Chili’s ‘Better Than Fast Food’ Campaign a Success

The Big Smasher has been on the $10.99 3 for Me combo menu since April. | Photo courtesy of Brinker International.

It has to be said. Chili’s Grill & Bar went all out with the Big Smasher.

The casual dining chain reported a 14.8% increase in same-store sales for the fourth quarter ended June 26 on Wednesday, including a 5.9% increase in traffic, making Chili’s a leading player in the sector at a time when consumers appear to be cutting back on spending.

“To put that in context, it was 15.6 points better than the industry in sales and 9.4 points better than the industry in traffic,” Brinker International Chairman and CEO Kevin Hochman said on a call with analysts Wednesday.

The generously sized burger, with its 3-ounce patty, was added to Chili’s 3 for Me combo menu in April, which includes unlimited fries and salsa, an entrée and an unlimited (non-alcoholic) drink starting at $10.99. It was part of Chili’s “better value than fast food” campaign, which, while more expensive than a Big Mac meal in most markets, has attracted new customers to Chili’s.

The good news for the Dallas-based brand, however, is that the $10.99 offer may have lured them in, but more than 80% of those customers end up ordering full-price items on the menu, Hochman said.

This indicates that the barbell pricing strategy implemented two years ago is working, he said.

The fourth quarter marked the second full year of a turnaround effort launched by Hochman to improve Chili’s economics. With a focus on fundamentals, Chili’s increased its average unit volume from $440,000 to $3.6 million.

Changes Hochman has implemented include simplifying the menu and operations, including suggestions gathered from managers and team members during listening tours.

The number of menu items, for example, has been reduced by 22 percent, and Chili’s has worked to reduce prep steps and eliminate administrative tasks that Hochman says “harm morale.”

Chili’s has invested in technology, including replacing kitchen display systems and deploying an AI-powered workforce forecasting tool that helps general managers spend less time planning.

The menu has been modernized over the past year, with a focus on core categories like margaritas, chicken crispers and burgers. Next up is a new and improved fajitas platform, already a $200 million business, with upgrades planned for the second quarter of fiscal 2025 and a full relaunch in the fourth quarter.

Chili’s has also invested in advertising after several years of absence. Ads have been placed in live sports programming, premium cable, primetime, streaming and digital, and Hochman plans to increase that investment in fiscal 2025.

But perhaps most telling is how Chili’s has fared on TikTok over the past year. The Big Smasher and the more recent Nashville Hot Mozz fried cheese sticks have gone viral, which Hochman says marked a turning point in the business. He estimates that about 60% of the increase in traffic is the result of advertising, while about 40% is due to TikTok buzz.

In fact, Chili’s had planned to remove the Big Smasher from the $10.99 offering this fall and replace it with another entrée, but it sold so well that they decided to keep it.

Another product is set to be added to the 3 for Me offering in the next fiscal year, when they need it. “But for now, we’re going to stick with the Big Smasher while it still works,” Hochman said.

The promotion worked in part because Chili’s invested in extra manpower to ensure restaurants weren’t overrun by customers drawn by advertising and social media, he noted.

“The majority of the new customers were new to Chili’s, so we responded quickly by adding manpower to handle the increased volume,” he said. “Normally, restaurants would have been faced with such a sudden influx of customers.”

But thanks to streamlining efforts and workforce investments in the fourth quarter, Chili’s was able to maintain record sales through May and into June and July, he said.

Traffic growth also continued in the first quarter. Brinker CFO Mika Ware said in her first earnings call since joining the company in late June that Chili’s same-store sales in July were in the high single digits and included positive traffic, despite broader “challenging macro events.”

Efforts to streamline operations will continue in the first quarter, including a focus on off-premises ordering to improve accuracy and packaging to ensure food is delivered hot and fresh. By the end of the first quarter, Chili’s will eliminate curbside delivery, which has been a source of friction for team members, Hochman said.

There’s still work to be done, however, at its sister brand Maggiano’s, which posted a 2.5% same-store sales increase in the quarter, though that was largely due to a 9.2% increase in prices and a 2.2% increase in menu mix. Traffic was down 8.9% at Maggiano’s.

Hochman said the company plans to take lessons from Chili’s turnaround and apply them to the Italian brand.

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