雅虎香港財經 Chili's parent CEO: Why half-pound burgers are a hot seller amid high inflation
Chili's extra-large, half-pound burgers and Maggiano's heaping pasta bowls are having moments for parent company Brinker International (EAT).
Credit that to inflation-ravaged middle-income diners seeking refuge in big portion sizes at reasonable prices when splurging to eat out, says Brinker International CEO Kevin Hochman.
"Value is really important. Customers are smart. Our guests come in, and they don't want to get nickel and dimed," Hochman said on Yahoo! Finance Live (video above).
It's hard to argue diners at Chili's are getting ripped off on the Big Bacon BBQ burger. At a cost of $17.19, you get nearly 1,700 calories, consisting of two enormous patties, six slices of bacon, BBQ sauce, cheddar cheese, red onion, pickles, and a side of fries.
For a value-focused restaurant player such as Brinker, giving diners more bang for their buck worked out well in the first quarter.
Same-restaurant sales at Chili's and Maggiano's rose a hearty 9.6% and 21.6%, respectively. The company said the sales gains were fueled by higher menu prices and more orders of premium items like that Big Bacon BBQ burger.
Operating profit margins for Brinker rose to 13.4% from 13.1% a year ago. Margins improved year over year at both Chili's and Maggiano's.
Earnings per share surged 34% from a year earlier.
Serving up feasts at a great price has also worked out well for long-time Brinker International competitor Darden (DRI), owner of value chains Olive Garden and Longhorn Steakhouse.
Same-restaurant sales at Olive Garden rose 12.3% in the most recent quarter, followed by a 10.8% increase at Longhorn Steakhouse.
Operating profits increased 16% from a year ago for Darden.
"Consumers continue to seek value, which is not about low prices," Darden CEO Rick Cardenas told analysts on an earnings call.
Shares of Brinker International and Darden are up 16% and 11%, respectively this year, compared to a 7.7% gain for the S&P 500.
Successful quarters (and as a result, favorable stock-price reactions) for some of the country's largest sit-down restaurant chains come amid growing economic stress on lower-income to middle-income diners.
These cohorts have taken to cutting back on items purchased at fast-food chains such as McDonald's (MCD) and Berkshire Hathaway (BRK-A, BRK-B) owned Dairy Queen.
The read may be that these cash-strapped diners see greater overall value in spending a little more sitting down to eat at a Chili's or Olive Garden for all-you-can-eat breadsticks or a 1,700-calorie burger and fries for under $20.
A less stomach-filling McDonald's Big Mac, fries, and soda could set you back more than $15, depending on where you live.
Says Brinker's Hochman, "Guests know when they are getting a fair deal and they are getting abundant quality."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com
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