Brinker details global expansion plans for Chili's
June 9, 2010
by Eric Schroeder
BOSTON — Brinker International, Inc., which operates nearly 1,500 Chili’s Grill & Bar restaurants around the world, plans to expand to 425 overseas restaurants by fiscal 2014, up from 207 restaurants currently.
Speaking at the Bank of America Merrill Lynch Small and Mid Cap Conference held June 8 in Boston, Guy Constant, senior vice-president of corporate finance for Brinker, outlined the Dallas-based restaurant operator’s four-pronged strategy for leveraging its international growth opportunities.
First, the company will continue to build its presence in scalable markets, Mr. Constant said.
“It is not just about opening restaurants and planting flags in new countries, but creating depth in a market, giving us operating efficiencies and healthy profit levels,” he said. “In line with this strategy, we’ve signed development agreements with partners in both India and Russia to open 25 restaurants in each country.”
A second strategy Mr. Constant pointed to is Brinker’s relationship with strong franchise partners. He said the company has gone to great measures to review potential franchisees’ debt levels and available equity, as well as their reputation and operating track record.
Building strong customer connections are a third key to international success, Mr. Constant said.
“Understanding the local market and tapping into the growing middle class is one of the keys to driving sales,” he said. “By listening to our guests, Brinker’s tailored its menus to local diets more so than any other casual dining brand internationally.”
Finally, Mr. Constant said Brinker is developing a flexible investment model, one in which the market dictates what will be most effective for franchise partners in expanding their development commitments.
“This four-pronged strategy provides the foundation we need to reach our goal of 425 restaurants by 2014,” Mr. Constant said. “While the primary growth vehicle will be partnering with strong franchisees, we also anticipate investing approximately $7 million over the next two years to fund joint ventures in high-growth markets like Brazil and Mexico.
“We will open approximately 30 international restaurants in fiscal 2010, more than anyone in the casual dining industry, and will open another 95 to 105 during fiscal 2011 and 2012, with more than 70% already committed through an existing development agreement. As we look forward, the growth potential on the global front continues to be huge for Brinker.”