The number of chicken sandwiches sold at Chili's locations has increased 175% - and shares of its parent company are now trading at record highs
Chili's parent Brinker International reported quarterly earnings on Wednesday.
Chili's newest chicken-sandwich offerings appear to be a winner as more sit-down restaurants try to directly compete with fast-food chains.
The Chili's version of the fast-food staple, the Big Crispy chicken sandwich, has been the No. 1 driver of an acceleration in demand through July and August, said management at Brinker International $(EAT)$ during the Chili's parent company's quarterly earnings call Wednesday.
"The Big Crispy is now a signature sandwich and another important chapter in our better-than-fast-food story that will continue to position Chili's uniquely as a restaurant destination," CEO Kevin Hochman said.
Restaurant chains have tried to refine their chicken-sandwich recipes ever since Popeye's chicken sandwich went viral about seven years ago. The success of Chili's addition to that battle also comes after a multiyear turnaround effort by the chain, which has increasingly taken aim at fast-food operators with promotional deals of its own.
Chicken sandwiches, as well as chicken tenders, have become more popular in large part because they're easier for people to eat in their cars. As beef costs rose through this year, McDonald's $(MCD)$ in May said more consumers were choosing chicken.
Hochman on Wednesday said that before the chidken sandwich's launch in April, the chain - known for things like ribs and fajitas - had been selling 20 chicken sandwiches per restaurant per day. By the end of Brinker's fourth quarter, which wrapped up on June 24, it was selling 55, a 175% increase. That momentum had continued through the current quarter, the CEO said.
Shares of Brinker jumped 11.6% on Wednesday to around $247, a new record, after the company's full fiscal-year outlook topped Wall Street's expectations.
In January, Hochman called Popeye's chicken sandwich the biggest innovation in "fast-food history or modern [fast-food] history." He said at that time that a sandwich intended to compete with Popeye's was in the works, with "a very large hand-breaded chicken breast" that he suggested outdid rival sandwiches in size.
The launch of the Big Crispy sandwich came with a marketing campaign intended to take fast food to "food court," with a pop-up event in New York featuring a courthouse facade. Chili's has also rolled out $10.99 value deals that have squeezed fast-food chains, as well as fast-casual chains like Sweetgreen $(SG)$ and Chipotle Mexican Grill $(CMG)$.
Restaurants raised menu prices a few years ago to digest cost shocks in the wake of the pandemic. But more recently, they've reversed course, offering more discounts to bring back consumers driven away by those increases. Meanwhile, this summer, the industry has dealt with cyclospora and salmonella outbreaks that have weighed on demand.
Brinker on Wednesday said it expects fiscal 2027 sales of $6.15 billion to $6.27 billion, with adjusted earnings per share of $12.60 to $13.40. Analysts polled by FactSet expected sales of $6.16 billion, with adjusted earnings of $12.61.
Brinker reported adjusted earnings of $3.07 a share, a bit below analyst estimates for $3.09. Revenue of $1.54 billion was up around 5% year over year, and above forecasts for $1.53 billion. Same-store sales rose 5% overall, and were up 5.6% for Chili's.
-Bill Peters