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Investors rally behind Chili’s new menu, send shares up more than 7 percent

  • Chili's ditched more than 40 percent of its menu in September and it's paying off.
  • Investors rallied around the stock after CEO Wyman Roberts told analysts that changes at Chili's showing benefits.
  • Roberts said that within six weeks of adopting the new menu, the average time to get orders out to customers has fallen 12 percent.
Source: Chili's Grill & Bar

It seems less really is more — especially, for Chili's.

The restaurant chain, owned by Brinker International, ditched more than 40 percent of its menu in September and it's paying off.

"As anticipated, our first quarter was challenging including unique weather events," said Roberts said. "However, late in the quarter, we successfully introduced our new menu and implemented our operational focus on speed. We believe both are fundamental to driving improved traffic at Chili's."

While the company reported lackluster fiscal first-quarter earnings on Wednesday, investors rallied around the stock after CEO Wyman Roberts told analysts that changes at Chili's were already showing benefits.

Shares of the company rose more than 7 percent Wednesday.

Same-store sales for the quarter were down 3.3 percent overall, a steeper dive than analysts had expected.

"We have seen our traffic trends turn," he said during an earnings conference call Wednesday. "They are turning, and we are going to move that momentum to continue to focus on building traffic at Chili's."

Chili's cut more than 50 menu items so that it will be able to focus on guest experience and food quality, and make things easier for its kitchen staff.

Perhaps one of the biggest reasons Chili's is narrowed its focus from 125 menu items to 75 is the behind-the-scenes trouble the larger menu was causing. The company told CNBC in September that the kitchen was stretched thin and, with a smaller menu, the company can give guests a faster experience, which has been an issue for the restaurant.

Roberts said that within six weeks of adopting the new menu, the average time to get orders out to customers has fallen 12 percent.

WATCH: Chili's ditching 40 percent of its menu