Chili’s sales boosted by TikTok, fast food rivalry

An ad campaign targeting fast-food chains and a TikTok-viral appetizer helped Chili’s same-store sales climb nearly 15% in its latest quarter.

But Kevin Hochman, CEO of parent company Brinker International, told CNBC that the chain’s strong performance is just a sign that customers are finally catching onto the chain’s two-year turnaround.

Shares of Brinker have climbed 53% this year, bringing its market value up to $2.99 billion. However, the stock closed 10.7% lower Wednesday after the company disappointed analysts with weaker-than-expected earnings and a conservative outlook for its fiscal 2025.

Shares were up 7% in afternoon trading on Thursday, rebounding from what BMO Capital Markets called an “overreaction” from investors. KeyBanc Capital Markets also upgraded the stock on Thursday, saying that its quarterly results were misunderstood.

Forecast aside, Chili’s made even StreetAccount’s same-store sales estimates of 8.6% growth look cautious. Its 14.8% same-store sales growth puts it in rare company, joining Chipotle and Wingstop as the few public restaurants reporting strong traffic and same-store sales growth at a time when many consumers are pulling back their spending, putting pressure on the industry. Chili’s casual-dining rivals like Applebee’s, owned by Dine Brands, and Bloomin’ Brands’ Outback Steakhouse, reported same-store sales declines for their latest quarters.

“This is just a whole ‘nother step change in the business,” Hochman said. “I think sky’s the limit for this brand.”

About 60% of Chili’s growth in its latest quarter came from its $10.99 Big Smasher meal, according to Hochman. The chain promoted the deal by taking aim at fast-food rivals in TV ads.

“We had tapped into this insight that we were seeing in social media months prior, that customers were upset about where fast-food prices were going,” Hochman said. “The advertising clearly touched a nerve on that.”

Another successful menu item for Chili’s this quarter was its Triple Dipper, which lets diners select three appetizers and dips. The item went viral on TikTok in May. Hochman estimates that the Triple Dipper accounted for about 40% of the chain’s sales growth.

But the popularity of both the Triple Dipper and the Big Smasher created new problems for Chili’s. Its restaurants have to be prepared to serve the influx of customers, many of whom were trying Chili’s for the first time or returning after a long time away. Hochman said Chili’s has been investing in labor for the last two years — from hiring bussers to adding more cooks — but those steps pressured its bottom line this quarter.

Chili’s turnaround has touched more than just its workforce, according to Hochman.

Under his leadership, the company has spent the last two years trying to grow sales profitably. Chili’s has culled its menu, shedding about 22% of items.

Brinker has also ended some less profitable strategies to attract customers. Chili’s doesn’t offer as many coupons as it once did, and Brinker pulled the…