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Chili’s Is ‘Close’ to Finding an Official Delivery Partner

Danni Santana
Chili’s Is ‘Close’ to Finding an Official Delivery Partner

Chili’s will be among the first major casual dining chains in the U.S. to announce an official third-party delivery partner, beating out direct market rivals Olive Garden, Applebee’s, and Outback Steakhouse.

That’s according to parent company Brinker International, which on Tuesday reported positive fiscal third-quarter earnings, including a 3.3 percent rise in revenue to $839 million.

Chili’s spent much of 2018 building out its mobile and online ordering capabilities, and is now ready to capitalize on consecutive quarters of double-digit off-premise sales lifts, including 17 percent growth in takeout and delivery orders last quarter, according to Brinker CEO Wyman Roberts. More than half of Chili’s tickets currently arrive via its digital channels, the company said.

“Now that our foundational business is strong, we’re committed to figuring out a delivery program that integrates with our system and delivers the high-quality experience to our guests, just as they’re experiencing inside the restaurants and with takeout,” said Roberts, on a call with analysts. “We’re close to finding a partner capable of managing our scale.”

The restaurant group failed to identify a company by name or provide a timetable for when the pending agreement would be announced. But it did specify it is looking for a chain that efficiently covers suburban markets, where Chili’s has a large market presence. Brinker’s only other chain, Maggiano’s Little Italy, works with a handful of delivery providers already, including Grubhub.

Finding The Right Marketplace

As recently as January, Chili’s was in talks with all of the big delivery marketplaces, but remained dissatisfied, particularly with third-party service fees. Olive Garden owner Darden Restaurants has also expressed similar concerns on past company earnings calls.

But Chili’s has quickly found the ongoing competition in the delivery space for market share can benefit larger chains in negotiations. Delivery companies are in a race to sign as many restaurant chain partners as possible, in order to scale quickly and boost order count.

“Brands that are big that can partner with third-party aggregators and give them something in the equation more than just a big percentage of the results at the top, they’re going to be able to negotiate better deals and partnerships,” Roberts said.

Chili’s is hoping to leverage current delivery market trends to ensure it continues to capture customer data even after an official partner is named. The chain is additionally eyeing a launch of proprietary delivery through its loyalty app in the future, similar to Outback or Chipotle.

“For a long time now, we’ve talked about and have been focused on the importance of data, and how we utilize data to help drive our business,” said Joseph Taylor, SVP and chief financial officer of Brinker International. “And that’s not going to change as it relates to the delivery options.”

The restaurant chain reported same-store restaurant sales growth of 2.9 percent in the third quarter, fueled by a 3 percent increase in foot traffic and a revamped value menu launched last year. Maggiano’s comparable sales also marginally improved by 0.4 percent.

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