By the fall of 1986, the restaurant industry's future did not appear to be very hopeful. According to Standard and Poor, restaurant profits had dropped 22 percent compared with the same period in 1985, due primarily to increased competition among restaurant chains and an increase in the popularity of ready-made packaged foods. Some chains were forced to close units, others decided to introduce new menu items, and others looked into geographical expansion. Chili's restaurant was a chain that was forced to re-evaluate its marketing strategies to meet these changed circumstances.
In 1983, Norman Brinker and several other top executives were brought in to replace the original founders of Chili's restaurant, the Lavine brothers. This new team had a reputation in the restaurant industry for holding aggressive marketing philosophies and growth-oriented attitudes. Between 1983 and 1987, Brinker and the other executives introduced a series of systematic changes to Chili's operation that have apparently succeeded in increased Chili's customer base and market share despite the relatively unfavorable conditions the market was experiencing. However, the question remains as to how many changes the management can successfully introduce without alienating loyal customers.
Justification for Problem Definition
In 1975, the Lavine brothers opened the first Chili's restaurant in Dallas, Texas. The Lavines aimed their restaurant at the new niche in the restaurant business between fast-food and midscale restaurants. The first Chili's offered customers fast, full service and quality hamburgers. Between 1975 and 1986, the Lavines opened up 79 more Chili's primarily in Sunbelt cities with a youthful atmosphere, such as Dallas, Houston, Atlanta, Tampa, Orlando, Los Angeles, and San Francisco. In addition, by 1986, Chili's made new menu introductions, marketing efforts and a 25 percent increase in total employment. At this point, Chili'...