Chili’s CEO Breaks Down the Changes That Turned the Restaurant Around | WSJ

Summary

Chili's, under CEO Kevin Hoffman, has thrived in the competitive casual dining space by focusing on operational efficiency, innovation, and a customer-driven experience. Key strategies include simplifying the menu for better consistency, improving kitchen processes, and leveraging social media to promote viral menu items like the Triple Dipper. The brand has successfully balanced affordability with premium options, driving growth despite industry challenges. With plans for expansion and ongoing improvements, Chili's is poised for continued success, making it a standout in the restaurant industry.

Takeaways

• 😀 Chili's has found success by focusing on customer experience and consistently improving its food quality and service.
• 😀 The restaurant industry has faced significant challenges, including a high number of bankruptcies, but Chili's has thrived due to its strategic focus.
• 😀 Kevin Hoffman, CEO of Chili's, has been pivotal in the chain's success by making efficiency improvements, especially in the kitchen.
• 😀 One notable change was streamlining operations, such as simplifying the preparation of fries, which led to better quality and faster service.
• 😀 Chili's slimmed down its menu by 25% over the past two years, making dishes like chicken crispers more consistent and increasing sales.
• 😀 The Big Smasher, a value-oriented burger, helped Chili's compete with fast food chains by offering a familiar flavor at a competitive price point.
• 😀 Chili's uses a barbell strategy, offering both affordable and premium menu items to balance value and profitability.
• 😀 Despite competitors like Applebee's offering value deals, Chili's has maintained strong sales growth, proving that value is not just about the lowest price.
• 😀 The Triple Dipper appetizer has become a sensation, with sales increasing 70% in one year due to consistent quality and viral social media marketing.
• 😀 Chili's success in social media marketing has driven sales, with the company seeing a 50% increase in business over the past three years, partly due to effective social media engagement.

Q & A

Why has Chili's been successful while other casual dining chains are struggling?

Chili's has managed to thrive by focusing on the fundamentals of casual dining, improving food quality, consistency, and customer experience. The brand has been able to innovate both in the kitchen and with marketing strategies, leading to increased sales and customer engagement.

How did Chili's optimize its kitchen processes to save time and costs?

Chili's made small but impactful changes, such as simplifying the fries preparation process. They switched to a single type of fry, which could be cooked faster and seasoned more easily with a more effective shaker. This improved the consistency and quality of the fries.

What role did the culinary team play in improving the restaurant's food?

The culinary team was actively involved in making improvements, such as testing the impact of different pickles and creating more efficient processes for cooking and seasoning. They also contributed to innovations that reduced costs while maintaining or enhancing food quality.

What was the idea behind slimming down the menu at Chili's?

The decision to slim down the menu allowed Chili's to focus on making the food better and more consistent. Reducing menu items helped streamline kitchen operations, leading to higher sales and better product quality, as seen with the popular chicken crispers.

How did the Big Smasher burger contribute to Chili's success?

The Big Smasher was developed to offer a fast-food-style burger at a competitive price, which resonated with customers experiencing price fatigue. It became a highly successful item for Chili's, contributing to a significant sales boost.

What is Chili's barbell strategy, and how does it work?

Chili's barbell strategy involves offering both affordable options, like the $6 margarita, and premium options, like the Presidente margarita. This approach allows the chain to cater to a wide customer base, balancing value with higher-end offerings to maintain profitability.

How has Chili's been able to outperform competitors despite price-based promotions from rivals like Applebee's?

Chili's focuses not just on low prices but also on offering a better overall experience. Their value meals, such as the 3 for Me, are considered superior to similar deals from competitors, as they offer higher quality and better customer experience, which has led to increased sales and customer traffic.

What is the Triple Dipper, and why has it become such a sensation at Chili's?

The Triple Dipper is a menu item that offers a variety of dipping options in a single dish, which appeals to younger consumers who enjoy interactive, shareable meals. Its success is also fueled by social media, with customers posting about their experiences, helping the item go viral.

How does Chili's use social media to drive sales?

Chili's leverages social media to market popular items like the Triple Dipper, partnering with influencers and encouraging user-generated content. The marketing strategy emphasizes the visual appeal of their food, especially for younger audiences, which has translated into increased sales.

What are Chili's plans for the future, and where do they see the brand in the next few years?

Chili's plans to continue growing by focusing on the fundamentals of casual dining, improving restaurant productivity, and expanding into markets where they currently have limited presence. They aim to grow both the volume of their existing restaurants and open new locations, with a goal of becoming a more significant player in the casual dining industry.