CHUY - Earnings call transcript Q4 2019

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Operator

Good day, everyone, and welcome to the Chuy's Holdings Fourth Quarter 2019 Earnings Conference Call. Today's call is being recorded. At this time, all participants have been placed in a listen-only mode and the lines will be opened for your questions following the presentation. [Operator Instructions] 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’ll turn the conference over to Mr. Howie. sir. ahead, go Please

Jon Howie

at and our By release. fourth also our it operator, Investors have If everyone access can website on found to quarter be in good you, the now, section. afternoon. should not, www.chuys.com Thank XXXX earnings

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

the way, With to that the of Steve. out to I'd call over turn like

Steve Hislop

Good fourth the strong call and Thank you, ended our on joining XXXX. profit we to a posted We quarter with execute our afternoon, at initiatives out onset for a comparable restaurant X.X% the positive grew you of we level, high Jon. our we continued fourth of year by laid sales revenues the performance today. us as quarter consecutive thank quarter On and and seventh everyone sales.

over leveraged quarter, adjusted solid successfully in operating the More growth This improvement level during restaurant our operating income importantly our margin. cost net despite cost continued posted of in we restaurant and a purchases XX%. results

that we review we given accomplish Chuy's XXXX. plan these enter clearly initiatives working XXXX. solid a Our what and footing initiatives in to and as let's With are

used partner, space. strategy. start have Most aware marketing XXXX of we testing ground the our at with marketing digital XXXX enlisted in Scott especially and a Madison the media we of most as and of Kelly end that Let's you

which improved included been social to media outreach experience and advertising recognition has digital location-based and success upon build paid and XXXX. intend paid in sales brand campaigns Our nationwide we have mobile stronger as the search, productive we

marketing more approach strategic. to based and from XXXX be be our will last learnings spending our year, targeted While on will similar our

that to digital utilize Chuy's on every continue our the our addition end focusing To we by marketing quarter. in will wide approach in outreach, national twofold XXXX to strategy to markets

first with will area heritage The where a recognition. solid stores we include have in already market brand several the

guests market by local In billboards, see platforms be use market we promotional second boards, both educate feel the Chuy's Waze, paid paid as radio, the better these where social emerging supported experience. of well markets, our search Hulu, as will some YouTube, of The sponsorships. on advertising an you'll outdoor such as digital need event traditional throughout to increase an

will quarter, first attention our Dallas DC focus the and For on Washington we markets.

Moving in on to technology. our investment

closely a behavior. intelligence market to platform allow ability offerings provider our as this customer specific will targeted quarter, to In management we working with opt-in utilize continue well table our to as customer our an our to to implement and us as During loyalty fourth future spending track the customers improve our Wi-Fi to the we also will efficiency system program front-of-the-house through serve services. personalized months, gather foundation of coming the intelligence for experience. Together our be new more

to our customer in are pieces of technology experience restaurants. we our two testing enhance addition, In also new

a a experience. believe extended volume restaurants. wait table at of We great our are is this The at lot device testing dining potentially from first one currently relieve pay a following ticket time could device frustration an high that for taking of we one the the

floor more our involves the second goal hospitality keeping enhance guest on to improve with waiters by device Our ordering to our the engagement. test a handheld of and the use waitresses

these been has still very both favorable. While stages, of far in early so feedback are the devices

to strategy. our off-premise Turning

successfully platform as continue initiatives well out rolled catering quarter. our perform in two during to Our we the new fourth markets

in $X.X of component our the dedicated of new A previous $X.X catering in compared quarter, to revenue to addition the year's has quarter. million contributed million For manager a for catering catering date the approximately key success market. been each

For year. each markets XX of would markets the continue platform in for end with of XXXX, we to the the reaching two catering rollout by quarter goal

of aspect is third-party our Another delivery. optimist offering

would our the agreement completely an first with be delivery service did we the benefits, orders. quarter, include the expect will end a fourth third-party these delivery which out of reduce of During cost partnership become previously quarter of delivery. year restaurants we provider system-wide the DoorDash overall we to not signed believe to this other rolled have that XX DoorDash by this Among the

food customers. However, our our to improving quality mind packaging reinvesting as delivered in gets on plan from we and keep to-go of ensure portion savings our delivery that a the to freshness it the fees and of to

of the dispatch they dispatch online by also feedback The dispatch strategy is option marketing which be for our these Both efficiency quarter. our company's website. Based provider's on from we of system-wide locations by order providing our complete will and process first us which have and once versus have positive synchronize for accuracy to begun test launched we as end allow out supported and delivery a last the third-party sales, from to DoorDash website aspect fully rolling should expect system-wide. as improved a an delivering off-premise ordering well

new openings plan. turn our me one to Polaris, successfully during quarter, our six let Columbus bringing Now to We near fourth the opened development restaurants. restaurant XXXX Ohio,

All with of proven markets in are AUVs. existing located which

during a to made fourth restaurants decision quarter. the close four also We

seven drive markets. restaurant our opened unit sales the which end, For development new to will to and primarily XXXX, open five expect restaurants a with in we in to includes that month. Frisco, initiatives continue restaurant existing improve This To profitability. new to balance last Texas we

in it tool plan with analytics XXXX beyond. utilize real our and new estate the pipeline are making test to also We development our progress in for

to our I'd more call quarter review over to Howie for like detailed With results. turn of Jon the second the CFO, that

Jon Howie

increased as offset during are sales loss closures decrease in weeks growth. were just incremental due XXth, year, $XXX The weeks, of XX These to in the same incremental XX was million revenue fourth XXXX store increases new $X.X Thanks in to as additional million revenue well ended operating by as mentioned. restaurant revenue Steve. decrease increase year. compared Revenues by the the to from restaurants partially operating for last an from primarily in a in not sales quarter non-comparable a as store included the as driven the result that December million quarter the comparable $XX.X well of

included X.X%. X.X% we total, X,XXX offset Comparable increase approximately pricing during partially increased the during was customers. average a check, XXXX. In fourth decrease operating in a restaurant Effective approximately quarter sales the had X% in weekly the weeks for fourth during by quarter and average X.X% quarter

Turning the lower approximately Labor to XX.X% a expecting openings Based new for inflation discussion unfavorable for X%. efficiency in pricing a to to by offset and items, decreased produce, cost increased labor chicken decreased cost approximately XX.X%, favorable XXX beef X.X% inflation as commodity partially due expense quarter expense basis grocery, X.X% of line basis managers. of on points and are training of pricing. selected to revenue dairy menu sales at trends, current new fourth revenue driven was All-in-all, percentage as XX and of and points price primarily XXXX. store to for now a percentage we leverage, commodity by

a marketing year's Occupancy sales, cost stores to revenue was as expense by due approximately Marketing decreased leverage our newly last at occupancy cost on on as to by X% our basis percentage national partially and restaurants of points offset hourly fixed to markets. points service basis higher a to primarily XX compared of increased XX quarter initiatives. expense X.X% by cost comparable labor partially X.X%. in basis certain our higher of to This higher as costs offset level revenue XX delivery Operating opened driven points larger rate insurance rental revenue increased we percentage inflation percentage charges. as XX.X%

bonuses million $X.X fourth from administrative driven the in quarter in primarily $X.X performance-based quarter year, salaries. increased million and last by and increase the in General expenses same to

of In or compared per $X.X the fourth of million $X.XX same to was income net summary, $X.X quarter diluted period per or in $X.XX share net loss share diluted for XXXX million last the year.

restaurant During impairment to net share offset the closed fourth in legal quarter, of as charge, of we settlements restaurant closure the closed approximately cost million diluted million costs. quarter non-cash related million $X.X well $X.X $X.X an recorded the and impairment restaurants during four This of as XXXX, included charge of per by $X.XX of or underperforming tax.

diluted $X.X million XXXX $X.XX in on $XX.X share million in net sheet income no for adjusted $X.XX fourth period debt. account to We net XX.X% income XX.X% adjusted the same per ended into million that balance per increased last $X.X with and with the quarter to from quarter Taking year. increased share the cash from of the

Now diluted We per This a $X.XX. to compares XXXX adjusted diluted $X.XX our of share let's earnings earnings XXXX currently adjusted dollar. share outlook. of expect discuss and $X.XX between per

noted during earnings restaurants during reduce we accounted we fourth as XXXX the for earlier, Additionally, closed and share. in quarter. four by million diluted $X.XX our per revenues approximately $X.X approximately These restaurants

is the assumptions. guidance upon based our updated Now following

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

pre-opening million million. approximately of We expect $X.X restaurant expenses $X.X to

$XX.X of between expenses expect million. G&A We to $XX.X million

are expected XX.X modeling between of X% weighted is Our effective to to we annual rate average diluted million tax million outstanding And to XX X%. shares. shares range

And open We $XX tenant restaurants improvement expenditures seven net projected $XX are allowances year. planning lastly, new is million. to this between of capital million and five to our

turn Steve I'll to With the over back up. to that call wrap

Steve Hislop

Jon. Thanks

capitalize health pleased service initiatives and focused our will made put strengthen will on food taking care We to believe place XXXX our from scratch forward we've are to that look and of this we through performance. our quality overall customers drinks. exceptional enter We and remain our momentum with the of on in high and continue as the and business

differentiated employees new to returning and both their truly I'd our for making like dedication Lastly, all work Chuy's guests. a our of for tireless thank and experience and

any With to that happy we're answer Thank questions. you.

Operator

Instructions] [Operator

from your Please with proceed is question from first Setyan Our question. Nick Securities. Wedbush

NickSetyan

Thank a on Congrats year. fantastic you.

you would January, - on guidance, quarter-to-date incremental February have wouldn't any comp given guidance detail You would X% warrant the helpful. if not to probably but didn't be kind that X% of comp

SteveHislop

Yes.

January, As quarter far continued February, our fourth as and third trends. it

NickSetyan

customer in fears? kind related seen behavior change near-term due Have Okay. any coronavirus you a to of

SteveHislop

Not yet the that or anything not over and last so. we've month yet in seen

NickSetyan

all short-term it's science, see if but you And of estimate they if Jon, think don't hourly even variable? variable like sales. variable? types some come going continue to kind that part did would employees work? your you, of cost this is, we know I What exact demand in slowdown XX%-XX% not short-term variable decline scenario? Is about food a should your are? you Is costs to of we Are labor cost of How paying

JonHowie

I fixed. and I XX%-XX% that I front mean basically are in of talking the don't you're of me, probably our rest about but have say variable probably, would costs

So the of don't and of you're precautions and about but mean obviously variable some but is those But foresee some hopefully taking that kind we're costs just this scenario we will would We're that there obviously I yet. mean talking correct become concern I some there. given seeing fixed, waiting itself. out

Operator

Chris from from with is your Please question O'Cull next question. proceed Stifel. Our

ChrisO'Cull

Thanks. Hi, guys.

slower Just that then, so a influenced usage seen hasn't isn't change so I that locations have you perceptible comp has there or that the just like but hotspots your called in be located know most sales speak follow-up anything could a you conference system or been by trends been your slower on to? impacted, where can in any tourism overall of virus

SteveHislop

might say there. early have, We still the high it's we but it be have, to drive

so really. of the into that's Spring as or anything really not got Breaks haven't now yet We and

ChrisO'Cull

marketing Okay. it start then guys little national just on hoping And on makes was mediums. sense the I more spending company level elaborate why a for could you bit to

SteveHislop

social on and just, so and stores in paid And covering just basically participating social. that's nationals We're we're single digital just all digital. in every XX where are. the the what my We're only calling paid the stores states that it's talking I'm

JonHowie

There's Chris. nothing that's we all did new. And year what last

ChrisO'Cull

same what's sales what built when delivery your into store with And comp partner? to as comes Jon, then, impact DoorDash out Okay. - an it rolling is guidance it what exclusive or

JonHowie

we that XX the built have don't since delivery different We than want now other all I make it many the transition Well, so right providers. to and much stores. really so into have

that can And we've delivery. to basis those got points are XX stores probably that so figure you XXX the adding in

ChrisO'Cull

stores Are concerned that sales you the other about seeing any because at of delivery would removing be all kind providers that? the weakness of

JonHowie

it for XX far the that as make we controls can going side by happen. combat of that And with Well, we've behind so got lot days. sure some place marketing as to in side doesn't we're that DoorDash, a

kind written on we good. another in the DoorDash if we've the provider that ahead back the of got So the agreement the bring decrease were in Also is or go DoorDash, bring transition, and other provider. to service we something service can

in not so going percent. we're a situation hopefully, that And where decrease

Operator

question is from Baird. Hodes your question. proceed next Our with from Please Mary

MaryHodes

Good a on the couple afternoon. the outlook. I Thanks taking just for had question. comp

it think about X% recently I that structure would flat to hold you mentioned in take First, comp the XXXX. a margin

I first has off, So guess, relationship changed? that

SteveHislop

a of with stores inflation X% mean with hasn't us higher in we're if it base. year. And we no, bit on our the We in about Well, it we're last number lower the opened cost changed, revenue did of so labor little decreased I may well a management year sales, but there under get same as expecting little this training. a continued focus as

So little a leverage in see could some labor. leverage we

the not this to see through see being year, saw this a position but could You're we leverage going still flat that year. labor leveraged we

MaryHodes

That's helpful. Thank you.

previously growth XXXX in think when potentially I you've resuming you talked I about eSite a the in also finalized. pace faster unit got had

mind? XXXX you is you that piece still in that plan the pipeline together start As that have to

SteveHislop

in and to counts need jump saying. The key the saw going I return increased for I And to right counts it And I've year I'm accelerate around as down. the what we increasing see were been the fourth consistent the guest of with think is XXXX. that's pipeline I X% quarter. in guest before similar very you a in really say finished

get So assume couple on double you'll a the a customer, up I into I and digits and then still as probably low estate us real see see see for quarters us you'll openings.

Operator

is proceed question. Brooks Our with CL question from your & Todd Associates. King next from Please

ToddBrooks

Hey, guys. Congratulations nice quarter. on

the after that unit's just out and came and team the all First question hoping storms in Tennessee the okay tornadoes. the

SteveHislop

and a the stores our care most far, saying Well, taking important that our luckily. all They folks and luckily for And running. had employees and thank are us bit It that's luckily we we're thing of but by them, you was for affected. a our couple the of of there. and north is all stores were actually little sound up are safe not,

ToddBrooks

That's Great. hear. to great

versus what in the Just looking the a quick end high the follow-up, the that $X low range couple drives at of G&A the guidance range end Jon? million year,

JonHowie

We we fluctuate. exceed bonus. target bonus whether target don't or it target the upon budget Really and the our exceed basically based can

ToddBrooks

in kind kind parallel. Okay. the behavior delivery Great. something of middle And then brand? other party wondering for question, indicator out percent behavior I Is it third existence the all the for demand? Is of migration and kind changes where plays delivery you're watching? delivered concept. of the or be orders coronavirus of headed your with Is that's that of delivery how But customer weak of we're may and we're the here customer how of know as the sitting

SteveHislop

We've week is been sales What what week is been of the even we've of started, basis digitally. yes; go that digital XX% off-premise. seeing we've our we're constantly go to to seen total XX%-XX% been to have it's looking to go saying art at exceeding we're on

will stores that go sale. as we're so Like expect XX I especially go seeing that well said And a delivery up the we don't with that up go percent currently earlier have up we delivery. with that of as it would to

mean in I right good probably yes, people at of that at So, look home. indicator we a staying and are that's you to continue

Operator

Raymond is from Dan Please question. your James. question with from next proceed Our Docherty

DanDocherty

said walk you the and for to X.X% XXXX. your in of for pricing are commodity this on evening. Dan your takes major some puts How question seeing to of what you're inflation contracted you what XXXX? Brian I it's Hi, Could think you and guys items? X.X% Quick on for plans are

SteveHislop

Yes. little for what flat thing beef locked I little most is quarters expecting is seen produce, in a continues it's in part biggest seen which We're the then the a last wildcard years. the last It's few that to saw especially and mean to year. the up. but dairy - we've than the higher we're first go in in produce higher we've

DanDocherty

follow-up then Great. did Okay. I'm something? sorry And one question. you say

SteveHislop

Yes.

- February didn't which our your the for of the answer We take for pricing thing. year. approximately one of year is X% second in period and we around Just beginning the it's

DanDocherty

provide in Okay. Great. on expectations then strong labor, then a detail have and Thank you. And seen leverage break quarters. drivers about XXXX follow-up more in you that leverage on recent guys you the into down your Could little line?

JonHowie

Sure.

take as look improvement our points. this hourly XX I've kind basis some leverage, stores. or hourly and we've seen a of is saying as new - you not seen been If decrease quarter opening we've hourly But what at well about on

we though XX one is biggest piece That's total points points. management Our and significant or then about decrease. a basis training managers which XX basis is in the And in about were pars appropriate XX we've to those continue managers at look sales down make of or and manager as up the location. to fluctuate amount the each at got right sure our size

SteveHislop

we're as we how to labor at expect we line maybe on this. the remain we little to going at sale for right obviously I looking rest leverage the of move probably of mean as where it bit but forward a XXXX, it's on it And the time it's XXXX. for

that. Sorry I forgot to answer

JonHowie

current that see basis could We're to XX we But we expecting not saw the XX points. in the huge year. leverage

Operator

question. Andrew we Please BMO Strelzik from And Markets. Capital with your have proceed

AndrewStrelzik

Hey. questions A for afternoon. couple me. Good

more thought ago? thinking the one year all. of consistent over kind as or in the to a run keep of been it you that trend And higher longer last business price to to range, Do you down pricing you has able The would a X% two years so. you're one traffic kind duration higher greater as changed absorb have power the first levels maybe a than ability have pricing your around over that believe of

SteveHislop

probably XX that were really think time on year want don't casual to market, and the in than the higher we value prior what were within X What that for to this seeing I we're X average the and last I the years prior we lot Over a are? an X% while averaging no. to dining of that period so. do it's Oh we years in do is even of then the to you and something over marketplace what would and currently be the would the - there. X.X% this year,

spreads larger getting years our and actually all value the over So in markets. our

just as now of we for So markets the right that size last two years. our looking we're for at

But we to see move we comfortable as range X% - we're in forward. in X.X% quarter still probably our the

AndrewStrelzik

off, cycle Okay. cycled and consistent on is the you you're at in basis, you to marketing kind awareness? or you've basis, across consistent maintained to of point more quarterly advertising - revisit kind do you're as terms off I notice understand where side, going have And you've that to some Or to that of seen the cycling as of marketing it's you markets running of the levels some a a markets have been on relatively those that you've have start those national of but able performance on kind markets? stay of

SteveHislop

we're search, Now social paid doing the paid always one a that's is one market the key and forget heritage and thing market, digital, we so forth new paid when have don't all for still constantly of these kind us running. at

a awareness that in at six a bump giving markets. we're in little never time a We're we off. there for really basically run those So months just

off not don't any So - we've those. have drop we on seen

AndrewStrelzik

last the that then about kind me closures I'm clean Did rate thinking wondering for fourth impacted closures quarter much the quarter going closure these just how those the how well. one margins forward. you're the up? in wondering as And And Okay. of

JonHowie

said, the and store the for I As points far level you margins as overall closures the basis on impacting margin. year margins, about look XX the it about $X.XX affected the was if a at for like year the impact it

SteveHislop

bottom for and as as continue bottom at a take as to standpoint bit it markets and at XX% evaluate rule move to that constantly resource make those XX%. sure sense makes stores with obviously us going a because from look, always human I financial standpoint our And on always, a far a we thumb little do just times. a our are of look And

Operator

And is James. next Raymond our question from Docherty Please Dan with from proceed question. your

DanDocherty

guys. Hi,

of dine-in? the prices on on terms is kind in delivery. you on will are of menu question versus DoorDash quick thoughts What Could channels you'll the us price them? different your of a how what let and know of kind Just expectation sort the be whether higher channel

SteveHislop

Dan. Thanks

kind to period prices platform prices to Our We on those the increase currently that charges. offset and plan of third menu help those we prices that is increase the some increase as of delivery delivery for year. to

In stores the was XX we the that those to door we So I want back more on delivery, somewhat so And prices are there. Dan, for stores those a increased margin that actually to out it platform. little new even started the follow neutral up. those

management think you management training The the XX I things manager down. points was- then and labor. XX in was some I wrong down. in points basis hourly basis points the that was XX basis The of down piece was gave

So that your equals XXX.

about Sorry that.

DanDocherty

notice, share doesn't XXXX. look share on great, new question have any it is guidance And you authorization the one account Okay, you. repurchases but more like then in share your thank which repurchases for embedded

you about share guys Just curious the through repurchases year? thinking we as how go are

JonHowie

Yes.

those buy put year, you now. if an in be right a opportune buying just We which But in it because think it'd approach to guidance to in have opportunistic time a that to that recover going we're this quiet take in to a the never were was period. very trying we're

three and open can the release. weeks we So the we window it do after only is when

we we program that XXBX-X year purchases. anything our those got currently place that. a forecast have will put for probably And don't this in with so in have will But help

the end call remarks. now the have over reached session. Hislop for we closing will to Steve And the turn of question-and-answer I the And

Steve Hislop

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

Operator

This lines participation. you disconnect you time. concludes today's And conference. Thank your this at may for your

Steve Hislop	President and Chief Executive Officer
Jon Howie	Vice President and Chief Financial Officer
Nick Setyan	Wedbush Securities
Chris O'Cull	Stifel
Mary Hodes	Robert W. Baird & Co.
Todd Brooks	CL King & Associates.
Dan Docherty	Raymond James & Associates, Inc
Andrew Strelzik	BMO Capital Markets

Chuy's (CHUY) 5 Mar 202019 Q4 Earnings call transcript