RUTH - Earnings call transcript Q2 2022 | Ruths Hospitality Group Inc

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Operator

Good morning, and welcome to the Ruth's Hospitality Group, Inc.

Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. the to turn host, now will call your over Mr. I and Vice President Hynes, Accounting. of Mike Finance Please, go ahead, sir.

Mike Hynes

Ryan, you, Thank and good morning, everyone.

the Officer the on President, and Chief our me call Cheryl Officer is Joining Officer. Henry, Chief Chief Financial Executive and and Board; of Operating Chairperson Kristy Chipman, today our

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

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

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

Cheryl Henry

good you, Thank and morning, Mike, everyone.

drives to That ingrained for success. with of serving Long experienced, as every this been firsthand our Beach, our this a be every highest prouder tactical embody required our and Our what the commitment of work element best-in-class our in and our teams, are they this to flawless ensure openings genuine Worcester, I Kristy always with commitment understood past not could California the members highly I weekend, watched core quality at is culture, is we hospitality execution. has they food Massachusetts new and of our dedication who day. team team members what's and opening experienced we as

we This dining as momentum double-digit occasion XXXX strong from exceptional strong quarter private We line a demand comparable and second in results. our continue to our growth sales. to just resulted delivered XXXX. by performance, and sales improved over both Turning special and demonstrated top because enjoy guests

period, the and resulting strong manage quarter versus earnings in the per in of adjusted year-over-year to able growth costs, also effectively share we XX% XXXX. For were XX% same

Beyond these numbers, relocations, progress our restaurants, technologies. investments new remodels we growing and continue digital organically, to business make in including

begin update Let's with our development an plan. on

For and in XXXX, new we our we I Worcester, the restaurant. California mentioned, Aventura, two kick-off And Long of opened Beach, Massachusetts. opening week this earlier with as year the Florida restaurants

will to the in a Additionally, restaurants from fourth of our which of as This we open restaurant year the development York. XXXX. in franchisees our weeks New we on territory adds Long one Island, our just couple you recall, in in repurchased Melville, of

site a Lastly, are fifth working we open of end by the XXXX. to

However, a early two or due construction to delays, into month XXXX. it may push

In signed leases negotiation terms final additional their of two XXXX, already agreements in three with stages. we've

Mother's and holidays versus during experienced of Day. major restaurants analyzing quarter, Moving our comp booking Day during digital and sales more quarter. By we this and XX% Father's of between table data, the that platform, three capacity management and increase With on investments positioned on holidays. traffic and all technologies. XX% completed and our already to data our We forecast and new platform weekends our capturing installation growth the to on demand the Easter, we're has improving in and of XXXX

in put to of are and better foundation our nearing We management also for a rollout. technologies made system new already on and our hospitality. continued world-class point-of-sale completion These labor system our a position progress will serve our deliver with teams as efficiency

Chef and goal the team. our to making a technology. we ensure and are focus training a the they other dynamic competitive initiatives completed hiring, share and restaurants restaurant with guest in investment and Most returning is The also and debt of to the GM new staffing includes shareholders new our capital basic are development to country and capital repurchases. dividends to market. training excess experience is plan. on back across our tools operations, Investing in key Meetings provide need recently, growth to ensure in balanced members Another we part through superior of That our and allocation reduction, team

resumed the increased to at year we per If this you of $X.XX $X.XX it share January QX. dividend and recall, in in

share We will in be paying a of per September. $X.XX dividend QX

in to long-term I'm the we specifics quarter. pleased significant create the long-term to million demonstrates believe approved our cover down worth further our of the to-date Kristy share $XX announce us Board turn positioned through that I'll million of $X.X shareholder In actions million a value. shares our we our In $XX have during addition, which all, new growth to to sustainable the debt and commitment repurchase repurchased call And paid achieve authorization, quarter. over to investments and returns. now has

Kristy Chipman

you, Cheryl. Thank

we diluted of prior quarter. $XX.X Please quarter EPS. reconciliation net $X.XX refer per or million to $XX.X a adjusted compared XX, earnings million income share diluted to share was to share year our $X.XX, compared of $X.XX reported for earnings For in year. common or release to XXXX, second June the per last ended GAAP GAAP the Adjusted $X.XX per

Comp quarterly sales XX.X% to versus XXXX. increased strong the quarter driven total of XX.X% and growth each. XX% revenue increased growth restaurant company-operated were compared XXXX results sales Our approximately for by in

of believe point. this a With lack for at the comparison in trends the trends sales continue to remains XXXX, as we relevant seasonal normal country XXXX reopen,

April, in June. in XXXX month, in sales grew comparable restaurant May XX.X% As XX.X% and compared by XX.X% to

$X.X of months, was XX.X%. to comps XX million, quarter last sales expected by similar versus low double-digits. to other the sales June for positive pleased primarily comp with beverage year, be food prior are last versus $X.X comp will million, June costs. XXXX, period the labor similar same operating lower to offset two the up operating and was and results income be the growth higher softened of industry XX.X% we income points July comparable growth. compared slowdown, overall in While to double-digit a versus as XX.X% with Franchise to the margin Overall, up due basis restaurant driven Other by expenses, year. declined franchisee growth percent approximately the

XX%. for While costs slightly one beverage than last restaurant of eased quarter's margin XX have highest to the prices we we quarter year inflation took this inflation beef March. primarily of basket margins the about of rest we Food the Overall, for basis end versus XXXX, versus to is was of quarter X% approximately lower history. the XXXX, saw in increase the run and towards X% XX.X%, of our quarterly the as benefit and deflation due price in the and these decreased food points the beverage of about and

expect to we approximately warrant this flat make will experience. That protect As of the and remain investments on similar expense the year, XXX the confident approximately inflation we increased we wage and we XXXX. versus year-over-year compared staffing XXXX. for conditions the beverage of increased our beef the or to deflation costs maintain to food XXXX of quarter our said, back necessary labor half date, on to to savings hourly mid-single-digit in points, X% primarily to quarter ability the basis with basis due rest resulting and relatively Based Labor if the to training move results basket XX points expenditures, guest additional of labor. management increases increased versus

the in of XX.X% was platform the second XX.X% Moving a XXXX, total as expect the XX.X%, of year. compared implementation of expenses, for and to combined to related resources timing XX.X% the new of percent restaurant into to beyond data revenues marketing revenue certain the said, reflecting our G&A the That and expenses full of addition G&A quarter marketing be business. to and range in key of the we of

had we was As outstanding of and million. cash, our $XX in debt June million $XX XX,

During Cheryl the X, And turn to $XX few back as beginning I'll August debt repaid million comments. a in since million. repayment $XX balance the call was of million the we of cash a our second for XXXX. for of now quarter, total approximately closing $XX

Cheryl Henry

adjust food Kristy. our and and a how genuine hard over accordingly. the pandemic XXXX operators pivot the directly solid decades you, comprised for veteran understanding the business with call have and of also And and Thank can of morning. first the great is best half are they by of to They numerous are to I and partners hospitality work this through the you believe joining on of the experience, closing, Thank business They as decades. the demonstrated success. franchise performance In last linked cycles managed team. in and us dedication in testament two the

the capture taking Brian, ahead. please line many invest positioned believe, open to Ruth look and continue ideally you in forward We your is to Chris those future for We the questions. questions. can the to opportunities

Operator

gentlemen, we Nicole from time, at will line Thank question-and-answer conducting is you. Piper this of Ladies be first [Operator Please Our the Sandler. session. ahead. Instructions] Miller from question go and a

Nicole Miller

those I I comps in Thank more talked on dig having ability little excess to total, bit up ask about not just making still good volumes Is comment, three you to Cheryl, the even the morning comping you about and about wanted point that. and capacity higher? days. in a comment that drive understood the quarter significantly a First, you're I into wanted to and so holidays if much, about your but this correctly,

Cheryl Henry

Yes. of demand think standpoint. was highest and as guess that Thanks, versus have historically, because volume our think you is there. I there certainly, from some about Nicole. know, you holidays Great when XXXX, question, the more a been those capacity And number

first the And we going is And real and the a given that tools so in place. was forward, we've new this them. it, big we've using those had about teams think holiday think as tools testament the that I season to

the will continue balance experience additional using We to capacity. guest that with

it. we're so, about excited And

that careful guests We but is the and saw we are there about in the those to it. strong holidays. experience balanced even want, this what some We make really from certainly, capacity want store is sure

Nicole Miller

opening I turning brunch from can Did turning efficiencies it also specifically, get this and And table? come just table right? define more to mean, specifically areas dayparts you from a but or both faster, from capacity, just from up a

Cheryl Henry

the It operating teams where was about restaurants throughout accordingly, the and being really really This did expand the the the hours out we was in allowing guests understand in not that and thoughtful Nicole, demand flow staff day. the spreading to of significantly. the latter, so managing is and

Nicole Miller

Thank on talk level last Awesome. you certainly markets, And then new filling acquired since loaded, or you. XXXX geographies, back-end open so the be a just jump, good year? existing a markets head in an then start. getting of a a bit And high early development, development question normal been always would you're Can would still stores for it a bit the earlier little obviously, goal. potentially such little the cadence next markets has couple about

Cheryl Henry

Yes.

we've -- so And announced the three.

there. so looking we mentioned for especially Florida. of market second-gen and just a talked for markets, opportunities the escalated. in also construction markets, in those Florida one was are of infilling, about some this we inflationary looking our the Obviously, of costs have for one looking infill And And time, existing you is things space, great us, for where

and existing so, And that York we've that's the about New remodel that market. work with, was talked finding space opportunity third in restaurant the -- we can

Nicole Miller

you. Thank

Operator

Thank you.

go is question the ahead. Vaccaro Brian Please from James. next from line Raymond Our of

Brian Vaccaro

primarily I'm Thank you on patterns, you in June, on among maybe was obviously, you what trends changes curious elaborate could traffic circle seeing on if any cetera? different very I and cohorts, order et hoping touch dynamic. strong moving behavior, could there. back saw consumer you're But you that's to changes or through check And and morning. a good sales

Cheryl Henry

we think out. to back back thought strong, April taking advantage sorry, margin -- what So I actually was another coming the wave think go and and opportunity right, really of I we Omicron to of May, what people out get

so June digits still softened, of we growth. while double were And

see, the softening are So we to a sign in inflation, for people my we that see have effect dining that that. feeling mentioned people and little We Are on So it come now we to basis to glad are regular because comments, check. seeing did of trying yet? good during us. stronger. I the We not right private quarter, were back and look understand, a is a manage seen

the an us, we'll that year we focus we the as that as of be And especially well. half on holiday certainly was so the back of that, at QX mentioned look for on and focusing season the and call area

Brian Vaccaro

in of Okay, you July? sales July low set where great. give comps up running Could you weekly were versus average And XXXX, a digits sense mentioned single Kristy, I us just year-on-year. or think maybe that level

Kristy Chipman

think it's double I So low digits.

Are far going…? First looking be XXXX, And July. as of for what not looking for? for as all, similar low are single clear. to you -- or then what to versus digits we is June, just XXXX, Yeah, think you

Brian Vaccaro

Sorry.

sales July. Just average weekly in

Kristy Chipman

somewhere -- about Yeah, XXX,XXX. between XXX,XXX and

Brian Vaccaro

Thanks. you saw say COGS you the And front, ratio in wanted on quarter second make there. Did around I similar sure back expect that COGS just to okay. Okay, XX%? to your second be circle to level half message just understood that the I the to the you

Kristy Chipman

said I relative deflated No, similar back inflation last we to fees of the commodity last No. if to half be saw higher are lap this what in continue year, we to over quarter, to some starting year.

of year-over-year for XXXX. our be relatively So versus six months overall inflation to flat last expect we XXXX, the

Brian Vaccaro

Okay, okay.

basket on inflation to expected the year-on-year be So flat. relatively is

I guess then Okay. Thank you And for clarifying just… that.

Kristy Chipman

beef. including Brian, sorry, I'm

Brian Vaccaro

Including beef?

Kristy Chipman

Yes.

Brian Vaccaro

Right, right.

line, you you that's about then talked you. you compared to I showing have very of the within XXXX. elaborate you be that on are up that some a OpEx Can the unpack cost just the other great. Okay. to operating and And way Thank within on guess just ex-labor? maybe further tie for or be still about leverage strong Thank on seem line, executed that. the there other in the talk Can with of little it how bit That's that in -- efficiency initiatives how labor some some efficiency clarifying whether you or initiatives call. the and back

Mike Hynes

This Brian. is Hey, Mike.

see we've efficiency about front, the XXXX in quarters. labor, we're talked on labor what prior So, on with the consistent to continuing versus

versus On the costs expense the seeing restaurant line, rest we're consistent of XXXX. operating really

for inflation there, beyond we're higher costs. leverage the which Some those check, from really, but some seeing giving inflation us benefiting more is we're the

Brian Vaccaro

pass you. I’ll All on. right. Thank it

Operator

Thank you.

question ahead. is Jefferies. go next Our Andy line the from from Please of Barish

Andy Barish

Good morning. Hey.

the how the far out the impact past if called back of cities some that are have in on you and business, the of bigger Just or of you the you lagged in if wondering that kind that event private could share sort you've of quarter, corporate will.

Kristy Chipman

Yes.

then want well. part, and So, to first in the I if I'll or as jump private take Cheryl, can there take

about Boston, So, the quarter. still basis Manhattan due points for Hawaii, we're depressed to XXX

dining, a better our significantly little ground, private overall versus trends, our QX, of create dining getting still bit comp So, and private May. little pressure a bit From up a improved primarily but in prior on they're making overall they base. April

what probably Softened compares a little during bit about say, was the back quarter, again in QX. June. it about, in XXXX to I'll But of XX% it's which about XX% in

we can make room doing for we have there, capture season. some we So, we're holiday still to now sure everything right it and the

Cheryl Henry

And do that and Andy. watch are close over you to pulling XXXX, that some some We add and have by the of I'll then little it lagging a back we that some fully markets color, have are kind down. market, significantly rest just are to

to opportunity use for growth. be to try to the we into half able especially as are to that fortunate markets so, those going And with back resources, target an

Andy Barish

that? part at And of that as the resumption look wine been that? that revenue in are Is you bucket of that has dinners, --

Cheryl Henry

Yes, it is.

wine part of for And the So, on we're center. are been demand We've has couple for got dining private dinners more coming the a counted those now calendar the our in the as back half, working XXXX. and strong. revenue

lot We that, to of we'll glad have we're building that and that keep program. those. comments thrilled a they're are back. The get guests So on

Andy Barish

think I comments do And year are of for growth. new of remodels? so of kind many then, you. five Got or was How in the next unit the some the on remodel interested you

Cheryl Henry

new restaurants we're year. So five going next open to

reinvestment have remodels to what you one upwards full existing the what as maybe would I three are Is mentioned second-generation we'll base I We were year, then imagine looking space. existing what referencing? of overall we'll refreshes for Andy, about plan restaurant is and to two, that locations. continue talk might at you next that our still do well. to

Andy Barish

sorry. Yes. I'm

Cheryl Henry

Okay.

Andy Barish

Yeah.

Cheryl Henry

having we've three ones the space. actually of gen about second two So talked are

Andy Barish

sometimes And -- some cost some surprises. are case could there of that there the things? have but most an of on sense on time, is individual help the they are of any I in how much of -- kind investment know do advantages, obviously, Is each they those side

Kristy Chipman

– Grove us we recently opened, was restaurant that relative almost of I one sites for half capital So, the to for of mean -- about new half is it Lake those that a cost and would be. was what

get wall, tearing so, don't in investment and up job to locations. as there's an as long we And at start a when when significant you the these benefit you we're anything find try do unforeseen, good which looking from you perspective,

perspective, for volume, return a tend investment sites I maybe lower hit think and they is, not average because from to an but overall our significantly. are are good what under slightly these So, average very us they unit

Andy Barish

you Okay, Thank helpful.

Operator

[Operator Todd Our go Benchmark from ahead. The the of you. Thank is next Instructions] question line Brooks from Company. Please

Todd Brooks

morning, certainly addition Hey quarter. we great here and first-time good And Worcester, Congrats had to want city everybody. our to experience, a on the second about a Cheryl's it's comments I the great visiting.

welcome Worcester So to certainly.

Cheryl Henry

you. Thank

Todd Brooks

questions, of side, of A QX, of to holidays three that additional squeeze the here. are as you look you the much got through you season? benefits table follow-up But can out on post, how year you management kind translating few think the Thanksgiving capacity at that that holiday in not you across the end the left

Cheryl Henry

Yes.

on we're So, One, a it a every basis. it's weekly things. weekend doing couple of

historically an sure same around really teams the in certainly, holiday busy week And And of restaurants we as the it's philosophy so, to having attention the single basis and into know same is every we opportunity. it weekends. we're the the make -- our about the and on detail traditionally times, go doing

we maximize the to we versus balance single the every using that's really is what moment first to want. want the against are learned optimize round opportunity make from what think seats completely the the sure and is experience that, guests and we I of balancing

is back planning year, half of of the a it it So, on for the do we'll our part very balanced absolutely but basis.

Todd Brooks

Great. Okay.

question, tourist-focused Hawaii quarter, the second bucket, to lift you pretesting In travel-related requirements the of the are come requirement? was more US. Boston, into you but the that the of talked from all seeing in Second since New about a the a and I just wondering York at of you lifting customers saw markets, listing some

Cheryl Henry

this point. bit Hawaii, at it's sporadic So a little

attribute board, we So months I can the from strong that. back – say – think it Across it in you're slowdown I to half the was half the of was would a that, to that, July describing. back I what don't year know – or about the a of the exactly sorry start June to what

yeah, that, people opportunity So, don't markets alone. us still up travel, I I I back. anything know travel to start more of for open kind that's particularly attribute that's start think us. to mean still can And is and come but to an for as to not we really Hawaii the

Todd Brooks

if Okay. Great. And the final can. I one,

the prime I you in some of You think on the thinking willingness Are I you for the the supply gave talked a partners the forward to more any back beef frame, you your on time beef seeing and supplier part the what's of of outlook hedged at kind about if hedges some in costs quarter, existing lock run in basket. in you. to price? remember off August Thank the Are half? correctly, able your

Kristy Chipman

question. Great

timeframe. extend locked August So we were had that November we into that the to able through

on XX% we of beef. overall about are And down. Prime grading locked is our so

what beef think that already locks don't offer we've are starting beyond looking be expect to over to prices from year. expect suppliers So that But that, going record last to are I taken. beyond we again, many level come necessarily more we I our

for pretty the think last confident And prices we're that deflationary flat to see going so six of year. months to we're I the beef

Todd Brooks

Okay. Kristy. Great. Thanks,

Operator

closing like Cheryl reached you. of Thank would call the remarks. the have Ladies to to we the session. question-and-answer and gentlemen, end Henry now And back turn for I

Cheryl Henry

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

Operator

your for The concluded. Hospitality you. Ruth's Thank you has of Inc. now participation. conference Thank Group,

may disconnect lines. your You now

Ruths Hospitality (RUTH) 5 Aug 222022 Q2 Earnings call transcript