Brinker International CEO Kevin Hochman unpacked the company’s recent quarter in an interview with CNBC’s Jim Cramer, describing marketing strategies that have improved business.
“We refortified our marketing budgets. Three years ago, we spent about $32 million in marketing,” Hochman said. “This past fiscal we just finished, we spent $137 million. So they actually have ammo with which to do marketing, and they’re doing a phenomenal job.”
Brinker owns restaurant franchises Chili’s and Maggiano’s Little Italy. The company beat on earnings and revenue when it reported Wednesday morning, and it raised its full-year forecast. Management highlighted the success of Chili’s, with same-store sales at the chain increasing by 23.7%. Shares popped during morning trading, and by close they were up 1.61%.
Hochman said social media influencers have helped bring business to Chili’s, suggesting it has been beneficial to give them “creative freedom” when advertising products. Some of the social media buzz is from paid endorsements, he said, but much of it is not. He claimed that some customers generally like to post online about positive experiences at Chili’s.
The standardization of Chili’s $10.99 value meal across different markets in the U.S. is a positive for the company, Hochman added. He indicated that customers appreciate that they don’t need a coupon or an app to get a meal deal.
Brinker is using growth to combat rising costs of labor and goods, Hochman said. With the “inflationary environment” that’s hitting the restaurant industry as a whole, it’s very difficult to “simply cost cut your way to control or maintain margins.” According to Hochman, Chili’s hefty spend on improving locations, food and labor is starting to pay off.
“We get leverage on the fixed costs, and that’s one way that we’re able to really explode margins,” he said.
