Chili’s: virtual brands can increase prices
As restaurants struggle to manage rising food prices, Brinker International, parent company of Chili’s Grill & Bar, Maggiano’s Little Italy and two virtual brands (It’s Just Wings and Maggiano’s Italian Classics), finds it has more leeway to raise menu prices on its delivery-only chains than their brick-and-mortar counterparts.
During a call with analysts Wednesday, Aug. 24, to discuss the company’s fourth-quarter fiscal 2022 financial results, Kevin Hochman, president and CEO of Brinker International and president of Chili’s, shared his point. view that the company can raise the prices of these brands. refocus on core omnichannel channels.
“We’re going to take pricing on virtual brands because the vast majority of business goes to delivery customers, who are much more focused on convenience and are willing to pay for that convenience,” Hochman said, adding that he ” knows[s] that of [his] pizza days. (Hochman served as President of Pizza Hut, USA from December 2019 to January 2022.)
Hochman added that investing less in the low prices of virtual brands will free up the company to invest in Chile’s delivery business, noting that the casual dining chain’s off-site sales exceed five or six to one of virtual brands. .
Additionally, the company appears to be using its virtual brands as a sort of testing tool for its much larger omnichannel brands. Hochman noted that next week, Brinker will add It’s Just Wings’ popular wing flavors and curly fries and add them to Chili’s menu, as the casual dining chain “makes about 24 times the sales” of the brand. Virtual.
Additionally, the company is rethinking its traffic generation efforts, shifting from rewarding its loyalty program members with free food to investing in targeted marketing.
“We will be restarting the My Chili’s Rewards program,” Hochman said. “We will probably still give away some things, but it will be more focused on compressing the time between visits from our loyal customers and we think we can make this loyalty program more traffic-generating, but less expensive with a better strategy and better execution based on key customer insights. »
On the other hand, free food is the main benefit that consumers look for when they sign up for and engage in loyalty programs.
Research from the August 2021 edition of PYMNTS’ “Delivering on Restaurant Rewards” report, created in collaboration with Paytronix, which is inspired by a survey of more than 2,000 American adults, found that 78% of consumers considered the availability of free food when deciding whether to sign up for loyalty programs more than any other benefit. In second place, 66% considered personalized coupons or discounts.
See more : Two-thirds of consumers find restaurant rewards impersonal
Still, while Hochman didn’t specify what the company would replace these free food offers with, he noted that the investment in these freebies hasn’t proven to be profitable, especially with the rapid inflation of food.
“We offer a lot of free food in our My Chili’s rewards,” he said. “There’s probably a better way to do this and keep the traffic driving without constantly giving away free food every week.”