TikTok and fast-food rivalry fuel Chili's sales as parent Brinker says turnaround is taking hold

An ad campaign and viral appetizer have boosted Chili’s same-store sales by nearly 15% in the latest quarter. Chili’s CEO, Kevin Hochman, believes this is a result of the chain’s successful two-year turnaround. Brinker International, the parent company, has seen its shares rise by 53% this year, with a market value of $2.93 billion. However, the stock experienced a 10.7% drop after disappointing earnings and a conservative outlook for fiscal 2025. Despite this, KeyBanc Capital Markets upgraded the stock, emphasizing that the quarterly results were misunderstood. Chili’s joined Chipotle and Wingstop as the few restaurants reporting strong traffic and sales growth in a time when consumers are cutting back on spending. Chili’s main driver of growth was its $10.99 Big Smasher meal, which accounted for 60% of the growth. Another successful menu item was the Triple Dipper, which went viral on TikTok and contributed to approximately 40% of sales growth. While these successes brought in new customers, Chili’s had to invest in labor, putting pressure on its bottom line. Throughout the past two years, Brinker has focused on growing sales profitably, culled the menu by 22%, and ended less profitable strategies. Despite new competition from other chains offering value meals, Hochman is confident that Chili’s can maintain its lead. However, as the new fiscal year begins, the retention of new customers may be challenging, as other restaurants are also offering discounts to attract diners seeking value. For fiscal 2025, Brinker anticipates earnings per share of $4.35 to $4.75 and revenue growth of 3% to 4.6%, taking into account uncertain economic conditions.