Chili's 2015 Annual Report Download - page 39

We have also differentiated the Chili’s brand by leveraging technology initiatives to engage our guests and
drive traffic. All domestic Chili’s restaurants with the exception of airport and college locations are now outfitted
with tabletop devices which gives us the largest network of tabletop devices in the country. Our Ziosk branded
tabletop device is a multi-functional device which provides entertainment, ordering, guest survey and pay-at-the-
table capabilities. We built on this momentum by launching the Chili’s loyalty program called My Chili’s
Rewards in the fourth quarter of this fiscal year which utilizes our existing tabletop technology and provides us
an opportunity to connect with our guests in a meaningful way to tailor their experience in our restaurants. We
are also investing in additional upgrades to our on-line ordering and mobile platforms. We have also launched No
Wait, a new technology which allows our hosts to provide more accurate wait times when a guest arrives during
peak shifts, and to send them a text when their table is ready. Guests can also add themselves to the wait list via
the Chili’s mobile app which we believe will reduce the in-restaurant wait time and increase the efficiency of our
restaurants by allowing us to turn tables more effectively.
We continually evaluate our menu at Chili’s to improve quality, freshness and value by introducing new
items and improving existing favorites. Our Fresh Mex platform introduced last year has been very successful
and includes Fresh Mex Bowls, Mix and Match Fajitas and Tableside Guacamole. We leveraged this success by
launching our new Top-Shelf Taco category including Pork Carnitas, Ranchero Chicken and Prime Rib tacos in
the fourth quarter. We also introduced Fresh Tex, a new Texas themed platform featuring ribs, steaks and burgers
this year. Our traditional burger menu was also updated with a new line of Craft Burgers, featuring fresh potato
buns and house made garlic pickles. We continually seek opportunities to reinforce value and create interest for
the brand with new and varied offerings to further enhance sales and drive incremental traffic. We are committed
to offering a compelling everyday menu that provides items our customers prefer at a solid value.
Improvements at Chili’s will have the most significant impact on the business; however, our results will also
benefit through additional contributions from Maggiano’s and our global business. Maggiano’s continues to
deliver sales growth and has opened three restaurants in fiscal 2015 based on the new prototype, which excludes
banquet space. This new prototype will allow the brand to enter new markets for which the existing model was
not suited. Maggiano’s is committed to delivering high quality food and a dining experience in line with our
brand heritage. We will continue to strengthen the brand’s business model with kitchen efficiency and inventory
controls that we believe will continue to enhance profitability.
We capitalized on an opportunity to further expand our domestic business by acquiring a franchisee which
owns 103 Chili’s restaurants primarily located in the Northeast and Southeast United States subsequent to the end
of the year. We believe this acquisition fits well within our capital allocation strategy and will enable us to grow
our sales and profits in fiscal 2016. We have begun implementing several initiatives designed to increase sales
and margins including restaurant reimage, loyalty and other operational processes. Global expansion allows
further diversification which will enable us to build strength in a variety of markets and economic conditions.
This expansion will come through franchise relationships, acquisitions, joint venture arrangements and equity
investments. Our international franchisees opened 22 new international Chili’s restaurants in fiscal 2015 and plan
to open 25-30 in fiscal 2016. Growing our franchise operations enables us to improve revenues and operating
income through increased royalties and franchise fees. We continue to work with our domestic franchisees to
increase the pace of reimages of their restaurants, and to leverage technology initiatives like My Chili’s Rewards
and No Wait in their restaurants.
The casual dining industry is a highly 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. We believe 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 enhance shareholder value. 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.
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