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Chili’s Heats Up the Restaurant Scene with a Surprising Comeback
In an era where budget-conscious diners are tightening their belts, even at traditionally affordable fast-food joints, one casual dining chain is bucking the trend: Chili’s. The restaurant is experiencing an unexpected surge in popularity, particularly among lower-income households, thanks to its strategic focus on value.
Chili’s recently reported an impressive quarter, showcasing substantial growth in both sales and customer traffic. According to Restaurant Business, same-store sales at Chili’s leaped by 21.4% last quarter, marking the sixth consecutive quarter of double-digit growth.
Traffic also saw a significant boost, rising by 13.1% and outperforming the casual-dining sector by a considerable margin. Furthermore, restaurant-level margins improved to 16.2%, an increase of 270 basis points year-over-year.
Who’s Driving the Growth?
The secret to Chili’s recent success lies in its ability to attract and retain low-income diners. While this demographic is generally cutting back on dining out across the board, households earning under $60,000 annually are now Chili’s fastest-growing customer segment.
The “3 for Me” Deal: A Winning Formula
The primary catalyst for this trend is Chili’s “3 for Me” deal. For just $10.99, customers can select a drink, an appetizer, and an entrée, offering a full-service dining experience at a price point comparable to many fast-food combos. This deal provides a perception of significant value without compromising on the dining experience.
Under the leadership of Kevin Hochman, who took the helm as CEO of Brinker International (Chili’s parent company) in 2022, Chili’s is undergoing what many are calling an unlikely market comeback. Hochman, a former KFC president, is leveraging his expertise in the fried chicken market.
Chili’s plans to expand its crispy chicken sandwich offerings and integrate them into the popular $10.99 meal deal. Hochman emphasized that boneless fried chicken is “one of the top five things Americans eat,” and upcoming campaigns will highlight this.
“It’s clear that the ‘Better than fast food’ campaign we’ve been hammering over the past two years has positioned Chili’s as an important value leader in the industry,” Hochman stated during a recent earnings call, as reported by Restaurant Business. “And we are gaining market share with low-income households while others are reporting softness with that group.”
Beyond the “3 for Me” deal, Chili’s has also seen success with other menu innovations. Reworked baby back ribs have led to a 35% sales increase and a 29% profit boost. Even frozen margaritas, despite a higher price point, are now selling twice as fast as their predecessors.
Are you a Chili’s fan? We’d love to hear what keeps you coming back to the chain in the comments below.