Chili’s same-store sales lifted 8.5 percent in the fourth quarter versus 2019 and grew 8.7 percent from July 1 to August 4 compared to the same period last year. On an absolute dollar basis, Q4 was the chain’s largest sales quarter on record, topping $900 million. Maggiano’s same-store sales dropped 17.5 percent against 2019, but grew 1.6 percent from July to August year-over-year.
Roberts emphasized Chili’s ability to handle four brands under one roof is only possible with best-in-class workers. And during the ongoing labor crisis, the company implemented a “full-court press” to hire, train, and retain employees. In Q4, Chili’s saw labor inflation grow in the mid-single digit range, which is a dynamic the company expects to continue in the near-term. Roberts noted that as government stimulus went away, servers became more available, but there are still pockets of challenges with back-of-house staff.
To reward managers and hourly workers, the company provided incremental bonuses in Q4 totaling $4 million beyond the normal payout formula. To support operators even further, Chili’s is rolling out handheld server devices that've been worked on for three years. The technology helps with execution, saves labor costs, delivers a quality guest experience, and puts more money in the pockets of workers. The devices are in more than 250 restaurants, and the company anticipates full implementation by November.
In addition to labor, commodity inflation—especially chicken and pork—has caused a notable headwind. Although Chili’s held prices during the pandemic to recoup traffic, Robert foresees the brand pricing more than its historical 1 to 2 percent in fiscal 2022. The company will move forward cautiously as it tries to maintain its value proposition.
“The value positioning of both of our brands is an important dynamic, and we want to continue to maintain that,” said CFO Joe Taylor. “We’re very aware of what’s going on in the industry, and you’re seeing some fairly aggressive moves on pricing. But I always go back to, the strategy drives traffic. And this is particularly a sector that has seen negative traffic trends really for a long period of time now, and that’s not something we want to fall into to. We’re going to be very focused on our ability to continue to drive traffic and price may or may not intersect with that thought process. “
Chili’s ended Q4 with 1,594 units systemwide, including 1,235 in the U.S. and 359 internationally. Maggiano’s has 54 locations domestically. Brinker is back to a pipeline of more than 20 restaurants, which will start to fall in place in the back half of fiscal 2022 and into 2023. The goal is to maintain that pipeline and build it into the 20-25 range in the years thereafter.
Restaurant operating margin in the fourth quarter increased to 16.9 percent compared to 6.4 percent last year. Operating income rose to $100.6 million versus an operating loss of $53.2 million in 2020.