Cloud Kitchens And COVID-19: An Interview With Wade Allen, Head Of Innovation For Brinker International

Conventional wisdom says casual dining brands will be among the hardest hit by the COVID-19 crisis. Just do the numbers. Seating capacities at chains like Chili’s and Maggiano’s Little Italy, both owned by Brinker International, are capped at 50% in most states and entirely closed in others. That reality sent the company’s stock crashing from $40 in February to $7.62 on March 18th.

Fast forward to August 12th. The company not only reported a smaller-than-expected Q2 loss by quickly pivoting to curbside pickup and delivery, but it also announced a new virtual concept, It’s Just Wings, which is projected to generate $150 million in its first year. Not surprisingly, Wall Street was pleased, and the stock was up 20% by the end of the week.

This is the context in which I sat down (virtually, of course) with Wade Allen, who is Brinker’s one-time chief digital and information officer and now leads innovation.

Rob Reed (RR): Let’s start off with a bit of background on Brinker International for those who aren’t aware of the company.

Wade Allen (WA): Brinker is one of the world’s leading casual dining restaurant companies. Most customers know us best when you think about the brands of Chili’s and Maggiano’s. Brinker has been in business for 45 years, so we have quite a bit of experience in polished casual and casual dining.

RR: You’ve been with Brinker for six years now. You’ve served in a number of different roles. Most recently, you became SVP and Head of Innovation. Talk to me a little bit about your history, the roles you’ve had previously and what led up to this one.

WA: I started at Brinker in 2014, and the first role I had was the VP of Digital Innovation and Guest Experience. The focus was about integrating and bringing marketing closer to IT. We were building a mobile app for both brands, and trying to build a customer database for the future. That was really what that focus was — on that kind of integration piece between marketing and IT.

After about four years in that role, I got the opportunity to move over to IT. Though I twisted my CEO’s arm to make sure it was still called CDO as a title, Chief Digital Officer, because I still wanted to have my hands in what I had a lot of passion for, which is marketing and digital innovation. I got the opportunity to work closely with a very large IT team, data security team, and analytics team. I spent a lot of time really securing the organization and ensuring that we weren’t going to be vulnerable. Then I made the transition just recently to a new role. This role was created about a year ago, pre-pandemic, to have a dedicated leader and team to innovate the future of restaurants.

RR: As painful as it was, tell me about the experience of dealing with the COVID-19 crisis. How prepared were the brands to pivot to pickup and delivery? How prepared was the whole organization for this?

WA: We spent a lot of time prior to this pandemic building the infrastructure. I would say the entire time I’ve been here at Brinker, my role has been about building pieces of that infrastructure and preparing for a transition the customer was making. It’s long been called the ‘Amazonian era’ or whatever you want to call it, this transition that’s happening with consumers where they have technology in their pocket. The investments we made really started back in 2014 and led up to this point. Everything from building a CRM database, customer retention marketing database, and loyalty program to establishing a better mobile experience for our guests and putting tablets on the table.

We were fairly prepared. We had a partnership with the delivery company, DoorDash. We were very committed, and we were really playing in the digital space. When it hit, and it hit violently, it came very fast, right? Sometimes, I get confused on what year we’re in because it seems like it’s been a year or two. We were able to pivot really quickly. We made some minor tweaks to some of the experience where we changed the thought process with our team members. That the dining room was now going to be moved into the parking lot. How do we take what we are already doing, which is curbside through our technology and then just make sure every order is no longer a walk-in but goes to the curbside? Really, we were in a great position. Part of that is because of the investment we made and the time we spent years before.

RR: What was the timing like in terms of making that transition? Was it immediate? Things got shut down and all of a sudden, things were shifted to curbside and delivery?

WA: Well, there was definitely some shock and awe. When it all happened, I’m sure any restaurateur can tell you. It was like everybody was stood up, and it was fine. Then it was like, market by market, by state, by region. All of a sudden, things just shut down in the dining room. And then you didn’t know. Do we have a right to operate to-go? Do we not? Can we do this? How does it work? What are the rules? We scrummed really quickly. We put a team in place that met twice a day every day when that first happened. But the level of effort to really make that happen was pretty minimal. Because of the systems that were already there, because we already had a very strong to-go and delivery business, we just leaned into that.

There was a lot of other emotion and commotion around testing team members and temperatures that were coming into the restaurant and making sure people were safe. And making sure that we had the appropriate personal protective gear that we could do these things. But contactless payment was already in place. We just modified our tablets that were on the table to work in the parking lots, so people could take payment in the parking lot using a credit card. We extended our Wi-Fi into the parking lots so that our team members could use their secure devices to make those payments. Those were minor tweaks, right?

All in all, when I compare to our peers in the group, we were probably the least disrupted of casual dining by far on our ability to pivot.  

RR: The radical step you’ve taken that you talked about recently on the earnings call was this approach of launching delivery-only concepts. The first one is called It’s Just Wings. Was it already on the roadmap or was it a direct response to the pandemic?

WA: We’ve been working on a virtual brand or a ghost kitchen or whatever you want to call this, a cloud kitchen. Basically, a brand that only exists in a delivery setting and not something you can stop off and pick up to-go or eat in a dining room. It’s just delivery only. We’ve been working on it for probably a year, but we’d been working on a slightly different concept. We’d been testing a different concept and we realized, ‘Hey, we can make some modifications to it and we could probably do something a little bit different that works better than the model we were working with.’ We started ideating on a couple of different food concepts.

The one that seemed to resonate best and seemed to be right in line with our business model and used some of the existing muscle memory we had was this wings concept.

It seemed to be a no-brainer because wings was a hot topic, and a lot of people were really digging wings right now, and it seems like a food that was going to continue to grow and do well. We knew we had a great product; we can make it abundant on the plate, and we knew it was a great value, so we literally developed it around that premise. And we launched it on June 23^rd, and it’s been great. I mean, right now, sales are in a great place. We think we can do better but we’re annualizing well over $150 million a year, so that’s a big number.

RR: It just lives inside of DoorDash. That’s pretty much it?

WA: That’s it. I mean, it is a DoorDash-only brand, and all of our marketing around this brand is in the DoorDash platform. That’s where we really play because that’s where the demand is, and that’s where we see the opportunity.

RR: All of the kitchens that are serving It’s Just Wings would be across Chili’s and Maggiano’s?

WA: Yes. It uses all of the kitchens at Brinker’s disposal, which today are the Chili’s and Maggiano’s brands. We’ve rolled it to our franchisees as well, and they’re taking advantage of that, our Chili’s franchise owners.

RR: Any plans to do additional concepts under this model?

WA: As a casual dining restaurant and a varied menu concept, we have a lot of options and a lot of opportunity. We have a lot of muscle memory. I’m keeping it pretty close to the vest but we’re exploring and testing other options.

RR: I guess you’re out there competing against like the Wingstops and the Buffalo Wild Wings of the world, which people can also order through DoorDash. But they’ve obviously got their brick-and-mortar counterparts. Do you feel like It’s Just Wings also needs a brick-and-mortar presence to pick up some of that Google search traffic? Some incremental sales from outside of DoorDash?

WA: It’s a really good question. I will tell you, we are looking at all options and all opportunities. The world has changed. I mean, it’s accelerated five years, and the world is a different place for restaurants. So, I think there are options for us.

RR: Are the customers aware that it’s coming from Chili’s? Is that anywhere in the experience?

WA: We made it as clear as we can, and we focused a lot on this internally before we launched this brand, just because we know that consumers are very savvy. And there’s been a history throughout the course of advertising, an air of deception. We discussed this at length. So before we launched It’s Just Wings, we ensured that we stood up our own website, that we trafficked it through Google, that we actually had a story that told about how we came out of our kitchens and specifically that we were a Brinker concept.

Also, in DoorDash, where we do most of our marketing and all that demand is coming from, we have a list on those pages, as you access that site, that we are a Brinker concept. Now, the honest truth is most consumers may not know about Brinker restaurants. But letting them know about Brinker, and if they were to do the research, they’ll see that we’ve been in the industry 45 years, that we’ve had multiple concepts, and we know restaurants. To your point, I think it’s really important to make sure that we’re honest and open with our customers.

Virtual kitchens and virtual brands are going to exist. The question now becomes, ‘How do guests accept them and how important is it to be transparent?’ And we think it’s critical.

RR: You’re not trying to trick anybody into ordering Chili’s wings with another brand. It didn’t seem that way from my perspective. But then you can also order wings from Chili’s through DoorDash as well, and it’s more or less the same product, but you could order a bunch of different things with that?

WA: We’ve tried to keep them pretty separate. For example, we offer a curly fry. We offer three different types of wings: bone-in, boneless, and smoked. We offer 11 different sauces. And we also offer a fried Oreo. None of that is available from Chili’s in DoorDash or in our dining rooms at Chili’s. We have a crisper and we have some wings. But none of the sauces, none of the desserts, and none of the sides of fries. We’ve tried to be pretty specific that this is a different brand with different product sets, but the same muscle memory from an operations standpoint because it’s fryers, and it’s wings, and it’s things that we know.

RR: Is it fair to say you’re still playing a pretty big role in the marketing organization within Brinker and the two brands?

WA: Yeah. Michael Breed today is our VP of Marketing. He leads that organization, but we’re very close. I worked with Michael for the better part of five years, and so we partnered pretty closely on a lot of the marketing both for Chili’s and specifically for the virtual brands.

RR: In response to the crisis, how has marketing shifted? Are there certain areas that are getting more or less investment or have you cut marketing across the board, which seems to be like a pretty common reaction?

WA: It has been — well, one, we kind of iced everything when we went into this, right? We’ve stopped everything because it’s an expenditure, and we’re not sure where we’re going to net out. Because we’ve spent so much time building a very strong digital and direct-to-consumer business, we had the strong position to have 8.5 million active guests in our Chili’s database that we can communicate to through text or email. At that scale, while we may have turned off the radio and television, we’re still getting the message to the loyal Chili’s guests. And we’re still pushing out into some other areas of marketing as well. We still lean into some social. We still lean into some PR work.

And then, coming weeks and months, we’ll start to turn back on that marketing engine. But the world has changed. We always knew that the flip was coming to a more digital and CRM focus, and we’ve been slowly transitioning our marketing model over the last couple of years. This has just accelerated it in a big way.

RR: I recently wrote a piece for Forbes called CMOs Need To Think And Act Locally In The Age Of COVID And Beyond. Is Brinker communicating and marketing at the store level, whether through CRM or externally?

WA: We do a lot of personalized marketing. Even, maybe, one step below a restaurant. ‘Hey, we know what Wade Allen has purchased in the past and what’s on his plate. We know what he tends to lean into, what he’s preferred. We know he likes kids’ meals because he has four little ones.’ So we’ve been really tailored in the messaging that goes to our guests in that fashion.

From a store level, we’re not as good and we need to get better. It is a big thing and I would say in our portfolio, while we do a fantastic job at very personalized communication, and we’re really strong in the digital CRM space, that localized or micro-localized area we probably could flex a bigger muscle there. And it’s something we’re probably going to continue to lean into as we pull out of mass and look to be more in those regions and areas around restaurants.