Brinker International introduced its new virtual brand, It's Just Wings, at all of its Chili's and ... [+]
There is no doubt sit the down, casual dining segment has experienced a substantial blow from the COVID-19 crisis.
A new report from TOP Data finds that casual dining concepts have seen 58% less traffic since the start of the pandemic, versus the fast food segment, which has experienced a 30% decrease.
But the segment is undoubtedly agile, and we’ve seen concepts pivot to solutions like curbside pickup, makeshift drive-thrus in parking lots, grocery sales–whatever it takes to keep business going. For Chili’s and Maggiano’s Little Italy parent Brinker
During Brinker’s Q4 earnings call Wednesday, CEO Wyman Roberts announced the launch of It’s Just Wings in late June. It marks the company’s first virtual brand and operates out of existing Chili’s and Maggiano’s locations. It’s Just Wings offers three styles of wings–boneless, bone-in and smoked–smoked in-house like Chili’s signature baby back ribs. Each order includes curly fries and ranch sauce, and there are 11 additional sauce choices available.
Roberts claims this hasn’t been done by anyone else in the segment at this scale and expects the brand to exceed $150 million in its first year, “which would secure It’s Just Wings a spot in the top 200 restaurant brands.”
Judging by what’s been happening in the restaurant space throughout the past few years (accelerating in the past few months) this is not a pie-in-the-sky expectation. Virtual brands, ghost kitchens and the like are facilitated by delivery, which has exploded during COVID-19 as shutdown orders and general anxiety have kept many consumers at home. According to a survey by GlobalData, that isn’t expected to change–34% of global consumers expect to order foodservice delivery more often than they did pre-COVID-19.
As such, Euromonitor expects a $1 trillion ghost kitchen market globally by 2030, which could replace up to half of all dine-in volume as early as 2022.
For Brinker specifically, this idea of a virtual brand has been in the works for about two years, when the company put a small innovation team in place. On a media call following Brinker’s earnings call Wednesday, Roberts said the team is tasked with looking at opportunities that can grow the company and drive it forward, ideas like food trucks and shared kitchens.
“We’ve tested some of those things and it’s clear to us the bigger opportunity is to leverage the assets we’ve already invested in,” he said.
That means using its existing 1,050 restaurants, specifically their kitchen space, to whip up It’s Just Wings’ menu for customers who place a delivery order. The company tinkered with another virtual concept focused on Mexican food, but ultimately landed on wings because it is a “big demand item without a lot of operational complexity.”
It’s Just Wings is facilitated by the company’s exclusive partnership with DoorDash, first announced last summer. Roberts said DoorDash is driving the marketing strategy behind the virtual brand.
“Everything we’ve gotten in terms of awareness levels and growth has come from our position and partnership with DoorDash and leveraging the awareness you get on their site,” Roberts said.
No doubt as customers rely more heavily on delivery, and quickly become more familiar with delivery, existing companies are more likely to take advantage of their existing space to reach them via that format.
“This whole idea that casual dining is overcapacity, we want to turn the tables on that. It’s just underutilized. Leveraging those assets is our primary thought right now,” Roberts said.
Smaller players are also likely to adopt this type of shared-kitchen-space model, as it presents significantly lower startup costs and significantly more menu flexibility.
However, at least for now, Roberts isn’t worried about those smaller concepts.
“There is scale involved in virtual branding. I don’t think virtual branding in the ones and twos is a big idea,” he said. “Whose got the number of kitchens to do virtual branding in a major way? There are not many of those. If you don’t have scale, then you’re not a big threat.”
To be sure, Brinker isn’t the only chain exploring this idea, but it does appear to be the largest.
Earlier this month, Smokey Bones introduced two new virtual brands–The Wing Experience and The Burger Experience. These new brands operate out of 122 existing Smokey Bones restaurants for delivery via Uber Eats. Smokey Bones already has a ghost kitchen location in Chicago, launched in 2019, which is part of the new brands’ footprint. Also, Applebee’s has toyed with Neighborhood Wings by Applebee’s, while Chuck E. Cheese recently added its virtual Pasqually’s Pizza concept.
If Brinker finds success here, more chains will likely experiment with the idea as well. So far, all signs are pointing in a positive direction for the company. Thirty percent of guests have reordered It’s Just Wings, while 70% of DoorDash users who ordered It’s Just Wings have never ordered Chili’s via the app. Further, more than 15% of sales are from items other than wings (for example, dessert and drinks).
“We’re pleasantly surprised with the sales we’re getting from non-wings. It’s been a nice incremental check build,” Roberts said. “The incrementality is strong.”
Roberts expects sales to ramp up quickly enough to offset added labor in the kitchen and help fulfill increased volume, noting that Brinker has an incentive program in place for its operators based on their sales volumes with the virtual brand.
“This gets them energized to take on the challenge,” he said.
Perhaps if enough energy manifests, Brinker might explore franchising in new markets. But that isn’t a priority at this time.
“You could franchise a virtual concept, but our priority right now is to establish the brand and understand how to grow it. We want to seed it and get the operational and executional elements fine-tuned,” Roberts said.
Eventually, perhaps, Brinker could even leverage this virtual brand, and the data it shares with DoorDash, to grow its existing core brands.
“We have a lot of insights into who our guests are, but we have to be careful how we build our virtual brands out and how they integrate and how to support volume capacities,” Roberts said. “This is where the power of our operating system is important. Our ability to take this new product and new business and integrate it into our current business and seamlessly support it is impressive from an operations standpoint and encouraging from our perspective.”
