Chili’s making moves on millennials

by Monica Watrous    View Me on Google+
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Chili's developed its Fresh Mex menu in part to attract millennial consumers to the brand.

DALLAS — Chili’s is chasing millennial consumers with on-trend menu items and mobile technology. The casual dining chain plans to expand on the recent roll-out of tabletop tablets with improved on-line ordering and a loyalty program in the coming year.

“(Technology is) one of the things we think is compelling for millennials is to engage them; they want to be engaged,” said Wyman Roberts, chief executive officer and president of parent company Brinker International, Inc., during an Aug. 7 earnings call with financial analysts. “They want loyalty more than any other demo based on some recent research I have seen.”

But the heart of Chili’s sales and traffic growth is culinary innovation. The recent introduction of Chili’s Fresh Mex menu was developed in part to lure burrito bowl-loving millennials to the brand. Other Fresh Mex items include quesadillas, fajitas, enchiladas, tostadas and crispy tacos.

“Obviously things like Fresh Mex, if you look at some of the fast-casual guys out there that have done fairly well — I won’t mention names — they seem to be doing fairly well with the millennials,” Mr. Roberts said. “So, the product offer has to be right for them. And so we are working on all those fronts because again we have a good base in millennials, but we think we have to grow that as well.”

In the year ahead, the chain will add more Fresh Mex offerings, plus an “exciting” new platform that Brinker declined to disclose during the call.

“The food innovation pipeline is full and strong and poised to drive traffic,” Mr. Roberts said.

The roll-out of Ziosk tabletop tablets during the year not only has improved efficiency in Chili’s restaurants by allowing users to order refills and add-ons. The technology also has delivered useful customer feedback to the company.

“We’ve got more guests providing feedback to us than anyone,” Mr. Roberts said. “I don’t think anyone in the retail space has the kind of data we have now through our Ziosk system. And so how good we are at managing that data to deliver better guest experience is where we think the payoff is...”

For the fiscal year ended June 25, the company had net income of $154,039,000, equal to $2.33 per share on the common stock, down from $163,359,000, or $2.28 per share, in the previous year.

Revenues for the year totaled $2,905,452,000, up from $2,846,098,000.

Net income for the fourth quarter dropped to $28,820,000, or 43c per share, from $46,367,000, or 67c per share, in the comparable quarter. Excluding special items that included litigation charges related to a labor dispute, earnings per share increased 10% over the prior-year quarter.

Fourth-quarter revenues climbed to $758,725,000 from $730,068,000 in the same period of the previous year.

Comparable restaurant sales at company-owned restaurants increased 2.3%. Chili’s company-owned comparable restaurant sales increased 2.5%, and Maggiano’s comparable restaurant sales increased 0.9%, representing the 18th consecutive quarterly increase for the Italian casual dining chain.

“Going forward we will continue to drive top-line growth while enhancing the experience of our team members and guests through initiatives that strengthen our brand relevance and further differentiate us from our competitors,” Mr. Roberts said. “In fiscal 2015 we will continue to innovate our menus with Fresh Mex variations, new differentiated products and Lighter Take options. We will leverage technology to launch a loyalty program and enhance our guest experiences at the table, on-line and on their mobile devices.”
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