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Brinker International CEO: Consumers looking for consistency and value over menu innovation

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Brinker International CEO & President Wyman Roberts sits down with Yahoo Finance Live to discuss how the company's restaurant brands fared during the late pandemic, outlook, inflation, dining innovations, and the restaurant labor shortage.

Video Transcript

BRAD SMITH: Brinker International, the parent company of Chili's and Maggiano's, reported its most recent quarterly results. And they saw its shares move higher on those results by about 9.2% here intraday during the session as investors snack on those earnings. Standing by is Yahoo Finance's Brian Sozzi, along with Brinker CEO and President Wyman Roberts. Brian, I'll toss it on over to you.

BRIAN SOZZI: All right, thanks so much, Brad. Wyman, good to see you, as always, here. Look, your stock price is higher in response to your earnings. We are-- we have not seen this type of reaction to other restaurant earnings thus far. I'm looking right at you, Starbucks. Why do you think the market likes your report and maybe not some others?

WYMAN ROBERTS: Yeah, thanks for having me. I think we had a good quarter, you know, and I think there was a lot of speculation as to, you know, what was happening within the restaurant space over the holidays, especially with the Delta spike and-- and kind of how the holidays were going to play out. And-- and we were-- we had a very good quarter relative to expectations and relative to kind of our-- our history.

So we're excited to see, as Delta kind of mitigated itself in the quarter and we got into the holidays with-- with less COVID headwinds, how well all of our brands perform, both Maggiano's, Chili's, and our virtual brands, It's Just Wings and Maggiano's Italian Classics. So everything worked fairly well for us coming through the holidays. And-- and, you know, then-- and as we kind of deal with this latest Omicron spike, we're-- we're optimistic about how quickly we're kind of moving through the-- the biggest part of that. So that was probably the headline news.

BRIAN SOZZI: How is traffic in January?

WYMAN ROBERTS: January is-- You know, we're not-- it's kind of third quarter, and we're not giving a lot of detail. We know that the industry-- you know through industry numbers, this latest spike in COVID has had an impact. And the good news is, it's kind of working its way out of the system much faster than the previous COVID spike. So as-- as widespread as the Omicron variant is, it's having less of an impact in terms of duration, at least right now. So that's-- that's got us optimistic that we're seeing things return kind of to where they were, you know, pre-Omicron at a faster rate than you would have seen with some of the other spikes.

EMILY MCCORMICK: Wyman, I mean this is Emily here. Based on what you've mentioned during the earnings call earlier, with your latest price increases, you noted that your menu prices are now up over 4%. How much more do you anticipate you'll have to raise prices going forward to offset ongoing, if they will be ongoing, costs to the company?

WYMAN ROBERTS: Yeah, Emily. We don't-- we don't know exactly where the inflationary pressures are going to be. We have a commitment to maintain our-- our business model and our margins. The thing that's kind of lost in our business a little bit is the fact that, with COVID and the shift to more takeout and delivery, we lose some dining-room traffic. And our dining-room traffic is so much more profitable with regard to the average check levels, with the alcohol sales, and-- and some of the other higher menu items that they eat.

So as COVID moves through, it's not so much about, oh, are we going to need to price a little bit more? It's just, we get the benefit of getting those dining guests back in, and that's what we saw in December. And that really helps us a lot to kind of deal with some of the inflationary pressures we're seeing on the cost side.

So we're not really thinking we have to price a whole lot more, although we'll continue to watch these-- these costs as they kind of fluctuate through the system, and we'll price if necessary. But we're-- we're thinking we might have enough priced in the system, at least in the short term, to carry us.

BRAD SMITH: You know, we always hear from some of the food and beverage services space, and hospitality sector more broadly, how much menu innovation plays into their ability to attract new customers, perhaps. I wonder to what sense you kind of look into the roadmap and have to think about that across some of your portfolio brands and what that is also going to do to prices both for the consumer and for the company operating-- in an operating manner.

WYMAN ROBERTS: Yeah, I don't think innovation today is quite as important across the menu. I think consumers right now are really looking for consistency. With all the supply-chain issues and everything that's out there, they're looking for great value, of which we have some of the strongest value propositions in the industry, and-- and consistency of delivery. And those are the things that we're focused on now.

Now, we've brought a lot of innovation into our business with regard to the use of technology. We just rolled out a brand new service model using handheld technology in all of our restaurants. We've rolled out a new curbside system to better deal with the increase in takeout and delivery, to make sure our guest experiences are better. Those are the kind of things I think consumers are more interested in right now, just to make sure everything is working well for them and ensuring that their-- their meals are on time and at a great value.

BRIAN SOZZI: Wyman, I was talking to a couple of my contacts in the industry, and they're putting out applications for jobs. And only two or three people are signing up for these jobs. Just given the tight labor market, are you having any success attracting the workers you need over at Brinker?

WYMAN ROBERTS: Yeah, and I think that's one of the good news stories we shared today is, with all the pressure that we've had really through the summer and into-- into the winter with labor challenges, it's starting to-- to mitigate. We're-- we're actually seeing-- I was in restaurants just last week, and managers were sharing stories with me about the same thing, right? There would-- they'd put an application out. They'd get two or three responses, and now they're getting 10 or more.

And so we are starting to see the ability to staff our restaurants become much better. We're-- we actually have more team members per restaurant today than we had pre-COVID. So we're really now focusing on training and retaining those-- those hourly team members as well as our management staff.

BRIAN SOZZI: And if you noticed, Wyman, I'm-- I'm right in Times Square, in New York City, here at the NASDAQ. But I hear now-- and correct me if I'm wrong. Are you in Manhattan with a Chili's?

WYMAN ROBERTS: We are. You can now get the-- your Chili's and your It's Just Wings in Manhattan. So we-- we've opened the ghost kitchen. We're about a month in. We're very encouraged by that. We're going to continue to look at new ways to bring the brands to kind of more dense, urban, probably smaller footprint-centric models, and we're excited.

We're excited about what we're seeing in our first urban kitchen in Manhattan. We've got a couple of new prototypes on the boards that will open in some college towns here in the not-too-distant future.

BRAD SMITH: Wyman Roberts, who is the Brinker International CEO and president, and Yahoo Finance's own Brian Sozzi joining here on the afternoon fun. Great to have you both here with us today, and great conversation as well.