After ending its “3 for $20” value promotion in January, Chili’s Grill & Bar has resurrected the deal as a limited-time offer for E-mail Club members in three states.
The coupon-required promotion, which again offers two guests two entrees and a shared appetizer and dessert for $20, may be aimed at boosting same-store sales, Brad Ludington, an analyst with KeyBanc Capital Markets Inc., said in a research note Wednesday.
The e-mail offer is available in California, Texas and Utah through May 23. The offer includes a choice of five appetizers and three desserts. Fourteen entrees were on the list, including such new items as Santa Fe Chicken Wrap, BBQ Pulled Pork Sandwich, Shiner Bock BBQ Burger and a half rack of ribs with Shiner Bock BBQ Sauce.
“We believe the decision to again run ‘3 for $20’ in major markets supports our thesis that Chili’s would lag other restaurants' [same-store sales] improvements when rolling off of the deep discounts of last year into a consumer recovery,” Ludington wrote.
Chili’s same-store sales for the quarter ended March 24 were down 5 percent, compared with a decline of 9.5 percent in the year-ago period.
A Chili’s spokeswoman said late Wednesday that she was looking into the promotion and did not have an immediate response.
Chili’s first introduced the “3 for $20” deal in the summer of 2009, following competitor Applebee’s Neighborhood Grill’s “2 for $20” deal, which includes a shared appetizer and two entrees, but no dessert. Chili’s retooled the promotion's margins during an early fall hiatus and reintroduced it last October.
It ended the deal in late January, when Chili’s president Wyman Roberts said a more streamlined menu with 75 percent new items would replace the promotion.
“The three-course promotion did drive traffic and our continued focus on improving the program has made each phase of the promotion more profitable,” Roberts said at the time.
Meanwhile, some casual-dining competitors have continued their value deals. Applebee’s has continued its “2 for $20” menu, and T.G.I. Friday’s has offered an appetizer, entree and dessert for $12.99 a person.
Ludington said, “We continue to believe Chili's ‘3 for $20’ deal, while a driver of incremental guest traffic, pressures margins and average check.”
Other restaurant segments have been nibbling at casual-dining’s market as well. Buffet chain Golden Corral has been promoting its “Endless Baby-Back Ribs” nationwide with a television advertising campaign that takes an indirect shot at casual-dining chains like Chili’s, which has made baby-back ribs a signature item. Golden Corral’s rib promotion began April 27 and lasts through July 5.
Ludington added in the research note that while Chili's offer applies to restaurants in only three states, it probably reaches customers in 26 percent of Chili’s more than 1,290 domestic stores.
“While the offer states that it is only available to E-mail Club members who print out the coupon at Texas, California and Utah participating locations, we believe restaurants in these states will likely honor requests for the promotion to all interested customers with or without a printed coupon,” he said.
As of March 24 in the United States, Brinker had 1,293 Chili’s restaurants and 44 Maggiano’s Little Italy locations. Brinker in March announced it was selling its 149-unit On the Border Mexican Grill & Cantina division to Golden Gate Capital, a private-equity firm in San Francisco, for $180 million. In 2008, Brinker sold a majority stake in its Romano’s Macaroni Grill chain to Golden Gate.
Executives at Dallas-based Brinker recently said they were putting more emphasis on international expansion, where it currently has 206 Chili’s, 11 On the Borders and one Maggiano’s.
Contact Ron Ruggless at [email protected]