Investments in Technology and Image Remodeling Will Drive Sales Growth at This Company

By Ash Sharma - June 24, 2013 | Tickers: EAT, DRI, TXRH | 0 Comments

Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Casual dining, full service restaurant companies are facing tough competition from their Quick Service Restaurant peers. The opportunities to increase the top-line remain limited and companies are making extra efforts to increase shareholder returns. These steps include new product introductions to drive sales and use of technology to reduce costs and improve services.Brinker International (NYSE: EAT) is one such full service restaurant company shooting to increase its gross margin by 400 bps by 2015 through investment in the kitchen of the future and point of sales Ziosk tabletop technology. In this article, I am discussing some of these initiatives in detail.

New kitchen technology has helped to contain cost and to offer new products

The company has invested in kitchen equipment to make the Kitchen of the future. This new equipment has helped it to reduce costs as it reduces food wastage and creates savings in kitchen labor wages. It has also helped the company to be innovative and launch new product lines. It has launched Chilis pizza and flatbread products, and it has rolled out pizza across the system and will be coming up with a new advertising campaign. Flatbreads have achieved a good response in initial tests, appealing more to female than male customers. These products are expected to be introduced system-wide in value platform offerings. Its new product lines are basically high-margin categories and will boost the bottom line of the company.

Technological enhancement in Point of Sales (POS) service will attract customers

Brinker has invested in the Ziosk tabletop technology to enhance the in-store experience of its customers. Its initial results at franchisee stores are encouraging with higher average checks and customer satisfaction. This technology, with a 7 HD tablet at guests level, facilitates smooth ordering and payment. It also provides a real-time promotion opportunity and entertainment during the service process. According to store operators, it has improved sales of promoted products by 10% to 100% and increased dessert sales by 20%-50%. This technology will attract customers in the future with system-wide implementation.

Chilis brand re-image program is expected to drive growth

Chilis brand will get re-imaged after the investments in technology and new product lines introduced recently. 40% of company-owned stores have completed this re-imaging process so far. This is expected to attract customers across the chain when completed by the end of 2014 or early 2015. It has invested around $200 million for remodeling, and the remodeled stores have seen same stores sales lifted by an estimated 3%.

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Investments in Technology and Image Remodeling Will Drive Sales Growth at This Company