Chili's Grill & Bar, battered by the recession and a crowd of rivals, is trying to remake its image by revamping some of its most-popular menu items and reviving an old ad campaign.
The moves are part of a strategy shift at the chain, a unit of Brinker International Inc. that has posted declining same-store sales for the past four quarters. Like a lot of restaurants during boom times, Chili's grew by opening new outlets, but the recession has forced it to reconsider its formula.Chili's wouldn't say how much it will spend on the campaign.
As a result, Chili's is changing the way it prepares its burgers and ribs, making sure all customers are greeted with a cheerful "Welcome to Chili's" upon entering its restaurants and bringing back its retired "Baby Back Ribs" jingle in television ads that will begin airing Thursday. In the commercial, a deep male voice sings, "I want my new baby back, baby back, baby back..."
The push comes as Chili's is scaling back its expansion plans. The chain has opened more than 400 company-owned restaurants in the past five years but will open none in the current fiscal year, which ends in June 2010.
"As the economy was humming along, [expansion] was a great strategy, but in the past 12 months...some of the same markets we grew in had to slow down, if not stop our growth," said Todd Diener, president of both Chili's and Brinker's On the Border Mexican Grill & Cantina.
Chili's
Some industry experts doubt Chili's menu changes and ad push will help it much. Grill-and-bar-style eateries, such as DineEquity Inc.'s Applebee's Internationaland Ruby Tuesday Inc., look similar and serve a standard line-up of burgers and salads. Same-store sales in the category in the second quarter fell 6% from a year earlier, according to restaurant consulting firm Technomic Inc.
"Most of these chains have been attempting to differentiate themselves for the last several years, with new menu items and better service, and it doesn't matter. It's not enough to materially change investor perception of these concepts," says Jeff Farmer, a restaurant analyst at Jefferies & Co.
Chili's kicked off its new strategy by focusing on its ribs and burgers. The chain had been using fresh ground beef in its burgers, which arrived at restaurants already formed into patties. After studying various cuts and qualities of meat, Chili's executives decided to switch to choice ground chuck. And it decided its cooks would hand-form the patties themselves before grilling, a change the chain's executives say makes its burgers juicier.Chili's also took another look at its baby back ribs, a signature dish it introduced in the late 1980s and popularized with the "Baby Back" jingle.
Seeking a better smoking process, the chain consulted with high-end chefs across the country, whom it declined to name. Chili's executives ended up doubling the ribs' smoking time, which they say makes the meat more tender, and started using pecan wood, which they say adds more flavor, instead of mesquite.
The new burgers and ribs began appearing on Chili's menus last week. Chili's also is bringing back a three-course-for-$20 deal that had ended in August, featuring the new ribs and burgers.
Chili's stopped using the ribs jingle in 2006 because "at some point, you have to give things a rest," said Mr. Diener. "With the reintroduction of our ribs, we thought it would be apropos to bring it back."
Chili's executives say they have altered their approach to menu changes, which had been based solely on sales. About a year ago, Chili's removed its Caribbean salad from the menu, only to learn that was a mistake. Though it wasn't a high-volume product, it was ordered by some loyal customers whenever they ate at the chain.
Wyman Roberts, chief
marketing officer of both Chili's and On the Border and president of Maggiano's Little Italy, said he isn't sure when the salad, which contains soy-marinated chicken, mandarin oranges and pineapples, will return to the menu because Chili's is still trying to determine whether to bring it back as it was or improve the recipe.Chili's also has been training its staff in how to improve customer service. Over the weekend of Sept. 14, Chili's restaurant employees were required to report to work at 7 a.m. to watch televised lessons on the subject. The chain now requires its hosts to greet all guests with a smile and eye contact, and tell them about new menu items and the three-course promotion.
And managers are supposed to inquire whether everything was all right if a guest hasn't finished his meal. "Our research with guests tells us that if problems are taken care of before they leave, it's a huge loyalty driver and a reason they come back," Mr. Diener said.
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