When sorting through Chili’s multi-year turnaround, connection always comes to the surface. CMO Ellie Doty says the brand had to learn to listen. The days of telling guests what they should know about Chili’s? They were over.
“The journey really began with thinking more about our guests and what they’re interested in from us, rather than about ourselves and what we want our guests to think,” she says.
Marketing was always going to be a critical piece of Chili’s comeback, which has now stretched seven consecutive periods of positive same-store sales growth. But it’s cast a larger shadow in recent months.
The reason is simple. Brinker International’s flagship spent years reworking operations and pulling back to its core. A 40 percent slash in menu items. Renewed focus on the classics, like fajitas and margaritas. Value that sticks. Technology updates. Simplicity over complexity. A seamless rewards platform. Yet those are, for the most part, behind-the-curtain refreshes that manifest in faster service times, improved customer satisfaction metrics, and lower costs throughout the organization. Guests notice changes, but they don’t really broadcast unless you provide a megaphone.
And that’s where Doty dialed in, mining something she calls, “a journey in our authentic beginnings.”
“We really wanted to place a stake in the ground around being true to our roots and updating that to be relevant today,” she says. Doty was promoted in September after joining Brinker in 2017 as VP of marketing. Previously, she worked at KFC from 2013–2017, including a stint as marketing director and CMO for it Canada division, and clocked time as senior brand manager for Taco Bell and brand and field marketing manager at Long John Silver’s.
The Chili’s challenge opportunity centered on a phenomenon not every marketer embraces. Social media has accomplished a lot of things for brand messaging (and not all of them good). One undeniable reality, however, is that it’s opened the funnel for core users to speak on company’s behalf, and to do so at a scale unimaginable just a decade ago. Call it word-of-mouth marketing for the masses.
Doty says Chili’s started thinking about guests and what they’re in interested in hearing from the brand.
“Marketing overall, not just at Chili’s, has made a transition from how well can you communicate to how well can you listen,” she says.
And the road map was pretty clear—start paying attention to what consumers engage with—what they talk about. The content they’re creating about Chili’s, Doty says. The online communities the brand gets attention in already.
“That was really the birthplace of many ideas where we said, ‘this is how guests want Chili’s to show up and it’s authentic to who we are,” she says. “We’re being ourselves when we do this.”
With social, Doty says restaurants, at some point, need to decide if they want to be cool, or if they want to be useful. That’s a trap many legacy chains fall into. Appealing to a generation that’s not listening. Chili’s leans the second point, although Doty says the brand “is a little bit cool as your dad’s cool,” and that’s OK by them.
“Our most important thing we focus on regarding how we show up in those channels is authenticity and usefulness,” she says. “So, we don’t want to be in places or force ourselves into places or conversations where, frankly, there’s no place for Chili’s. Why are you here? Even if it’s big and it’s taking off and our competitors are showing up in it, if it’s not authentic to us and useful to our guests that’s not a place for us.”
Some recent examples: Chili’s My House Starter Packs, complete with baby back ribs scented candles; $25 Halloween costumes, boxers included; and a Chili-fied school bus. The brand also recently got on TikTok for the first time to celebrate turning 45.
Part of Chili’s surge in recent months stemmed from personalization tactics. The company has shifted a lot of marketing energy into ensuring it delivers a message that speaks to a specific guest, delivered in a time and place that makes sense. That could include social targeting. It could be SMS text.
Mainly, though, Chili’s CRM and loyalty programs have redefined its business at a broad, and quickly moving, scale.
The brand today has six million people in its rewards program. And that’s engaged names—people who have interacted with Chili’s in the last 180 days. Doty says there is a sizable number of guests in the database who haven’t and possibly could in the future.
With this active pool, though, Chili’s sees about twice the level of frequency compared to regular guests.
Back in spring 2018, the chain exited American Express Co.’s Plenti Rewards program. It was a points-based setup that proved too complex, the company said at the time.
Chili’s moved away from an in-house program in favor of the coalition-based Plenti loyalty platform in 2016. American Express launched its multi-tier retailer platform in May 2015 with a host of partners, including AT&T, Nationwide, and Hulu. Macy’s also left when Chili’s did. Plenti offered one point for each dollar spent at participating retailers and restaurants, allowing members to redeem for savings or through an online marketplace that included partners like WalMart and Office Depot.
Plenti users grabbed points on eligible purchases at participating restaurants to a certain date.
Today’s version—My Chili’s Rewards—started testing in August 2017. Arguably the most important fix was that customers now get a free perk immediately for signing up. Right from the outset, nearly half of the guests opted for free chips and salsa. The other chose a free non-alcoholic beverage.
If diners come every 60 days, they get free chips or drinks again. “It’s a lot more transparent for them to get something,” Doty says.
The message today, and the power of the 3 for $10
On February 17, Chili’s launched its latest campaign—“Out to ‘ITA!” The message revolves around the sounds, smell, and overall experience of coming to the restaurant. It also taps into something casual-dining giants in general have leaned into lately: A laid-back, social-forward experience that customers can’t get from fine dining or quick service.
“Come as you are,” by Chili’s label, versus using your indoor voice, “stuffy,” or having to put your phone down.
You can see in the ad below how Chili’s aims to speak to customers and families. A dine-in experience that doesn’t break the bank or the rule book.
The campaign also highlights chicken or shrimp fajitas joining Chili’s 3 for $10 lunch menu. In January, the chain marketing pushed the addition of steak into its 3 for $10 across all channels. The move had a significant impact, CEO Wyman Roberts said last quarter, in igniting same-store sales trends. Chili’s goal through the rest of the calendar, he added, is to balance communicating innovation and new news for dine-in business as well as expanded off-premises opportunities. The brand recently started offering direct delivery through its site, in addition to third-party outlets.
Chili’s reported same-store sales gains of 2 percent at company-owned stores in Q2, the seventh consecutive period of positive growth (1,060 of Chili’s 1,240 U.S. restaurants are corporate) as noted before. It gave the brand a two-year stack of 4.9 percent. Chili’s franchised restaurants experienced a 0.4 percent dip in same-store sales.
Focusing on the 3 for $10, the deal has been one of the industry’s most transformational offers since it launched in March of 2018. Just adding steak to it, CFO Joe Taylor said, lifted “the entire segment of stakes,” given how it positioned premium and value together.
The positive same-store sales run
- Q2 2020: 2 percent
- Q1 2020: 2.9 percent
- Q4 2019: 1.3 percent
- Q3 2019: 2.7 percent
- Q2 2019: 3 percent
- Q1 2019: 1.9 percent
- Q4 2018: 0.4 percent
- Q3 2018: –1.1 percent
- Q2 2018: –1.6 percent
- Q1 2018: –3 percent
- Q4 2017: –1.7 percent
- Q3 2017: –1.7 percent
- Q2 2017: –3.2 percent
- Q1 2017: –1.3 percent
Doty believes Chili’s 3 for $10 has been a leading culprit for recent success. In October of 2019, the brand reconstituted its on-menu value offerings around the 3 for $10 deal, lunch combos, and a $25 three-course meal for two that replaced a 2 for $22 offering.
The 3 for $10, which features an appetizer, entrée, and drink at the price point, gave Chili’s an “extremely powerful” value proposition, Roberts said. And what was promising moving forward for the brand, he added, was the fact it didn’t promote heavy through initiatives in fiscal 2019 and still witnessed a steady flow of traffic. This coming year, there remains plenty of whitespace where it concerns awareness. It’s evident in Chili’s recent steak addition, the “Out to ‘ITA!” commercial, and the brand’s potential to keep adding new items into the value construct.
Unlike past LTOs—a menu practice Chili’s nixed in April 2017—or coupon-anchored deals, the brand doesn’t need to put all of its marketing weight behind a fresh campaign each time it launches a new item. It can just innovate around branding that already resonates with customers.
That’s a more cost-effective approach, Doty says, and it capitalizes on pent-up demand, especially from loyal users. Chili’s doesn’t become so reliant on chasing value seekers looking for the latest offer in the marketplace, although it still meets their demands.
The 3 for $10 is different because it gives Chili’s fans a reason to come in and show up again, and not worry so much about the cost, Doty says. Then Chili’s can hit the marketing or loyalty switch around new news (steak) and work the frequency angle.
Doty says 76 percent of Chili’s customers rate the 3 for $10 as the best or a better deal than what they’ve seen in the industry. “You know our competitive set is pretty tough when it comes to value proposition,” she says. “It’s part of our goal there to have a great everyday value proposition that doesn’t require any hoops or hurdles. No coupon. No specific daypart. No certain day of the week it’s available. No starting ats. No restrictions.”
The heart of the 3 for $10 beats on repeat visits, Doty says. It was the day-one goal. Not every wining move needs to be complicated. “Indeed, we’ve been able to provide these families, particularly those that love coming to Chili’s, the ability to come a lot more often,” she says. “It takes away some of their concerns about, can they get everything they want? And if they do, how much is it going to cost at the end of the bill?”
Perhaps the most unique element of the 3 for $10, and also why it has legs for the future, is how Chili’s actually approached what goes into the offer. The chain included “the best stuff at the best price,” Doty says.
This isn’t something you see too often. Adding steak, which guests clamored for, she says, being a prime example. Chili’s is putting frequency at the forefront, and worrying less about laddering guests up to more premium items. The idea that a discount on a high-margin ticket product can still bring store-level profit when you’re stealing traffic share.
Over time, Chili’s will bring incrementality to the 3 for $10, too, by simply adding more items it identifies off its mix that customers want. In that way, Chili’s can drive business to a deal almost like a new LTO. Options will pulse in and out of the 3 for $10 and get loyal diners excited when the change is made.
Doty adds Chili’s has the ability, through its loyalty program, to offer exclusive deals and unexpected surprises into the 3 for $10. It’s another lure thrown from a marketing perch.
Roberts referred to this as making the “platform work even harder for us and continue to build off of the strength of that idea.”
Chili’s has the ability to layer in innovation and marketing support (as you’re seeing) and use CRM to target value-oriented guests. Couple that with stronger operational execution from the simplification work and “guests are having better experience and few problems,” Roberts said earlier in the year.
“[The 3 for $10] lines up with our strategy to deliver quality products at a great value, but not be the lowest possible price point out there not to necessarily go to the very bottom of the well, if you will, but to really put compelling value out there linked with quality products,” Brinker CEO Wyman Roberts said. “That’s strategically what we’re doing and that’s what’s winning.”
For years, Chili’s led with 2 for $20. The issue there? It wasn’t flexible enough to work across lunch and dinner.
The 3 for $10 brings options in for both and works within the company’s margin structure, as executives have said multiple times over 2019. It has consistently mixed in the mid-teens hold cost of sales.
What’s also valuable for Chili’s is that it doesn’t really present a concern many restaurants face with successful promotions. There’s no real promotional year-over-year lap because it’s a core value platform, not a fleeting one; it’s a solid base business Chili’s grows as it looks to the future. To an earlier point made by Taylor: “A reason it’s been so successful, and has long-term legs, is because it’s consistent, and something customers can count on whether they show up in January or April, Monday at 2 p.m. or Saturday at 7 p.m.”
Casual dining has long struggled with courting customers through fast food’s favored barbell approach. Typically, a brand uses something like a dollar menu to entice customers and then puts premium offers on the other side of the menu to inspire higher spend. A deal to get guests in the door. Alluring products to drive check through a la carte ordering, or simply with a second visit where they come back to try something else. Or maybe they changed their mind when they saw the deluxe option.
The 3 for $10 gave Chili’s a powerful avenue to speak to guests. It can market to value-oriented consumers as well as loyal, budget-conscious ones. And it doesn’t need to go to the bottom of the quality barrel. Then, springboarding off that added strength and traffic, Chili’s has the option to leverage messaging, offers, and appeal wherever it wants, whether that’s quality, abundance, or price. It turns the marketing flashlight on.
Just look at drinks, where Chili’s Margarita of the Month program has been “unbelievably powerful,” Roberts said. Rotating $5 options have been around for just about three years. January’s—the Patron Margarita—was Chili’s most successful yet, the company said.
“It lines up with our strategy to deliver quality products at a great value, but not be the lowest possible price point out there not to necessarily go to the very bottom of the well, if you will, but to really put compelling value out there linked with quality products,” Roberts said. “That’s strategically what we’re doing and that’s what’s winning.”