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Chili’s hones in on convenience focus

Brinker leans into off-premise sales, driving traffic

Brinker International Inc. continues to focus on driving traffic by working on making its Chili’s Grill & Bar more convenient for its customers, executives said Wednesday.

“This whole convenience aspect of the business is important,” said Wyman Roberts, Brinker CEO and president, in a first-quarter earnings call. “It is a trend.”

The Dallas-based casual-dining company, which also owns Maggiano’s Little Italy, has seen consumers widen their purchase channels as they seek more convenient ways to access restaurants.

For example, off-premise sales growth was the primary driver of Brinker’s company-wide 2.3% same-store sales increase in the first quarter ended Sept. 25, said Joe Taylor, Brinker chief financial officer, “with a year-over-year growth rate of in excess of 25%.” Off-premise sales, which include both to-go and delivery, make up about 15% of total Brinker sales, he added.

Brinker in June partnered with DoorDash as its third-party delivery aggregator and has incorporated that as a white-label option in its own Chili’s app.

“It’s early in all of our convenience initiatives, as we call them, whether they’re to-go, delivery, partners and the stuff we are doing on our own,” Roberts said.

The company is also working on other technology-based initiatives to debut next year.

“We are moving forward on a couple of technology fronts,” Roberts said, which including new tabletop devices in the third quarter and handhelds for wait staff. “We feel good about the progress we are making on the technology front.”

Roberts said Chili’s is focused on assuring it maintains and grows traffic in a competitive economy.

“We’re a little surprised, frankly, that given the macroeconomic trends that the industry is struggling a little bit on the traffic side, especially,” he said. “That’s why we continue to put a lot of emphasis on driving traffic and keeping bodies coming into the brand. We’re confident that the strategies we’ve got in place will continue to do that.”

Among those strategies is the continuation of Chili’s “strong, everyday value proposition” with the “3 for $10” platform which after more than year continues to perform well, Roberts said, but not available on all platforms.

“It’s not a current offer in third-party delivery,” he added, “so that’s an interesting twist, if you will, in how we market and leverage ‘3 for $10’ in various channels.”

The company is also continuing to maintain its takeout channels, which remains in the “high single digits” as a percentage of sales, Roberts said. “Convenience has to play across all the channels,” he noted.

“We’re now going into our ninth quarter of positive comps on takeout,” he said. “We don’t see any reason we can’t have a similar long runway with delivery.”

For the third quarter, Brinker’s net income fell 43.6% to $14.9 million, or 39 cents a share, from $26.4 million, or 64 cents a share, which included a sale leaseback transaction and other special items. Revenues increased 4.3% to $786 million in the quarter compared to $753.8 million in the prior-year period.

Same-store sales were up 2.3% systemwide, with company-owned Chili’s rising 2.9% and franchised restaurants up 0.4%. International franchised units saw same-store sales decline 1.3%.

Maggiano’s company-owned same-store sales declined 1.8% in the first quarter. “The brand used fewer marketing resources in this quarter to offset industry sales softness,” Taylor said.

Brinker International Inc. in September completed the acquisition of 116 Chili's restaurants, mostly in the Midwest, from its 14-year franchisee, ERJ Dining of Louisville, Ky.

As of Sept. 25, Brinker owned or franchised 1,672 restaurants, including 1,619 Chili’s and 53 Maggiano’s.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

TAGS: Finance
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