Dallas-based Chili’s will raise prices 3%, citing rising food and labor costs

The restaurant chain Chili’s Grill & Bar will raise its prices by an average of 3% by mid-November 2021.

Chili’s joins restaurants in the United States that bear inflated food costs and higher wages for workers. Fast-casual company Chipotle raised its prices 4% in mid-2021, putting some of the burden of higher prices on customers. According to Emily Williams Knight, CEO of the Texas Restaurant Association, 96% of restaurant owners pay more for food and 91% have higher labor costs.

According to a study by the National Restaurant Association’s chief economist Bruce Grindy, the 3% increase in chili’s is below the national average of 4.7% between September 2020 and September 2021.

“I think we are careful and methodical in our approach and keep our value proposition in mind,” said Mika Ware, vice president of restaurant development, finance and investor relations for Brinker International Inc., based in Coppell, Chili’s parent company.

Chili’s sister restaurant Maggiano’s Little Italy has not yet seen any price increases. Maggiano’s cost structures will be re-evaluated after the 2021 holidays, said Joe Taylor, chief financial officer and executive vice president of Brinker.

On a conference call this week, Brinker CEO Wyman Roberts said the past quarter was “more challenging than we expected,” but plans to “end the year strong”.

The company’s first quarter results were in line with expectations. Sales in the first quarter were reported with 860 million US dollars; Annual sales are between $ 3.75 billion and $ 3.85 billion, Taylor said.

Maggiano in particular could be challenging in the next few months as it relies on large banquet business, the CEO noted.

Why Hiring Restaurant Staff Is Difficult

The restaurant industry was in flux during the coronavirus pandemic, and Taylor said Chili’s were “bearing excessive costs in training and overtime” to accommodate an above-average number of new workers: 1,000 a week last month.

Restaurants in the Midwest are the hardest to fill, Roberts said.

Currently, Chili’s team members earn an average of $ 16.95 an hour, including tips, bonuses and sick pay, says a spokeswoman for Brinker International. The company plans to increase the average hourly wage to $ 18 by 2023.

General Managers at Chili’s earn $ 87,000 or more per year in salaries and bonuses; the same job at Maggiano costs $ 100,000 or more, the spokeswoman said.

Last year Brinker increased wage rates by 6% to 8%.

How some prices will change at Chili’s

Chili’s has already gradually increased its prices twice in July and October this year. The company will achieve its average growth of 3% by mid-November.

These changes offset the cost of higher wages for workers, challenges in the supply chain such as a lack of delivery drivers and higher food costs. The prices for wings with bones, ribs and cooking oils are particularly excessive.

According to the U.S. Department of Agriculture’s Texas Restaurant Association, oils cost 31 to 34% more than last year.

Chilies average increase of 3% isn’t tough and fast, Ware said.

“Those 3% don’t mean that you will see a 3% price increase at Chili’s. A lower percentage may be displayed [of higher-priced items] on the menu and more in other channels like third-party delivery, ”she said.

On the conference call, the CEO said traffic and sales are “extremely good,” and the company needs to raise prices to combat rising food and labor costs.

“Our short-term challenge is not to create demand, but to address the latest pandemic-related workforce and supply chain issues that are affecting our cost structure,” says Wyman.

“After 40 years in this business, I take on cost management every day instead of looking for sales and traffic. These are easy-to-solve problems because they are largely in our control. “

Brinker operates 1,596 chilli restaurants, 212 of them in Texas.

For more food news, follow Sarah Blaskovich on Twitter @sblaskovich.

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