January 31, 2025
iStock.com/J. Michael Jones
Chili’s Turnaround Called Best of ‘All Time’ by Analysts After 31% Increase in Sales
If there’s a success story amid the currently challenged restaurant business, Chili’s most certainly takes the crown. Releasing its fiscal Q2 2025 results on Jan. 29, the company proudly boasted of its most recent successes.
“Improving fundamentals continues to drive a better guest experience and sustained business results,” said Kevin Hochman, president and CEO of Brinker International, the parent company of Chili’s Grill & Bar.
“Chili’s sales comps accelerated to +31%, driven both by new guests trying Chili’s and return guests coming more frequently despite a more competitive promotional environment. These results would indicate we are building a much stronger business for the long term,” he added.
Foot traffic increased by 20% last quarter as well.
The turnaround plan was initiated in 2018, as FSR Magazine outlined, with traffic slumping alongside sales numbers. The COVID-19 pandemic would prove even more challenging, and in its wake, Chili’s has emerged relatively unscathed compared to imperiled competitors.
Investors and Analysts Wowed by Chili’s Q2 2025 Earnings
During the earnings call related to the results, analysts expressed excitement over the company’s recent fortunes nearly a dozen times, as CNN explained.
One analyst claimed that the company’s turnaround would be regarded as “the best one ever” in the restaurant business, while a second chimed in to say that Hochman was perhaps “going to write a great book on this some day.”
According to Restaurant Dive, Chili’s invested heavily in the marketing and promotion of its Triple Dipper offering. A menu item that allows guests to choose three items from a variety of appetizers for less than $20, the Triple Dipper represented just 7% of sales a year ago — that share has now doubled to 14%.
In tandem with the successful marketing of the Triple Dipper, Chili’s also aggressively promoted its 3 for Me deal, which allows diners to enjoy an appetizer, main course, and beverage starting at only $10.99. Popular menu items appearing as part of this offer are the chain’s famous Big Smasher Burger, three-count Crisper Combo, and 6-ounce Classic Sirloin dinner.
“While competitors can certainly price below our 3 for Me offer, it is very difficult for them to replicate the total value proposition given the amount of time and investment we have put into improving the experience,” Hochman said.
R.J. Hottovy, head of analytical research at Placer.ai, appeared to agree. “Chili’s innovative approach to value continues to resonate with consumers,” Hottovy wrote in an email, as Restaurant Dive reported.
“The 3 For Me promotion drove incremental visits this quarter, attracting a broader demographic range compared to the same period last year,” he added.
Can Chili’s Hold Strong, Despite Competition From Applebee’s, Fast Food?
Despite having gone viral many times on TikTok (one mozzarella stick cheese-pull video racking up over 16 million views) and producing tangible bottom-line sales results, competition is heating up for Chili’s as competitors sit up and take notice.
CNN detailed several examples, including Applebee’s launching a $9.99 “Really Big Meal” deal, which took direct aim at Chili’s now-iconic 3 for Me offer in its advertising. Endless fries and a soda are also part of Applebee’s deal as it seeks to wrangle market share away from the skyrocketing Chili’s.
McDonald’s, Wendy’s, and Burger King have all made serious recommitments to the value proposition in recent months as it becomes evident that price is king for consumers in the fast-food, fast-casual, and overall restaurant spaces.
When it comes to what the future holds for Chili’s, at least some investors appear to remain bullish on the chain’s immediate future.
“The flywheel of better food, service, atmosphere, and marketing translating into sales is in full effect, with Chili’s posting comp growth we’ve never seen from a mature brand (ex-COVID),” Citi restaurant analyst Jon Tower wrote in a client note, according to Yahoo! Finance.
“There’s little evidence to suggest this strength should fade with management pointing to sales momentum carrying into fiscal third quarter, a pipeline of new product news and store-level initiatives (oven replacement, remodels) providing duration to the sales story,” Tower added.
BrainTrust
Brad Halverson
Principal, Clearbrand CX
John Lietsch
CEO/Founder, Align Business Consulting
Neil Saunders
Managing Director, GlobalData
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Discussion Questions
Will Chili’s continue to see sustained growth over the next few quarters, successfully fending off hungry competitors?
Although Chili’s has outlined some of the markers of its success, what other lessons can be applied more broadly to others in the same or adjacent segments?
Do competitors have a chance of eating into Chili’s growth with value-conscious pricing or other strategies? If so, which other gameplans might work to gain a foothold?
Poll
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Chili’s has been on fire lately and has been significantly boosting traffic to its restaurants. There are a whole host of reasons for the success including improved menus and product quality, strong social media activity, and winning over younger diners. Chili’s is also helped by the fact it is good value for money, so it’s an affordable indulgence for many Americans who are still feeling pinched by inflation.
There are a lot of customers who want to experiment with new flavors, so offering them a 3-item trifecta for $20 is a smart move. (And it doesn’t hurt that some of its competitors feel flat and stale.)
“One analyst claimed…” Now what’s the point of grandstanding hyperbole if it doesn’t get your actual name in the news? Oh my…
Yes the results are impressive; even more important to me is that the sales increased even more than traffic counts (translation: they aren’t giving away the store to get sales). I wish them well, but doubt we’ll see too many more mid-double digit increases.
Several good decisions are being made at Chili’s in the kitchen, in the marketing department, and at the bank. As long as this trend continues, Chili’s need not worry too much what competition is doing.
The company is dedicated to providing good customer service, providing good food at reasonable prices, maintaining employees, and increasing profits and expanding the business. Although it is easier said than done, Chili’s is achieving all of this while other restaurants are unable to.
By offering an attractive value proposition with its 3 for Me. menu, Chili’s marketing strategy has been successful in targeting budget-conscious consumers.
In introducing the Big Smasher, Chili’s is not only expanding its menu options, but also appealing to customers who enjoy fast-food-style burgers at a sit-down restaurant. Chili’s is operating more efficiently than in the past due to its innovative approach to differentiate itself from traditional fast-food chains.
Chili’s is attracting a wider customer base that appreciates both quality and affordability. Because Chili’s employees have remained with the company longer and have become more proficient, the company has been able to maintain staffing levels despite an increase in traffic to its restaurants.
Chili’s has discontinued foods that were difficult for employees to prepare. For example, they dropped the smaller beef patties used for its Lunch Burger in favor of its regular 7.5-ounce patty, alleviating the burden on managers and simplifying the cooking process. Furthermore, Chili’s is now purchasing more of one type of patty, which reduces food costs.
Everyone loves a comeback story, and in this scenario Chili’s was the chronically out-of-work actor who is suddenly relevant again. The best part is that they didn’t have to do anything drastic to make it happen – better marketing of existing menu items, coupled with competitive pricing to win share from fast food sellers. Sometimes, the simplest path is the right one!
A broad success story – strong marketing brought in guests, while operational improvements created a better experience and food quality drove repeat visits. Brinker’s earnings released a treasure trove of data points. Very impressive performance. It’ll be interesting to see how / if Chili’s can continue to drive and service that demand as the year progresses.
Good food and good price… That’s a good combination when customers are looking for price value in a shakey economy. With lower prices comes lower margins. Volume becomes even more important. Let’s see how the numbers look a year from now. That’s how we will know the strategy really worked.
Chili’s has been perfectly aligned with what customers want during this current economic period – that is, building a perception dining out can be affordable and a decent food value for the money. All they have to do is continue to execute well on this with a rotating menu of specials, in a clean, well-kept restaurant, and performance stays strong.
Res firma mitescere nescit! In Latin, that loosely translates to, a firm resolve does not know how to weaken. It has a better colloquial translation in the movie American Flyers which applies to Chili’s: can Chili’s keep this up?
There’s no denying that the turnaround has been masterful but hype is never in it for the long term. The restaurant industry is highly competitive and Chili’s has positioned itself well for the world we’re in right now. Will those customers remain and become regulars and will they eventually move upstream and pay “full retail” for food or beverage items (with or without alcohol)?
The race to the bottom is still a race to the bottom even if we cloak it in the guise of a strong value proposition so Chili’s, at a high level, must either run lean, serve a lot of people, get new and repeat customers to buy more expensive stuff or all of the above. The formula doesn’t change much unless Chili’s wants to be exactly like a McDonald’s, Wendy’s or Burger King. It is a great turnaround story and worthy of accolades but the real work is just beginning.
For the first time in a long time I have friends and family getting together for lunch at Chili’s as a first choice in discussion. They managed to hit the combo of social media relevance to the young diners and delivering value to the older diners. Time will tell if it is sustainable to drive future growth. I actually haven’t eaten there under the current management and I guess I will have to stop by for lunch sometime 🙂
Yes, competitors can duplicate or even exceed the gross revenue growth and net profit profit turnaround that Chili’s has done. There are many ways to peel a potato, and in the restaurant business business, it is more what have you done for me lately, in addition to following excellent value and customer satisfaction, which Chili’s has done.
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Chili’s has been on fire lately and has been significantly boosting traffic to its restaurants. There are a whole host of reasons for the success including improved menus and product quality, strong social media activity, and winning over younger diners. Chili’s is also helped by the fact it is good value for money, so it’s an affordable indulgence for many Americans who are still feeling pinched by inflation.
There are a lot of customers who want to experiment with new flavors, so offering them a 3-item trifecta for $20 is a smart move. (And it doesn’t hurt that some of its competitors feel flat and stale.)
“One analyst claimed…” Now what’s the point of grandstanding hyperbole if it doesn’t get your actual name in the news? Oh my…
Yes the results are impressive; even more important to me is that the sales increased even more than traffic counts (translation: they aren’t giving away the store to get sales). I wish them well, but doubt we’ll see too many more mid-double digit increases.
Several good decisions are being made at Chili’s in the kitchen, in the marketing department, and at the bank. As long as this trend continues, Chili’s need not worry too much what competition is doing.
The company is dedicated to providing good customer service, providing good food at reasonable prices, maintaining employees, and increasing profits and expanding the business. Although it is easier said than done, Chili’s is achieving all of this while other restaurants are unable to.
By offering an attractive value proposition with its 3 for Me. menu, Chili’s marketing strategy has been successful in targeting budget-conscious consumers.
In introducing the Big Smasher, Chili’s is not only expanding its menu options, but also appealing to customers who enjoy fast-food-style burgers at a sit-down restaurant. Chili’s is operating more efficiently than in the past due to its innovative approach to differentiate itself from traditional fast-food chains.
Chili’s is attracting a wider customer base that appreciates both quality and affordability. Because Chili’s employees have remained with the company longer and have become more proficient, the company has been able to maintain staffing levels despite an increase in traffic to its restaurants.
Chili’s has discontinued foods that were difficult for employees to prepare. For example, they dropped the smaller beef patties used for its Lunch Burger in favor of its regular 7.5-ounce patty, alleviating the burden on managers and simplifying the cooking process. Furthermore, Chili’s is now purchasing more of one type of patty, which reduces food costs.
Everyone loves a comeback story, and in this scenario Chili’s was the chronically out-of-work actor who is suddenly relevant again. The best part is that they didn’t have to do anything drastic to make it happen – better marketing of existing menu items, coupled with competitive pricing to win share from fast food sellers. Sometimes, the simplest path is the right one!
A broad success story – strong marketing brought in guests, while operational improvements created a better experience and food quality drove repeat visits. Brinker’s earnings released a treasure trove of data points. Very impressive performance. It’ll be interesting to see how / if Chili’s can continue to drive and service that demand as the year progresses.
Good food and good price… That’s a good combination when customers are looking for price value in a shakey economy. With lower prices comes lower margins. Volume becomes even more important. Let’s see how the numbers look a year from now. That’s how we will know the strategy really worked.
Chili’s has been perfectly aligned with what customers want during this current economic period – that is, building a perception dining out can be affordable and a decent food value for the money. All they have to do is continue to execute well on this with a rotating menu of specials, in a clean, well-kept restaurant, and performance stays strong.
Res firma mitescere nescit! In Latin, that loosely translates to, a firm resolve does not know how to weaken. It has a better colloquial translation in the movie American Flyers which applies to Chili’s: can Chili’s keep this up?
There’s no denying that the turnaround has been masterful but hype is never in it for the long term. The restaurant industry is highly competitive and Chili’s has positioned itself well for the world we’re in right now. Will those customers remain and become regulars and will they eventually move upstream and pay “full retail” for food or beverage items (with or without alcohol)?
The race to the bottom is still a race to the bottom even if we cloak it in the guise of a strong value proposition so Chili’s, at a high level, must either run lean, serve a lot of people, get new and repeat customers to buy more expensive stuff or all of the above. The formula doesn’t change much unless Chili’s wants to be exactly like a McDonald’s, Wendy’s or Burger King. It is a great turnaround story and worthy of accolades but the real work is just beginning.
For the first time in a long time I have friends and family getting together for lunch at Chili’s as a first choice in discussion. They managed to hit the combo of social media relevance to the young diners and delivering value to the older diners. Time will tell if it is sustainable to drive future growth. I actually haven’t eaten there under the current management and I guess I will have to stop by for lunch sometime 🙂
Yes, competitors can duplicate or even exceed the gross revenue growth and net profit profit turnaround that Chili’s has done. There are many ways to peel a potato, and in the restaurant business business, it is more what have you done for me lately, in addition to following excellent value and customer satisfaction, which Chili’s has done.