Chili's is seeing “remarkable” growth thanks to affordable meals

Chili's Bar & Grill said it recovered from business difficulties earlier this year by introducing new, cheaper menu items that directly competed with fast-food restaurants.

The 49-year-old Dallas-based restaurant chain — known for its baby back ribs and sizzling fajita platters — reported Wednesday a whopping 14% increase in same-store sales and a 6.5% increase in customer traffic in its most recent quarter.

The company said growth was fueled by three items in particular: a $10.99 Big Smasher burger, a $6 margarita and the $17 Triple Dipper appetizer.

“The Big Smasher” is “bringing in more new guests from all demographics,” Chilis President Kevin Hochman said on an earnings call this week. “It turns out that all households, regardless of income, want unbeatable value for money.”

JPMorgan Chase analyst John Ivankoe described Chili's results on the earnings call as “truly remarkable,” adding that the chain – which made headlines last year and earlier this year for store closures – was “in a class of very high.” “, very few… in a difficult situation” is category.”

Shares of Chili's parent company Brinker International rose 7% on Wednesday on the news, hitting a 52-week intraday high of $107.15. Shares last traded at $103.30 on Thursday.

Brinker shares are up 150% for the year.

The Big Smasher made its debut in April as fast-food chains including McDonald's across the country lost customers due to their menu price increases.

Customers flocked to Chili's 1,500 restaurants after the campaign announced that Big Smasher burgers “have twice the meat of a Big Mac and flavors fast food lovers will recognize.”

The meal also includes chips and salsa and a non-alcoholic drink.

The triple dipper appetizer accounts for 11% of Chili's sales, while orders for the calorie-busting meal, which includes a choice of three items and dipping sauces, rose 70% in the most recent quarter.

Chili's profits come partly at the expense of McDonald's, which is struggling with slowing growth and an E. coli outbreak due to onion slivers in its Quarter Pounders.

McDonald's U.S. sales fell short of estimates as customers continued to restrain spending, senior executives said on an earnings call this week.

“Consumers, especially those with low incomes, were more likely to choose to eat at home. This trend continued in the third quarter,” CEO Chris Kempczinski said during the call. “Our performance so far this year has fallen short of our expectations.”

Some fast-food operators have expressed concerns — particularly in California, where the minimum wage for fast-food workers rose to $20 an hour this year — that they will soon be competing for customers with casual restaurants like Chili's.

According to a survey by the Employment Policies Institute, nearly 100% of fast food chains in California have increased their menu prices to cover their higher labor costs.

Casual dining restaurants are exempt from the wage increase in California, where many fast-food restaurants have closed since the wage law took effect in April.