- Brinker plans to double down on its virtual brand It's Just Wings by selling its menu items for takeout at Chili's restaurants, which would circumvent third-party commission fees for delivery and drive more of those sales to the bottom line, Brinker CEO Wyman Roberts said on Wednesday during the company's fiscal Q2 2021 earnings call.
- The company expects Chili's to record a net comp sales increase of 2% during the last four weeks of the January period, which have been supported by the performance of its virtual brand It's Just Wings, Brinker Chief Financial Officer and Executive Vice President Joseph Taylor said during the call. The company's Q2 same-store sales were down 6.3%, or up 2% excluding California and Illinois results.
- Roberts reiterated that the the company is comfortable in its original estimate that It's Just Wings will become a brand that generates $150 million in annualized sales, and he teased the the company is interested in launching another virtual brand and said additional details will be available by the end of the current fiscal year.
It's Just Wings benefited from the ability to market on its delivery platform around major sporting events, which helped boost incremental sales and also set a number of sales records during the period, Taylor said. The Super Bowl is likely to provide a huge opportunity for this brand alongside additional demand. Americans are expected to eat 1.42 billion chicken wings during the game, according to the National Chicken Council's annual Wing Report. This is up 2% from 2020.
The success of It's Just Wings could also be attributed to the fact that wings are a "big demand item without a lot of operational complexity," as Roberts explained in a Forbes interview last summer. Chicken wings servings were up 7% in 2020 versus 2019 despite an 11% decline in restaurant traffic, according to The NPD Group. Additionally, retail chicken wing sales were up more than 10% year-over-year, according to IRI.
Brinker isn't stopping with chicken wings either, and has been testing several virtual concepts, including one focused on Italian cuisine, Restaurant Business reports. The company also recently put a small innovation team in place that is testing other ideas, like food trucks and shared kitchens, according to Forbes.
Lauren Silberman, senior analyst at Credit Suisse, predicts that more major chains may adopt the virtual brand model throughout this next year. That already seems to be the case, which could erode Brinker's point of differentiation and potentially even its competitive advantage. In the past few months, Smokey Bones' The Wing Experience, Nathan's Famous' Wings of New York, Neighborhood Wings by Applebee's, Bad Daddy's Bad Mama's Chicken and Bloomin' Brands Tender Shack have thrown their hat in the ring, and that's just in the chicken category.
There is increasing competition in the virtual space in general, as company's like Denny's and Wow Bao roll out virtual brands and as influencers like MrBeast add their own virtual dining concepts. This brings the fight over share-of-stomach to smartphone screens. However, Brinker could maintain an edge if it diversifies It's Just Wings from delivery-only to a delivery and takeout brand.