TO: Professor Simon
FROM: Team 10
- Groendal, Amanda
- Lawlor, Elizabeth
- Ly, Antonio
- Nelson, Joshua
- Totah, Chelsea
DATE: November 3, 2011
SUBJECT: Marketing Plan Project 1
COMPANY: Brinker International, Inc. (NYSE: EAT)
PRODUCT: Chili’s Bar and Grill
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Table of Contents
1. Current Marketing Situation………………………………………………….............................3
1.1. Market Description……………………………………………………………………........3
1.2. Product Review…………………………………………………………………………….3
1.3. Competitive Review………………………………………………………………………..4
1.4. Distribution Review………………………………………………………………………..5
2. SWOT Analysis………………………………………………………………………………....5
2.1. Strengths…………………………………………………………………………………....5
2.2. Weaknesses………………………………………………………………………………....6
2.3. Opportunities……………………………………………………………………………….6
2.4. Threats……………………………………………………………………………………...7
3. Objectives and Issues…………………………………………………………………………....7
3.1. Objectives………………………………………………………………………………......7
3.2. Issues…………………………………………………………………………………….....7
4. Appendix………………………………………………………………………………………...8
4.1. Exhibit A: A View of Chili’s……………………………………………………………….8
4.2. Exhibit B: Chili’s Multi-Attribute Positioning Map………………………………………..9
4.3. Exhibit C: Chili’s Product Lifecycle……………………………………………………...10
4.4. Exhibit D: Chili’s Herfindahl Index……………………………………………………... 10
4.5. Works Cited………………………………………………………………………………11
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1. Current Marketing Situation
1.1 Market Description
Chili’s Grill and Bar (Chili’s), as a subsidiary of Brinker International, Inc. (Brinker), operates within the casual
dining industry: primarily full service restaurants offering decent quality food at affordable prices (Industry Profile:
Casual Restaurants, 2011). These restaurants are configured to attract a wide array of consumers in middle America
though young adults and families are generally the most highly valued groups (Industry Profile: Casual Restaurants,
2011). Chili’s targets the 18-54 year old age group which comprises about fifty percent of the American population
(“Brinker International Inc.,” 2011). Chili’s’ target markets: the following is an analysis of the chain’s most salient
customer groups within the 18-54 year old age range based on whether the customers had purchased a meal from
Chili’s within the last six months of 2010. Compared to the general U.S. adult population:

18-49 year olds were most likely to have purchased a meal from Chili’s in the last six months of 2010.

College Graduates were 30% more likely to have purchased a meal at Chili’s in the last six months of 2010.

Women between the ages of 18 and 54 were more likely to have purchased a meal at Chili’s in the last six
months of 2010 compared to men of the same age group.

Professionals were 44% more likely to have purchased a meal from Chili’s in the last six months of 2010.

Households with aggregate income greater than $150,000 were 43% more likely to have purchased a meal at
Chili’s in the last six months of 2010.
(MRI + MediaMark, Leisure and Sports 2010)
Chili’s targets a broad audience as part of its business strategy. People view Chili’s as a place they can go
any night of the week for an easy, inexpensive meal if cooking is not an option. Families enjoy Chili’s’ friendly
environment, kids’ menus and promotional coupons. Parents with younger children are among the groups that are
increasingly time poor, so a convenient meal at Chili’s is often attractive. Young professionals visit Chili’s for lunch
and happy hour with co-workers when their schedules allow. The atmosphere is fun; the food tastes good and is
relatively cheap for those with more disposable income (college graduates/professionals). According to MRI+ data,
there appears to be little disparity among the number of ethnic groups that patronize Chili’s which indicates the
chain is able to attract a variety of customers regardless of geo-demographic location. Finally, Chili’s appears to be
more popular among women because men generally prefer sports orientated restaurants such as Wingstop.
1.2 Product Review
Chili’s serves southwestern and Tex-Mex style dishes emphasizing “bold flavors that will satisfy any
appetite” (Brinker International Company Report, 2010). The menu features items such as “Texas Cheese Fries,”
“Margarita Chicken Tacos” and their heavily promoted baby back ribs, but additionally includes a variety of soups,
salads, burgers, seafood, steaks and sandwiches that cater to the southwestern and Tex-Mex theme (Menu, Chili’s).
This is one way Chili’s positions its products—traditionally American food with a splash of ethnic influence. Chili’s
serves large portions and utilizes the color of its ingredients for presentation. The restaurant uses ceramic plates and
bowls for most of its dishes, but continues to use plastic baskets for items like hot wings. Chili’s interiors are well lit
and make use of wooden floors, walls, countertops and tables to create a warm atmosphere. Chili’s has an all-day
menu and consistently offers special deals such as the current twenty dollar dinner for two (Menu, Chili’s). Guests
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can also order food for pickup over the phone or internet. Each Chili’s location is equipped with a bar offering a full
selection of alcoholic beverages. Chili’s provides a relaxed, fun and hospitable experience for people looking for a
convenient, inexpensive and good-tasting meal. Every food service establishment must comply with the appropriate
laws and regulations that govern it; this is the warranty or product guarantee that Chili’s’ guests receive. For
example, restaurants must use food in the order it is received from suppliers and the maximum amount of time that
food is allowed to be exposed to temperatures between 40 and 140 degrees Fahrenheit is four hours (Food Code
2009). There are also expected service guarantees such as a free dessert if a customer’s food takes too long to
prepare. As a final point, Chili’s is considered to be in the maturity phase of its product life cycle. The chain is well
established and stable, it has considerable market share and the growth of the casual dining market is relatively low.
1.3 Competitive Review
The casual dining industry includes more than 200,000 establishments that generate $190 billion in revenue
annually (Industry Profile: Casual Restaurants). The industry is monopolistically competitive; however, there are a
handful of clear front-runners within the industry. Casual dining is highly fragmented with the 50 largest companies
accounting for about 20% of the market (Industry Profile: Casual Restaurants). Brinker International Inc. is
considered the third most successful company in the industry based on 2010’s year-end revenues and market shares
(Industry Profile: Casual Restaurants). The top tier of the market is currently laid out as follows:

Darden: Red Lobster and Olive Garden, revenue of $7.50 Billion and a 3.95% market share (2010)

OSI Restaurant Partners: Outback Steakhouse and Carrabba’s, revenue of $3.63 Billion and a 1.91% market
share (2010)

Brinker International: Chili’s, Maggiano’s Little Italy, Romano’s Macaroni Grill, revenue of $2.76 Billion and a
1.45% market share (2010)

DineEquity: Applebee’s and IHOP, revenue of $1.33 Billion and a 0.7% market share (in 2010).
(Hoover’s Company Overview, 2010)
Based on this data, the key competitors for Brinker International, Inc. are the casual dining restaurants
under the ownership of OSI Restaurant Partners, Darden and DineEquity. The fragmented market is illustrated in the
market share percentages. The top four companies only make up 8% of the entire casual dining industry, meaning
that Chili’s has an unusually high number of competitors beyond the largest companies (Hoover’s Company
Overview, 2010). Although the majority of restaurants in the industry are not large chains like Chili’s, most of the
restaurants are seen by consumers as substitutes to some degree. Thus, while a restaurant with one location cannot
compete with Brinker the corporation, it can compete with the Chili’s down the street. Casual dining is a mature,
saturated market making entry difficult. Currently, there are no large corporations that could be prospective
competitors. Local casual restaurants though are constantly prospective competitors on a smaller scale. It seems that
the predominant competitive strategy in the industry is to invest heavily in marketing and advertising efforts to
direct customers to their restaurants and steal the competition’s customers (Hoover’s Company Overview, 2010).
With such a large quantity of competitors with similar statistics, the current standing of Chili’s, and Brinker
International as a whole, reflects well on the corporation and displays the strength of their products and services.
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1.4 Distribution Review
Chili’s’ distribution channels includes sit-down restaurants, bars with different menus, bar lounge areas,
phone orders for pickup, and online orders for pickup (About us, Chili’s). Chili’s products are not limited to food;
they also have a diverse line of merchandise. They use their website to sell Chili’s labeled and themed merchandise
including, but not limited to, apparel, drink ware, jewelry, and accessories (Chili’s merchandise, Chili’s). To
categorize each distribution channel, there are three services and products with multiple channels each. First, is in
the restaurant. To dine in the restaurant you can sit in the dining room, order at the bar, or eat in the bar lounge
(About us, Chili’s). Second are the to-go options. An individual can walk in to order, order on the phone, or order
online for food to go (Online Ordering, Chili’s). Third is the Chili’s merchandise. The channels of distribution for
merchandise include buying it at the restaurant or on the Chili’s website (Chili’s Merchandise, Chili’s). The website
is a newer development that Chili’s is attempting to utilize, giving their customers an alternative ordering option and
another way to sell their merchandise. Due to the traditional nature of restaurants, the distribution of Chili’s’
products and services does not have a propensity for new developments. Website development is the newest feature
in Chili’s’ distribution channels.
2. SWOT Analysis
2.1 Strengths
Due to a powerfully positioned brand, consumers are aware of and responsive to Chili’s and its products.
Chili’s has been able to build its brand through strategically placing their restaurants at locations near shopping
centers, movie theaters, public attractions, and through effective advertising efforts and specials promotions.
Another one of Chili’s strengths is its Tex-Mex inspired food and its full bar, which differentiate Chili’s from its
competitors that offer more Americanized cuisine styles. Chili’s also has the same menu in every location which
allows for consistency among its different locations (“Chili’s”, 2011). No matter which location a customer visits,
they can be confident of their expectations. “On an operations level, the company has focused increased resources
on menu innovation and improving its customer service” (Euromonitor International, 2011). Brinker has done a
great job of this especially during the recession, which has allowed them to penetrate their market and in turn create
customer loyalty. Another strength of Chili’s is that during the recession, the company came out with, “Chili’s ToGo
nationwide, offering online ordering that guests can then pick up. This targets lunch guests who may not have time
for a full-service meal (Euromonitor International, 2011). This is a strength because having this curbside pickup
available to customers allows them to target a greater variety of customers. One of Chili’s newest strengths that was
formerly a weaknesses was that much of their food was premade or frozen. Recently they came out with the
statement, “Big Mouth Burgers are better than ever. We make‘em with fresh, never-frozen 100% USDA Choice
beef” (“Food Made with Quality Ingredients, 2011”). Although these burgers may not be much healthier, they were
able to add product value in consumer’s minds. Finally, Chili’s appeals to a broader customer base through its
support of St. Jude’s Hospital. During the month of September, Chili’s promotes the Create-A-Pepper campaign for
St. Jude Children’s Research Hospital. The company has raised 35 million dollars to date and hopes to raise 50
million dollars by the ten-year mark of inception of the program (“Chili’s Grill & Bar Participates in Create-APepper Campaign for St. Jude”, 2011). Chili’s can leverage the appeal of corporate-social responsibility and has
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successfully attracted many guests into their restaurants through this effort by offering a “feel-good incentive” to
purchase their products (“Chili’s Grill & Bar Participates in Create-A-Pepper Campaign for St. Jude”, 2011).
2.2 Weaknesses
Although Chili’s has tried to differentiate itself from competitors through its unique style of Tex-Mex food,
it is still very similar to its competitors in food quality, target markets, atmosphere, price, etc. Also, because it is on
the cheaper side of the chain restaurants it has a perception of being low quality, which makes it harder to reach out
and target higher income segments. One reason for this perception is that some of Chili’s foods are known to come
frozen or premade, which may turn off customers who know the food is not fresh. In addition, with today’s more
health conscious society, “many restaurant retailers now face potentially significant market changes due to
legislation proposed by the federal, state and local divisions that would mandate the provision of calorie and
nutritional information on restaurant menus and menu boards” (Burton, 2009). This is a weakness because Chili’s
tends to have a menu consisting of foods that are very unhealthy. Showing the nutrition facts could be a turn-off for
many potential or current customers. Additionally, Chili’s has a current labor lawsuit that has brought negative
publicity. According to the lawsuit it is Chili’s policy that, “in the event the server has suffered loss of money, credit
card receipts and other tender recognized by defendants prior to the close of that server’s shift, the server is
responsible to make up that shortage even if the loss was not the fault of the server or was due to the simple
negligence of the server” (Holter, 2011). It is also Chili’s policy that if a customer leaves the restaurant without
paying their bill, the server must either pay for the walkout or be written up (Holter, 2011). If it happens again the
employee may be terminated (Holter, 2011). This lawsuit may have negatively changed customer perceptions about
the company’s business ethics.
2.3 Opportunities
Global market: The casual dining industry will be characterized for the next five years by high competition.
In order to profit in the current marketing environment with the loss of many health conscious U.S. customers,
chain restaurants can focus on international markets overseas and expanded menus (Anonymous, 2011).
Technology: To decrease the cost of employees performing solo tasks, Chili’s is currently testing new
combination ovens that will replace current skillets and smokers. These ovens can cook necessary food at three
times the old capacity. The chain is also getting prepared to test new fast food-like conveyor belt technology. This
would allow line cooks to prepare more meals more efficiently (Jargon, 2011).
Health-conscious market: The current time poor society is eating out more frequently than in years past.
People are struggling to eat health consciously with many restaurant meals having twice as many calories as their
home cooked counterparts. An example is Chili’s’ grilled barbecue chicken salad which has 1050 calories or over
half of the average persons daily recommended intake. Chili’s has a good opportunity in repositioning its guiltless
grill line, which includes the Caribbean and Asian salads, along with a few other healthy and reasonable items. This
would allow Chili’s to better compete with semi-fast food restaurants which include Chipotle, Panera Bread, and
Subway. These restaurants offer more items that are reasonably healthy, affordable, convenient and fast (Wright,
2011).
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2.4 Threats
Cost of raw materials: Restaurants are looking to negotiate price floors and ceilings for commodities. In
addition, many large restaurants are looking to buy essential items in large quantities, often more than customers
demand in a given time period. This cost saving strategy is in attempt to combat a rise in demand for protein rich
foods. In addition, bad weather in agricultural regions, government health regulations, technologies to turn corn into
ethanol and investors have helped boost the price of many food commodities recently. Current market factors
including high unemployment, weak home values and consumers looking for good deals have made raising prices at
restaurants very risky. Rising commodities include grains, sugar, cheese, and meats (Jargon, 2011).
Government regulations: The new universal healthcare law may be one of the biggest and most costly
threats to restaurant chains in the near future. Restaurants with fifty or more workers would have to provide health
insurance to employees who work more than thirty hours per week. This means that many rank-and-file employees
who are not covered, which is eighty percent industry wide, would now qualify for health insurance at the expense
of their employer (Jargon, 2011).
Market competition: the restaurant industry is a monopolistically competitive market. In turn, restaurants
have very low profit margins since many of them have closely related products. Although different restaurants are
considered to have different products, these products are considered to be substitutable. This physiological need for
food creates very high competition for the restaurant industry as opposed to an industry that sells luxury items. In
addition, restaurants are very labor dependant and are highly vulnerable to new laws, regulations, and
macroeconomic factors (Jargon, 2011).
3. Objectives and Issues
3.1 Objectives
Chili’s strives to remain true to its roots through establishing a consistent dining experience and a casual
burger joint feel (Brinker 10K). This restaurant’s menu focuses on bold flavors and Tex-Mex inspired meals
intentionally connecting every franchise to the original Chili’s in Dallas. Brinker International’s goal is to
differentiate Chili’s image within the eighteen to fifty-four year old age group and create a strong presence
domestically and internationally (Brinker 10K). Chili’s emphasizes their focus on offering a quality meal in order to
establish long-term brand success. Lastly, Brinker International wants to expand the reach of its locations beyond
the major metropolitan areas and create stronger name recognition. Management can measure progress through
comment cards, by recording which menu items are ordered and comparing sales between franchise locations.
3.2 Issues
According to the National Restaurant Association, Americans spend 48 cents of every food dollar at a
restaurant (Slade, 2009). However, due to the current recession this number is expected to decline, as many
Americans are willing to eat at home in order to save money. Another issue Chili’s faces is the tremendous amount
of competition. Not only must Chili’s compete within the casual dining industry, but there is an abundance of dining
options that are faster and less expensive than Chili’s. These other alternatives may deter Chili’s target market from
eating at their restaurant or responding to Chili’s marketing campaigns particularly in a weak economy.
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4. Appendix
4.1Exhibit A: A View of Chili’s
Chili’s Logo and a Typical Location:
Typical Menu Items:
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4.2 Exhibit B: Multi Attribute Positioning Map: Casual Dining Industry
High
HID
Value
C
Price
KABCEF
AEKI
JKEIA
CDH
Convenience
F J
Service
J
HIGD
Variety
F
Health
F
B
IGJKAEB
DKEAIB
F
Atmosphere
G
DBHG
F
Food Quality
Importance
J
JKBEA
GJKHDBAE I
AKIHE D
F
CDGH
F
HGC
BGC
C
C
Low
High
Low
Ranking
A. Applebee’s
B. BJ’s
C. Cheesecake Factory
D. Chevy’s
E. Chili’s
F. Denny’s
G. Olive Garden
H. Outback Steakhouse
I. Red Lobster
J. Ruby Tuesday
K. T.G.I. Friday’s
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4.3 Exhibit C: Product Life Cycle
Chili’s
Introduction
Growth
Maturity
Decline
Chili’s still has some room for growth particularly on the international front.
4.4 Exhibit D: Herfindahl Index Calculation
N
H   s 2i
i 1
For the 50 largest firms in the industry:
H = .03952 + .01912 + .01452 + .0072 + (.0012*46) = .0022 → monopolistic competition
Note: The casual dining industry consists of more than 200,000 establishments which complicates the calculation of
the Herfindahl index because each company’s market share is so small. Therefore, we have included the market
shares of the four largest corporations in the industry and then based the rest of our calculation on the assumption
that all other companies have very small market shares (.1%). However, this assumption is for illustrative purposes
and does not take away from the substance of the calculation. Because we know that nearly all the dining
establishments in the industry have very small market shares (probably smaller than .1%), we can tell that the
Herfindahl index would still be lower than .15, which indicates a monopolistically competitive industry. The
industry and company profiles provided by Hoover’s supplied the numbers needed for the calculation.
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Works Cited
“About Us.” Chili’s Grill and Bar Restaurant. Web. 20 October 2011.
Anonymous. (2011, September). Chain Restaurants in the US. IBIS World Industry Report. Retrieved
October 13, 2011, from Factiva Database.
"Brinker International Inc. In Consumer Foodservice (USA)." (2011, Aug. 10). Euromonitor
International. Retrieved Oct. 20 2011, from Passport GMID Database.
Burton, Tangari, and Howlett. (2009, June 2). "Food for Thought: How Will the Nutrition Labeling of
Quick Service Restaurant Menu Items Influence Consumers’ Product Evaluations, Purchase Intentions,
and Choices?" Science Direct. Elsevier Inc. Web. 25 October 2011.
“Chili’s Grill & Bar Participates in Create-A-Pepper Campaign for St. Jude.” Food & Beverage CloseUp. Sept. 2011 Retrieved October 6, 2011, from Factiva Database.
“Chili’s.” Chili’s Grill and Bar Restaurant. Web. 18 October 2011.
“Chili’s Merchandise.” Chili’s Grill and Bar Restaurant. Web. 20 October 2011.
First Research. Industry Profile: Casual Restaurants. Retrieved October 12, 2011 from First Research.
"Food Code 2009". U S Food and Drug Administration. Web. 27 October 2011.
"Food Made With Quality Ingredients." Chilis.com. Chili's Bar and Grill. Web. 12 October 2011.
Ginger, Adams, Otis. (2009, May 24). “Food Fright - Scary Findings Reveal Why Processed Food Tastes
So Good”. New York Post, 27. Retrieved November 1, 2011, from ProQuest Newsstand.
Holter, Mike. (2011, Sept. 20). "Chili's Restaurant Server Minimum Wage Class Action Lawsuit." Legafi.
Legafi LLC. Web. 25 October 2011.
Hoover's Online. Brinker International, Inc. Company Report: Company Description. Retrieved October
13, 2011 from Hoover's Online.
Hoover’s Online. Brinker International, Inc. Company Report: Company Overview. Retrieved October 6,
2011 from Hoover’s Online.
Jargon, Julie. Chili's Feels Heat to Pare Costs --- Restaurant Chain Looks for Savings in Kitchens Ahead
of Expected Changes From Health Overhaul. (2011, January). Wall Street Journal (Eastern Edition), p.
B.8. Retrieved October 13, 2011, from ABI/INFORM Global.
Jargon, Julie. Restaurants Test New Ways to Shop. (2011, March). Wall Street Journal (Online).
Retrieved October 27, 2011, from ABI/INFORM Global.
“Online Ordering.” Chili’s Grill and Bar Restaurant. Web. 20 October 2011.
Lockyer, S. Commodity costs may pressure chains in '10. (2009, November) Nation's Restaurant News,
43(42), 1, 49. Retrieved October 27, 2011, from ABI/INFORM Global.
"Menu." Chili's Grill & Bar Restaurant. Web. 27 October 2011
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MRI+ MediaMark. Fall 2010 Product Report. Liesure/Sports - Restaurants: Bought at Last 6 Months
Chili’s Bar and Grill). Retrieved October 20, 2011, from MRI+ MediaMark.
“Ordering Online.” Chili’s Grill and Bar Restaurant. Web. 20 October 2011.
Securities and Exchange Commission, (2011). Brinker International, Inc. Form 10k (1-10275).
Washington D.C.
Slade, Bill. Taylor, Cameron. Hamilton, Casey. Strategic Report for Brinker International. (2009, April)
Oasis Consulting.
Trostle, R.. Fluctuating Food Commodity Prices. (2008, November). Amber Waves, 6(5), 11-17.
Retrieved October 13, 2011, from ABI/INFORM Global.
Wright, Brown, Middleton, Chancellor, and Cherry. Eating out, Minus guilt. (2011, October). McClatchy
- Tribune Business News. Retrieved October 15, 2011, from ABI/INFORM Dateline.