Chili’s has outperformed most of its competitors in the casual dining sector. | Photo: Shutterstock
Who says consumers are cutting back? Brinker International reported a 14.8% increase in same-store sales and a 5.9% increase in traffic in the fourth quarter, attributing the exceptional gains for a casual dining chain to the fact that it is behaving more like a fast-food brand.
The results were not enough to satisfy Wall Street. The company’s stock price fell 13% as profits fell short of analysts’ expectations. Investors were also disappointed by the company’s guidance for the coming fiscal year.
However, Chili’s biggest driver of sales and traffic has been its Big Smasher burger and the advertising that went with it, which has presented the offering as a cheap alternative to what fast food lovers would find at McDonald’s or Burger King. Many of the customers drawn to this value play have been new customers, according to Brinker CEO Kevin Hochman.
He noted that the traffic gain for Chili’s, a figure largely unmatched for the most recent calendar quarter by other public restaurant companies, was actually tempered by 2.3 percentage points by the chain’s shift away from its virtual wings brand.
The numbers from Chili’s, which primarily offers burgers and margaritas, contrast sharply with those released by most other public restaurant chains for their latest quarters, which have established a pattern of reporting a slight change in same-store sales and a decline in traffic of between 1% and 5%.
Gains at Brinker’s second brand, Maggiano’s, were more muted but still positive. The Italian casual-dining chain posted a 2.5% increase in same-store sales. The company didn’t initially report traffic figures for the secondary brand, but executives later said that customer numbers fell 8.9% and that the sales increase reflected a 9.2% price increase.
Overall, the company reported net income for the quarter of $57.3 million on revenue of $1.2 billion.
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Peter Romeo has been covering the restaurant industry since 1984 for various media outlets. As editor-in-chief of Restaurant Business, his current areas of focus are government affairs, labor and family dining. He also serves as the publication’s unofficial historian.
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