Category: Food and Beverage Company

Chili’s Restaurant

[URIS id=153]

Headquartered in Dallas, TX, Chili’s Grill & Bar is owned and operated by Chili’s, Inc. which is a subsidiary of Brinker International, Inc. It is an American restaurant chain that offers Tex-Mex style cuisine which includes appetizers, lighter choices, craft burgers, sandwiches and handhelds, chicken and seafood, ribs and steaks, tacos and quesadillas, burritos, fresh Mex Bowls, fajitas, and enchiladas, among many others. The company was established by Larry Lavine in 1975 in Texas where it all began with one dream; that is, to put up a place where you can go and hang out with good friends over a burger and a beer. For those who long for connection with friends and family, Chili’s were the only restaurant to offer a true Southwest spirit packed with positive energy. The Company’s first location opened in 1975 in Dallas, where a post office was converted into a cool little joint named Chili’s.

Throughout history, Brinker International funded or co-funded over 15 restaurants that grew to become familiar brands in their own right. It was only in 1991 when Chili’s started expanding globally. The Company opened its first international location in Canada, which was shortly followed by Mexico, Middle East, South Korea, and East Asia. Since then, there was no stopping Chili’s from growing exponentially in the U.S. and around the globe. On Aug. 3, 2004, the Company marked its 1,000th restaurant at Pinnacle Park in Dallas.

But just like any other businesses, Chili’s had its own share of downfalls too. In October 2008, a Chili’s Australia franchise was sued for underpaying employees, compelling staff to agree on an Australian workplace contract and failing to recompense AU$45,000 in owed wages by a deadline mandated by the Office of Industrial Relations. The said Australian franchise was later penalized with a fine of AU$300,000 by the NSW Office of Industrial Relations. In the same year, Brinker International, Inc. announced that it would be closing all of its Chili’s branches in Australia.

In spite of the fact that the weather was, without a doubt, this season a huge stumbling block for the industry, Brinker was able to increase its sales and expanding operative margins too. The introduction of new items on the menu such as Fresh Mex boosted Chili’s margins to 16% and EPS increased to $0.58.

The strategy for Brinker’s appears to be a combination of expansion and innovation, particularly for Chili’s, with a re-branding program for the restaurants, the launch of technology-driven initiatives, such as online ordering and tabletop entertainment, and the development of new delivery solutions for about 450 locations.

Clearly, Brinker International have geared the past years on keeping Chili’s innovative, transforming and optimizing the brand. The introduction of higher-margin alcoholic drinks, for example, has given the joint higher levels in sales. Similarly, the introduction of more advanced kitchen equipment allowed the firm to save on food waste and labor costs, as well as improving overall management.

Brinker has reported year over year performance increase in profitability, driven by its cost saving efforts and sales leverage. The Company has also just announced some encouraging results as company-owned comps were up 0.8% in the quarter, exceeding and overcoming the previous quarter 1.3% decline.

The solid franchise system allows the restaurant chain to uphold a revenue stream while focusing on developing new products and marketing strategies, and while expand into new markets. The firm also provides value to shareholders by means of increased dividend payments and share buybacks. Return on equity is 88.9, which is actually above 60 points compared to the industry average of 26.0. Brinker is conducting an aggressive expansion to maintain upward revenue and is likely to do so. The company has also introduced its first road-side prototype restaurant concept in Mexico called “Chili’s Express”.

The enormous overhaul of Chili’s paid off, and the company has been able to keep a stable upward trajectory for the past years. Though, the prospect for the years ahead is not as encouraging as the last two fiscal years, as industry experts say the company’s growth will actually become more hooked on global expansion.

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