John Gordon's  Instablog

We were able to get into a Chili's (EAT) test unit for lunch today, and there are some interesting menu items in the works. All are lower priced, menu adds or new platforms that may give Chili's some new news to talk about, particularly at lunch, or in conjunction with bar themes.

Chili's has redone its menu face and is featuring its burgers, ribs and fajitas heritage, while adding the triple dipper menu (preset items, $9.99). It's also featuring $4.99 Margaritas and happy hour begins at 300P in many units, as well.

The new items added are mostly lower than $10 and speak to a more lunch time, snack, sandwich focus:

4 new entree salads: Caribbean, Asian Noodle, BBQ Chicken, Chicken Caesar for $8.79 (most) to $11.29 (shrimp, salmon)

4 new sandwiches/wraps: Turkey, Carne Adada , BBQ Pulled Pork, Chicken Wrap: for $6.99 to $7.99

5 new taco items: chicken, shrimp, pulled pork, ground beef and combination, for about $8.99.

Store management indicated that while it was a test, the tacos and sandwiches were selling well and had largely favorable reaction. 
While we haven't seen all of the menu items, the percentage gross profit shouldn't be bad.

We all know it will take some promotional muscle to establish these new items in the marketplace. The market is so crowded, and messages get lost quickly. For
example, Macaroni Grill (former EAT, now privately held) began broadcast featuring its almost totally redone menu recently. 

The valuation is still cheap and has a run of upgrades since November, 2008.
Current year EPS estimate is $1.31, about a 13 multiple. We'll see how earnings go tomorrow. I've been in four Chili's in the last month and they look about steady to me.  

Disclosure: no positions