By Jennifer Williams

Chili's Grill & Bar is packing in diners with help from viral social-media posts showcasing its take on mozzarella sticks and other menu items. Now, the chain is taking steps to keep customers coming back regardless of which way the online popularity winds blow, especially as casual-dining restaurants overall have struggled.

Becoming a social-media darling isn't the only factor behind Chili's resurgence. Parent company Brinker International has spent the past two years working to revive Chili's image and improve its operations. It has also revamped the Chili's menu, cutting unprofitable items, selectively adding new options and upgrading existing ones, while promoting value meals and streamlining its kitchen procedures.

The changes are working. Traffic at Chili's was up almost 20% in the three months ended Dec. 25, a metric that turned positive for the first time in at least two years last summer and has stayed there for three consecutive quarters. Meanwhile, traffic across casual-dining restaurants has been down for the past few years, falling 3.8% in 2024, according to market-research firm Black Box Intelligence. Comparable-restaurant sales at Chili's were up over 31% in the latest three-month period compared with a year earlier.

Analysts question whether the rise in traffic could be fleeting -- the product of a short-lived social-media bump, or diners flocking to the best deals. But the company insists it has found a winning formula. In the months ahead, it plans to make further changes to its menu to maintain diners' attention, while also upgrading its kitchens and restaurant decor.

"It isn't luck," said Brinker finance chief Mika Ware. "We introduced a lot of new people to Chili's and...they are coming back and coming back more frequently."

Brinker, which also owns Maggiano's Little Italy, gets roughly 90% of its revenue from Chili's. The chain has been around for roughly five decades, and was for a time a go-to place for family outings and date nights. But it fell out of favor over the years, with guest visits dropping by around 30% over the two decades starting in 2002, analysts said.

One reason was the menu, according to Ware, which she described as bloated. The chain for years resisted cutting menu items, figuring that even the lowest selling ones had some fans who would stop dining at Chili's if their favorites were gone, she said. "So all of the sudden, your menu is monstrous and everything is OK, but nothing is great."

The company now has a more cutthroat approach, slashing low-selling menu items and reducing the number of offerings by around 25% over the past two years. And while there isn't a "sweet spot" for the number of dishes and beverages on the menu, executives are looking for trims when offerings are added, Ware said.

Brinker plans to make additional menu changes in the coming months, but declined to provide details on which items could be cut or added. Ware said any new items will complement current options. "We're not going to introduce pizzas...or sushi," she said.

Meanwhile, two menu items in particular are driving sales: a value meal with a beverage, starter and main dish for as low as $10.99, which accounted for 19% of the chain's sales for the quarter ended in late December. There is also an appetizer bundle called the Triple Dipper that lets diners choose three appetizers, such as boneless wings, chicken crispers and fried mozzarella, along with sauces. Sales of the offering doubled in the latest three-month period compared with a year earlier, and accounted for nearly 15% of sales.

The Triple Dipper has gone viral. TikTok users have racked up millions of views biting into Chili's version of a mozzarella stick, a rectangular block of fried cheese, to see how far it stretches. Triple Dipper-themed bedding, which Brinker launched to feed into the hype, sold out within a week.

Beyond menu upgrades, the chain is improving efficiency in the kitchen. For instance, Chili's scrapped a station in its kitchens dedicated to assembling a chicken wing offering launched during the pandemic, freeing up space to make and prepare food, according to Ware.

Chili's also plans to spruce up its restaurants, including with new paint, artwork and tables, as well as potentially opening up bar areas that have lower ceilings. The changes will ramp up starting next summer -- beginning with around 200 older locations of the chain's roughly 1,100 restaurants -- and it will likely take around eight to 10 years to hit a majority of them, the CFO said.

Holding on to diners who in some cases are drawn in by social-media buzz can be hard to do, analysts say.

"When something catches fire, whether it's a restaurant or a consumer trend in fashion or apparel, to what degree is there an element of, that's the cool, in thing to do, but eventually that wears off," said Brian Vaccaro, a senior restaurant analyst at Raymond James. "To say it plainly, will people be doing mozz pulls on TikTok 12 to 18 months from now?"

But the steady increase in traffic gives analysts reason to think diners will continue showing up to Chili's. Other chains have recently begun to offer lower prices, such as Applebee's with a meal deal for $9.99, but there hasn't so far been a notable impact on Chili's traffic, they said. A critical indicator of whether the momentum is sustainable will come this summer, when Chili's is a year out from posting positive traffic for the first time in a couple of years.

"We think they'll be pretty successful lapping that," said Chris O'Cull, a restaurant and franchising analyst at Stifel. "But we'll see."

Write to Jennifer Williams at jennifer.williams@wsj.com

(END) Dow Jones Newswires

February 06, 2025 05:30 ET (10:30 GMT)

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