Every Sit-Down Chain is Struggling But Chili's

Sit-down chain restaurants in the U.S. are facing significant financial challenges amid a shifting economic climate. Iconic brands like Red Lobster, TGI Fridays, and Hooters, have filed for bankruptcy or closed numerous locations due to declining customer traffic and rising costs. While inflation has eased somewhat, budget-conscious consumers are increasingly dining at home or opting for lower-cost fast-food and fast-casual alternatives. Labor expenses, which previously consumed 30-35% of sales, now account for 40-45%, placing additional strain on restaurants already saddled with high debt from private equity ownership and leveraged acquisitions. Overall, traffic to full-service chains in Q3 2024 dropped by 3% compared to the previous year and was 17% lower than in 2019, before the pandemic.

Despite these trends, one brand has managed to thrive amid the economic headwinds: Chili’s. The chain's recent success can be attributed to strategic changes under its new leadership, which revamped its menu, promotional deals, and marketing to better resonate with Gen Z consumers. Chili’s has streamlined its menu to focus on popular items like burgers, fajitas, and margaritas, while amplifying its presence on social media, particularly TikTok, to engage with younger audiences.

One key menu that has taken off and boosted sales is the Chili’s Triple Dipper appetizer platter which has become a viral hit. The Triple Dipper, a customizable platter where diners can select three items from a wide array of choices like:

Crispy Chicken Crispers Honey-Chipotle Chicken Crispers Big Mouth Bites (mini burgers) Boneless Buffalo Wings Southwestern Eggrolls Loaded Potato Skins Fried Mozzarella Sticks Chicken Quesadillas … to name a few. 

The Triple Dipper taps into Gen Z’s love for personalization, sampling diverse options, and maximizing value for money.

The appeal of the Triple Dipper lies not only in its customizable nature but also in its share-ability, making it perfect for social media. TikTok videos featuring unique combinations of the appetizer have racked up millions of views, with creators showcasing their personalized samplers. For example, a post by @laneygrn boasting 6.3 million views and another post by @dylaneats with 5.7 million views highlight the Triple Dipper’s status as a must-try menu item. This viral attention has translated into real-world results: sales of the Triple Dipper have surged 70% over the past year, now making up 11% of Chili’s total sales. This growth contributed to a 14.1% increase in same-store sales for the quarter ending September 25, along with a 6% rise in customer traffic.

CEO Kevin Hochman credits the Triple Dipper’s success as “very relevant” to the brand’s revitalized growth. As a result, Chili’s has raised its revenue forecast to $4.7 billion-$4.75 billion, up from the previous estimate of $4.55 billion-$4.62 billion. The company’s momentum follows a period of rising costs and declining traffic, marking a significant shift in strategy and outlook. Chili’s success underscores that even in declining markets, brands can succeed by creating distinctive new offerings that align with Gen Z-centric consumer trends.