Brinker takes cautious approach to Chile and Maggiano prices
Brinker International Inc. is facing commodity pressures but is taking a cautious approach to its pricing at Chili’s Grill & Bar and Maggiano’s Little Italy concepts, executives said Wednesday.
The Dallas-based casual dining company, which also owns two virtual brands, continued to focus on value in the company’s third quarter, which ended March 30, said Wyman Roberts, CEO and President. de Brinker, during a conference call with analysts.
“It will come as no surprise that going forward, our biggest challenge is commodity inflation,” Roberts said. “We believe that the high costs we face today will not remain at these levels permanently. We will therefore continue to leverage our pricing strategy which is not passive, but also not reckless. »
Roberts said Brinker has already taken six “pricing actions this year to ensure consumer acceptance and protect our long-term traffic growth.”
He said Chili plans to roll out a new menu within weeks that will reduce operational complexity, restructure value for better margins and take an additional price, which is expected to approach 6% for the year.
Joseph Taylor, chief financial officer of Brinker, said that for the third quarter, the company recorded a 4.3% year-over-year price increase.
“Both brands took action on pricing during the quarter, with Chili’s exiting the quarter with a 4.6% menu price increase, while Maggiano’s exited with an additional 5.1% menu price,” Taylor said.
Roberts noted that consumers had “been quite receptive” to price increases.
“We see, in the broader industry data, some concerns about consumer value ratings and how they are responding,” Roberts said. “So we want to be careful and always look at their expectations and their perceptions of value.
The company expects further price increases in the fourth quarter to approach 6% year-over-year prices in June, Taylor said, which would offset some of the increases in commodity prices.
In the third quarter, Taylor said food and beverage costs rose 180 basis points year over year, driven by 11% commodity inflation.
Roberts warned that brands will continue to emphasize value messaging to maintain average unit volumes.
“We have been betting on the field as an industry leader in value, which has been key in boosting our AUVs and guest frequency,” Roberts said. “And as we move into a slower economic cycle, that becomes an increasingly important competitive advantage for us. So, to further mitigate inflationary pressure, we are also actively looking for ways to run a more efficient operation.
Among those efficiencies, he added, are wearable technology for wait staff and the operation of food runners. Chili’s is also extend its use or robot assistants over 60 units.
“At Chili’s, we’re encouraged by the change we’re seeing in dining rooms, which is driving higher check averages,” Roberts said, adding that off-site sales remain at around double pre-pandemic levels at both at Chili’s and Maggiano,
For the third quarter ended March 30, Brinker’s net income was $36.6 million, or 81 cents per share, compared to $33.9 million, or 73 cents per share, in the same period ago. a year. Revenue for the quarter was $980.4 million, compared to $828.4 million in the same period a year earlier.
Brinker’s same-store sales increased 13.5% in the quarter, with increases of 10.3% at Chili’s and 50.5% at Maggiano’s.
Brinker International owns, operates and franchises more than 1,600 restaurants in 29 countries and two U.S. territories, including Chili’s Grill & Bar, Maggiano’s Little Italy and virtual brands It’s Just Wings and Maggiano’s Italian Classics.
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