Brinker International Inc. plans to maintain its dumbbell pricing strategy that led to an increase in customer traffic in the fourth quarter and further simplify operations, executives at the parent company of Chili’s Grill & Bar said Wednesday.
Dallas-based Brinker, which also owns the Maggiano’s Little Italy brand, evaluated Chili’s turnaround in two years and the impact of the $10.99 starting price “3 for me” Platform following the release of results for the fourth quarter ended June 26.
“The last two years of our turnaround at Chili’s have been all about improving the guest experience and creating a traffic-driving model to create sustainable momentum in our business,” said Kevin Hochman, Brinker’s CEO and president, during Wednesday’s quarterly earnings call.
“Over the next two years, we will continue to do what we have always done: driving our differentiated brand through advertising, superior quality and food innovation with a dumbbell pricing strategy, simplifying operations and removing friction to improve the guest experience,” he said.
Hochman said Chili’s increased average restaurant sales by $440,000 to $3.6 million over the past two fiscal years.
“On the operations side, we have been conducting consultations with restaurant managers at our field offices across the country to better understand what we can do to make working in our restaurants easier and more rewarding, or to avoid it altogether,” he said.
As a result, Chili’s menu currently contains 22% fewer dishes than it did two years ago, he added.
In addition, Chili’s recently introduced artificial –“This reduces the amount of time our managers spend writing work plans and makes their forecasts more accurate,” Hochman said.
Among the dumbbell promotions, Chili’s has had success with the Big Smasher Burger on the $10.99 “3 for Me” menu, he added.
“A half-pound burger, unlimited chips and salsa, and unlimited drink for $10.99 continues to be an industry-leading offering in our opinion, and it continues to work,” Hochman said.
Mika Ware, Brinker’s chief financial officer, added that only 17.7% of guests chose the $10.99 tier, with premium products increasing in price to $14.99 and $16.99.
“The majority of our guests still come for the value, but then see the great menu and all the other options and opportunities to upgrade,” she said. “Over 80% of people still eat a full-price menu.”
Chili’s is also planning to relaunch its fajitas platform, which is currently a $200 million business.
“The new fajita lineup will include enhanced chicken, guacamole and pico de gallo recipes, as well as improved soft tortillas,” Hochman said. “We are also introducing new dip add-ons and all-new menu merchandising aimed at encouraging larger fajita packages.”
Chili’s also plans to streamline its operations by “eliminating curbside delivery to eliminate friction for team members and improving packaging to ensure our food arrives hot and fresh,” he said.
The first of these changes, curbside pickup, will be rolled out by the end of the first quarter.
For the fourth quarter ended June 26, Brinker reported net income of $57.3 million, or $1.24 per share, compared with $54.2 million, or $1.19 per share, in the same period a year ago. Revenue was $1.208 billion, compared with $1.075 billion in the year-ago quarter.
Store sales increased 13.5% for the quarter, with Chili’s increasing 14.8% and Maggiano’s increasing 2.5%.
Founded in 1975, Brinker International has 1,614 restaurants in the United States and 27 other countries, as well as two U.S. territories.
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