Chili's is the flagship brand of Brinker International (EAT +0.04%). Brinker International also owns Maggiano's Little Italy, but it's Chili's that drives sales and profits. Today, there are more than 1,600 Chili's in 33 countries and two territories. It's hard to believe that what started as a hamburger joint in Dallas, Texas in 1975 has turned into an international restaurant chain. "Only in America," as Don King would say.
The early years
While Chili's was founded by Larry Lavine, it's Norman Brinker that gets the credit for Chili's being where it is today. Norman Brinker was an industry pioneer that served as President of both Jack in the Box and Burger King. He also founded Steak and Ale and helped get Bennigan's off the ground. We can also thank Norman Brinker since he was the one that brought us the salad bar.
Image source: Getty Images.
When Norman Brinker bought Chili's from Larry Lavine in 1983, the chain had grown to 23 locations in the Southwestern part of the U.S. The original focus was on Chili's original "Big Mouth Burger." Brinker added Sizzling Fajitas to the menu in 1984 and Baby Back ribs in 1986.
Upside down picture in every Chili's restaurant
No one is quite sure how it came about, but every Chili's locations has one upside down picture hanging somewhere in the restaurant. Each sign is painted in red and green and hung upside down. The tradition looks to have influences of Chinese culture as the Chinese word for 'arrive' rhymes with the word for 'upside down'. The upside down picture symbolizes that good luck will arrive and it's a subtle way that Chili's is greeting all those that arrive at its locations.
A jingle for the ages
"I want my baby back, baby back, I want my baby back, baby back, baby back...Chiiilliiiis baby baaack riiibbs!"
The jingle for Chili's Baby Back Ribs is one of the most recognizable songs of all time. Ad Age magazine named the jingle number one on its list of "10 songs most likely to get stuck in your head" in 2004. The jingle has become a part of American culture after being featured on shows such as "Will & Grace," "The Office" and "Scrubs." For many, the most memorable rendition was by Mike Myer's character Fat Bastard in the movie "Austin Powers: The Spy Who Shagged Me."
That's a lot of meat and other juicy tidbits
Every year, Chili's serves roughly 281 million customers. Those customers consume about 60.4 million pounds of fajita meat every year and roughly 20,000 miles of its famous Baby Back ribs. Chilis' also claims that it serves enough burgers that would stretch for 3,000 miles. Its Presidente Margaritas are so popular that Chili's could fill up 4,500 bathtubs.
How does Chili's stack up to the competition?
Chilis' primarily competes with Ruby Tuesday (RT +0.00%) and Applebee's, which is owned by DineEquity (DIN 3.62%). All three chains target the same type of customer in the casual dining segment and each has similar menu offerings. To say they're competitors is an understatement. Each chain looks to outdo the other. Last September, Chili's announced that they would offer table-side tablets at 800 of its locations. Applebee's decided to top that and just announced that it will introduce 100,000 Intel-backed tablets next year. While Chili's and Applebee's are focused on growth, Ruby Tuesday is in the middle of a turnaround and focused on cost-saving measures.
How do things look for investors?
Shares of Brinker International have been on a tear over the past year. The stock is up over 51%. Shares in DineEquity performed slightly lower with a rise of over 33%. Ruby Tuesday is the laggard of the group and is down 12% in the past year. Brinker International trades at about 15 times next year's earnings, while DineEquity trades at 18 times. Ruby Tuesday is posting losses and is forecast to lose money again next year. DineEquity has the highest dividend yield at 3.6%. Shares of Brinker International yield 2%, while Ruby Tuesday doesn't pay a dividend.
Foolish assessment
Chilis' is one of this fool's favorite restaurants. The food is always consistent and I love their burgers and fajitas. I really like that the concept has done so well internationally. I still see plenty of growth for Chili's, especially considering that while it has a Chinese element with each restaurant having an upside down picture, the chain is not yet in China. China is a huge market for Chili's and expansion into China would be a tremendous growth opportunity for Chili's and its parent Brinker International.
