Brinker's Tech Initiatives Improve Customer Dine-In, Curbside Experience
Customers are returning to restaurants -- and employees are returning to the workforce, Brinker International CEO told analysts in fiscal Q2 2022 earnings call with analysts.
Company sales in Q2 increased to $904.5 million as compared to $746.2 million in the second quarter of fiscal 2021. Chili's sales increased primarily due to higher dining room sales, partially offset by a decrease in off-premise sales.
Two Times the Tech
The casual dining brand Chili's recently implemented two major technology systems to improve the customer experience, including a handheld system. The solution had been in test mode for over a year at 10% of locations and is now in use at all Chili’s locations nationwide. The solution helps waitstaff not only serve guests more efficiently, but also earn more, said Wyman Roberts, CEO, President Brinker International on the fiscal Q2 earnings call with analysts.
"With this system, our servers cover more tables and earn more money … We're already seeing an average of 15% higher server earnings and significant improvements in guest metrics," Roberts explained
The tech is relatively new, so there is room for further improvement of KPIs. “…It's now going through what I will call the learning curve, just getting used to how to run a different model where your servers stay out on the floor, and you've got a runner component and the technology is communicating back and forth. But it's out, it's running, and we're just getting proficient at it,” he added.
Roberts said he expects the new system to enhance team member earnings, and as a result, reduce staff turnover. “One thing we know is when our team members are making more money, which we focus on that extensively, they stay longer… Retention goes up when server earnings go up and both of those things are happening,” he added.
In general staffing numbers appear to be improving. "We have more team members in our restaurants today on an average then we had pre-COVID. So we're getting back to being fully staffed,” Roberts said.
Off-Premises Dining
According to a recent study, 54% of say off-premises dining is essential to their lifestyle. Brinker has taken notice and added "a new curbside system that provides a more seamless guest experience” to most Chili’s locations. The solution works best in freestanding locations. “They have the structure, and the curbside takeout system works perfectly well in all of them,” said Roberts.
New Store Formats
Brinker too is among the brands such as Chipotle, WOWWorks and CEC Entertainment that are rolling out new store formats in response to the increased demand for off-premises.
[Peter Piper Pizza Rolls Out Off-Prem Concept]
"We're also testing small footprint off-premise centric designs for densely populated markets that don't make sense for full-size prototype,” Roberts explained.
Recently the company opened its first urban kitchen in Manhattan, offering both Chili's and its virtual wing brand, It's Just Wings. Brinker rolled out the virtual restaurant brand to 1000+ locations that was on track to top $150M in its first year. “I never thought I'd see the day when I'd see a Chili's in Manhattan, but it's been up and running for a month, and we're encouraged by its early performance,” said Roberts. “We plan to open two small footprint locations and trade areas adjacent to college campuses in the near future.”
[ Restaurants Lean Into New Models, New Revenue Streams]
Virtual brands continue to be an important growth vehicle for Brinker. “It's Just Wings continues to perform well. And as of (last) week, Maggiano's Italian Classics is up and running in over 700 restaurants. We're actively working to expand sales channels, build brand awareness and accelerate this part of our business. … We see a lot of opportunity to leverage our scale, our ownership model, to grow the brands in our portfolio and move the business forward and deliver a great return for our shareholders. And this is only possible because of our amazing teams working tirelessly in the restaurants and in the support center, and I want to thank each of them for their passion and commitment,” said Roberts.
COVID-19 Impact: Roberts said, "I do want to talk a little bit about ... the impact of these COVID episodes and spikes as we're calling them, have on our mix. And so the good news is we continue to drive traffic and beat the industry by not a small margin, but by double-digit numbers on traffic. But it does shift from more dine-in to take out. And that's a pretty significant check hit. Obviously, the alcohol sales and the other things that don't happen as much when people dine out.”
Delivery: “When we get these COVID spikes, we see people shift from the dining room to take out and delivery,” said Roberts. For Q2, off-premises dining was in the mid-30% of total sales range, with about 15-16% of total sales coming from delivery, explained Joseph Taylor, Brinker's IExecutive VP & CFO.
Menu Pricing: Roberts said, “We control what we can control, right? And what we can control is our value propositions and the quality of our brands. And we have one of the strongest value propositions in the industry in casual dining. … During every recessionary period we looked at, it's always confirmed that consumers continue to want to dine out... They don't know how to cook. It's not like they learned how to cook in COVID, they're still wanting to go out or have their food brought to them. And we just want to make sure that if things get a little tighter, we have a really strong value proposition. That's why we're very cautious about how we price and making sure that our pricing actions don't do damage to the overall value propositions that we offer for consumers, which is why we think we've been able to, again, beat the category for 16 consecutive quarters on traffic.”
Brinker's full earnings release is here.