Chili's Earnings Fueled by Marketing and Takeout Demand

Chili’s is slowly but surely getting its customer base back.

The Dallas, Texas-based chain reported fiscal 2019 first quarter earnings Tuesday, and results were uplifting for the company that as recently as January was still struggling to attract restaurant visitors.

Chili’s announced a 2 percent rise in comparable-store sales in the quarter, boosted by a 4 percent jump in traffic. By comparison, parent company Brinker international, which also owns Maggiano's Little Italy, disclosed positive same-store sales of 1.8 percent and an overall 3.6 percent rise in visits.

Chili’s began committing efforts to improving its customer retention in the latter half of fiscal 2018 — gutting its menu by 40 percent in order to simplify offerings and revamping its rewards program. This quarter, Chili’s depended more heavily on marketing, running its 3 for $10 offering “quite a lot” during the period, Wayne Roberts, CEO and president of Chili’s acknowledged in an earnings call with investors. Don’t expect the company to stop pumping out ads either, he says.

“We've been following that strategy for the last eight or nine years” said Roberts. “Our preferable strategy is to make sure our value proposition on the base menu is compelling so that we don't have to go in and out and basically kind of whipsaw the restaurants with traffic changes that are just totally promotionally driven.”

Off-Premise Orders

Without giving much insight into traffic growth — regarding popular menu items or preferred customer dayparts — Chili’s says its quarterly numbers dictate the company’s next area of focus should be takeout, in order to capitalize on weekend nights and other restaurant peak times.

“Our new to-go business continues to grow double digits and now we're growing traffic both inside and outside the restaurant. So we've dialed in the basics and we'll continue to refine and tweak as we move forward,” Roberts said.

Chili’s, however, does not yet feel the same way about delivery, despite currently working with close to 50 different delivery companies nationwide.

“Right now when you walk into our restaurant, you see multiple iPads for every delivery partner. Those don't integrate very well into a restaurant system, especially a busy restaurant on a weekend night,” Roberts added. “So our focus right now with some of these big partners is [to] say listen, if you're going to partner with us, you're going to have to give us an operational model that works and you have to start thinking about how you're integrating with us.”