Chili’s Defies Industry Trends
While 2023 has been challenging for many restaurants, Chili’s, the popular Dallas-based Tex-Mex chain renowned for its baby back ribs and frozen margaritas, is experiencing remarkable success. The brand recently reported an impressive 24 percent increase in sales, serving millions more customers compared to last year.
This surge follows a notable rise in 2023, resulting in a two-year sales growth of 39 percent. Furthermore, Chili’s has now achieved five consecutive quarters of growth, standing out in a sector where diners are increasingly favoring home-cooked meals to save money.
Effective Strategies and Affordable Offerings
Chili’s attributes its success to a strategic focus on attracting younger clientele and maintaining affordable prices. The 1,200-store chain sees its $10.99 three-plate value deal as a key attraction, alongside a $14.39 burger and fries meal positioned to compete with fast-food giants like Burger King and McDonald’s.
Neil Saunders, head of retail at GlobalData, praised Chili’s for its recent surge, stating, ‘Chili’s has been on fire lately and has been significantly boosting traffic to its restaurants.’ He noted several factors contributing to this success, including an improved menu, high-quality products, effective social media presence, and a strong appeal to younger diners.
Moreover, Chili’s offers good value for money, making it an affordable indulgence for many Americans still feeling the effects of inflation.
Menu Revamp and Fresh Investments
Under the leadership of CEO Kevin Hochman, who took the reins in 2022, Chili’s has revamped its menu, enhancing recipes for staples like french fries and chicken tenders, also known as chicken “crispers.” Brinker International, Chili’s parent company, invested over $400 million into this new menu, hiring additional servers and refurbishing outdated locations.
The revamped menu now emphasizes four main offerings: burgers, chicken crispers, fajitas, and margaritas. Rather than raising prices, the chain introduced enticing deals such as $6 margaritas and a $10.99 ‘Big Smasher’ burger—boasting twice the beef of a Big Mac. While it provides affordable options, the menu also features pricier items like steaks and ribs for customers willing to spend more.
Harnessing Social Media
Chili’s has successfully leveraged social media to boost its profile, particularly on TikTok, where videos featuring popular influencers often go viral. The company’s TikTok channel has garnered over 180,000 followers, showcasing current trends and popular dishes.
CEO Hochman remarked on the company’s momentum, stating, ‘It’s clear we have a winning product with our new ribs, and our intent now is to use them to drive traffic.’ He believes that the success of their products has been the primary driver, countering claims that social media alone is responsible for their growth.
Contrasting Industry Challenges
In stark contrast, many other restaurant chains have reported disappointing sales figures as consumer sentiment remains low. Inflation-weary shoppers are cutting back on unnecessary expenses, leading to notable declines in quarterly sales for brands like Burger King, Wingstop, and Shake Shack. While these companies maintain profitability, their lower-than-expected sales highlight a significant shift in American spending habits.
Additionally, several well-known restaurants have faced financial hardship, with TGI Fridays, Hooters, Red Lobster, Bertucci’s, On The Border, and Buca di Beppo filing for Chapter 11 bankruptcy due to rising food costs and diminished customer traffic.
