Convinced that Chili’s Grill & Bar has mastered its operational challenges and won back the trust of dine-in patrons, parent Brinker International has decided the brand is ready to plunge into delivery.
Brinker CEO Wyman Roberts said the choice of at least one third-party delivery partner could come shortly, though he added that there’s no set timetable. He also did not dismiss suggestions that Chili’s might team up with one or both of the delivery services used by its casual sister, Maggiano’s Little Italy. The Italian chain has been offering delivery through Postmates and DoorDash.
Chili’s has been one of the few forces in casual dining to sit out the delivery boom, along with Olive Garden and Texas Roadhouse. In Chili’s instance, the brand was concerned about logistics, quality and profitability. “We've seen a lot of players skin their knees on the bleeding edge of this burgeoning business, and, frankly, for us, it's been too high a risk as we worked hard the past year to build trust with our guests,” Roberts told investors Tuesday.
Instead, Chili’s focused on operations, cutting its menu to improve serving times and quality, intensifying the brand’s focus on its signature burgers, ribs and margaritas, and lessening its reliance on marketing as the key business driver. Its effort to tap consumers’ drift toward off-premise dining was limited to revamping the brand’s takeout program.
Roberts cited those efforts as the reasons for a 3% increase in Chili’s traffic for the third quarter ended March 27. The rise in transactions translated into a 2.9% rise in same-store sales for company-operated restaurants and a 2% increase for franchises.
“Now that our foundational business is strong, we're committed to figuring out a delivery program that integrates with our system and delivers the high-quality experience to our guests they're experiencing inside the restaurants and with takeout,” Roberts said. “We're close to finding a partner capable of managing our scale, one who is just as committed to our guests as well as profits for our shareholders.”
The decision was made easier by what Chili’s has learned from its revised Chili’s To Go program, and indications that third-party services are willing to budge on issues such as how much customer data they’re willing to share.
“As that marketplace becomes more competitive, you’re seeing what you’d expect to see: people fighting for share. People partnering better. And people working together better,” Roberts said.
He added, “We’re also seeing scale matter,” a suggestion that third parties may be willing to bend on the commission they charge chains of considerable size.
Because Brinker believed that Maggiano’s entrees traveled better than the bar food sold by Chili’s, the Italian chain has offered two types of delivery for some time. Small orders are transported via third parties, while the chain itself delivers large catering-sized orders.
Roberts’ comments suggested that Chili’s is not looking at self-delivery as an option. Archrivals Outback Steakhouse and Carrabba’s Italian Grill, both operated by Bloomin’ Brands, have opted to hire their own drivers and amass a proprietary delivery fleet.
“At Maggiano's, our delivery business continues to grow, up double digits year to date primarily through our third-party partnerships,” Roberts said. Maggiano’s posted a comp-sales gain of 0.4% for Q3.
“We clearly see the opportunity delivery could bring to our business,” he said of the pending decision for Chili’s.
Overall, Brinker posted a net income for Q3 of $49.8 million, an increase of 6.2% from the year-ago quarter, on revenues of $839.3 million, up 3.3%. The company operates or franchises 1,676 full-service restaurants.
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