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2018 Top 200 countdown: No. 50-No. 1 Chili's

Chili’s value strategy drives traffic in Q1

Traffic was up 4% at company restaurants in the period

Chili’s Grill & Bar has calibrated its value equation just about right, executives said Tuesday, creating a mix of offers that helped drive traffic gains in the latest quarter.

With a variety of value-oriented platforms such as “3 for $10” and “2 for $22,” the Dallas-based division of Brinker International Inc., saw traffic at company-owned Chili’s increase 4 percent in the first quarter ended Sept. 26. 

“We feel really good about where we're sitting right now with the combination of several kind of more value-oriented platforms on our menu,” Joe Taylor, Brinker chief financial officer, told analysts in a post-earnings call. “We think we've got a really nice balance.”

Wyman Roberts, Brinker CEO and president, added that the brand’s most recent menu introduced a “comprehensive value strategy” that was compelling to core guests at both lunch and dinner.

“We've taken an aggressive approach to creating offerings that meet a variety of consumer's needs and that leverage the unique attributes that differentiate the Chili’s brand,” Roberts said. 

Roberts said Chili’s will “lean into” the value programs, which also include the monthly feature of various $5 happy-hour margaritas, for longer periods than a limited-time offer.

“It also takes pressure off your marketing that you don't have to kind of recreate urgency every six or eight weeks,” he said. “You get to build a loyal guest base against the ongoing value propositions that you offer, and that's kind of the strategy we're taking and with regard to how it's playing out for us. We feel really good about where we are right now.”

Meanwhile, Chili’s continues to emphasize its to-go business, and Roberts said that is growing “double digits.”

He added that the brand continues to focus on to-go orders, which he said are incremental, with less emphasis on a delivery program, though it works with third-party programs.

“The desire for today's consumer across the demographics to find convenience and to spend a little more time at home is undeniable,” Roberts said, but the third-party platform delivery business so far has few clear leaders. 

“It still a very fragmented,” he said. “You see some bigger players that are coming in. We're first off focused on making sure that the delivery options — if there's going to be a big one — that it works well within the system. And right now when you walk into our restaurant you see multiple iPads for every delivery partner … Those don't integrate very well into a restaurant system, especially on a busy restaurant on a weekend night.”

Roberts said Chili’s doesn’t have an aversion to delivery, “but we're going to walk into it with our eyes wide open and with partners that kind of understand our business.”

For the first quarter ended Sept. 26, Brinker’s net income increased 166.7 percent to $26.4 million, or 64 cents a share, from $9.9 million, or 20 cents a share, in the same period a year earlier. Profit included special items, including a $11.1 million gain related to sale-leaseback transactions in the quarter. Revenues increased 1.9 percent to $753.8 million from $739.4 million in the same quarter a year earlier.

Same-store sales at company-owned Chili’s rose 2 percent in the first quarter and 1.5 percent at domestic franchised units. Chili’s international franchise same-store sales declined 3 percent in the first quarter. Maggiano’s Little Italy’s same-store sales were flat in the quarter.

As of Sept. 26, Brinker owned, operated, or franchised 1,686 restaurants, including 1,634 Chili’s and 52 Maggiano’s Little Italy units. 

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

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