- Earnings call transcript Q3 2022

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Operator

Good morning, ladies and gentlemen. Welcome to today's the Ruth's Hospitality Group, Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Following the company's formal remarks, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions.

conference being today's reminder, a call recorded. is As turn over Finance to would Accounting. now Hynes, conference to like of I Mike the Vice and President Please go ahead.

Mike Hynes

you, everyone. Thank good and David, morning,

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

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

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

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

Cheryl Henry

you, and everyone. good morning, Thank Mike,

our core of Our serving proud we who of are commitment the members, hospitality genuine be every and embody been more this to commitment could always the highest with as quality has day. I not they food team

while term. our growth Ruth's infrastructure and our necessary to over operations utilize our team, continued digital guest equity position experience, the restaurant make building the We strong that exceptional and long brand strategically base continue strengthen capital for and investments to

momentum, our we delivered line Turning now part realized by from XX% from over comparable special results solid the XXXX. our because growth sales the strong than and occasion top demand We demonstrated more continued third guests. just in to quarter,

resulting is year, line quarter pressures, the internal of EBITDA expectations. best our per ongoing in last share strong adjusted adjusted managed in $XX.X $X.XX company and successfully this inflationary third and the landed with of also We of Outside had earnings has performance million.

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

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

third the new During restaurants, Long Long Island. New opened on Massachusetts quarter, California, and including we Worcester, three York Beach, Melville,

In relocated our in standards. and in remodels addition, our Winter and brand Florida to includes Garden end Biloxi we hometown year. be also last New opened of ongoing by upgrading relocation part Nashville, this restaurant restaurants of to is location, City, Park, which our our remodel modern week, This the efforts, completed York

annually. remain in develop ahead, at confident new five Looking ability least we to our units

prepare a negotiations for for for or late actively fourth final signed in We we opening and lease XXXX, another new recently a for are four and quarter. As fifth location. to XXXX agreements early are stages have we confirm XXXX in working signed of lease the Jupiter, Florida XXXX,

labor and capacity are digital our with point-of-sale To insights producing a enhance and will experience. exceptional the to included our our shareholders. the who Officer, a actionable a Chief Phase data-driven efficiency process paid digital will steakhouse lead in software. in platform, digital hiring new and on and increased X management that experience investments Moving to investment develop of website reservation we're ability targeted new to to deliver program. transformation, in our efforts, on benefit point, To Phase enhanced and investments our these further inventory continue media guest drive Commercial investments that generated our X technologies. us booking, and already confidence These we have digital give platforms, business beginning

as and restaurants well balanced disciplined that in deeper other allocation. our new CCO Investing maximize new marketing approach lead guests, to profitability. also with knowledge been and efforts new approach to leverages as of even that more we sales and so to will of our insights initiatives capital marketing our growth are targeted our part always Our the has

turn of been shareholders very million all, excess now is $XX will shareholders to million of position X.X value excess to $X and second to actions also at of consistent long-term we quarter. dividends approach, returned over down per debt quarter. these we call share Kristy paid To growth I'll and returning cover which dividends million the We capital In The over that has debt, continue $XX years, believe repurchases. share point, have and part creation. that in reduction, through $X.XX to the us paid million of specifics the and the repurchased capital shares. to sustainable for over during the

Kristy Chipman

you, Thank Cheryl.

XX.X% and to Comparable year. in EPS. October was earnings For XXXX, share to diluted $X.XX per diluted quarter and X% were compared to increased we growth our $X.XX restaurant quarter. versus XXXX. Non-GAAP per third company-operated the earnings for XXXX, XX, of grew to approximately in September a for year sales or XXXX, up compared the sales share GAAP revenue total net of $X.X GAAP income XXXX of $X.XX, last $X.X the X.X% versus Total non-GAAP Comp respectively. ended quarter X.X%. refer approximately including reported reconciliation versus The release XXXX million common and X% or diluted per million $X.XX by prior compared sales X.X% share Please increased to

points was part the growth operating our in for by offset the XXX XXXX. X.X% XX.X%, international of basket. versus X.X% increase comparable of plus positive and X.X%, compared for pound and as be increase per to last for to manager expenses, leading driven labor, prices post per percentage Food high in food trend will restaurants. this franchisee points line of as sales versus a of last sales the in year in hourly beverage expense the QX restaurant, to of costs Franchise period We We X% most commodity by expect due to to as improve add million, of increases to lack a these due costs domestic operating primarily versus quarter that continue beverage point at in with and consider same basis our versus year. last basis decreased compared reiterate by up XXXX. to comparison approximately be to year. us number year, XXXX XXXX increase our Labor up a single including $X QX continued and Other continue the the digits seasonality quarter in to million, the the XX.X%. an wage These sales basis for we income XXXX to relevant assist XX% to XXXX restaurant to management quarter of full income $X.X with and was declined X% costs managers points, XXXX, balance sales normal in sales and when XXX QX, increased expectations XXX

marketing Moving a and key beyond compared quarter restaurant XX.X% addition the and combined was the of certain resources business. to of back transformation the investments third the in G&A revenue as to in of X.X% percentage timing reflecting business expenses, of XXXX,

are of quarter is typically as revenue third typically quarter the our the the percentage reminder, third a as a lowest. spend sales in As highest

to year. marketing expect million when full be $XX combined the G&A between $XX and for We and million

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

supports sheet business strong shareholders. grow cash to to organically We return will a continue balance and ability ensure to that our the

turn I'll be As as now of paying $X.XX of part of a we XX. comments. record will shareholders of December November to dividend for back on the this, a Cheryl X closing to few call

Cheryl Henry

is performance the solid of our hard of closing, members. our a In Kristy. team direct and you, dedication work Thank result

We face efforts adversity, recently during partners, have Hurricane Ian. their recovery veteran with who resilience have always in operators and the most franchise of shown

remainder As fourth to we the and XXXX, to and we adjust quarter the of continue look on forward accordingly. to monitor economy will the

for you for us Question-and-Answer value over the that to taking and open And forward we that this us many David, you, are line position operated all through capital Thank incredible iconic XX-year look please believe our and stakeholders on team. questions. call confidence plan, morning, have old you we to strategic remind Session that me a our your brand questions. we strong and joining grow well create cycles, would we in the opportunities time. our economic Let positions for is

Operator

this Joshua Long time, from be question conducting Stephens. Thank with we you. will question-and-answer At a is first Our session. Instructions] [Operator

Joshua Long

of opportunity results your quarter. Great. we Thank we update update if had you also first mentioned line for from the the I for and start a might the talking the month to the taking about have the for expectations, or and came XQ period you ago. your you with an part two just to wanted the question in that, know through today. trends see up, some of first I

curious, you the out of of any as about talked just and shaped sort rest the So acceleration of that how some directionality into XQ? quarter

Cheryl Henry

Yes. Thanks Josh.

an the had I to we update, given went at July before September, conference and for our The regarding So August. sales Benchmark we beginning think, of

September X.X% in So, came about versus at XXXX.

comp were that overall from with we perspective. an so, And pleased

food the that that beneficiary earlier saw. other online, been As pricing of we we and we've pressures expected, in came items some supported and inflationary the

that a there in the disconnect we on think restaurant here, you operating kind has anchoring mentioned, particular from of line of between with perspective, what of, we little all was came space well, with up set we were for line bit or as So expenses difference a I right a expected what expenses. XXXX

Joshua Long

at helpful. it. seeing could of commodity any from Got you're company engaging thoughts on changes And brand maybe updated the pricing the for about about the comp there sort is level? how the or your on mix, where outside think of trends you given now? right quarter, we the that talk When guests, store That's any basket they're X.X% with the touch sort pricing

Cheryl Henry

Yes, pricing, the thinking at and this -- and guest I'll Christi where on touch around let jump about in then how we're Josh. consumer the point. I'll we're

Kristy Chipman

Sure, Sorry. I’ll.

we X% of about well. versus and for were XXXX. increase took we carrying mid-October what a in as can and about versus talk about October So quarter, the XX% for price And about we approximately X.X% XXXX October, pricing

the be next So first we'll carrying of forward that into part year.

Cheryl Henry

guest. a the on follow-up And just

that check haven't point. XXXX -- point, Josh, any managing levels at year. the at to All at recovered we've this past so the about more than of not is We half the seen dining private first in talked this

some of has strength we're that resilience seeing However, that, that guest and in special made segment for guests our base. and still occasion, up because just

Joshua Long

Got one increases net that incremental of X% quarter? running or those it. X.X% here in Were you kind to helpful. get a an or to for clarification. two price that was fourth October, Kristy the -- That's at

Kristy Chipman

Sorry.

clarify. carry just into at X.X% next X% a -- were In that obviously. took We increase me price in we let October So mid-October, will QX. year,

about is be when to pricing compared to X% expected our QX, For XXXX.

Joshua Long

I'll you. Thank helpful. That's requeue. and pass along

Operator

Nicole Our next from Sandler. Miller is Piper question with

Unidentified Analyst

taking for on the hoping question. Thanks guys. Nicole. Just any could holiday provide heading elevated I bookings was guys my you're some just seeing Hi, Anything there. Abbie quarter. commentary detail is This on for you demand? into fourth

Cheryl Henry

December and a the to people, of for those the We've It's the and so Abby. holiday being predict little Thanks, Yes. again, events. they're patterns us seen early strongest for how some throughout shift obviously, events. booking month year booking early

So, give I specifics. want wouldn't to

generally, are as peak booking think see. so up peak fast, some days and expected I of to those times good that's

it's the to off indicator. the put some the that special that really in for of folks of holidays some in of a I some against resources in we've segment times think been have good doing us and around that past. successful our those the We've are fill new menus business help quarter driving

Unidentified Analyst

it. Got

surrounding And helpful. but D&A, provided guys Okay. up just is technical I know That's you Is step provide quarter assumption? can I safe you modeling Thank there this this just the historically. you. your tends super question. fourth a to in notice a then commentary margins, a helpful anything more

Mike Hynes

H, the in at Abby, trued when because the this gets the on end some quarter is seen past, with of we've year incentive year, Mike. of performance. the fourth it's compensation based In that G&A noise full that up

consider that I And seasonality normal so the wouldn't necessarily for XXXX.

Unidentified Analyst

D&A, And it. not just said G&A I to Got confirm,

Mike Hynes

sorry. I'm

quarter. restaurants three saw in fourth the quarter to So the the you increase third continue yes, in quarter. increase We depreciation will in that had third the

In a investments of our third the in quarter, technology we placed they of addition, a partial there. and in depreciation got lot quarter service

And see so higher fourth you'll quarter depreciation QX. than

Unidentified Analyst

back hop it. appreciate I in I Thank Great. queue. will you.

Operator

Our is Brian Vaccaro Raymond with from next James. question

Brian Vaccaro

so Could and on on update. level and I average weekly good Hi, question. page? were appreciate to quarter-to-date October I morning start comp wanted set taking my for sales, the just where same just you thanks the sales

Kristy Chipman

Brian. Sure,

locate.\ me Let just find to

Mike Hynes

at It Brian. XXX, came in

Kristy Chipman

Here you XXX go,

Brian Vaccaro

XXX.

also check quarter. it and thinking Okay. X%, about guess Cheryl, your touched think little dig you. I Great. trends that's But than Thank traffic trends lower And as versus ago. a guess, into you the XXXX, your a third I on set your and I'm I you minute up you comps

that, they are guess, in you I'm So middle dig into embedded dialing reduced what up broader or on maybe and XXX(k) you lower have reflected as and think you or any And just back there what you, had starting that, with were be boosted are I stimulus changes frequency frequency concerns amongst recession traded higher down by curious behavior? kind side, whether that maybe the income or or might other consumer seeing bit in of is income the consumer customer a away. maybe

on perspective hood the any front. what you're on sales beneath a Just bit the seeing little

Cheryl Henry

Sure.

in as recovering quarters, traffic versus into really So we've the it, it's of impact sales as dig we their and down in this and XXXX. about not various still those Brian, quickly markets talked

point, probably we traffic kind it's for really still as, as so impacts the some seeing the -- on benefit versus not guiding sales a check impact. we from that biggest of to-go are -- markets private that la at but the slower pull not as one of that is XXXX, carte having that's again, which around back seeing not well our so apart, kind seeing management those pull the program, of recovering much biggest So and diner and that [indiscernible], have specific us that the this of again,

Brian Vaccaro

to ratio that? of fourth for quarter of you Kristy, or maybe what guess be say similar margins, XXXX. the I other assumptions COGS kind I quarter that. within wanted you commodity Thank just terms inflation to you that And the will of on could clarify, And fourth Okay. your in reflects unpack did any on beef perspective

Kristy Chipman

Good Brian. Sure. Yeah. clarification,

think, of as seeing XXXX up so are beef QX normal go So the QX prices, fourth into similar in come be I seasonal XXXX, have October, continue will demand pretty to we to we of reflecting, quarter.

seeing of to the coming be going what we're of cost maybe And of there flat with the level Brian. rest so a we bit, similar in overall basket, little we're a based on of sales inflation relatively XXXX across down QX to the think

Brian Vaccaro

notes right, a worth I lapping been enter you Okay. to or contract you had you were new through that And if highlighting? are able my into think are contracts, Have any mid-October.

Kristy Chipman

right cost note. through small here to And None, reflected going hit now, that are QX have large a worth of few very meaningful enough sales. of for we are to those nothing a work highlighting but weeks commentary in one are us XXXX on November, highlights, of to similar take my being able

Brian Vaccaro

And one Okay. me. Great. last then, for

on operating Just quarter. other the costs the in

in pressured some As categories. seeing a maintenance were companies, just inflation other quarter? other on might have of, and from you was And kind that parse repair about we've through, lot lot these a utilities, and where of and third that other heard labor the of some line? Could categories where

Kristy Chipman

basis there. -- and restaurant we XXXX, of at points inflation and look utilities written and in coming with certain XXX being line it's Yeah. line items. labor When to than other seen definitely the you expectation particularly, sorry, better be The operating line expenses, in was continues and and have our M&R XXXX

to has a that. pricing been Our lot able offset of

expense bit to across think card was operating cetera, had maybe less year When about were the third delta, a up I return best -- year, on base less last just restaurant meant XXX normal XXXX the didn't value. to have which We last think Credit ramped savings basis almost et had really XXXX. XXXX, the overall the charges little And XX%. base enter you July at we're have we he quickly that board. we versus right from mode. operating fully wrapping We as on expenses in sales the and quarter. point

including And a so that's reasonable enter why more as we baseline continue for expenses, to XXXX, in operating restaurant labor.

Brian Vaccaro

Thank on. it you. pass Okay. I’ll

Operator

[Operator Todd The Instructions] Company. with Our question is Brooks from next Benchmark

Todd Brooks

I maybe on beef Hey. Good quick hedge of finishing November. know, up morning said everybody. through you A for there's Kristy, a just costs. you, couple small questions

have for for overall outlook just looking gone has XXXX? there other side an year. you're of any to it on what costs to for at you to out prime And soon hedge XXXX, chunk hard all let into that too with your XXXX? co-parties to As needs come Is relative with XXXX this may willingness with increased is contracts at least the of the a

Kristy Chipman

say that's which it seeing from little So XXXX first, the we're it into for think little that we're we'll and a card say, is out as transportation bit is little specifically perspective. in relates to bit continues wild do high production bit. on pricing at secure not forward increasingly what are on up, down packers be guiding your be it's labor grading is to of let figure while easing what bit because, you give become can where side, point, a we texture to Costs active has going supply, the fees. if the year, costs, try to market as there a we I fewer a a little to to we that. It but so just we Prime come as would the supply catalog me that on to always feed are I contract able continues costs, early, difficult be a a us to possible. of tight

to And so different months few in at share contract bit anything XXXX. been to-date we can looking have we that nothing little more at a ways for past strategic the but

Todd Brooks

Thanks. helpful. That's great. Okay,

November, back early window guys to wanted delta you Delta into have So, sales Secondly, things -- from a benefit? where as October was impacting sense same-store the any dig further we last we've and kind seen know Do just year? you maybe gotten have is out getting strength. of October, normalize there lap to I of if September just into the

Kristy Chipman

Yes. it she I'll I'll Cheryl, start, has then comments. some and to additional turn

came I period timeframe. of the think impact. the we're That variant, August out of us time -- that was of I Delta kind think for in definitely short pretty we out a of

Omicron people you again behaviors, and to going mid-November, to we started and January all mid-December into later changed of are I that hold in of piece the hear that I argue into when December in part would think particularly as Omicron, take is of all have interesting timeframe. October that's is really come and but out not January when about started would some

Cheryl Henry

Yes, Kristy, not much add. to

as Just of that as driver private that's mid-December, time in off last began when kind really going period, a talk big larger during the of groups that mentioned, we they last year about make you fall the the weren't to to the year. restaurant groups to visit of dining decided year as

Todd Brooks

Did And and lost where to the hours look menus or restricted It's you'll did during great. that how have long. levels you us blur staffing in to levels any reality? with that so at does operating But lapping, you were Omicron, -- if impact Okay, a far exclusions, as can all call-outs? locations it's been you go as to back remind to sadly you now. it just Omicron kind all deal be have of of staffing

Cheryl Henry

back it basis, they operating in a the were experiencing have thinking the be so hours And shouldn't point -- this close but shifts didn’t to gets year. it did we is And that have not Yes. a call-outs, significant of I little because but to on talked about it do shift some we we frequently. recall you're right, again, or had where lost, we we change

Todd Brooks

with know into guys this table Okay, tool that the be then you holiday big one. management rolled first that And will final I the season armed we're great. year. going out a this

holiday at Thanks. or that some be extracted peak thinking if you capacity to so should from it these technology peaky we just do the know if there's begin you are don't that about for be how that periods feel unlock the of what could wanes, I satisfy? periods with, because benefit Just might can actually like

Cheryl Henry

question, Yeah. Todd. Great

we've And so and as holidays. that, is seen weekends, Friday, intent program the hit this exactly and then the with so those impact we really, to in put Saturdays

have between as those well teams driving the the belt we guest now their as the capacity. balance do expect experience and under months around opportunities So understanding

we majority to so nights. the as well And -- them holidays this the Friday we and focus those through those expect next on of as be Saturday see of months busy the couple as

Todd Brooks

Thanks. Great. Okay.

Operator

Our next Stephens. a with question is Long Joshua from follow-up

Joshua Long

Great. taking Thanks for the follow-up.

earlier you the can talk but New markets some we it, of are and how Boston, about Hawaii update missed it, think in quantified in offered? challenged if I terms in it the touched trending on you last the of those you that district York, versus I theater

Kristy Chipman

Sure, Josh.

tune Manhattan for and do in Japanese [ph]. challenge to fairly that They're stores continuing more about restaurant that in of a much and dependent are impact expect Japan The were as are Hawaii YTC up XXX site basis was quarter little work. the points Boston, of pretty to on the start back significant Manhattan, to the to Hawaii particularly, us different. quarter. opened Hawaii on that So come tied one particularly a return during back Boston the bit to We

be to green the pharma challenged of restaurant continues that challenged, projective be Boston continues some couple to albeit shoots, sales but it it a in we there does haul restaurants as Manhattan include. over had long Our

Joshua Long

it. Thank for Got helpful. that. you That's

digital timing just on together where largely digital able that some front perspective Just being put place initiatives. or for hit of Can and to kind the that trying might realized? view of other back put about benefits your line the into might now? something to that and line when the your a around be talk Phase investments of to Going in when And cost is you of the items X is or some G&A those? start

Kristy Chipman

get that, it rest a capital of rolled to And you'll us so take is but capital now, year the to that's configuration of the Sure. start to management hit you'll it's right next then that early in software expenses quarterish, going out. mainly first the early fully configuration. see inventory and year of We're in it the -- good next stage of part outside system of

order that food and particularly system has imagine, and order and can which large guide every get state system is you configured and lift As that's fairly significant to beer, liquor both across then a local and different ready tested. sometimes requirements covering wine, in implementing

we expect and in significant start will the into then next a that of fourth definitely system assign until to inventory don't quarter XXXX, savings placement category. that So some we probably inventory from year benefit where

As it of program, -- other work, the media relates QX. process testing the right we reservation to into That And the think I we Cheryl are now. won't go websites. mentioned then paid until

And G&A going to in so the you're gave already. and see that, and that you was marketing we that reflected dollars

built QX we'll use we it, have So the that starting that from of the in be and incrementality next implemented will year. in specific for case, and call that learnings benefits

Joshua Long

there. on but how in shaping fall is about not Then to dining think be shaping curious that the helpful. one just there's the technically just that dining has or one private perspective view an how knowing you'd on definition strong. early hopefully, come we what -- bookings might period? shaping Cheryl, mentioned your just no for up. or a just remained you going maybe it, because private you're very for shape follow-up. in share you're up you're major through, on or that how the to I sort for volatility curious if social in disruption a It it's of terms opportunity little here you know have where dynamic That's ones the but it of of more like a that how -- this of Is seems you're first up, it season looking is while But to holiday XQ as curious

Cheryl Henry

Yes.

or sales our So -- managing as the you we of la haven't check the carte a space. in kind said, in the seen reduction of

think into are there go for we we're as and the demand is we the peak this someone at again, books? about the how it, question our asked getting we times way it. when Are managing So quarter, the we

open -- what focusing it we experience can that open, to way what or they right sure do and best we're incremental books that So Steak our pick that delivering are we it's really, and they the demand operators well, managing any up do on get. the making House

Kristy Chipman

we just use if recall pretty our I'll dining you about and we And get I room. to how had add during think COVID, worried

there by able space to not So sales dining of event, is opportunity it day servicing and the perspective. in of if a need if we private in it from week terms grow depend to what what continue on with is using fill it's the an main room -- we're guests going for to to us an not capacity

Joshua Long

Thank sense. Makes you.

Operator

we to Ladies back the team management would question-and-answer reached of like call I of remarks. and End the closing end to for gentlemen, the have turn the Q&A session. And

Cheryl Henry

and all David, look soon. call you, forward you with to you Thank great us again thank joining for on the today. a speaking We Have day.

Operator

today's This conference. you Thank participation. your concludes for

lines time. your at You may disconnect this

Ruths Hospitality (RUTH) 4 Nov 222022 Q3 Earnings call transcript