CHUY - Earnings call transcript Q1 2019

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Operator

Good day, everyone, and welcome to Chuy’s Holdings First Quarter 2019 Earnings Conference. Today’s call is being recorded. At this time, all participants have been placed in a listen-only mode and the lines will be open for questions following the presentation. On today’s call, we have Steve Hislop, President and Chief Executive Officer; and Jon Howie, Vice President and Chief Financial Officer of Chuy's Holdings, Incorporated. At this time, I’d turn the conference over to Mr. Howie. sir. ahead, go Please

Jon Howie

in and our By release. first found at also operator, have It everyone access be www.chuys.com website our to quarter on Investors good you, section. now, afternoon. should can the Thank XXXX earnings

of cause begin them. today therefore, actual need more discussions that to remarks, future we statements guarantees and financial and on results forward-looking recent include undue way, should We of statements. from turn that that Before discussion to not to filings operating and of risks could statements results the the over call formal SEC risks of of are performance, what our everyone not detailed Steve. part I also are subject we refer our you differ to out I’d impact With put review our you numerous These expect. conditions. our like of materially will a remind These that forward-looking to reliance for the future to uncertainties all could

Steve Hislop

improved upon to which we X.X%, revenues also first have Comparable Thank as everyone top focused you on with we sales remain us line joining by improved we On and during pleased level call also you, restaurant today. performance the recent afternoon profitability. for trajectory the by improve efforts a marketing while grew the our X%. thank believe we sales high good by Jon, augmented our are we our almost has we been our on opportunities quarter

long-term, addition off technology, push previously to include initiatives of variety on to growth out marketing we premise on drive over laid For these line leverage XXXX, intend and we a to sustainable strategies. labor in top the renewed initiatives

with strategy of cover mobile campaigns heavily will marketing our paid Let you the Starting that paid half for these will year all on advertising media and on each for location-based lean the first our me search, items. update of social markets.

Houston, these three particularly to increased in focusing and restaurants. experience. during improve our are market focus Chuy's certain Chicago that addition with awareness the in where we only is of end the two efforts drive overall we to also on quarter Houston we and locations have To restaurants brand is to marketing efforts these the educate our markets, In XX launched our fourth Chicago quarter, to this successful markets In a April, late frequency test media targeted probably XXXX. in following in goal

platforms signage and are In on addition, digital stadium Youtube, strategic advertising and we like Spotify. Google employing highway and promotional radio,

Cinco traffic We de create excitement also leverage the and Mayo restaurants. our drive celebration to to further

the to the technology despite an front, overall lack online increase adoption it. initiative see continue ordering of we rate in our advertising in On

represent to-go the to-go ordering all to all approximately of Starting overall of the will off XX% markets our in quarter drive sales ordering. should end first business. our adoption promoting premise and May online in increased strengthen which we As of XX% begin

traction. the add first in now by We business new productivity. our both markets engagement end. in Overall catering add catering as additional two view markets As which catering foundation to future we as approximately premise it our we we premise awareness important on gives makes us back initiatives we to during up With to aware program of our part of to it business will and an integrated top the Chuy's test relates to off continue will half guests platform loyalty time off sale. the newly delivery, still increase becoming offerings include store we a said our is system, continue past in to-go important of off the which Other our another quarter while regard six markets. premise efficiencies our on delivery further this believe and that gain XX to the believe as which we saw strategy explore track two improving look XX.X%, POS the platform grow together second sales. we in of I that to to Further our we'll of quarter, are time total delivery year catering will year. contributes this have labor, premise of level to in initiative continues same now improve which with caterings as At is line offerings Beginning to forward our growth optimizing increasingly for at and and brand. in we X.X% labor launch our continue to almost

make continue new path labor by to on by average also efficiencies, progress to opening related with We initiatives. labor labor reducing glide hires new and our our tangible our store improved improved, seven system targets and achieving XX% and month focus

like the would turn briefly development. I to XXXX I to Jon our back call Before review

the we additional Huntsville, first Colorado, and two first of one Alabama. in pleased All restaurants, opened all in with Springs, three these recent openings. quarter opened the the we in of During one one restaurant end in the to performance quarter, we're Colorado Kentucky very subsequent Hamburg,

and unique job new continues operators our culture excellent of development these Chuy's restaurants. instilling to team Our in an do

open the unit to the laid our we profitability out. of through initiatives restaurants between For I driving expect restaurant level to while part improving full growth and seven and sales as balance five continue I've to strategy year new

excited our of units All in for and developments complete markets are year. in the new with of history XXXX our remaining a we're AUVs proven strong to

allow stages to like markets CFO, top to of identify a graphic for the profile will real that more in quarter estate turn have cycle open which a of later will We're markets of up Howie going developed fully we're create building to would forward. us not it tool detailed new believe to use expansion XXXX. our sometime trade for this results. review which I our until going and first markets during any a we tool to a tested we analytics over successful the be and Lastly With new Jon

Jon Howie

the XXX.X to March incremental ended year XX.X first increased total In restaurant and by compared had was primarily unfavorable Eve New XXXX approximately million quarter increase and million last million an from net primarily in sales Comparable of during quarter Year's approximately sales in store in first weeks quarter Revenues Steve. a during the Easter, basis in X.X during first driven to by sales for and XX the quarter benefited growth quarter XX, approximately lease. XX weather average of check the driven Comparable timing the X.X% the increase operating by in X.X%. of restaurant comparable Effective pricing increased the during weekly to XXXX regions same points customers. revenue X.X% X.X% Thanks, restaurant and additional new first Southeast average we XXXX. due quarter. operating Midwest

on XX.X%, to produce in a commodity was revenue largely this favorable expense partially of Turning driven points by by largely increased a offset and basis items, X.X% pricing line cost discussion in pricing selected unfavorable to to of XX dairy. as sales beef percentage inflation, attributable inflation

compensation, Labor to cost offset For labor new comparable our store restaurants. due XX XX.X%. to primarily to increase higher additional to growth, to X.X% attributable a of to million commodity points and $X.X revenue X% for increased higher compared driven expect was The costs due tax increased support lower the markets, and we the based and rates in inflation General basis approximately continue estate first labor X%. increased of to in fees. increase in real inflation rate headcount as of labor and part points in hourly revenue to Occupancy X.X% cost year, percentage approximately in million to year some newly primarily a in XX% to of newer opened stores percentage basis certain higher $X.X of the approximately rental as period last performance training managers. bonuses same by expenses expense our inefficiencies, administrative professional our new by higher in quarter management our at

for year. net review Adjusted balance that, compared was share first quarter the quarter We of sheet debt. $X.X cash to per last our currently X.X of $X.X no have diluted will was closing diluted $X.XX share XXXX the income period diluted $X.XX $X.XX per or $X.XX million compared income the per for our on the last million with or we million related outlook $X.X of ended same for to now quarter year. restaurants the to million XXXX net the on per two $X.X quarter call. summary, during or While incurred discussed share in period million $X.XX same diluted last first we With or the XXXX. which share we of and we in per million cost share of In X.X diluted or

compares year full XXXX adjusted between diluted expect $X.XX per XXXX. and to per earnings $X.XX This share to continue share $X.XX. We of earnings for

Our guidance based assumptions. the is updated on following

We X.X% continue sales growth for X.X%. the comparable of to to year restaurant expect

We expenses expect G&A between million. $XX.X $X.X We $XX.X expect restaurant of million pre-opening $X.X expenses now to million. approximately and

diluted is Our XX.X modeling year. our to weighted to seven million be million approximately restaurants we're shares. X% five of shares plan now to our versus effective now X% maintaining Chuy’s and average previous of expected tax rate annual X% development to to for X% range outstanding We're XX this

that, projected I’ll at continue $XX.X net the turn call expenditures to capital to back allowances With million our and Steve Lastly, of wrap be million. tenant up. over $XX.X improvement to

Steve Hislop

Jon. Thanks,

are our brand in top initiatives is but frequency development achievable Together profitability initiatives As ample foundation improve that and also in we a improve and solid to to our restaurant strategy sustainable opportunity this awareness designed also our have and markets. We newer line we drive look we for ahead believe drive superior not markets operations disciplined to only through ongoing create our value. is the with shareholder believe existing goal growth.

single questions. to Q&A of happy like for to I turn and to day. we would work dedication our the earning their every any employees that we're Before Chuy's to hard all dollar answer With thank

Operator

take question ahead. our Baird. Please Hodes [Operator go from next Mary first with instructions] We will

Mary Hodes

openings Could in units units and the you target. that out if closed you talk back the were class the you a about tracking little internal remaining of there XXXX bit to are from the

Steve Hislop

XXXX with In subtracted out. those forma set of on that still we're pro we kind yes, the tracking

Mary Hodes

more can about a those markets are a Helpful, and said Q beginning at bit then newer seeing more and stage worked how the some just in in are anything what thank marketing know for Chicago but QX you Miami talk you're the in little there. I few going you, QX, of this and initiatives you that markets that on like

Steve Hislop

ran we've a movement and small those a in we the to we again course first really time We for expecting there. digital five period, to and and the much, we're seen then the believe cause tested how throughout one And only and small in social quarter have even six it's a five profile moment quarter that to we a we've track it we in run DC we some stores stores knack, in awareness week of three the and return get company. fourth markets such much have is the more key seen paid some like the again Chicago whole the then

but again more far pleased visits. we bit So store investment need so on the far little with as return to a as run we're

Operator

next O’Cull Chris Please Our will from go with come question Stifel. ahead.

Unidentified Analyst

for on Mitch Chris. Actually

a perspective. on those then can both Texas during how on comment quarter you your comment versus your stores and First trended traffic non-core the the comp April could in performance from you markets and of in

Jon Howie

Let's the had some because as start bad as April, we well April with started switch weather. have we Easter out

impact, the So basis but And and weather shift on believe the we were of about the a points rest with a as to XX Texas. Texas that the basis it far impacting basis basis. continues pleased there that XXX on about as points still so period that’s in to, back was far that continues country Easter April slightly we're trend we there, do adding down well. as after as quarter with is the

was in our Texas definitely better. areas all we of geographic significant However, but sales had slightly momentum

Unidentified Analyst

to this The company Thank program. of is next you, where initiatives. and mentioned to steps labor to you on reduce are level comment development wanted on system store previously and managers I the the you number of some shift wide? initiative then Could that optimization expeditor front

Steve Hislop

key really functions reduction there has management expos further. on our recruiting store the be in can part and will basically but work as to mainly hourlies next of Certain, the business the move really of into more some that side some and parts up will management as is that management serve are positions able be importantly for we moved in some

Unidentified Analyst

plan the I’m the the me the business you of time for off more additional of one on XX. the then bringing at premise available. throughout total that store extend to year catering what curious to base markets the mentioned six Okay have percentage the service to will remainder

Steve Hislop

we're is XX catering doing by supervisory end market how and currently have of result of By that the have the in will and it markets. we a putting market in XX van and

So little XX%. bit more than

Operator

take will go We Andrew question Capital with Markets. instructions] our [Operator BMO from Please ahead. Strelzik next

Unidentified Analyst

Thanks Andrew bit just you about out for was year we've could This current for beef the the taking question. and a is this seen far quarter. hoping called Dan inflation for if so guys little I some today. your given current commodity it environment you that on talk and import view the

hoping didn’t guess raise your you rest commodities add I that commodities for the you're Just some thinking and the but about you I color could forecast year forward. wondering about guess are I going know the how locked of you how on

Steve Hislop

a the are I somewhere where reading X% projected dining where inflation to and projects restaurant be project, casual to few have still in and industry things in X%. they been they the

really mix in pork. in for correct much our And You're the as a mean so which beef doesn’t the are I the that have rest we we don’t of affect locked really year. much far pork

our up well pretty cuts and that So have significantly a cut specific it of the some of so I has mentioned. fajitas, more have specifically that that other with and believe locked the all in was it over with actually same driven type subsequent in was that has meat thin quarter we last X.X% the the than we though previous a increase year. of QX quarter. that lock But down the comfortable the we're up year it over about for rest X.X% or We and

we're seeing So and the X% last a are why down with the of to still so last the that’s half comfortable we prices year little come X%. bit from

Unidentified Analyst

color then benefits that from specifically. I that the start know follow maybe up on and if tested any on just system's to back said is to subject, that labor guess for could back one Great we thanks in I how implementation you some the the me, it, given implementation half additional XXXX, you understand expect as think wondering still going? last that call I management just system could still on labor seeing that’s and of certain being track I provide

Steve Hislop

bugs of I it Well now. have a two we we set there testing working that out is right know expect year still all we're in have in it second but there to and few stores and in half it is place. this few three We still the

Jon Howie

second times its enforcement, and clock that’s so little the people and a that’s is Specifically the key a the of half. we're having what proper in that to tool thing in the and number clock projections what the tool of that’s in getting possibly and using really ready with roll key the will bit be enforcement this on time, at proper off real

Operator

move will Please to Raymond ahead. go We James. next with instructions] [Operator Brian Vaccaro

Brian Vaccaro

lower an but and rate maybe guidance guidance looks to be to $X.XX guidance. other wanted tweak back shifts your just Jon you the there, that within any the circle call guy etcetera tax not offset outlook your if in out the a on inflation to store $X.XX outlook, curious margin G&A so good you was if Just

Jon Howie

that. on tax, The things we different the some biggest brewing is one got obviously

biz XXX,XXX margin, takes expenses kind the and as a say increase standpoint, year-to-date much. gives kind in overall the increase we're only takes bit the opening changed some far the G&A of store The has from As the should of kind nothing the not there the other or there's full will that on up within but of guidance of gives and related to guidance of I trend approximately one bonuses in timing some really which performance may restaurant the changing XXXX. that preopening really is that, the year much really and on a given little is

So trend that but little color as could we on you up more bit. a will progresses that that give

Brian Vaccaro

had around quarter past shift moving the does on sometimes de that's is from about a just on that talking of the does to guess the impact. Sunday I your ago have business in that material I move on and Mayo Saturday the a today, but know a impact Just I that curious we're sort couple of a today was Cinco mutual days quarter impact

Steve Hislop

Saturday a weekend From weekend and utilize it's try to Sunday, still you that. do know to whole we we when the

the impact bigger a versus marketing don't to some day the extra will So we weekend. we actual think shift a be it in but had year, day it when add impact did to much week this you shift it shift

Brian Vaccaro

comparing you And other spend of initiatives marketing the I you then know impacting launched a spend of in your laid type of just messaging business and could how just market that’s prepared you strategies on, some on one, value that Could those behind minute new you value the Steve. a minute your week the remarks, kind versus out last in promotions. initiatives day

Steve Hislop

we customer we're But digital. social that our is with there have that then a of Fajita busy, on five single definitely We're of as we like What and speaking. are supporting day. margaritas and Taco the do paid increased a and Jon's group the profitability we're some doing calculating Wednesdays just that like through and we a is this we're we're counts. dollar do it, way certain dirty in done it's stores daily and it it we special media started pleased doing stores down we as Tuesday every our and

Jon Howie

on clear to And to stores. Brian, select be few just it's that

Steve Hislop

a our mean not is ever prospective. strategy discount overall I to really from company

Brian Vaccaro

to happened of just in that be stores your of percentage small markets. a the in it’s one so today, Okay

Steve Hislop

Yes.

Brian Vaccaro

you. Understood. Thank

Operator

management remarks. the time. to no telephone closing any additional further or this turn back over at I’d like conference And to there for are questions

Steve Hislop

and Jon in will always and we appreciate much. Again, any available you. to have all good And a be continued your I so you Chuy’s. evening. interest questions. answer Thank And thank

Operator

you today’s participation. conclude Thank your conference. for does This

You may now disconnect.

Chuy's (CHUY) 7 May 192019 Q1 Earnings call transcript