Wednesday, October 21, 2009

Chili's to run tacos through the shrink ray

The menu miniaturization craze will get a mainstream boost when the Chili’s casual-dining chain adds a line of tiny tacos in, well, a short time.

Executives say the array will include pulled pork, pecan-smoked chicken, spicy beef and shrimp versions. But they were mum about the price and how the minis will be packaged into a selection (all of one, a sampler, pick two, etc.).

The addition is part of the menu and prep re-do that Chili’s announced a few weeks ago. That effort that is already revamping the way two signature items, baby back ribs and burgers, are cooked. The former will now be smoked longer, over pecan wood, while the latter will be hand-formed from fresh ground chuck rather than pre-portioned into patties.

Changes have also been made in Chili’s kitchens to ensure that French fry orders are always fresh and hot, according to executives of the chain’s parent company, Brinker International. But, in a conference call with financial analysts yesterday, they didn’t divulge how the preparation was upgraded.

The mini tacos are being added to the menu despite an overall trim in Chili’s bill of fare. The Brinker officials declined to say how big of a cut the menu will get. They characterized the likely deletions as item that fail to differentiate Chili’s from its competitors.

The execs would also not divulge how much the menu and prep overhauls would cost. But they noted that at least some of the profits from the recent improvement in Chili’s margins would be used to pay for kitchen tweaks and additional training.

“Wee are talking about small costs there,” Brinker CFO Chuck Sonetsby told participants in the conference call. “We are not talking about anything that is that expensive. We have had some things that cost $175 apiece.”

All told, he said, the investment should trim earnings by a penny or two per share.

The addition of mini tacos would be the latest in an ongoing shift by the industry to more Lilliputian fare. Uno Chicago Grill, for instance, debuted a pulled pork slider just last week.

It's now possible to have a complete meal out of Munchkin Land. You can get in your Mini Cooper, dash a short distance to the smaller restaurants chains are now building, have a slider for your meal, wash it down with sampler-sized cocktails or beers, and follow it with the shot-glass desserts that are now ubiquitous. It's the check that may not be so tiny.

My thanks to Seeking Alpha for making available a transcript of Brinker's quarterly conference call.

1 comment:

Bobby said...

It will be interesting to see the long term run on all things mini. The execution of these items is a greater challenge and, should they truly take off, consistant guest performance could suffer. Making 3 sliders is harder than 1 burger just like pouring a flight of wine costs more than a glass. More to carry for the server, more to drop, bus, clean, etc. The multiple-cost of mini has yet to be fully determined.
-Bobby Fitzgerald
White Chocolate Grill