Brinker continues to focus on turnaround strategy for Chili's

by Eric Schroeder
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Chilis
Chili's is focused on improving the quality and value of its core menu items — burgers, ribs and fajitas.
 
DALLAS — The first quarter of fiscal 2018 was a challenging one for Brinker International, Inc. as the Dallas-based quick-service restaurant operator dealt with significant weather events and finalized its turnaround strategy for Chili’s.

Net income in the first quarter ended Sept. 27 totaled $9,877,000, equal to $0.20 per share on the common stock, down nearly 58 percent from $23,233,000, or $0.42 per share, in the same period a year ago. Net revenues also were lower, easing 3 percent to $739,390,000 from $758,492,000.

During the first quarter Brinker said its focus was squarely on finalizing its turnaround strategy for Chili’s. In mid-September, the company said it would be cutting its menu by 40 percent and investing in improving the quality and value of its core menu items — burgers, ribs and fajitas.

Wyman
Wyman Roberts, president and CEO of Brinker

“Our strategy started with the new menu,” Wyman T. Roberts, president and CEO, said during a Nov. 1 conference call with analysts. “We reduced the menu by 40 percent and improved quality across signature items that present the biggest opportunity to move our business forward, specifically burgers, ribs and fajitas. With this simplified menu, we now offer guests full-on fajitas with improved-quality products and presentation and nearly 50 percent more meat; Texas-sized ribs, a new meatier rib offered at the same price as our original product; and bigger, Big Mouth Burgers, industry-leading, half-pound, handcrafted patties across the category, smashed for greater flavor and served on a brioche bun. We also established a solid value foundation in this important category with the longtime favorite, Oldtimer with cheese, served with fries, for just $6.99 all day, every day.

“We’re about six weeks into the new menu, and preference is up to nearly 40 percent across these signature entrees. And with so many of our guests choosing burgers, ribs and fajitas, our operators can focus on delivering faster, hotter foods. Our teams are guided by the principle that nothing matters, except that the guest returns. We’ve been training at every level to improve the consistency and speed of the guest experience, and so far, overall ticket times have decreased 12 percent. More importantly, tickets longer than 15 minutes, and those are ones that generate the greatest number of guest complaints, have dropped 40 percent, and those guests are now much more likely to return.”

 

Chilis
Chili's offers a burger called the Oldtimer with cheese, served with fries, for $6.99.
 
Now that Chili’s has established a solid foundation for its menu, the restaurant chain has its eyes set on turning up the dial on value strategy, Roberts said. While declining to go into detail about its strategy, he indicated that broad plans call for Chili’s to “more aggressively address dayparts, products and price points to execute a value strategy that works even harder to drive traffic.”

Asked during the call where Chili’s is seeing the biggest shift in restaurant traffic, Roberts said it’s still a little too early in the turnaround to pinpoint specifics. However, he noted that there has been an uptick in traffic from lighter users as well as a return from guests who hadn’t been to Chili’s in a while.

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