Chili's fourth-quarter same-store sales rose 6%, extending its streak to 21 quarters. McDonald's comps grew 0.8%, and Chili's CEO pitches value against fast food.
Alpha Score of 46 reflects weak overall profile with weak momentum, weak value, moderate quality, moderate sentiment.
Chili's same-store sales rose 6% in the fourth quarter, extending the chain's run of consecutive quarterly growth to 21. Parent company Brinker International reported the result Wednesday.
Part of the draw has been a cheeky social media voice that brought in Gen Z diners. Chili's also upgraded its in-restaurant technology, including the tablets waitstaff use to send orders to the kitchen. Newer menu items appear to take direct aim at McDonald's classics such as the Quarter Pounder.
McDonald's latest quarterly comparable sales growth came in at 0.8%. CEO Chris Kempczinski tied the slower pace to execution problems, including the rollout of the company's latest value menu. The burger giant also replaced its U.S. president when it reported earnings last week. AlphaScala's proprietary score on McDonald's is 50 out of 100, a mixed label on the McDonald's stock page.
A few years ago, calling the two chains rivals would have made no sense. A visit to a Chili's near a major highway in Northern Virginia showed the strategy in practice.
The restaurant was just under half full when a reporter arrived after 5 p.m. on a Thursday. A table of five appeared to be celebrating a reunion, and more diners drifted in during the meal, from singles to families.
No 3 for Me deal appeared on the menu. An employee reached by phone could not explain why. The Spicy Big Crispy chicken sandwich with fries ran $16.29. Two Triple Dippers, each $17.99, brought six smaller items.
The chicken sandwich landed in less than 10 minutes. Chili's says the Big Crispy filet is "80% bigger than the average McCrispy breaded filet." The whole cut of chicken felt heartier than the processed patty used in many fast-food sandwiches, and the size difference was easy to see.
Sliders from the Triple Dipper delivered a beefy hit with a little bacon on each. The mozzarella sticks came out gooey. The boneless wings, coated in Honey Chipotle sauce, lost their breading when picked up.
Each Triple Dipper felt like reasonable value, and the assortment offered more choices than a typical fast-food menu. The table tablet, part of Chili's tech upgrade, included games and a loyalty-account button. A reporter played "Subway Rush" while waiting and used the same tablet to pay the check.
With tax and tip, the meal came to just over $77. The bill ran above the $10.99 promotional price point. The Triple Dippers worked almost as full meals on their own, which made the total feel more reasonable.
The chicken sandwich alone cost two to three times a McCrispy meal at McDonald's. It was also clearly a better sandwich. The fries were thick and soggy, and the mac and cheese arrived with too much sauce, an odd pairing next to fried chicken.
Some consumers are pulling back on restaurant spending. Others still want to eat out if the check reads as a deal. Chili's menu push is built around bigger portions and a wider selection, the value argument Hochman made on the call.
"The customer reviews and social media comments have been excellent, declaring Chili's victorious for size, price, value, and taste versus fast food," Hochman said.
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