890 basis points, Brinker International CEO Kevin Hochman said Wednesday.
As it has throughout its revival, Chili’s credited its focus on the fundamentals of food, service and atmosphere, a strategy that Hochman put in place when he took the helm three years ago. The company’s goal was to lure customers with value and marketing, and then keep them coming back by providing a good experience in the restaurant.
Chili’s main traffic-generating engine, the $10.99 3 for Me value meal, continued to draw in customers in the quarter. In April, Chili’s expanded the 3 for Me selection with a new Big QP Burger that was aimed squarely at fans of McDonald’s Quarter Pounder. Executives hailed the Big QP as another success.
The Triple Dipper appetizer platter, meanwhile, continues to see strong demand after sparking a social media movement last year, with TikTok users showing off their “cheese pulls” with the trio’s mozzarella sticks. About 15% of transactions now include a Triple Dipper, and Chili’s is planning to build on that interest by featuring the platter in TV ads later this year.
Not content to rest on its laurels, Chili’s also introduced two new menu initiatives in the period that are showing promising results: ribs and frozen margaritas.
Ribs have long been a core item for Chili’s, which remains well-known for its “baby back ribs” jingle from the ’90s. But the item has not been all that popular as of late. Before the recent upgrade, only about 4% or 5% of Chili’s customers ordered ribs, Hochman said.
The new ribs are larger and tastier than before, with a “delicious bark,” creating a “wow” factor when they’re brought to the table, he said. Since the relaunch, rib orders are up 20%, and the brand plans to begin marketing them in earnest at the end of the calendar year.
“It's clear we have a winning product with our new ribs, and our intent now is to use them to drive traffic,” Hochman said.
The new frozen margaritas program, meanwhile, features three frozen drinks made with Patron tequila. Sales are up 100% despite a higher $10 price point, “significantly exceeding expectations,” Hochman said.
The latest flurry of good news for Chili’s prompted the CEO to take a look back at how far the chain has come since its turnaround began three years ago.
Chili’s average unit volumes have increased by more than $1 million, to $4.5 million, over that time. Its menu is now 25% smaller, allowing the chain to focus on core items such as burgers, chicken crispers, fajitas and margaritas, and reducing complexity for employees. Chili’s is now spending $160 million more on labor than it did in 2022, and yet restaurant-level margins have expanded nearly 6 points, to 17.6%. And it has invested $100 million into repairs and maintenance at its restaurants.
The changes have led to not only industry-leading sales and traffic growth, but also better operations. The chain’s food scores are at a record high, and its key metric, “guests with a problem,” is at an all-time low of 2.3%, Hochman said.
“The reason why we are sharing this detail is to substantiate that Chili's is a completely different concept today than it was three years ago,” Hochman said. “Those who believe our success was driven solely from a cheese pull and social media are just not close enough to our story.”
In other words, Chili’s believes this hot streak is sustainable. And it is not planning to take its foot off the gas.
Besides ribs and frozen margs, Chili’s is zeroing in on two other menu items to generate sales over its next fiscal year: nachos featuring a new queso, and a “major relaunch” of its chicken sandwiches.
It also plans to invest in upgrades to base ingredients like mayo, ranch and bacon slices, which will be 50% thicker. The chain believes these changes will help lift overall menu quality and put further distance between Chili's and its competitors.
“At a time when others may be pulling back on quality to offset inflationary headwinds, we view this as an opportunity to accelerate our food quality,” Hochman said.
On the operations side, it is continuing to look for ways to simplify processes and improve execution. Specifically, it’s taking best practices from its highest-grossing restaurants—those with AUVs of $6 million and above—and bringing them to the rest of the system. It’s also introducing new labor scheduling tools.
With immediate repairs and maintenance now complete, it will also move on to remodeling restaurants. It plans to complete four remodels by the end of the year and will use results from those to determine how to best bring the new look chainwide. By fiscal 2027, it expects to begin remodeling 10% of its stores annually.
Hochman did not provide many details about the new Chili’s design, but said it elicited “a lot of oohs and ahs” at the chain’s annual manager conference last week.
Aside from remodels, Chili's will also begin to ramp up new restaurant openings for the first time in years with the goal of returning to net new unit growth in fiscal 2027. Chili’s biggest footprint is in Texas, Florida and California, but with new stores, it will look at new or less-penetrated markets, such as the Northeast and the Pacific Northwest.
To support those efforts, Brinker hired Richard Ingram as its new VP of restaurant development. He’ll oversee remodels and new openings at Chili’s and its sister brand, Maggiano’s. Ingram previously spent more than 20 years with 7-Eleven.
Chili’s is also looking at some of its technology. It plans to upgrade its Wi-Fi chainwide for faster and more reliable service. And it is redesigning the interface on its handheld server tablets to make them easier for staff to navigate. That will involve removing 700 SKUs from the menu that are no longer offered, and will reduce the need for employees to click and scroll as much to enter orders. Hochman said the chain has had issues with turnover among new employees who are frustrated by the technology.
“It's going to remove eight years of tapping for the servers when you add it all up annually,” Hochman said. “So it's a pretty big project.”
These efforts have given the brand confidence that it can keep up its same-store sales and traffic growth, albeit not necessarily at the astronomical levels of the past few quarters.
For fiscal 2026, executives expect Chili’s same-store sales to land in the mid-single digits while continuing to outpace the industry. The strongest growth is expected in the current quarter, with “more moderate gains” in the following quarters as the brand laps the large increases of the past nine months.
“We do expect to have positive same-store sales at Chili's all four quarters,” CFO Mika Ware said Wednesday. “It will be maybe less positive as we lap the harder numbers, but we still expect it to be positive.”
CORRECTION: A previous version of this story said Chili's traffic rose 19% last quarter. It rose 16%.
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