Brinker CEO talks guidance on menu pricing, Chili's growth
Brinker International (EAT), the parent company of restaurant chains Chili's and Maggiano's, recently raised its full-year guidance due to improved comparable sales at both brands. This improvement was attributed to increased menu prices and product variety.
Brinker International CEO Kevin Hochman shares insights on this strategic shift, highlighting a focus on the "core business of Chili's", which is more significant and higher margin compared to the virtual brands.
He emphasizes that the strategy is working, and the company is achieving top-line growth and improved profitability, noting to Yahoo Finance that the company is "building back muscle." This approach has contributed to the stock's positive performance, according to Hochman.
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Video Transcript
DIANE KING HALL: Brinker International, the parent company of restaurant chains, Chili's and Maggiano's, raised full-year guidance after stronger than expected same store sales in its most recent quarter.
Comparable sales improved across both Chili's and Maggiano's thanks to increased menu pricing and favorable item mix. Though, sales were partially offset by lower traffic. Down almost 6% across both brands.
The decline in traffic was largely attributed to a decision to de-emphasize virtual brands. But will the company's investment in consumer experience pay off? Kevin Hochman is the CEO of Brinker International. He joins us now.
Thanks for joining us this morning, Kevin. So I want to get into this de-emphasis on digital virtual experience. A lot of companies are leaning more into that. What's the rationale behind this?
KEVIN HOCHMAN: Yeah. It's really about focusing on the core business. So we arguably have, potentially, the largest virtual brand in the world. And it's just wings. It's still only 3% to 4% of the business. So it's quite small. And we are spending enormous amounts of time, both operationally and with our marketing spend on it.
When all that effort and time and money could be focused on the core business of Chili's. Number one, it's a much bigger business. It's 96% of our business. And then number two, it's much higher margin. Most of the business we transact is in the dining room. We have alcohol attachment. We don't pay additional fees like we do to aggregators in the virtual world.
So it's been a decision that we made about 15 months ago. And we've been building back muscle. And the good news is the strategy is working. We delivered on the top line growth of Wall Street expectations. We had a huge beat on profitability. Big part driven by this strategy.
And then if you factor out the virtual band traffic, we're growing traffic ahead of the industry. So we feel like we're very much on track. That's why we raised guidance. I think that's why you've seen the stock pop.
