Chili's 2012 Annual Report Download - page 15

our overall brand standards and operating procedures. Each brand is responsible for maintaining their operational
training program. The training program typically includes a two-to four-month training period for restaurant
management trainees. We also provide reoccurring management training for managers and supervisors to
improve effectiveness or prepare them for more responsibility.
Supply Chain
Our ability to maintain consistent quality throughout each of our restaurant brands depends upon acquiring
products from reliable sources. Our pre-approved suppliers and our restaurants are required to adhere to strict
product and safety specifications established through our quality assurance and culinary programs. These
requirements ensure that high quality products are served in each of our restaurants. We strategically negotiate
directly with major suppliers to obtain competitive prices. We also use purchase commitment contracts when
appropriate to stabilize the potentially volatile pricing associated with certain commodity items. All essential
products are available from pre-qualified distributors to be delivered to any of our restaurant brands.
Additionally, as a purchaser of a variety of protein products, we do require our vendors to adhere to humane
processing standards for their respective industries and encourage them to evaluate new technologies for food
safety and humane processing improvements. Because of the relatively rapid turnover of perishable food
products, inventories in the restaurants, consisting primarily of food, beverages and supplies, have a modest
aggregate dollar value in relation to revenues. Internationally, our franchisees and joint venture operations may
encounter cultural and regulatory differences resulting in differences with product specifications for international
restaurant locations.
Advertising and Marketing
Our brands generally target the twenty-four to fifty-four year-old age group, which constitutes
approximately 41% of the United States population. We believe that for many meal occasions, these consumers
value the benefits of the casual dining category. In choosing not to cook, these consumers want the higher food
quality, the opportunity to connect with family and friends and the enhanced dining experience that our
restaurant brands offer. To reach this target group, we use a mix of television, radio, print, outdoor or online
advertising, as well as mail (direct and electronic) and social media, with each of our restaurant brands utilizing
one or more of these mediums to meet the brand’s communication strategy and budget. Our brands have also
leveraged extensive consumer marketing research to monitor brand health, guest satisfaction and emerging
trends, as well as to validate menu development and creative campaigns.
Our franchise agreements generally require advertising contributions to us by the franchisees. We use these
contributions, in conjunction with company funds, for the purpose of retaining agencies, obtaining consumer
insights, developing and producing brand-specific creative materials and purchasing national or regional media to
meet the brand’s strategy. Some franchisees also spend additional amounts on local advertising. Any such local
advertising must first be approved by us.
Team Members
As of June 27, 2012, we employed approximately 58,068 team members, of which 646 were restaurant
support center personnel in Dallas, and 4,399 were restaurant area directors, managers, or trainees. The
remaining 53,023 were employed in non-management restaurant positions. Our executive officers have an
average of 24 years of experience in the restaurant industry, some of whom began their careers in the restaurants
we operate today.
We have a positive team member relations outlook and continue to focus on improving our team member
turnover rate. We have a variety of tools and strong resources in place to help us recruit and retain the best talent
to work in our restaurants.
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