Chili’s Grill & Bar plans to “out-fast fast-casual” with five major initiatives. Like many of its casual-dining competitors, the Brinker International brand has seen a shift from traditional table service as consumers flock to quicker and more affordable options like Chipotle Mexican Grill and Panera Bread.
To regain relevance, Chili’s has tapped into key drivers that have catapulted the fast-casual segment in the recession’s wake. Brinker outlined the five-point strategy during a March 5 presentation at the Raymond James Financial Inc. Institutional Investors Conference in Orlando.
First, the chain is refreshing its look, with a system-wide reimaging of company-owned U.S. locations to be completed in fiscal 2015.
Second, Chili’s is increasing media spend where it had lost its share of voice, particularly in national television.
“We are a national TV player,” said Guy Constant, chief financial officer of Dallas-based Brinker. “There is only a handful of us in casual dining that have that, so we certainly want to leverage that competitive advantage, and we want to restore some of that lost share voice.”
Increased investment in advertising also enables Chili’s to communicate different messages.
“One of the challenges of casual dining for the past few years is we have had to focus a lot of our media spend on price point or value-oriented advertising just given the state of the economy and the consumer right now in our space, so it hasn’t given our brands a lot of opportunity to focus more on messaging our brand and to talk a little bit more about our innovation,” Mr. Constant said. “So, the increased media spend is allowing as to do that now without having to give up the gains we made in terms of value TV advertising or social and digital spend.”
Technology represents a third priority for the chain, led by new tabletop media tablets that will be rolled out to all company-owned restaurants by June.
“We are at the point now where at least 8 to 9 out of every 10 guests are actually touching the device and using the device right now,” Mr. Constant said.
Additionally, more than half of customers use the device to pay for their order, speeding up the service process and restaurant throughput. Not only has customer feedback improved significantly, but also Chili’s said it has experienced a slight check lift, as a result of beverage and dessert purchases added on devices after the initial order.
“The part we like the best about these devices on top of all of those other benefits we just talked about is that there is no capital outlay required to put these devices on our table,” Mr. Constant said. “And currently now the game revenue that is generated from the devices is more than enough for us to be in a position where we are not out of pocket at all for putting these devices on our tables.”
The tablets aren’t intended to replace servers in the restaurants, but to enhance the customer’s experience, he added.
“The memorable service experience you have came from how well the server treated you: did they make you feel special, did they provide that memorable experience for you, did they help you get out quicker if it was a convenience occasion, or were they unobtrusive for you if you were trying to have much more of an event you were spending with your family?” Mr. Constant said. “So what we think the devices can do, they can enable our servers to focus on more of those value-add things that the service environment provides and differentiates us and worry less about the routine functions that unfortunately only result in a bad experience if we don't get them right. That is how we view the rollout of the tablets.”
For what Chili’s has identified as a predominantly younger-skewing consumer base, technology provides an important differentiator in the competitive casual-dining arena. Culinary innovation, the chain’s fourth priority, also offers opportunities to reach what Chili’s called its “new school guests,” the lapsed casual-dining users who are drawn to the freshness and relevance found in successful fast-casual brands, Mr. Constant said. The recently introduced Fresh Mex menu does just that.
“And so as you look at, for example, the most recent roll-out of Fresh Mex for us, you see the items like the enchiladas that are very much in the center of the fairway and attractive to our loyal guests, and we think something that will immediately increase their frequency in mix because they are familiar with it and they order these types of items in our restaurant today,” he said. “But at the same time we introduced the Fresh Mex bowls, which we think are much more attractive to guests who are lapsing or in our lapsed users, not just at Chili’s but of casual dining as a whole.”
Finally, Chili’s is focusing on its off-premise platforms of large-order delivery and to-go options.
“The good news about delivery is that it is made during the off-peak times in the restaurant,” Mr. Constant said. “Typically we are preparing a delivery order between 10:30 and 11:15 in the morning to be delivered right after that, or between 4:30 and 6:00 in the evening to be delivered right after that. So it allows us to use slack capacity in the restaurant and labor that is already in the restaurant to drive additional revenue without necessarily crowding out the busy time periods when we have our dining rooms full and our guests are in the restaurant.”
To-go orders represent about 10% of Chili’s business, and the company sees technology as a way to enhance the platform.
“I think it would be very difficult for us inside our own four walls to get faster than fast-casual for a guest that comes into the building,” Mr. Constant said. “But for someone who could perhaps place an order on-line and we had a way to identify when that customer was on the lot and to be able to bring that food out to their car when they arrived, I think that actually results in a faster experience and you would get a fast-casual, where you are still driving to the fast-casual restaurant, you have to get out of your car, you have to stand in the queue in order to get your food. If we can nail to-go the way we think we can, we think that actually gives us an alternative that could be faster than fast-casual and represents an additional revenue growth opportunity for the brand.”
