Virtual Brands & Chili's
When will this headache end for Chili's?
Restaurant Business ran an interesting article on Virtual Brands. The idea was great for Chili's in early 2020, but maybe not so much anymore. The pandemic had just begun, and restaurants couldn't serve guests inside their restaurants. So Chili's started "Its Just Wings," suggesting they could suddenly operate two, three, or four restaurants under one roof using the same staff and equipment. Fast-forward two and a half years, things have gotten a bit more complicated with everyone doing it. How is it going at Chili's? On the last earnings call, the new CEO was hesitant, but at FSTEC, he was a little transparent. "Virtual brands were designed to fill excess capacity, which restaurants had in spades at the beginning of the pandemic.
The return of regular business patterns has raised questions about restaurants' ability to run multiple brands out of one kitchen. Chili's It's Just Wings concept is probably the largest virtual brand in the world. It's in many of the chain's more than 1,200 locations and generates $150 million yearly or 4% of Chili's total sales. CEO Kevin Hochman said it could also be "a bit of a headache" at FSTEC. "There's the theory of excess capacity, and then there's the reality of operating a restaurant, but It's Just Wings customers tend to come at the same time as other customers." So people want to eat lunch and dinner at the same time every day? Novel concept!
As such, the chain is looking at ways to simplify the brand, now dropping its labor-intensive smoked wing option, to better pace the flow of orders into the kitchen. But Hochman hinted that most of the company's energy would be focused on Chili's rather than its wing brand. "It's a big part of our business," he said, but "it's not going to be the thing that I think some people think it could be."
The article said, "Companies that sell virtual brands to restaurants disagree. The extra revenue provided by the brands, they said, can make restaurants more profitable—even if it means scaling back their core concepts."
We shall see!
So how is Chili's doing in this environment?
According to Placer.AI Chilis's traffic is consistently underperforming the Casual Dining industry
SBUX is pumping China
Starbucks will inaugurate its 6,000th store in the Chinese mainland on September 30 at Shanghai Lippo Plaza, where it opened its first store in Shanghai more than 20 years ago.
This new store marks the company's 1,000th store in Shanghai alone, the first city in the world to pass the milestone. According to the press release, the new Shanghai Lippo Plaza Store bears a testament to the continuous evolution of Starbucks stores in China's dynamic consumer landscape. The company still expects to operate 9,000 stores across 300 cities in China by 2025, opening one new store nearly every nine hours in China for the next three years. It will also accelerate the rollout of the Starbucks Greener Stores framework in China with a plan to operate 2,500 Greener Stores by FY2025.
