Chili’s Parent Speeds Restaurant Development While Adding Delivery Choices

Article originally posted on CoStar on August 19, 2021

Brinker International Adds Second ‘Virtual Only’ Food Brand in Response to Pandemic Trend

The parent of Chili’s plans to ramp up its restaurant development pipeline that was essentially on hold in the pandemic, looking to get its annual openings to at least 20 nationwide starting by 2023.

At the same time, Dallas-based Brinker International is doubling down on delivery and other off-premise food choices that account for almost one-third of its sales, launching a second “virtual only” brand selling Italian-style food. Brinker operates more than 1,600 full-service casual restaurants in the United States and 28 other countries under the brands Chili’s Grill & Bar and Maggiano’s Little Italy, with most eateries company-owned rather than franchised.

“We obviously had a pause during the pandemic from a real estate standpoint,” Chief Financial Officer Joe Taylor told analysts during Brinker’s fourth-quarter earnings call. “That’s now back online very fully and very aggressively.”

Taylor said Brinker has an existing development pipeline “north of 20 restaurants,” and six to nine of those are expected to open during the current 2022 fiscal year that started July 1, including some that could debut by the end of calendar 2021.

Executives didn’t disclose what U.S. regions are being targeted for expansion, though the company in 2019 bought back 116 Chili’s from a Midwest franchisee with an eye toward speeding up development of new locations.

If timetables line up, Taylor said new openings could be running at a clip of 20 to 25 locations during the company’s 2023 fiscal year. To that end, Brinker is boosting capital spending to an expected $155 million to $165 million during fiscal 2022, to support new development and continue remodeling older locations.

Executives said the company is looking over the next two years to update existing dining rooms, bars and pickup service areas to accommodate a mix of trends, including rising in-person visits happening simultaneously with increased preference for app-enabled takeout and delivery options.

CEO Wyman Roberts said Brinker this month launched Maggiano’s Italian Classics, a virtual-only brand using existing kitchens of its Maggiano’s restaurants to produce food for delivery by third-party providers such as DoorDash. The offering is deployed at 250 locations and is expected to be in 900 of its Maggiano’s within the coming year.

The CEO said the double-down strategy was spurred largely by the success of It’s Just Wings, a delivery-only chicken wing offering that launched in June 2020 at 1,000 Chili’s locations and has since garnered $170 million in sales for Brinker.

Roberts noted that app-enabled delivery and pickup sales now account for more than 30% of overall sales at Brinker, compared with a percentage in the mid-teens prior to the pandemic. The company reported total revenue of $1 billion for its fourth quarter ended June 30, up 78% from the year-ago quarter, and net income of $75 million, compared with a net loss of $49.2 million a year ago.

For the full fiscal year ended June 30, revenue totaled $3.3 billion, up 8.4% from a year ago, and net income was $131.6 million, well above the year-ago figure of $24.4 million.