If you think Chili’s is busy now, you should have seen the chain 25 years ago.
The resurgent casual-dining chain has been on a sales and traffic tear over the past three years. It just recorded its 20th straight quarter of positive same-store sales and is running circles around many of its competitors. And yet it’s still averaging 20% fewer customers per week than it was from 2000 to 2005.
In other words, its restaurants are capable of doing even more. And the company is working on figuring out how.
Chili’s already has a solid framework in place: Continual investments in food, service and atmosphere, backed by savvy, value-driven marketing, has been a reliable formula for growth over the past three years. When a new customer comes to Chili's these days, they tend to keep coming back.
The challenge for Chili's now is not necessarily attracting more customers, but ensuring that its restaurants can meet the demand.
Recently, executives for parent company Brinker International have been studying the chain’s most lucrative locations to determine how the chain can reach its ceiling. They call this group “North of 6” because they generate more than $6 million in revenue a year, compared to about $4.6 million for the average Chili’s. Traffic at North of 6 locations can be anywhere from 20% to 80% higher than average.
The message from managers at those restaurants is that Chili’s needs to make its operations even simpler.
Since Brinker CEO Kevin Hochman took the reins in 2022, simplification has been one of his calling cards. Some of his first moves were eliminating small, unnecessary tasks at Chili’s, like counting out shrimp in the morning and serving fries in fussy, paper-lined metal baskets. All of those little cuts have added up to significant strides in service and staff retention at Chili’s in the Hochman era.
There’s always more to be done. On an earnings call Wednesday, Hochman noted that the chain is looking at ways to ease friction when customers pay with the Ziosk tablet at their table, for instance. Sometimes a discount isn’t applied or the customer makes a tipping mistake and needs a manager to reverse it, which slows down service.
There are so many examples like this that Hochman described it as both “frustrating” and “exciting.”
The chain is taking a particularly close look at what it calls cycle times, which is essentially every step that goes into turning a table, from the host stand to checkout and resetting the table. It’s working to understand where the bottlenecks are and how to remove them so that its restaurants can serve more customers.
On weekends, the average wait time for a table at Chili’s is about 15 to 20 minutes. “That number is pretty good,” Hochman said. “But remember, that's just an average, which means there are about half of restaurants with longer waits.”
This is where North of 6 restaurants tend to do things differently. For instance, these stores will often put more staff at the host stand than what Chili’s standard labor formula calls for. Sometimes they will allocate more senior employees or even a manager to that position during busy periods to help manage traffic and ensure accurate quote times. Some of these processes will roll out to more locations next fiscal year, Hochman said.
In general, Chili’s North of 6 restaurants do tend to spend more on labor, which is typical of any high-volume restaurant. Usually they beef up the busser or server assistant roles and sometimes servers, hosts and cooks as well, said CFO Mika Ware.
Some of these additional investments will be baked into Chili’s budget for next year, she said, but much of the work will simply be formalizing practices that some restaurants are already doing.
“There will be some investment, but it's not going to be as material as it has been in the last few years when we really had to staff up to just get that base model right,” she said.
Despite all of Chili’s growth over the past three years, it still has a lot of dry powder. It has a proven formula for growth. It has only just begun a campaign to renovate many of its restaurants, not to mention opening new ones, which won’t happen until fiscal 2029. And if it can get more of its 1,510 locations to $6 million in annual sales, look out.
“We know we have a lot more capacity in the buildings,” Hochman said.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.