Times are hard, and people are cutting costs wherever they can. That includes dining out, especially since fast-food restaurants — traditionally considered an affordable option — have dramatically raised prices.
But one chain seems to be the exception: Chili’s. The brand has figured out how to make people feel like they’re getting a deal, leading lower-income diners to flock to the sit-down chain.
Who Is Dining at Chili’s?
The casual dining chain just posted another blowout quarter, with sales and traffic both up. According to Restaurant Business, Chili’s same-store sales jumped 21.4% last quarter — the sixth straight quarter of double-digit growth. Traffic was up 13.1%, beating the casual-dining segment by more than 1,600 basis points. Restaurant-level margins also rose to 16.2%, an increase of 270 basis points year-over-year.
This success has a lot to do with who’s staying loyal to the brand: low-income diners, the same group cutting back on restaurants across the board. Restaurant Business said that households earning under $60,000 a year are now Chili’s fastest-growing customer base, even as they’re pulling back from most other dining spots.
What’s the Draw?
The reason for this seemingly paradoxical trend is simple. The draw is Chili’s “3 for Me” deal, a $10.99 combo that lets customers pick a drink, appetizer, and entrée for one flat price. It’s one of the few full-service meals left that costs about the same as a fast-food combo, and it doesn’t feel like a downgrade.
Chili’s — led by Kevin Hochman, a former KFC president who took over as CEO of Brinker International, Chili’s parent company, in 2022 — is experiencing what some call the unlikeliest comeback story on the market. Hochman is leaning into what he knows best, so Chili’s plans to expand its crispy chicken sandwich offerings and fold them into the $10.99 meal deal. He called boneless fried chicken “one of the top five things Americans eat,” and the brand’s next campaign will make sure guests are reminded of that.
“It’s clear that the ‘Better than fast food’ campaign we’ve been hammering over the past two years has positioned Chili’s as an important value leader in the industry,” Hochman said during an earnings call Wednesday reported by Restaurant Business. “And we are gaining market share with low-income households while others are reporting softness with that group.”
Chili’s has also been up to its elbows in menu updates that are actually landing. The chain’s reworked baby back ribs saw a 35% sales boost and a 29% profit bump. Frozen margaritas are selling twice as fast as the old ones despite a higher price.
Are you a Chili’s fan? Let us know what you love about the chain in the comments.
Read about more restaurant chains:
- The Most Popular Restaurant Chains Among Boomers — America’s dining culture has changed, but Boomers still stand by the classics.
- Your State’s Favorite Local Restaurant Chain — We took a look at the most revered chains, based on customer reviews, critics, and popularity.
- 6 Restaurant Chains That Cook Their Fries in Beef Tallow — These fast-food and casual restaurant chains still cook their fries in beef tallow, or a mix that includes beef tallow.
