Chili's 2012 Annual Report Download - page 12

expectations regarding the quality of the experience. Improvements at Chili’s are expected to have the most
significant impact on the business; however, our results are also expected to benefit through additional
contributions from Maggiano’s and our global business. Maggiano’s sales trends and traffic continue to improve,
driven by offering guests a great value with classic pasta, the new Marco’s Meal offering, new menu items and
direct marketing. Additionally, Maggiano’s has implemented initiatives around kitchen efficiency and inventory
control contributing to increased financial results. We believe our unique food and signature drinks, improved
service and updated atmospheres will result in stronger brands and sustainable sales and profit growth through
increased guest loyalty and traffic.
Global expansion allows further diversification which is intended to enable us to build strength in a variety
of markets and economic conditions. This expansion will come through franchise relationships, joint venture
arrangements and equity investments, taking advantage of demographic and eating trends that will accelerate in
the international market over the next decade. Our growing percentage of franchise operations, both domestically
and internationally, enable us to improve margins as royalty payments impact the bottom line.
The casual dining industry is a competitive business which is sensitive to changes in economic conditions,
trends in lifestyles and fluctuating costs. Our priority remains increasing profitable growth over time in all
operating environments. We have designed both operational and financial strategies to achieve this goal and in
our opinion, improve shareholder value. Success with our initiatives to improve sales trends and operational
effectiveness will enhance the profitability of our restaurants and strengthen our competitive position. The
effective execution of our financial strategies, including repurchasing shares of our common stock, payment of
quarterly dividends, disciplined use of capital and efficient management of operating expenses, will further
enhance our profitability and return value to our shareholders. We remain confident in the financial health of our
company, the long-term prospects of the industry as well as our ability to perform effectively in a competitive
marketplace and a variety of economic environments.
Company Development
In fulfilling our long-term vision, over the past fiscal year we have evaluated the expansion of our restaurant
brands domestically through new company-owned restaurants and recommenced the development of a select
number of company-owned restaurants in strategically desirable markets. We will concentrate on the
development of certain identified markets to achieve the necessary levels to improve our competitive position,
marketing potential, profitability and return on invested capital. Our domestic expansion efforts focus not only on
major metropolitan areas in the United States but also on smaller market areas and non-traditional locations (such
as airports and universities) that can adequately support our restaurant brands.
The restaurant site selection process is critical and we devote significant effort to the investigation of new
locations utilizing a variety of sophisticated analytical techniques. Our process evaluates a variety of factors,
including: trade area demographics, such as target population density and household income levels, physical site
characteristics, such as visibility, accessibility and traffic volume; relative proximity to activity centers, such as
shopping centers, hotel and entertainment complexes and office buildings; supply and demand trends, such as
proposed infrastructure improvements, new developments and existing and potential competition. Members of
each brand’s executive team inspect, review and approve each restaurant site prior to its acquisition for that
brand.
The specific rate at which we are able to open new restaurants is determined, in part, by our success in
locating satisfactory sites, negotiating acceptable lease or purchase terms, securing appropriate local
governmental permits and approvals, and by our capacity to supervise construction and recruit and train
management and hourly team members.
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