Why Chili’s plans to change its menu more

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Menu innovation

During the first quarter, Brinker International (or EAT) refreshed its burger menu. It applied what it learned from its Fresh Mex platform. The result was “Craft Burgers.” It uses fresh ingredients.

According to the company, the platform uses ingredients grown specifically for Chili’s—like lettuce and a potato bun. It also uses garlic-pickle. Garlic-pickle is prepared in-house every day.

EAT Chili's Menu Innovation 2014-10-29

The company is working to introduce these new items to its lunch combos, value platform, and $20 for two platforms. It wants to expose customers to newer items on its menu. For example, the company added the double burger, from its Craft Burger line, to its lunch combos.

Fresh Mex recap

In our overview of Brinker International’s 2Q14 earnings, we learned that the company introduced its Fresh Mex platform last year. It uses fresh ingredients. It’s prepared in-house every day.

Management stated that one out of every four guests at Chili’s is eating a Fresh Mex entree. The platform is critical for Chili’s. The company added “Top-Shelf Enchiladas” to this platform during the quarter.

Menu innovation at Maggiano’s

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During the second quarter earnings overview, we discussed the company’s plan to launch a lighter menu. In September, the company rolled out the “Lighter Take” menu at Maggiano’s. The menu includes its classic Italian items with lower calories. According to the company, 18% of its guests are eating “Lighter Take” entrees.

In its recent earnings, McDonald’s (MCD) discussed menu innovation. It introduced more localized menu items. Management hopes that the new items will drive traffic. MCD is part of the Consumer Discretionary Select Sector SPDR Fund (XLY).

XLY gives investors access to several restaurant stocks—like Yum! Brands (YUM), Chipotle Mexican Grill (CMG), and Darden Restaurants (DRI).

These new items must be accompanied by effective marketing campaigns. We’ll discuss this in the next part of the series.

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