Flatbreads performing favorably at Chili’s

by Eric Schroeder
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DALLAS — The May introduction of three new flatbreads — California Grilled Chicken, Margherita, and Chipotle Chicken — delivered on key business drivers at Chili’s Grill & Bar, helping spur stronger sales and earnings at parent Brinker International, Inc. in fiscal 2013.

Net income at Brinker in the year ended June 26 was $163,359,000, equal to $2.28 per share on the common stock, up 8% from $151,232,000, or $1.93 per share, in fiscal 2012. Net sales totaled $2,846,098,000, up from $2,820,722,000.

“Through favorable cost of sales, (flatbreads) fit into our margin improvements, further strengthening our business model,” Wyman Roberts, president and chief executive officer of Brinker, said during an Aug. 2 conference call with analysts. “The guest experience surveys show this product is delighting our guests as satisfaction scores on checks containing flatbreads are significantly higher than the rest of our menu.”

Mr. Roberts said guests primarily have purchased the flatbreads as an appetizer, but Chili’s sees potential growth for the product line as an entree.

“As we change guests’ use of the product we expect to see incremental traffic to go along with the great cost of sales numbers we have been seeing,” he said.

He said the flatbreads, which were introduced about the same time as the restaurant chain’s new pizzas, have performed better than the latter to date.

“Guests are more excited about the flatbread product,” Mr. Roberts said. “Pizza is doing fine, but I think we like the flatbread product as well. It just feels like it is more in line with what works for us and kind of where the consumer is going a little bit more, at least with our concept.”

In addition to flatbreads and pizza, Chili’s is excited about the potential to develop a Tex-Mex platform, Mr. Roberts said. He indicated that although both a Mexican centric offering and flatbread have home run potential, Mexican is “right in our wheelhouse.”

“We just want to make sure that when we bring that new message forward — because we obviously have a lot of great Mexican food now, or Southwest or Mexican centric — … that it’s exciting, that it really does deliver on all the things that we kind of filter against,” he said.

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