Chili's 2012 Annual Report Download - page 11

During the year ending June 27, 2012, entrée selections ranged in menu price from $12.95 to $39.95. The
average revenue per meal, including alcoholic beverages, was approximately $26.10 per person. During this
same year, food and non-alcoholic beverage sales constituted approximately 82.9% of Maggiano’s total
restaurant revenues, with alcoholic beverage sales accounting for the remaining 17.1%. Sales from events at our
banquet facilities made up 19.6% of our total restaurant revenues for the year. Our average annual sales volume
per Maggiano’s restaurant during this same year was $8.75 million.
Business Strategy
We are committed to strategies and initiatives that are centered on long-term sales and profit growth,
enhancing the guest experience and team member engagement. These strategies are intended to differentiate our
brands from the competition, reduce the costs associated with managing our restaurants allowing us to reinvest
back into the guest experience and value proposition, and establish a strong presence for our brands in key
markets around the world. We will continue to maintain a strong balance sheet and financial flexibility to support
our strategic initiatives and to provide stability in all operating environments.
Economic growth continues to be tepid providing a challenging operating environment for the casual dining
industry as a whole. Growth in key economic factors such as total employment, consumer confidence and
personal disposable income levels have been lethargic this year. More recently, the political environment,
continued soaring governmental deficits, and weak employment in the United States as well as fiscal concerns
and civil and political unrest abroad have adversely impacted consumer confidence. In addition, the potential for
near term commodity price increases may negatively impact the industry. We anticipate that market conditions
will continue to affect our business and consumers will remain cautious as the economy slowly rebounds. We
will continue to maintain a strong balance sheet and maintain our ability to provide results in all operating
environments.
Our current initiatives are designed to drive profitable sales growth and improve the guest experience in our
restaurants. We have implemented a team service model at Chili’s which has resulted in labor efficiencies and
positive guest feedback. Additional labor savings were achieved through improved food preparation procedures,
a component of our kitchen retrofit initiative which was implemented last year. Another component of this
initiative currently in rollout and implementation is the modification of our kitchens to include improved
technology and equipment to provide a more consistent, high quality product at a faster pace, while generating
significant labor cost savings. We are also implementing new restaurant information systems which we anticipate
will increase profits through increased kitchen efficiency and better inventory control. Both of these initiatives
will be completed for all company-owned Chili’s restaurants in fiscal 2013. In addition to executing these
operational strategies, we have repurchased shares of our common stock in order to return value to our
shareholders and executed a revision to our credit facility to increase our financial flexibility while taking
advantage of more favorable interest rates. We believe that the successful implementation of these operational
and financial initiatives will help continue to drive sales growth and operational efficiency while strengthening
our competitive advantage and enhancing shareholder value.
In addition to these cost savings initiatives, we are also driving strategic initiatives that will further enhance
guest traffic and sales. We continually evaluate our menu at Chili’s to improve quality, freshness and value by
introducing new items and improving existing favorites. We reconfigured the lighter choices section of our menu
by adding new items that are available at both lunch and dinner. We have refined our value offerings in both
dayparts, including the addition of new items to our lunch combo platform to improve pace of service.
Additionally, we have recently enhanced our steak selections, resulting in higher guest preference in this section
of our menu. We believe these changes will further enhance sales and drive incremental traffic. We will continue
to utilize value offerings as a tool to drive incremental sales; however, this is only one aspect of our overall sales
strategy. We are committed to offering a compelling everyday menu that provides items our guests prefer at a
compelling value. We remodeled a significant number of company-owned restaurants in fiscal 2012 and will
continue the remodeling into fiscal 2013, revitalizing Chili’s in a way which enhance the brand and raises guest
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