Brinker International CEO and Chili’s Grill & Bar President Kevin Hochman joins Yahoo Finance Live to discuss hurricane damage to Chili's restaurants and reopening plans in Florida, the core menu offerings the restaurant chain can win in, and creating a fun atmosphere to draw customers as inflation weighs on spending.

Video Transcript

BRIAN SOZZI: Chili's owner, Brinker International, has a new CEO in Kevin Hochman, but he is no stranger to the Yahoo Finance community, having been on our airwaves talking about KFC when he ran a point there. Now that he has passed his first 90 days as Brinker CEO, Kevin rejoins us now in his new capacity.

Kevin, good to see you. It has been a while. Now, before we get into some of the things you have started to do at the brand, I do understand you have about 12% of your company operated restaurants in Florida. It has been a lot of devastation in there because of Hurricane Ian. What are the status of those stores? What are the status of your team members?

KEVIN HOCHMAN: Yeah, we had-- so all of our team members are accounted for, except for two, and part of that is, we think it's just the cell phone reception. It's tough to get to them. So we don't want to assume the worst yet, but we got most-- 99% of the folks are accounted for, which is the most important thing. From an operations-- the disruption in operations, we've got 37 restaurants reopened in Tampa. We expect another roughly 50 to get reopened today.

There are some that have damage, obviously, and we continue to assess how severe that damage is and how long it's going to take to recover. But the good news is, our employees are safe, or at least, most of them that we've been able to talk to. And then we're quickly getting operations back. We were-- our goal is to try to be the first one to open once it's safe to operate. And we are ready with trucks to go ahead and do that.

BRAD SMITH: That's great to hear, especially establishing and reestablishing and connecting with the employee base and hope that continues to move forward, and ultimately reassessing and assessing the damaging-- the tolls that this is taking on and working through that. We wish you and the team the best with that.

There's been a lot of movement within this kind of broader space to really engage with the consumer right now, even as the consumer is trying to identify, are we eating at home, or are we going out? What are some of the initiatives that you really want to push forward now at Brinker?

KEVIN HOCHMAN: Yeah, you know, it's true wherever the economy is on the fundamentals of casual dining. But it's probably even more important now. So when you have a cash strapped customer and they can't go out as much, you better sure as have the best experience on the block, which means amazing food, no matter where you go, no matter what time of day you go to, great service, and a fun and inviting atmosphere. And those are the things that we're working on at Chili's.

You know, how do we streamline the menu to make sure we have the fresh and the best margaritas and fajitas and burgers and fries and chicken crispers that we can have in the industry? How do we make sure that we have more and more time for the servers to be able to delight the guests and make them feel special? And how do we do it in a fun and inviting atmosphere? And those are the initiatives that we're working on both in the short-term right now to fight through some of this economic stuff, as well as the long-term as we think about how do we really exploit our growth.

BRIAN SOZZI: Kevin, I went to a Chili's by my house before you, pre-Kevin's arrival, and for the $5 all-you-can-drink margaritas. I've been doing those since I was in college. That was fun, but I was surprised by the size of the menu. To your point, the menu has just gotten so big. What have you cut out, and what have you put on?

KEVIN HOCHMAN: Yeah, so we just finished an offsite with our leadership team to focus on what are the core things that we have to win in. And we know those are fajitas, margaritas, burgers, and fries, crispers, and fresh chips and fresh salsa, right? And if we can nail those things-- those are the main reasons why customers come to us-- we're going to crush it. Everything else is fair game on the menu.

So we have about 17 salads on the menu. We think we can pare that back. We obviously have to have great salads that are fresh and delicious for that guest that wants that, but we certainly don't need to feed 17. And we're going through the process every six weeks.

We're either taking what we call pantry SKUs out of the menu, simplifying the way we do things, or taking whole things off of the menu. And so over time, that menu will get a lot more focused. Food will fly out of the kitchen hotter and fresher. And certainly, it will be a lot easier for our team members to work at a Chili's.

BRIAN SOZZI: Well, let me just stay on food real quick. Brad has a couple more questions for you, but you had these big mouth burgers. Now, these are the largest burgers I've ever seen in my life. They're the size of softballs. What are you going to do with these burgers on that menu?

KEVIN HOCHMAN: Yeah, well, that's a key area for us. It was interesting. We had our supplier summit here earlier this week. And I was talking to one of the suppliers of those burgers. And he said, well, when we let our team members take burgers home, they always choose your burger, Kevin, because the Chili's burger is the best in the industry, right?

And so that's an example where, how do we make sure that we have a fry that's as good as the burger that we have? So we've got a team working on how do we make our-- elevate our fry, which are served in-- over half of our dishes come with fries. How do we have the best fry in casual dining so that it meets the quality test that our burger has? And we're going to continue to drive burgers. It's a big part of our business. And I expect it to get a whole lot bigger in the future.

BRAD SMITH: How are you going about retaining employees, especially when across the food and beverage landscape, there are even more incentives that are continuing to get thrown out there for the workforce? What is that strategy at Brinker International and making sure that people are just as excited to keep serving up those unlimited margs that Sozzi is taking advantage of?

BRIAN SOZZI: Big fan.

KEVIN HOCHMAN: By the way, thank you for our business, Brian. And I've got a great margarita for you. Don't let me get off without telling you about it. So, you know, I sat down with our founder, Larry Levine, and our second CEO, Doug Brooks. And I asked them the question of, like, when Chili's was at its best and the restaurants were super packed and people loved working here, what were we doing?

And what they told me was the team members and the guests were both having fun. Food was flying out of the kitchen. The bar was packed. And everybody was having a good time. And that's the Chili's that we need to get back to. So the first thing that we've done is we've established this thing called the Raise the Bar initiative.

We have a whole new bar menu of amazing foods. We have a loaded fries starting at $5. We have wings and fries starting at $7. And we have our amazing new Philly's Chili, or Chili's Philly, which is premium sirloin and premium ribeye with curly fries for just $10 with our Chili's white queso.

And so that kind of excitement with some new happy hour specials and some new drinks like Ranch water, and then repositioning our El Presidente as that premium margarita-- that is the number one selling margarita in the world. That's the kind of thing that's going to create excitement and buzz, not just at the bar, but across the entire dining room.

And then the second thing we're going to do, in addition to simplifying working at a Chili's, is making sure that the team members can have fun again. And so we're bringing back something called Giveback Nights, which is customers can actually use our restaurant to raise money for their local softball team or their local church, right? And the team members love it. I mean, who doesn't love being able to give back to your community?

And so the team members were the ones that told me about it and said bring that back, Kevin. That'll make this restaurant fun again. And then we're doing a whole lot of other things to bring the fun back into Chili's, not just for the guests, but obviously for the team member, so we can create that excitement for both groups.

BRIAN SOZZI: Key to getting these people-- key to this turnaround or driving just even better results, Kevin, is getting human beings through this door. And the economy is really struggling. Do you see-- what does the traffic look like? Does it feel recessionary to you?

KEVIN HOCHMAN: Yeah, at least on the cash strapped customer, that low income customer, Brian, then, yeah, we're seeing some trips pull back. And there's really three things that we need to do to make sure that we can claw back those trips and grow share in an environment like that so that when the environment gets better, we are accelerating our growth.

Now, the first one is making sure the fundamentals are right, so serving amazing food with great service in a fun and inviting atmosphere. And that's really what our team is focused on because that's going to help us both in the short-term with this recessionary environment, as well as in the long-term, exploding our growth.

The second thing is all about price points. And you were talking about in your early segment about consumer goods and making sure the absolute price point is low. We need to do that, at least for our low income guests.

So we have an unbeatable value called 10.99, 3 for Me. And you can get a burger or a chicken sandwich, your choice of appetizers, and an unlimited drink for just 10.99. That's not only unbeatable in casual dining, it's unbeatable in fast casual and fast food, right? And plus, you get, obviously, Chili's service and the atmosphere here.

So that's the kind of thing that as long as we limit the mix, and can you take pricing on other parts of our menu, we can grow the overall P&L and improve restaurant margins. And it's going to help protect that guest that if that's all the money they have, they know they can come to casual dining, and they know they can come to Chili's.

BRAD SMITH: Brinker International CEO and president, Kevin Hochman, thanks so much for joining us here today. Next time, we're going to do this over some margs. And I've got to try out that Philly cheesesteak, too. I mean, I'm going to be--

[INTERPOSING VOICES]

All right, thanks so much. Appreciate it.

KEVIN HOCHMAN: Awesome. Thanks, guys. I'll bring margaritas next time.

BRAD SMITH: Sounds good.