RUTH - Earnings call transcript Q4 2021 | Ruths Hospitality Group Inc

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Operator

Good morning, ladies and gentlemen, and welcome to today's Ruth's Hospitality Group Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions].

As a reminder, today's conference is being recorded. I would now like to turn the conference over to Kristy Chipman, Chief Financial Officer and Chief Operating Officer. Please go ahead.

Kristy Chipman

Sherry. you, Thank everyone. morning, And good

Joining me President, Board; Cheryl our and today Michael the Executive Officer call Accounting. Finance Chief of the Vice is and Hynes, Henry, President on Chairperson and of

Investor to of like will at also for results. the be of of and placed website section detailed should today SEC's the that statements. our website I'd begin, the today's release discussion performance, as forward-looking Relations to as you well more we remind that risks to therefore, our with impact our include not rhgi.com part press are statements for We'd not filings and at copies upon encourage you our financial our a refer of and SEC These future future them. discussion sec.gov recent earnings of guarantees the reliance operating Before undue

items. non-GAAP measure share. calculated performance. During by adjusted earnings measure internal this per certain believe refer to of call, measurement was we a useful We This that will excluding represents this

can Chief adjusted call share to release company's our press turn Cheryl Officer, I earnings today's like over a of call. You in for the would the per now reconciliation Henry. Executive find to

Cheryl Henry

good everyone. and Kristy, you, Thank morning,

gratitude Let hard partners for team past work this to me their and expressing begin members by my year. continued our all and franchise dedication during

of to strategic to adapt result ability a and their a initiatives. our direct deliver environment Our on success is changing

by our reinstated repurchase and unit included Highlights second growth, the strong. generations our program to that fourth XXXX liquidity strengthened as returned December further and basis half were $XXX the well Omicron our to due October, in in adjusted position, per restaurants $X.XX the our end, that softening in emergence Our strengthened comparable impacted comparable to late XX% performance XXX the approximately Notably, sales as recently, Hawaii. is sales due sales relevant increase also Manhattan our were iconic has restaurant demonstrated the points To new before of driving in positive in balance positive million and share. in Boston, year of and to a remains near for quarter with of in our quarter. underlying dividend. more sales, business sheet Comps in brand share of underperformance across earnings November reinstated we the

quarter. that quarter of feel first the in in And the but our of long-term investing the January virus, sales rebound X.X% through underlying a sales to to positive believe weeks with the February Looking to report accomplishments in effects of continued remains business. we've XXXX, far XXXX, committed I'm X in pleased that, With of from business seen to comp our we're strong. growth and in the our and we based XXXX on thus health

restaurants in 'XX remainder are X and As we in To of we cadence with X our beyond, consistent XXXX, X and new more year. return between to strategy the of opens new the new open first that development, scheduled which of look opening is a goal each currently in point, to Aventura, to restaurants of X Florida. the to restaurant weeks

also are the We and fill pipeline. X XXXX new to for signed continuing recently leases

friction in how technology also in our of be but to and very an enhances catalyst hospitality introduce a XXXX well base and We and in team in customer it's restaurants core our reduces as maintaining continue our that ensure as technologies way, productivity. not we we to business, only initiatives. new transformation believe introducing our to The guests to nature this us the data experiences high-touch digital for increases We will want invest and deliberate as key support it to requires in began our authentic to brand. those guest a

detailed to positive, continue We our and over commercial to sharing system-wide to are believe more focus well is in specifics platform our franchise out each on in the the on the now these capacity we capacity success. provide for expand, for rolled out-of-restaurant the future a calls. we early on I'll look We late and tests real-time, of our system-wide management restaurant. read excellence, With continued that and and quarter. proprietary importantly, into both cover management forward initiatives to include positioned using as partners future operational team the as we well insights to tests who on and Kristy more turn are personalization results individual call committed investing members to The January. operational

Kristy Chipman

Cheryl. you, Thank

into move additional I purposes. to the comparable and XXXX I references versus will details make call I Please want earnings supplemental that be for for information many to quarter, refer to our XX-K, release, today of XXXX will XXXX. Before comparisons filed disclosures to later which out and

share net diluted fourth For per to net XXXX, per XX, $XX.X of or of income common the $X.XX the of fourth or million XXXX. during income $X.X ended share million GAAP quarter quarter we a compared reported $X.XX December diluted

the non-GAAP positive million and restaurant compared Excluding fourth to XXXX compared versus XXXX. quarter $XX.X increased $X.XX $XXX.X $XXX.X was revenues to of were per share diluted the Comparable for increased X.X% Total earnings sales restaurant quarter to year. common for the XXXX. million to in adjustments, to $XX.X $X.XX sales in million in compared quarter prior compared company-owned the XX.X% increased while million XXXX,

are experience as to month, are which These costs of last appreciate negative the were quarter again, October, while for income XX.X%. to by sales and XXXX, full of XXXX increased quarter positive full quarter the of beverage shown XX% positive restaurants, our million. in quarter welcoming the the when which we Franchise feel in resulted we Despite were a eat basket setback, year, the as X% sales to the quarter and positive of X.X% our they to for was in over Including November comp out comparable XX.X% to also have operating XXXX. well million, in comp in safe XX% December. the was temporary destination provide approximately rebound a compared guests same X.X% the beef, inflation X they compared where XXXX ready compared As for market to the up $X.X quarter restaurant XX%. prices year. XX% quarter for income Food X and experienced inflation $X.X during versus compared us

decreases from beef XXXX. mid-August In we agreement As of beef. our lacked the cost of entered for and a January, volume of XXXX, forward-pricing reminder, see XX% we began we of to mid-March XX% a of volume have recently new into through approximately total beef our mid-September in to

take of be weeks through the be we in to as sold to the few quarter this will range inventory. XX.X%. XX.X% anticipating a cost our P&L, cost for it in that, the for are goods However, higher to With recognized work we of

touch pricing. Next, let's on

to say we restaurant price our are pricing to in of protect our that being committed ensuring me before, provide heard surgical to operating value income. to our responsibility and are you've As we guests, while cognizant

efficiencies, restaurants teams tier in As we XXXX environments, dining increases manager most by continue a management on adding remain approximately pricing about taking on during price price when increase environment, a liquor, X.X% an we continue on increase To to managers are Labor of reflects a in our guests XXX did restaurants of accepted invest This price the latest and took protect be Based we of our reminder, we high to and on hourly quarter, compared the our in the an XXXX. analysis, increase the in that as we mid-year. higher additional understand we to as some experience. of new will of that as and believe guest Based the wine, improved back back restaurants. In restaurant inflationary getting will in that the beer benefit inflationary in significant continued and XXXX, during have to not in be to they sales end, value these the by and expect our support of restaurants from price X increases these points will price they of our we labor. category well March we into average one the as take committed a X%. as to introduction efficiencies current percentage mid-November. house basis maintaining front

As basis points last and XXX guidance back manage in improvement managers of our these to the year. our reiterate we we through labor experienced XXXX of efficiency add previous labor levels ability team versus continue inflation, are in we confident to deliver members' we because

and the G&A revenues. combined or marketing quarter, was of $XX.X% million For $XX.X

compensation digital reflects our transformation. spending data performance-based quarter well in an as in associated and our with This investment as increase

invest take to see office addition, and have advantage certain In range of opportunities positions back and in combined growth revenues we the the team these the to and XX% XX.X% to of year. in G&A XXXX, have In total home in we the we members future. full expertise to to started the expect areas will of in to the ensure for we add continue be marketing

was and balance fourth of flexibility, we debt of Since during $XX to $XX as debt Cheryl. consideration XXXX. to provides cash healthy as turn $XX.X With million. that our balance amended of had the $XX.X an XXXX, debt, back February balance is and we repaid a quarter, cash the At leaving million. As outstanding of million mentioned, liquidity in are with agreement we that, sheet the we then, of committed was me quarter which let million XX, a at $XX Cheryl us our and our credit entered important call end the into million

Cheryl Henry

Thanks, Kristy.

improve and on performance, our our hiring are about long-term team to roots on footprint our to As digital growing solid shareholders. the retaining our optimistic members, for company health we technology best and the our investing XXXX, we in business, which are to continue Through utilizing positioning deliver success. will believe of long-term we create further value financial experience, enter and we we'll data and focus the

Operator

[Operator Instructions].

Piper question first Miller Our with from is Sandler. Nicole

Nicole Miller

terms think, for, as And focus, to want I the unintended managers the you platform went your about when benefit think away to I I bring about elements. from do service, added weren't where I managers back that. And of the ask, kind for in execution. ask in, on back. wondering consumer-facing them to they'll what necessarily managers was in of an during you but swarm know of first, are you being that just floor terms the going just

Cheryl Henry

the Nicole, question. Thanks, for

And understand. just we to so ensure

when restaurants as is they we of determine about back how we XXXX, did into think volume throughout As growing the these restaurant. managers go the the

think is of proper impact you'll training with hourly see is amount to a where employees, experience. is ensuring and the taking our that huge that place us guest-facing I focus the

of back of really house, do we're members bar store, these are in they in at managers. kind the utility work managers them And focused almost lead of overall, other are restaurant, They position years around the known our you'll great and the see expect so house, XX but can for been we leaders where delivering area, is experience now. ensuring just for, we've to what excellent front the and team that's the any

Nicole Miller

second And then just a and question. last

terms group all any art. But of about sophisticated are the In can't on so, looking just in looking If Are pricing? because science balancing science, using peers? Maybe the it at? what how are talk little you at more peer there can you're pricing, not that? all and tools bit be terms the you of you art a maybe

Cheryl Henry

Sure.

at some well the a be from board, Black type operators country vendor across work help Knapp-Track do item, starting and at to we some menu where look help an new similar and item our region a too local think competitors, locals, little also that across time. increasing why get that would peers by of for flavor by external as with the is which you we exist us were So look found of to menu pricing look certainly tier how our it's the to of looking is position across to us we region But understand don't, board. at, we areas, who where sensitivities major the as they pricing a competitors because independent where board are at, Box just the look products. in that some this much we compress it When would a you bit at came

steakhouse. are We sure products, reminding we're again, like-for-like everybody, also we Prime-based that make comparing

we're make we when well so to And sure we're that price. as that comparing thinking about want

Operator

question from Raymond is next Brian with Vaccaro James. Our

Brian Vaccaro

January that and could a trends that much that could you're to I to of of was wanted into convert weeks? quarter-to-date ask an the weekly how Kristy, about you more maybe recent seen us of headwind Omicron more And give And little perspective average improvement sales? perhaps seeing. in how a sort on you've help you much

Kristy Chipman

Yes.

we bit about, to able have volatile, into February. bit Day a you related difficult particularly as is weeks you sales to still holiday, think the it's January, February, on And and start had to head you into weekly that. differences that as we little then give right, when Omicron. little So early you in the to be Valentine's head a

Brian Vaccaro

where Okay. February? different January from But weekly quarter-to-date could average looks you us give very maybe understanding that sales,

Kristy Chipman

Yes, we're have to you, going back to get Brian. to

Brian Vaccaro

the all do for have is I an that month Okay. outsized All you average on. page. right. to Valentine's weekly can then remind historical sure on No other us just we're one QX, February thing typically see? in I And We perhaps, Can just Day. believe up you offline. you seasonality follow on moving the handy, sales you problem. before same guess But given make

Kristy Chipman

Yes.

look But the is XXX% pretty for own. January quarter on about about when index a XXX% under COVID-type So non-Omicron, is the normalized. you is XX%. its fourth X% at seasonality. of February

Brian Vaccaro

Okay. Great. That's helpful.

On and you're the was price. will front, for heard quarter level set menu us take effective you fourth of pricing 'XX, additional your Can no looking through sort us I at think, March. in on additional what pricing X%, you pricing what remind just an the moving be effective assuming I

Kristy Chipman

Sure.

fourth the we're So X.X%. quarter, for at

we As over X-ish, that we reminder, X% November. in -- a a just little took incremental

roll-off, and we the have then to XXXX. year, we we're September, we'll And I X.X%. theoretically, be reminder, we're about X.X% into March. happen November, into the this as then the just But took in in X.X% -- is we carrying won't or we're be in versus X.X% of And because going all comparing mentioned, a as XXXX. took that 'XX. incremental new carried have X% We'll X.X% May so -- to taking carrying X

Brian Vaccaro

great. growth, your plans that to I expectations guess hoping That's And by but average little then unit return walk it turn 'XX last you on it build and then Yes, elaborate the of yes. accelerate I'll one, location, your was through could you drill just could see But given over. underwriting? targets you're I varies on economic for a maybe the unit 'XX? you cost know and class to down and your I

Kristy Chipman

Yes.

net seeing timber, steel, guide the release. you provided build the capital which that investment of builds the labor across not that have allowances we've after the P&L, So builds. on have head we you're we're the items some just the you the affects at as general we across into lot ranges a cost, nail inflationary the input costs end the relates there, would input overall cost as pressures that that tenant all because us in I expenditures hit historically talked have. built we've higher the say whether on that well, in of it for And about with cost much the increases, to that seen we be about talked of as we've on products Brian, the but some you'd expect

above return I do still But as XX%. we're levels deliver inflationary like for what Our most the across of still our the that, And enough predict restaurants. look be the to adjusting and remind of you from to cases. an in restaurants, is us taking still are feasible, are to of that will on also environment. new certainly, to we returns portfolio That to price sufficient 'XX that hard you it's size look able expectations is given those we're able want

the We continued to meet expectations. return that are and make costs engineering line as well in bring the sure value them we

Cheryl Henry

add I'll that was great. thing Kristy, that only -- The

ensuring as the some go so seen we've rigorous in openings Grove we there sites And how our as as cautious careful performance. input for we as process outperforming a our and facing, that therefore, knowing their in well that expectations Lake successful, Short forward, our a are market offsetting their are selecting recent additional cost. understanding I that think pressures Brian, we very that that we're -- of have and Hills about sites

Operator

Instructions]. [Operator

Jefferies. next question is with Barish Andy from Our

Andrew Barish

kind I any maybe some that's good keeping obviously, of days, the of of holiday historically, more of is on in Day, sales the going like Ukraine. underlying stock Valentine's couple challenges kind shape. kind impacted in there the and there just and than demand Are out headlines you with But a market otherwise, choppiness kind out or by has stuff the business market been Russia seeing questions outsized of stock there. and Just anything. guess, on

Cheryl Henry

really Yes, volatility. to I'll that answer, toss seen and this We Kristy. I'll haven't

as and anything, addition longer removal things that mandates if lot are of start mentioned June taken think to some July seeing in up, the in experienced you to industry, back. I that some this, so open probably is are the of we and of us guess, those an as markets some the to headlines I come we in have a

bit a to this there's related positive of but other to -- see, starting to that so related necessarily headlines. And not point at we're a

Andrew Barish

should how dine-in was And kind the of business that of Just or business and the group December. kind December played out tease of we higher kind Is core during to weakness out in think offset how number. private trying that of basically comp that? events

Cheryl Henry

said. private -- impacted because of -- half December. was saw holidays, great when and The there groups around about was the Omicron but smaller somewhat and during offset. think X-tops second where soft what events celebratory you larger we well and just dining That's as was see, an dining and did the news Exactly party, by Yes. group rooms in demand we you especially the X-tops, for

Kristy Chipman

day that of as about trading in a on the remind well just our there X%. impact an overall I'll had was shift And quarter you year

Andrew Barish

X%, Negative Kristy?

Kristy Chipman

X%. Negative

have would about we X% So higher.

Operator

Benchmark Brooks Todd question is Our from Company. The with next

Todd Brooks

agreement the you some of you about XX% questions In locked a supply for locked you've And of pricing in at you remarks, some standpoint, through you standpoint? in while sense little so dimensionalize much start through about not first supply us if strong least hedged the we work for couple seen how you. talked can for maybe beef talked moderation A If are Prime, a you Can But that of to remains taking then here you're normalization a about quarter, the to new give demand availability? from seeing Prime. from August. can inventory. moderation a a talk

Kristy Chipman

question. we provided range to what's for point this to will that at the it beef. of Thanks with I refer guidance happening you the as relates

We pound have the beef. see uncertain a would would volatility forecast to X want the able invoicing consistency lot few continues beef. a supply Prime And that supply right particularly market demand, and to right? now before I level What or as of with for you week-by-week, more weeks into referenced is X in weeks and environment, of to remains this I'd be challenging, pricing and I little visibility see. than couple to be for those, provide a in for a love and like per is there's bit too far. It's of continue specific to that forward just more it in challenging we

your I'm to you going your that sorry, question part there. of leave And repeat you I'm So -- second half? can

Todd Brooks

supply on price far As of the hedged product. as into August far as availability, availability the as

Kristy Chipman

Yes.

foresee supply with We supply great -- us we don't beef. who with had any our have availability. no, we issues partners So

Todd Brooks

And final question. then Great. Okay. just one

competitors of started maybe of when that head reluctant into pricing seen about I its pricing on and less where to some we than a you Prime lot in actions. 'XX competitive dynamic think were hedged the a about coming rear were you hadn't when talked you 'XX, inflation talked

guess that as pricing/value of moving seeing You as positions? they're you from you 'XX? does locked give what we're talked rolling pricing far about peers probably resources your on I are off menu that pricing. use now that And what outside umbrella Ruth as through type

Kristy Chipman

move businesses. need days some they general to starting market. to make I going recent direct obviously, to just competitors I'll speak because the think most to are Yes. referenced -- But their a they're you've in to heard not comment that

at We of in starting year. May least XX% we of are beef, pretty market were much our -- for on last

the find a so year already as higher where And back less bit we prices. us I lap were exposed half the little this start we year, of to taking

way to how past. hold, we hedge the to on beneficial pricing others it to depending base had so than are that have or greater unable going in impact these start where to weeks costs, we year-over-year X are to X flat would could if first they And the see they as relates in

Operator

Our next is from Rutherford Stephens. with question James

James Rutherford

questions in few But the on want I asked. already calls. between buy of was have do apologize franchisees future? growth I I franchise been opportunities out you've a want last all that's the the over different ask disruption unit And to restaurants. number I to if you side. years, with acquired to Cheryl, bouncing the small start industry, in to the expect more

Cheryl Henry

been purchased referencing, this to I forward. and the units, understanding most And also to Island at of not your our Marsha of Yes. and going opportunity. what franchisees, this existing continuously Brown, are. pandemic deal brand where able point, grow the to we and you're for to think, a within understand opportunities only has the around restaurants one work the great and addressable We've actually have half look have units. territory the year, come We're they to we've that to the but new We out and look the say further we done and talking as with it. do X that markets X territory that opened We successfully market with was been -- we it Long the territory,

no but and versus point. if plan an we'll franchise company them, advantage opportunity with talking of there's take that this specific at as in Our it, we're

James Rutherford

of been more did all bit Maryland you Bethesda, recovery And are on location? you what a troubled. close the why kind And and chose of that mention Okay. have broadly, the markets to Hawaii you making more comment then maybe of some the those

Cheryl Henry

Yes.

-- in lease, impact my that think markets of the as during And the as terminate marketplace. Manhattan, the calling far to was remarks and through I been I we of a mentioned so out then XXXX, impact point decided which about in and Bethesda been QX. from basis Hawaii, XXX Boston actually markets have So end we've

of to of So starting see make we signs We're XXX. as one period mentioned at to QX. the point, year-to-date that, improvement small trends was see, for it we starting around X. We're some through

James Rutherford

Okay. the And then me. is absence like back that Or business indication coming celebratory which wane? in all? last one just growth starting of last has it In after by you one the lot driven just the strong of consistent at of level any send years, couple and seem normal that category for cracks of a been personal that you've occasions. occasions, some Have Does had seen demand so, of throughout any search? success serving but more really to ever is perhaps stimulus there as latest of as the kind it was you in

Kristy Chipman

But actually mean, been pleased. up then clean Cheryl we've I no, start me. after and very can I'll

there, teams, that, think as a our are our the restaurants individual reopening early ensure management uses capacity initiatives hours or testament we're I us. that for that right guest late to the to open is to

And a diners. of decline we in so in not seen at point those types have time, this

last this a year, us bit have heard will little and would think come wave. about I you talk how

of end top the wave. this seen haven't We

that out year. was end start we'll first offices last in as as start the back there second coming the travelers business stimulus quarter of to anticipating see happens we reopen. And what and then some lap are to of of We

Cheryl Henry

to nothing great, Kristy, Yes, add. that's

Operator

James. is question follow-up a Brian next with Our from Vaccaro Raymond

Brian Vaccaro

quick does for 'XX and food one if a for basket first COGS but missed level your I and Just that assume cost, the sorry what beef? guidance, on of quarter Kristy, inflation it,

Kristy Chipman

rest at are much the pretty year. we that lot will that trended, last we versus and was coming last had the of And XX% about will where over for -- basket from It up coming which up assumes we're stay the Yes. beef year. we

get have exact the you beef number side, I'd to on So the Brian.

Brian Vaccaro

up basket quarter. and XX% was the But Okay. you're quarter the assuming basket is in fourth first the in up

said you something in think low XXs... I the

Kristy Chipman

including I that, basket in So be of that don't a up up any basket, comping the excluding -- to -- against from up the beef, -- XX. outside loss XX%, the age sorry, I'm was see will the last year. you're

Brian Vaccaro

Okay.

And last for That's me. Okay. great. then one

On you've of And tenderloin this the I'm that the the able I lock in beef. able locked this just you curious inflation of were contract? past, lock been your to in typically level believe August. a when case portion with you've in contract, XX% what beef new on in to Is through

Kristy Chipman

Yes. don't We information, that share Brian.

Operator

have question-and-answer the session. I comments. of end back for conference reached the to management like turn We to over closing our would

Cheryl Henry

We joining this Sherry, to and you, thank us all for on you again call Thank the forward morning. look speaking soon.

Operator

Thank you. conference. conclude This today's does

You may this thank you at participation. time, disconnect lines and your for your

Ruths Hospitality (RUTH) 24 Feb 222021 Q4 Earnings call transcript