When Brinker International CMO George Felix arrived at the Chili’s and Maggiano’s parent 10 months ago, one of the first things he did was look at Chili’s menu. And he did not like what he saw.
The bill of fare was complicated, cluttered and hard to navigate, he said during Brinker’s annual investor day this week. What’s more, the food hadn’t really changed in years.
From a marketer’s perspective, it was “difficult to really say what we stood for as a brand,” he said, according to a transcript from financial services site Sentieo.
Felix was hired by CEO Kevin Hochman, who came over from Yum Brands to help revive the listless casual-dining chain. Felix worked with Hochman at KFC and has been a key part of Chili’s efforts to reclaim its identity.
That has included standard marketing tactics like new TV ads and a margarita song contest. But part of his focus has also been on the menu, where Chili’s is doubling down on its “core four” items: burgers, fajitas, margaritas and chicken tenders (or Chicken Crispers, if you’re a ChiliHead).
Those categories already make up about 40% of the chain’s sales, Hochman told investors. With some close attention, he thinks they can be even bigger.
The trouble was, when Felix arrived, there was no formal process for menu innovation. So the CMO created one, called Pepper.
He didn’t go into much detail about how Pepper works, saying only that it’s a five-part stage-gate process. Over the past six months, two of Chili’s core four—Chicken Crispers and margaritas—have gotten the Pepper treatment. Here’s how the process shook out.
Chicken Crispers get a facelift
Despite being a popular item, Chicken Crispers used to occupy just a small corner of Chili’s in-restaurant menus. After Pepper, Chili’s is giving them a bigger spotlight, including eye-catching photography and more real estate.
Customers will also find more variety within the Crispers segment. For instance, they can now choose servings of four, five or six pieces, a change Chili’s believes will appeal to bigger appetites and lead to bigger checks.
In a test market, the expanded options contributed to 30% higher Crispers sales, “just by offering guests bigger amounts to purchase,” Hochman said. “That could be 2 to 3 points of sales growth just on that.”
Through Pepper, Chili’s also identified a need to add more sauce options for its Crispers, noting that 90% of customers dip their chicken tenders. So it turned to its virtual brand, It’s Just Wings, and brought some of its sauces to the Crispers lineup. It also added two new sauces of its own: Buffalo Ranch and Sweet Chili Zing.
The chain has also improved the frying process for the Crispers, resulting in crispier, juicier pieces. Late last year, it also dropped the less-popular Original Chicken Crispers from its menu. The item was made with tempura batter and added complexity to the kitchen.
Finally, it ditched corn on the cob as Crispers’ default side (Felix said it’s a bit outdated) and replaced it with a new item, white cheddar mac and cheese.
“We've now significantly upgraded our Crisper bundle, and we now have created what we think is a great growth layer for us going forward,” Felix said.
More margs
Chili’s has always been known as a margarita destination. In fact, Felix said, if Chili’s were a country, it would trail only the U.S. and Mexico in terms of total tequila consumption. “And we are right on the heels of Mexico.”
But prior to Pepper, much of Chili’s margarita strategy was centered on its discounted Margarita of the Month program. In addition, the flavor profile of its margs lineup tended to skew towards sweet, Felix said.
“We found that we needed to innovate both in terms of flavor breadth and in terms of different varieties of margaritas” at different price points, he said.
It came up with what Felix called a “good, better, best” model for its margs. The update maintains the Margarita of the Month option at a low price point of $6 or $7. But it upgrades the middle tier, home to Chili’s signature Presidente Margarita. The popular drink will once again be hand-shaken, allowing Chili’s to push the price to $9—“a pretty easy trade-up for those that are looking for something a little bit better than that opening price point,” Felix said.
On top of that, it’s adding premium margaritas made with better ingredients, such as Casamigos tequila, that will go for around $13.
“We know that some of our guests come to Chili's and they're looking for a trade-up,” Felix said. “And now we've given them an ability and a lineup to do so.”
To promote the refreshed margarita menu, Chili’s launched a new ad campaign, “It all starts with the marg,” featuring Jenna Fischer and Angela Kinsey, who played Pam and Angela on “The Office.”
The changes align with Chili's broader turnaround strategy, which has sought to de-emphasize discounts; encourage trade-up; and simplify operations in service of better food.
In its most recent quarter, same-store sales rose 9.6%, including 9.8% higher prices, a 5.6% positive mix shift and 5.8% negative traffic.