CHUY - Earnings call transcript Q4 2021

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Operator

Good day, everyone, and welcome to the Chuy’s Holdings Fourth Quarter 2021 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 open for your 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 like to turn the conference over to Mr. Howie. sir. ahead, go Please

Jon Howie

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

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

Steve Hislop

healthy. you Good I everyone thank quarter and everyone. staying And earnings us hope joining you, John. safe the Thank call on afternoon, today. for is fourth

us the Our have and uncertain to compared top in line are direct solid but did compared by improve tenacity points XXX allowed our efficiencies XX%, grow our the only team we conditions a fourth profitability over COVID-XX our and and to the testament points operating by cost quarter of economic to resilience of results members face continued XXXX. environment. Not basis on year XXX and our focus last to basis a management

restaurant fiscal of after anticipate we continue approximately inflationary basis to basis pressure. sales the current XXXX, factoring even increased we to Comparable over over XXX timing that decreased improvement XXX As negatively Christmas previously, by margin compared points XXXX. in to fourth mentioned XXXX. points to noting the impacted XXXX X.X% of performance our worth compared XXXX and a to It's compared quarter is XX%

a increased Excluding our are compared this and shift, to XXXX. Christmas and fourth pleased would've safety, in in how business we current for operations. environment, our Nevertheless, continue and we the us our to of external comparable our focusing help All nimble with our challenges. key on aspects value trajectory remain we will foundation restaurant strong approximately X.X% are sales pillars manage key provide business convenience, quarter to the of several all,

staffing on on touch a since mind. everyone's me let First, topic it's

culture. something before, are most in rooted our our I've deeply retention As people the is noted asset valuable and

rate a prided We on having be and have historically low to very the ourselves turnover that case. continues

casual XXXX. management lower In some sector, of in turnover best were in fact, our XXXX are and dining the than hourly and pre-pandemic

of team guests fire believe to you'll to single also which when paid and as we during thank efforts your for for quarter day. performing stores. members, out their higher being team, of million every our your leads generally you X.X year's third that recall, stabilize hourly you managers stabilize serve management retention If second the We last our bonuses in a line you

to and we staff new bringing that increase them the hourly they capitalize our creative pay practice. and upon enjoy continue people case To be retention, restaurants. would rewarding for for to to within found have bonus in working We members, team referral ways other with our to further looking our

our come good overall regard environment. development, our Switching we our we back decided combination are items restaurants scratch in month, eight to to at food staffing drinks and continue tough into with menu, this enjoy guests from have believe to starting result, value. a to position tremendous in our To end, to plates. earlier made primarily that bring we labor the current a to many As that

excellent happy new we additions to addition, been in menu past. In are these a of very this consider to profitability bode our good with top-line with be a mix also for month, items the guests more to growth process our and proven operations We our well returns kitchen as which has margin in of our normalized traffic profile little hour and introducing popular complexity levels. which menu should added the

that Turning can to the off-premise spike mix percent we a pleased off-premise, we longer-term. during low spread maintain of with to XX to with seen our quarter, Omicron plus mix we XX% fourth continue have range a the the are while our believe menus the mid-XX% variant, into

We also catering look offerings. in to forward expanding XX with our We markets. XXXX ended catering

of in catering the XXXX. adding add to remaining of by onset end the the to we markets are at postpone system pandemic, of we While the additional catering now planning our

important marketing we on are focused is Another our effort. aspect currently

As you conjunction marketing back the we up during our spend in our the down addition remember, our pandemic. came initiatives new In are with menu ramping slowly XXXX to levels. to marketing

our highlight also program not use DoorDash this and TikTok launch a year. of digital recent introduce with For Other website to include menu influencer initiatives a utilize tool. organic heavily including media, Instagram, an and advertising, YouTube items, video partnership new XXXX, of advertising only recruiting we marketing our will on but new later as digital promotional

new group the connect allow All a of returning to which with audience us better designed are reach and and guests. broader to

quickly development. me our discuss Lastly, let

greater quarter that, negatively the over have impacted results to five half to that XXXX, I'll will Howie, now shortages our issues which and to The turn to For year, chain open ongoing With labor construction between now this of the we in of to restaurants. our CFO, new due Jon majority call the the industrywide. detail. process eight supply discuss planning in be are back fourth

Jon Howie

capacity XXXX. traffic fiscal incremental continued as we for restaurants, revenue was all restaurants as million opened the to to million for growth XX.X% in $X.X year million relax to December fourth well dining in our new same ended .The XXXX increased $XX.X as customer Revenues compared quarter indoor restrictions during of last $XX.X primarily from Steve. XX, to Thanks, quarter the related increase

the XX% weeks during our compared the XXXX, approximately approximately of had in in revenue of to operating were X,XXX XXXX. we quarter of and total, fourth fourth sales XXXX, quarter In approximately XX% total XX.X% off-premise the For XXXX. Comparable customer included average sales weekly XX.X% sales a restaurant and X.X% year, average XXXX. fourth increase restaurant check. XX% quarter and Comparable versus a versus in declined increased increase customers X.X% last in during

However, have fiscal as would timing that's that primarily Steve shift, X.X% to the mentioned And this comparable versus decline due was compared without to earlier, of sales Christmas XXXX. increased XXXX.

partially a as family we management overtime. XXXX. as beef the approximately in of of sales of our first as increased by the look year. cost driven driven chicken to to mix Labor due prior we compared costs commodity labor, XX.X%, compared by as mid higher XX a of basis points ahead, to expenses, XXX commodity in by part anticipated, quarter due X.X%, revenue was sold inflation high XXXX hourly teens in partially decreased inflation by and to offset XX.X%, as the to to Commodity we quarter And percentage XX.X%, revenue increased approximately points basis approximately sales a to higher leverage expect inflation be on to percentage the inflation offset labor decrease of primarily to rate costs. fajita kits during than of slightly primarily Turning originally

improved points compared to XX% we Marketing revenue XX.X%, of costs on to percent expense XX of decreased XX% due first a hourly for basis XXXX restaurant as X%. basis fixed percent of labor XX points operating leverage to sales a cost. revenue to as elevated XXXX. persist, as labor to quarter of As challenges inflation the remain at expect Operating to levels approximately

by timing XXXX. same premiums sales partially as leverage occupancy the administrative expenses Our driven period technical quarter revenue during offset salaries partially from XXX reduced due cost by the million management of X.X% a offset fixed and makeup decreased to result and of on expenses, and performance-based excuse higher million occupancy fourth $X management fiscal during the to basis increased reinstatement in services, last salaries $X.X the percentage fiscal by General higher XXXX year, a percentage points of bonuses to and bonuses rent. -- of as me, in and lower insurance

G&A $X.XX percentage $X.XX diluted summary, compared same the income period XXX.X% in to of year. basis diluted last increased per decreased or X.X%. million XXX $X.X a to the for points per of revenue, XXXX share share to or As million fourth quarter net In $X

fourth closed restaurant per share the the impairment, tax incurred we period the other $X.XX XXXX, compared and fourth of increased share last $X.X million diluted or quarter million or During in $X.X Taking diluted $X.XX into in million year. net of or account, XXXX to quarter that a million income costs. $X.X for same per XXX.X% to $X.X of net adjusted

balance Moving sheet. to our and liquidity

credit our equivalents, cash $XXX.X of facility. in and end $XX million the we and the availability As had of from million of no debt quarter, cash

During of of of common total, for common a total $X.X million. stock we the our our fourth of stock approximately quarter purchased repurchased we shares of XXXX, for In a XXX,XXX for total year of total shares of an the million. the XXXX. repurchased fourth shares of we $XX.X of for quarter XXXX a XXX,XXX to common million $XX additional Subsequent stock our full XXX,XXX

February XX, XX.X million we repurchase As under [XXXX], XXXX. remaining program, XX, of had on our approximately expire December will which $XX million

a for are that Lastly, guidance, position hope give some will metrics be our you I we not usual helpful. will we in to XXXX still while provide fiscal financial directional

open in X in XXXX. mentioned earlier, to expecting Steve As restaurants now to we are between new X

to allowances approximately net We million be million. to expenditures, tenant $XX improvement of capital $XX expect net

million call XXXX. restaurant With are lastly, million be And over our pre-opening the expecting effective to expected back approximately expenses rate to to to annual XX% approximately $X I'll Steve. to turn XX%. in We that, is be $X tax

Steve Hislop

Thanks, Jon.

from best what the different continue Our scratch offer made to focus members through team continued on focus quality from by external high on and food a manage cost value tremendous talent to best and Chuy’s retaining challenges operating efficiencies. do various at and management makes drinks their

hard I'm you. members, working strong positioned and each With questions. are fiscal well we're Our continue of would've work we remains proud none be Thank day. this underlying possible to answer been XXXX. to the them team alongside in dedication of business any recovery happy of Again, our and every that, without our and to single

Operator

we Instructions] go first Baird. to [Operator And of Hodes will Mary

Mary Hodes

question. from Thanks been there you weekly Good for taking sales slowdown tracking I how QX in update comps understanding QX the share or average Omicron? on afternoon. a that an first, would willing have might mid be guess, to-date are to

Jon Howie

you Omicron our in what Yes. markets tell obviously other the Mary. weather. was very was cloudy but It's an I issue, issue all and

we get there. like I'd lost that days related quarter. during to So mean, first in over the to I million $X a out door weather closed

murky other, other to really any So very given Omicron I that. the give you than guess, statistics it's and weather

Jon Howie

Yes.

Mary Hodes

the on And and into openings? in achieve development that the then on the current you seeing you of costs it. are guess, class play construction what does on expect Got returns development, I how to

Steve Hislop

take I'll the side. front

quarter, You one -- probably of why that think now -- we're year. right can take costs a increase it definitely them probably and return. there to near we're seeing we It's the of in construction Hopefully end the the rest to across I will and little can the we'll have some reduce the have that's costs out the the now, back but of as bit, second the in be right in XX% XX% pushed board.

Jon Howie

Yes.

doors. the Steve going as little what opening of returns year where -- like margins, are this lower a our target than these little a costs. some construction be far to kind because in higher But the we the have past we As probably of getting said, just than margins expect we're the

they will than XX%. little targeted So our to a XX% be lower

Mary Hodes

it. Got

the about Okay. be, pre-COVID. how you Is you should XXXX there in you're G&A grow years? G&A of in to on philosophically, either in where just think revenue XXXX where been how XXXX or dimensionalize how that ratio pre-COVID ratio XXXX a one elevated thinking were has last way trajectory obviously you the to versus relative about would were And then relative and upcoming just and to

Jon Howie

-- of but as Yes, growth growing, to get as you we grown store to as much, I to mean, get XX% limit like the again, back really percentage G&A to know, growth. of back that we growing our we haven't about we

back So what to. think we'll I get that's

Operator

Andrew hear BMO. from And next we'll Strelzik of

Andrew Strelzik

you I all? you lot quarter, volatility. expecting last outlook. Obviously And guess to that inflationary Understand the is Or trend to there's to XX% I first going the range. I ask to kind year? think at the changed quarter a about wanted of be How are ‘XX in of be about that throughout inflation expected you're outlook said thinking to Has pricing? XX% margins that restaurant in how you elevated.

Jon Howie

extent of that kind would it'd mean, right. range, looking to we I at year. that you're could we range level. No, Like in meet of both the think and in price are be numbers increase I we call, didn't absolutely in we possibly cost saying labor We the start over we -- on of that the said kind in later a and XXXX looking I was sales at the mid-teen inflation think

of subsequent So, that's quarter, in quarter, Because to said, the a increased. in fourth were what QX that's right But numbers, inflation kind the being we But X% already right, quarter, mean, right? about over in commodity. of lot are we're we're only with that here only first increasing being the of commodities our I in with kind crazy going that said, now. in fourth

of And the at chart you've oil of some lately all-time But off the So for high. mayonnaise other but we towards still soybeans contract its contract now, soybean if the we oil. down our to we latter half charts, things. come at which going expect looked chicken them Oils, and a year. is it's right oil, soybean

off that's charts. the going So

or We year half inflation our the that pretty in the we expecting half beef of first hopefully are at so year, it’s numbers. we'll right But but locked back back we're pricing Andrew thought through prices. high first some the better now. think in get and half better that's quarter the to get that the just we floating with two,

Andrew Strelzik

about and Thanks. sales I you ask on anything an Understanding stands quarter, you for first maybe about XX% I impact in then today? some the on you thing to staffing. looking it to where now numbers, favorable may having quarter, other but have mentioned last going now wanted as we And I the challenges, update just forward? And believe the some but turnover that on sit misunderstood were and where was said you XX% earlier do think was,

Steve Hislop

of right and during been really With out as still But bad, week, still so a moving forward we to around it’s we pretty about. XX%, lot we're of we're think get most that better than better Omicron felt good starting to we're which Omicron this pretty but there, ways I go. got

Operator

[Operator next Chris Instructions] we'll O'Cull move of And to Stifel.

Chris O'Cull

a to if impact be I'm the also you’re staffing well. or can had another I had as any any you'd I at. had Because of to mentioned related question you on -- talk little if satisfaction? curious, guest know, I'm you the XX% about, had just guest wondering Steve, just So service it's bit And the it's to experience. level staffing you've like if implications maybe

Steve Hislop

or is, a that’s preach we the think dining our separately you living thing do that's with what -- world Chris. is pandemic, question, with that this to go I opening big whether great be The I key in thing. things through us it that we're rooms, then can the have, for that a everybody you you started up to one and what did

tables, five all I'm for So, XX that's we that what sitting have Chris, five up, table show servers is stations that does if means mean only if means. and that

not any way to a it's going ever your unacceptable to keep table they because wait, you're door, table, wait at the standards going at are. at the you're to If

the for that's So, us. key

a And Yelp. far add better of our it so, what down, eating is, on waits. does sitting been But little bit as they've the as you are do environment at of they than the scores tables, on

Chris O'Cull

that can to to as you you of Okay. back achieve staffing do sales? that get labor you XX% percentage still That's range if And a helpful. Jon, were expect, then in for XXXX, you XX% that level cost that

Jon Howie

in But XXXX with business, what do, at our to again probably and XXXX. not we do. we we get how were staffing be to to we're back because going yes, XX% that's to levels, of XX% We the Chris, looking changed

Chris O'Cull

that's you your today, 'XX? were And XX% so relative not to the where to you levels par quoted, in

Steve Hislop

Yes, sir.

Jon Howie

Correct.

Chris O'Cull

Okay.

shake average Okay. And the it question. kind check Because in out of to in expect third. quarter? the the I then, the the sequential it you drove think just where here What of one negative do for first improvement in quarter? the And

Jon Howie

Yes.

is, kit. of fajita numbers the over the kind you're comparable did we deal when ran at some -- think we was we over more looking I ran what

wasn't sense? Does as decrease So, mix the it great the is was past. make that what as a

Chris O'Cull

think I so.

Jon Howie

the makes we were it the really as increase those driving So dine-in, cost that kits less. fajita

so, starting dramatic then or really a And to-go-only the a we really perspective. over numbers those, to in dine it roll we are when are that impact, now rolling had started but over from comparable more

And so, it wasn't as dramatic.

And up so, drove it bit. little a

Operator

The We'll Company. next Benchmark Todd to of Brooks go

Todd Brooks

talk of first know questions you. to Hey. talk these. Omicron, ups. Good where that quick afternoon, Kind We of before couple versus impact. year-to-date kind impact kind during for December was trending to I of noisy you the guys. Can touched month? A both of up about it's about on started ramp 'XX follow half of maybe

Jon Howie

Okay. Yes.

like and just we in sales XX plus Christmas then then period for let and you, give you then had that So to in a comp also X% you running the in caused you're were the had XX, Omicron XX, me period X.X%, period XXXX. positive when shift XX. that And positive comparing

So don't numbers thought mix-match down for period drove really you. XX? that -- the -- but see last that have Christmas to it, what three there, of get number weeks two I it. to I'll was I year, here. are had Let’s the that, kind along that with really it I but of

Todd Brooks

of Okay. Great. then talk about impact. the could And Omicron you the nature

or that talked a percent are not a per during the standpoint? how the you was this demand rolling tables business that If level? issue Is issue demand of the customer period? we're we're versus responding you related labor five customers attributing constraint from to seat about, staffing what impact were server, a this it Steve, a during So availability above going

Steve Hislop

bit It’s but Labor labor availability. little both, a of availability?

Todd Brooks

Omicron Even about XX% September a or you, just did to as of applicant as muddy in you side. feel I on maybe open much bit then yet, flow, have you now October the end number staffing seeing do applicant really know for peers though from haven't you're Okay, one of positions. the little were far applicants about other front ramp they number flow? Xx level the the how better inflected probably on ability the and some but great. And the Xx maybe for given talked what up that seeing

Steve Hislop

up Xx, two little don't last a as the applicant markets, that X%, flow in pickup it's been or sales. a an seen I as The the lessening -- our say some weeks specifically I'd applicant seen definitely Omicron in know we've over flow we've of XX% walking I is if in there’s virus more seen traffic have the definitely lot but of

Todd Brooks

the So of to if to here of new is staffed I’m to which think does at from pars? fiscal what XX% take of levels trying fully kind to slope, that staffing, mid-February current it XX% get the in of ‘XX

Steve Hislop

that is Yes. date that on. Again, it’s murky is a little working we're thing happen one To something our bit when give going we're number for that's to working, exact me. you

Jon Howie

in were we of and Christmas just down X.X%, that. the impact because to Omicron, Todd, had the And period of Christmas X.X% XX, because answer but X.X% a of

XX kind running, see can was a up in period running of about were and you So X% we XX. where

impact of the gives December. kind that so will in Omicron differential if kind you you And of the

Operator

any comments. closing no call over would with now other questions for queue, to Hislop the additional in like Steve And to or turn the I

Steve Hislop

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

Operator

your participation. Thank And so you for today's this call. concludes

now You may disconnect.

Chuy's (CHUY) 18 Feb 222021 Q4 Earnings call transcript