Chili's slimmed-down menu is winning, CEO says
Chili's says it is ushering in a younger audience with the help of social media
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A number of dinner-favorite restaurant chains, including TGI Friday's, Denny's, Ruby Tuesday, Rubio's Coastal Grill and Red Lobster, have faced financial difficulties in recent years, with many hit hard after the COVID-19 pandemic.
Even before the pandemic, Texas-based Chili's faced its own setbacks. The company contended with stagnant sales and closed locations.
Kevin Hochman, CEO of Chili's parent Brinker International, introduced a new strategy when he took the helm in 2022 to reinvent the company and bring it back to its heyday. It involved a smaller menu, revamped restaurants and boosting its social media presence.
"Having a more focused menu where we can do fewer things a lot better is having a big impact on our Food Great Scores as well as making the job easier for our Chilihead team members," Hochman told FOX Business. He added that the company will continue simplifying the menu while simultaneously enhancing key ingredients.
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A customer walks toward the entrance of a Chili's Grill & Bar restaurant in San Antonio. (Callaghan O'Hare/Bloomberg via Getty Images / Getty Images)
Food Great Scores is one of the ways the company measures the guest experience. Following their meal, guests have the option to answer a few questions on the Ziosk device at their table about their experience with food and service, and their intent to return to the restaurant.
The quick-service sector has been facing slowing traffic in back-to-back quarters as inflation-wary consumers continue to eat at home more often. However, Hochman says the company's strategy is driving back traffic among its "existing fan base" as well as with a younger generation that has been introduced to the brand for the first time through social media channels.
Chili's reported positive second-quarter results last month, with restaurant sales up 31% compared with the same period a year ago. Hochman said during the company's earnings call that the restaurant chain "significantly outperformed the industry."
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| EAT | BRINKER INTERNATIONAL INC. | 144.87 | -8.72 | -5.67% |
"We're pleased with our sustained momentum, the strength of the operational muscle we built and our significantly improved Chili's guest experience," Hochman told analysts on the Jan. 29 call. By simplifying its operation and making investments in labor and its stores, Hochman said that "Chili's is broadly relevant again and delivering a guest experience that has restored its leadership position in casual dining."
Aside from slimming down its menu, Hochman told FOX Business that the company "invested hundreds of millions of incremental dollars over the past three years" in improving the customer experience. This includes ramping up advertising investments and continuing to fund remodels and service improvements.
The company plans to revamp up to 125 restaurants each year by fiscal year 2027. The majority of the stores will be reimaged over the next 10 years.
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The company plans to revamp up to 125 restaurants each year by fiscal year 2027. (Callaghan O'Hare/Bloomberg via Getty Images / Getty Images)
During the earnings call, Hochman highlighted the success of its marketing team in particular, noting that it has done a good job at "bringing guests in and putting Chili's back in culture again."
Hochman believes that as long as the company continues with this strategy, it will keep an edge over competitors.
"It will be difficult for our competitors to catch up in the short term," Hochman said. "Sure, they can undercut our industry-leading value on price, but it would take years and a lot of courage to make the investments needed to get their experience and food where ours is now."