DALLAS — Improved operational execution, a 3 for $10 value platform and increased takeout orders led to “the best traffic growth we’ve seen in 10 years at Chili’s,” said Wyman T. Roberts, president and chief executive officer of parent company Brinker International, Inc., during a Jan. 29 earnings call.
Chili’s traffic jumped 2.9% from the previous year’s second quarter, which saw a 4.1% decrease from the year before that. Maggiano’s Little Italy restaurants brought in 1.3% more traffic from the same period a year ago.
Brinker International, Inc. in the second quarter of fiscal 2019 ended Dec. 26, 2018, had net income of $32 million, equal to 83c per share on the common stock, which was up 26% from $25.3 million, or 54c per share, in the previous year’s second quarter. Total revenues in the second quarter of fiscal 2019 increased 3.2% to $790.7 million from $766.4 million.
“Brinker delivered our fifth consecutive quarter of sequential sales improvement, posting positive sales and industry leading traffic,” Mr. Roberts said. “Our sustained momentum is being driven by several key factors including operational execution, takeout and value.”
Efficiency in operations has been key to Chili’s recent resurgence, Mr. Roberts said. In late 2017, Brinker whittled down the Chili’s menu by 40% and invested in improving the quality and value of its core menu items, which include burgers, ribs and fajitas. The efforts have streamlined operations and allowed the restaurant chain to deliver faster, hotter foods.
"Today, we’re seeing some of the best guest metrics we’ve ever seen." — Wyman Roberts, Brinker International, Inc.
“Our operational momentum is bringing guests back into our restaurants,” he said. “Our guests are telling us our execution and quality are significantly better even with the higher volumes. Today, we’re seeing some of the best guest metrics we’ve ever seen. We believe our ongoing commitment to keeping operations simple and getting it right for every guest will have long-term impact on bringing guests back.”
The company’s focus on operations led to Chili’s 3 for $10 value platform, which is simple for operators to execute consistently, Mr. Roberts said. The platform — which allows customers to choose a non-alcoholic beverage, an appetizer and an entree for $10 — has contributed significantly to Chili’s success.
“3 for $10 is a relevant and compelling offer that’s sustainable into the foreseeable future,” Mr. Roberts said. “The platform is highly motivating from a consumer’s perspective. It’s at the right level of preference, and it’s driving traffic because it meets the needs of our lunch, our dinner as well as our takeout guests. The offerings are full portion and high-quality products, and the platform is flexible enough to keep it fresh, so guest satisfaction and intent to return are very strong.”
Another sales and traffic driver for Chili’s during the quarter was its takeout business. To-go sales surged 20% in the second quarter, Mr. Roberts said, reflecting a rise in e-commerce, packaging improvements and better takeout experience execution.
“Consumers love the variety in our menu — couple that with the seamless experience we give them from order to checkout to pay to takeout, and you can’t get takeout any easier or more affordable than with Chili’s Curbside,” Mr. Roberts said, “We’re meeting our guests’ needs, and we’re delivering a great guest experience. So at 12% of our business today, we believe takeout still has plenty of upside, and we plan to leverage that.”
Additionally, Brinker has grown its My Chili’s Rewards loyalty members database to more than 6 million members, and Mr. Roberts said the company sees “significant opportunity” to leverage those connections in the future.
Brinker’s foremost future focus is continuing the upward trajectory of its traffic.
“This has been the best traffic growth that we’ve seen in the brand in quite some time,” Mr. Roberts said. “The potential for us to continue it, we’re optimistic about. We want to continue to move traffic forward. When we think about what the drivers are to future growth, it’s not just the viability of the value platform. It’s that, coupled with, where does your takeout strategy go from here, how does your operational momentum build to the future with regard to consistency and winning guests back from that perspective. So there’s multiple elements to the Chili’s growth story that we’re counting on, and we’re confident it will allow us to continue to grow the business.”