Chili’s Bar & Grill said it has bounced back from business struggles earlier this year by introducing new, lower-priced menu items that compete directly with fast-food restaurants.
The 49-year-old, Dallas-based restaurant chain — known for its baby back ribs and sizzling fajita platters — on Wednesday reported a massive 14% increase in same-store revenue and a 6.5% increase in customer traffic in the latest quarter. Entered.
The company said growth has been fueled by three items in particular: a $10.99 Big Smasher burger, a $6 margarita and a $17 Triple Dipper appetizer.
“The Big Smasher is bringing in more new guests across all demographics,” Chili’s president Kevin Hochman said on an earnings call this week. “Turns out that all families, regardless of income, want unbeatable value.”
JPMorgan Chase analyst John Evanko described Chili’s results as “really remarkable” on the earnings call, and said the chain — which made headlines last year and earlier this year for closing stores — “has very, very few people Is in the category of… in a difficult situation” class.
Shares of Chilean parent Brinker International rose 7% on the news Wednesday, hitting a 52-week high of $107.15. Shares were trading as recently as Thursday at $103.30.
Brinker shares are up 150% this year.
The Big Smasher debuted in April as fast food chains including McDonald’s were losing footfall across the country due to their menu price hikes.
Customers flocked to Chili’s 1,500 restaurants after the campaign advertised that the Big Smasher burger “has twice the meat of a Big Mac and a taste that fast food lovers will recognize.”
The meal also includes chips and salsa and a non-alcoholic beverage.
Triple dipper appetizers account for 11% of Chili’s sales, while orders for the calorie-busting meal, which includes a choice of three items and a dipping sauce, surged 70% in the latest quarter.
Chile’s gains have, in part, come at the expense of McDonald’s, which has struggled with slow growth and a recession. E. coli outbreak Because of the chopped onions in its quarter pounders.
McDonald’s same-store sales in the US fell short of estimates as customers continued to spend, top official said This week on the earnings call.
“Consumers, especially those in lower income groups, were often preferring to eat at home. This trend continued in the third quarter,” CEO Chris Kempczinski said during the call. “Our performance so far this year has fallen short of our expectations.”
Some fast-food operators have expressed concern – particularly in California where the minimum wage for fast food workers increased this year to $20 an hour – that they will soon compete for customers with casual restaurants like Chili’s,
Nearly 100% of fast food chains in California raised their menu prices to cover their higher labor costs, according to the Employment Policy Institute survey.
Casual restaurants are exempt from the wage increase in California, where many fast food eateries have closed since the wage law took effect in April.
