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Could Chicken Wings Save Brinker International?

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Could Chicken Wings Save Brinker International?

When you think of Brinker International (NYSE: EAT), owner of the Chili’s and Maggiano’s chains, chicken wings aren’t the first food item that likely come to mind. 

Instead, it’s the fajitas at Chili’s and the numerous Italian dishes at Maggiano’s. Facing declining dining room sales, it could soon be chicken wings coming from a new virtual-only Brinker brand that could fuel the company’s growth — and help the struggling stock.

'Killer Wings, Stupid Prices': Brinker International quietly launched a new virtual-only brand this summer: It’s Just Wings. The brand, which has a tagline of “Killer Wings, Stupid Prices,” is exclusively partnered with DoorDash to deliver to customers searching for chicken wings.

It’s Just Wings will operate out of existing Chili’s and Maggiano’s, but will not offer its products to customers inside those restaurants, according to the company. 

The menu for It’s Just Wings features 11 sauces and rubs for both boneless and bone-in wings.

Flavors include black truffle-infused hot sauce, mango habanero and apple barbecue. All wings come with complimentary fries.

The lone dessert option from It’s Just Wings is the Oreo Country Fair Cookie, which is battered and fried.

This seems like a no-brainer from Brinker International. The chain will roll out this virtual option at 1,000 company-owned locations. Brinker tested the brand beginning in November before going live in June.

The concept leverages the company’s scale without major additional operating costs.

Why It's Important: Many restaurants have expanded their delivery options, and some have even created new brands and names to gear toward those searching for particular types of food.

Virtual kitchens can even work as a form of search engine optimization, as users sometimes simply search for a particular type of food. So when people search for chicken wings, they might not get a menu from a restaurant with a large number of food offerings, but options for places that specialize in chicken wings. Applebee’s did this by selling wings under the name Neighborhood Wings by Applebee’s.

Success With Chicken Wings: Wingstop Inc (NASDAQ: WING), one of the largest chicken wing restaurant operators, has seen huge success over the last few months both financially and also in terms of its stock price.

First-quarter same-store sales were up 9.9% for Wingstop. Same-store sales at Wingstop locations were up 33% in April. Wingstop is also experimenting with smaller stores that offer delivery only.

Wingstop shares are up 62% in 2020.

How Brinker Is Faring In Pandemic Environment: Brinker has struggled like many casual dining restaurants that saw large percentage of their sales from dine-in guests before the pandemic.

As portions of the country shut down due to COVID-19 concerns, many restaurants saw large sales declines and couldn’t shift their business to off-premise quick enough.

As of June 8, 873 of the 1,060 company-owned Chili’s locations had open dining rooms. Same-store sales were down 11% at these locations during the first week in June.

The third-quarter earnings reported showed that same-store sales were up 3.3% at company-owned Chili’s locations. Off-premise sales had reached around 20%, comprised of 14% to-go and 6% delivery.

Brinker shares are down 47% in 2020 and down more than 60% over the last five years.

This strong shift to delivery options, which is a large growth segment in the restaurant industry, could be a catalyst for Brinker International. 

 

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