It has to be said. Chili’s Grill & Bar smashed it with the Big Smasher.
The casual-dining chain on Wednesday reported same-store sales up 14.8% for the fourth quarter ended June 26, and that included a 5.9% increase in traffic, making Chili’s a standout within the sector at a time when consumers appear to be cutting back.
“To put this into context, this was 15.6 points better than the industry on sales and 9.4 points better than the industry on traffic,” said Brinker International President and CEO Kevin Hochman, in a call with analysts on Wednesday.
The generously sized burger, with its 7.5-ounce patty, in April became part of Chili’s 3 for Me combo meal that includes bottomless chips and salsa, an entrée and a bottomless (non-alcoholic) drink starting at $10.99. It was part of Chili’s “better-value-than-fast-food” campaign, which—though more expensive than a Big Mac meal in most markets—drove in new guests at Chili’s.
The good news for the Dallas-based brand, however, was that the $10.99 deal might have brought them in, but more than 80% of those guests end up ordering full-priced items on the menu, said Hochman.
It’s an indication that the barbell pricing strategy put in place two years ago is working, he said.
The fourth quarter marked the second full year of a turnaround effort launched by Hochman to improve Chili’s four-wall economics. With a focus on fundamentals, Chili’s has grown its average unit volume by $440,000 to $3.6 million.
The changes Hochman has put in place include a simplification of the menu and operations, including suggestions gleaned from managers and team members while on listening tours.
The number of items on the menu have been reduced by 22%, for example, and Chili’s has worked to reduce prep steps and eliminate administrative tasks that, Hochman said, “get in the way of morale.”
Chili’s has invested in technology, like replacing kitchen display systems and rolling out an AI-powered labor forecasting tool that helps general managers spend less time on scheduling.
The menu has been upgraded over the past year, focusing on core categories like margaritas, Chicken Crispers and burgers. Up next is a new-and-improved fajita platform—one that is already a $200 million business—with upgrades coming in the second quarter of fiscal 2025 and a full relaunch in the fourth quarter.
Chili’s has also invested in advertising after several years off the air. Ads were placed in live sports programming, premium cable, primetime, streaming and digital, and Hochman plans to increase that investment in fiscal 2025.
Perhaps most significant, however, was how Chili’s played on TikTok over the past year. Both the Big Smasher and the more-recent Nashville Hot Mozz fried cheese stick appetizers went viral, which Hochman credited with a step change in business. He estimated about 60% of the traffic increase was a result of advertising, while about 40% was from the buzz on TikTok.
In fact, Chili’s had planned to shift the Big Smasher off the $10.99 deal this fall and replace it with another entree, but it was doing so well, they decided to keep it on.
Another product is on deck to slip into the 3 for Me deal in the coming fiscal year when they feel they need it. “But for now we’ll stick with the Big Smasher as long as it’s still working,” said Hochman.
The promotion worked in part because Chili’s invested in added labor, to make sure restaurants weren’t slammed by those guests driven in by the advertising and social media, he noted.
“A majority of the incremental guests were new to Chili’s, so we responded quickly by adding labor to ensure we could handle the increased volume,” he said. “Normally restaurants would have been very challenged with that sudden influx of traffic.”
But with the simplification efforts in place and labor investments in the fourth quarter, Chili’s was able to maintain record guest metrics throughout May and into June and July, he said.
Traffic growth has also continued into the first quarter. Brinker CFO Mika Ware—in her first earnings call after starting with the company at the end of June—said Chili’s same-store sales in July were in the high single digits and included positive traffic, despite “rocky macros” more broadly.
The effort to simplify operations will continue into the first quarter, including a focus on off premise to improve order accuracy and improve packaging to ensure food is delivered hot and fresh. At the end of the first quarter, Chili’s will eliminate curbside delivery, which has been a source of friction for team members, Hochman said.
Work still needs to be done at sister brand Maggiano’s, however, which recorded a same-store sales increase of 2.5% for the quarter, though that was largely the result of a 9.2% increase in pricing and 2.2% increase from the menu mix. Traffic declined 8.9% at Maggiano’s.
Hochman said the company plans to take learnings from Chili’s turnaround and apply it to the Italian brand.
UPDATE: This article has been updated to correct the size of the Big Smasher patty.
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