Dive Brief:

• Brinker will phase out its Maggiano’s Italian Classics virtual brand by the end of this quarter, which is the end of Brinker’s fiscal year, Chief Financial Officer Joe Taylor said on the company’s Q3 earnings call.
• Taylor said the decision reflected weakening demand for virtual brands following the end of COVID-19 pandemic restrictions.
• The future of the brand looked uncertain since last summer, when Brinker announced its intent to trim the brand’s SKUs in half as it accounted for less than 2% of the company’s systemwide sales.

Dive Insight:

The shuttering of the Italian virtual brand will only impact traffic by 60 basis points, Taylor said, while Chili’s has seen its in-restaurant traffic increase year-over-year.

Chili’s closed its off-premise-only test unit in Dallas after only two months earlier this year. The Maggiano’s Italian Classics virtual brand lasted less than two years.

Taylor said shuttering the Maggiano’s virtual brand was “part of simplifying our restaurant operations.” CEO Kevin Hochman said simplification of the company’s menus and operations is part of an effort to refocus on specific menu items at Chili’s.

“One of the main reasons we're so committed to ongoing simplification of our operations and menu is so we can reinvest our energy and our resources in what we call Core Four,” Hochman said. “Burgers, Fajitas, Chicken Crispers and Margaritas.”

On the company’s Q2 earnings call, Hochman said the investment in operations and labor included efforts to reduce the number of tables per server, giving waiters more time with guests and increasing the use of bussers to keep restaurants tidy during high-traffic periods. The company also added an expeditor position to the back of the house to help improve kitchen efficiency. On Q3’s call, Taylor said those changes in labor had reduced staff and managerial turnover and drove key guest satisfaction metrics above pre-pandemic levels.

Other companies are still looking at ghost kitchens and virtual brands. Wienerschnitzel announced it was using ghost kitchens to test its reception in new markets this week. In March, Nextbite and IHOP launched another virtual brand, this one focused on chicken tenders. But some restaurants have folded virtual brand items into their core menus. Chuck E. Cheese began serving some virtual brand items in-store last month, and last year, Applebee’s added wings from its virtual brand to its core menu.