CHUY - Earnings call transcript Q1 2022

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Operator

Good day, everyone, and welcome to the Chuy’s Holdings Inc.’s First Quarter 2022 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. At this time, I’d like to turn the conference over to Mr. Howie. sir. ahead, go Please

Jon Howie

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

Steve Hislop

XXXX. Jon. everyone results our Overall, and on for us call joining earnings quarter quarter first were afternoon, you, first of the pleased with we Good for thank our you Thank today.

rebound margin line of points variant While our on XXXX. cost margin the is extended weather, into basis in resulted XXXX form operating we’re the of positive is last to the to which basis environment, challenges, compared as year continued XXX saw points second ongoing sales in of improvement XXX focus with -- includes Despite in points XXX efficiencies these quarter, to to This compared rebound the comparable XXXX. and in expectation and and faced of improvements XXXX. inflationary stated compared basis as store April level well toward weather management the COVID to we we’re our of external severe sales Omicron and in with This date. both challenges winter pleased March the quarter end

a pleased which levels, we’re will in about improvement level talk from pressure point, with store margins detail. pre-pandemic our be Jon more the While to continues inflation in

of which our many from in customers, exceeds As drinks scratch value we most our know, you pride fresh at providing believe made an to of food ourselves peers. incredible and we

very As we price with have our result, a historically been strategic increases.

In navigate only which fact, years, we an X taken price in pricing between us substantial the X.X the armed environment. inflationary with we’ve has of current XX as average we a believe power increases last and

a our of the another to For we of between which retaining maintaining guests, restaurant value proposition our be still us quarter, and plan peers. below our most maintain for on we margin third during the to about strong balance will taking X.X% X% improvement level believe increase price

pillars value, against they have to key to Turning in to be of team our provide operations, restaurant executing with fully come guests unique expect. safety, the our convenience, our and engaged continues Chuy’s experience

However, our work is far done. from

key our current navigate we As off-premise, marketing environment, certain staffing, the including efforts. development, will menu remain of on aspects our focused and we business inflationary

that’s labor current and team believe past, members initiatives enjoy they team reasons providing best members said emphasis to are managers. our such high maintain of the one have our why that and and efforts with, hire a put in we end, To staffing staffing our asset bonuses I the continued to hourly our most in the put will bringing our paying referral we despite tough place people managers people in valuable we to As us we for levels bonuses working new retention environment. retain from our have for our the to in the

XXXX. we mix beyond. in pleased a sales dollar We rooms remained On basis, can our consistent believe and we’re off-premise, terms since in we In a mix our have off-premise low the to XX% off-premise mid our quarter. of during XXXX XX% with first maintain dining reopened

off-premise catering. Another our is of aspect

in available of system year. are attractive by catering we are our wide the As markets catering we last the resuming mentioned call, our expansion end have new to to and

a marketing We not our highlight are media initiatives and also during new items, up recruiting the ramping on quarter a tool. emphasis heavy it utilize also menu but with introduce only digital to as

of will Our promotional DoorDash. digital programs partnerships efforts with advertising video use Instagram, on influencer advertising, include the TikTok, and organic YouTube

which reach us connect year, We better group are guests. a new audience launch and later also to to to broader website and returning excited our with is allow this designed new both

decrease to new plan between now a we guidance the construction by six supply to chain of eight restaurants, and shortages. XXXX, restaurants previous driven in Finally, from labor four open disruptions to five

of majority to back in that, greater discuss quarter these I development first will half these the detail. now our Howie, year CFO, of and of believe the With some in results move the reminder, a of the may As our our we disruptions, is into restaurants to Jon call over because XXXX. turn

Jon Howie

Thanks increased subsequent relax as continue capacity of our XXXX. was The all to Steve. restrictions last the quarter XX.X% million, restaurants, to to to indoor for of million a increase revenue in new as $XXX.X as growth same million the dining from compared $XX.X we for restaurants first incremental related $X.X well quarter mandated opened quarter the to Revenues first primarily year. in customer traffic,

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

performance February, over most points. severe which approximately January mentioned Omicron negatively outbreak impacted impacted of the part during across variant US, to by earlier, the comparisons Steve heavily our central As addition of XXX winter weather XXXX and early in basis

latter in pleased which part remain of and to April positive beginning the and March sales we compared to includes in XXXX. improving the comparable trends sales date, into the and seen However, first last year we with quarter second quarter the have

basis to commodity across fresh a during levels expect our sales basket condition, as We commodity of to well restaurants of as Turning due XX.X%, increased points inflation and of due quarter, to increase as XX% inflation we basis to compared an approximately of inflation all year. the percentage as our increases primarily second staffing revenue points hourly XX%. compared XX.X%, XXX notably XXX to last in improvement a XXXX. labor of Labor of grocery quarter price to as as experienced the increased commodity cheese, produce, costs, approximately to comparable approximately market chicken, to current beef well revenue, Based rate cost XX% approximately to expenses, as as and as percentage items. on hourly

Marketing challenges, to points of to XXXX we quarter higher the remain staffing a revenue XXXX, maintenance digital inflation and labor of addition as costs, we lingering as XX.X%, an to X.X%, to and the increased up advertising as costs due overall earlier. due supplies year-over-year an XX% elevated including in continue costs fees expect to fees. labor our Operating transactions in dining campaigns, to have increased in levels of credit that Steve approximately that increase as well compared to percentage transaction a higher XX% hourly restaurant continuation With to-go as basis increases the XX revenue XX alluded and second expense for to basis higher ramp increase. in restaurant to of card as points and increase utility percentage as other operating costs repair to

year, occupancy a decreased XX period performance partially of lower in revenue million occupancy higher offset to the as of cost base partially first an in and expenses, result expenses percentage compensation. salaries a bonus as by the basis million and General -- on in driven percentage X.X fixed a leverage rent. Our administrative to from X.X by increase quarter by X.X%, offset stock-based same points management decreased last bonuses, sales

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

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

and cash equivalents, our Moving in we and as liquidity XX debt, balance our availability the million no to facility. from had and of of the XX.X end approximately quarter, credit cash sheet, million of

total repurchased for of quarter first of XX.X stock the common During XXXX, of approximately our XXX,XXX a million. shares we

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

we Lastly, not following a our financial while usual are we the are to XXXX. directional for still fiscal metrics position providing in provide guidance,

between to XX as as be Steve As new improvement and previous experiencing chain times. subcontractors by mentioned XX open supply construction now restaurants million. expenditures in disruptions four during net of driven are from capital expect currently expecting to XXXX, shortages, a these we labor guidance We decrease are to well general and allowances earlier, approximately are which tenant now six net

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

Steve Hislop

date to for believe to We in Thanks, were will and to path right us The allow on pleased nimble sales ahead. place we we improvement the and ready recovery. capture our were opportunities the initiatives have put Jon. with remain

dedication any them. course, work you. hard single team I’m one answer member Of every been that, questions. happy we’re With the without work of would and proud have of our Thank accomplishments to alongside every not to possible and Chuy’s

Operator

[Operator Instructions] Baird. with go to first we’ll Mary And Hodes

Mary Hodes

for the afternoon. taking Thanks question. Good

a store you’ve to just year or are just relative the XXXX I ask quarter-to-date either momentum to to want to on turn, positive in April, same you basis sales date First, quantify to level set? one on the willing seen

Steve Hislop

than little it Yeah, been X%. roughly XXXX, more -- about over a has bit

Mary Hodes

for the couple better balance anything Okay, the modeled. that about or XXXX? Was labor than And margin, is restaurant good there then for I we’d great. came just of a in depressing to in think you. QX questions, the that temporarily mean, run Thank on line rate line underlying QX a

Steve Hislop

little bit concept a little that about bit again, go, staffing staff, we’re to Yeah, could more go to got right so XX% still up a possibly now so more. in we about our XX%

Mary Hodes

the the -- of guess were to if QX XXXX good. tougher for overall, I spot that know, you. inflation And Thank you like you prices now, of Okay, given on I the year, through if in run current now and comparisons know the the second to look then right rate laps the if that for visibility tough but inflation half -- would is outlook -- the balance in seeing the year? you’re have rates or wage get what pass

Jon Howie

Yes, if quarter. like we’re prices if my XX%, you for as year. XX% said end today, down to the look remarks over It the gets the I second well about at current in markets were that, at we spot looking prepared of the in

the the I you’re around And mid that prices year, and then looking still still quarter have weighted average, so we probably XX% the looking, first with would in think. you’re that and a on

Mary Hodes

points And what’s Okay, on need XXX range, to points on is or related pricing that you basis you’ll philosophy philosophy current then your in take of that great. stay XXX to lastly, pricing basis that? what the to improvement

Steve Hislop

again, for this at all single at of is the be in key upcoming we’ve for that every the Yeah, along us we spread said what look kind what that’s And is market. looking year. value we’ll

we’ll this was on approach right on that one. that a set. now, But be at looking the So competitive

Mary Hodes

great. That’s

I’ll it Okay, on. pass Thank you.

Jon Howie

you, Thank Mary.

Operator

BMO Next from with Instructions] Strelzik hear we’ll Thank [Operator Capital Andrew you. Markets.

Daniel Gold

Hi, is on Gold Strelzik. for Andrew this Daniel

Jon Howie

Daniel. Okay. Hi,

Daniel Gold

for turnover Can you has Thanks at manager taking hourly and the discuss the trended? level how question.

Steve Hislop

much industry again, than the that’s Yeah, average. better

and to management. hourly XXX XX about in XXX We’re right around in the

Daniel Gold

Got discuss can seeing regionally and any trends parts? you it. And across the you’re

Jon Howie

performance -- No, I they’re geographies. mean, pretty a pretty they’re the standpoint, from consistent throughout

Daniel Gold

it on. Thanks much. Understood. I’ll so pass

Steve Hislop

you. Thank

Operator

Thank you.

Nick from Setyan hear of Securities. we’ll Wedbush Next

Paul Hao

give by a there QX, Paul on first sales of month Nick. Thank on to April My is maybe the for in Hao question. if AWS the AWS? [Phonetic] us possible, question Hi, is, this you way and is any behalf insight the

Jon Howie

versus sales, negative the said, So comp negative was positive and as then X.X%, month, sales at X.X%. we by if looking you’re X.X%, XXXX,

was and to that it compare XX.X%, you X.X%, If X.X%. XXXX,

Steve Hislop

up. All

Jon Howie

yeah, X.X I’m All and positive, XX.X up, positive, up, X.X All positive. sorry.

Paul Hao

expected Okay. blended menu QX? QX? if is price possible, price in your increase And the about how And in increase what

Jon Howie

one higher The menu than in period blended the little about a price increase two late. price but last a year say we X.X, was price in X.XX% we had took period there

than higher blended, if looking it’s little So you’re that. a

Paul Hao

And pre-COVID, terms dining sale, in just is where are a Okay. there way not to versus like transaction? you -- now introduction of

Jon Howie

-- we’re XX%, right I -- level transaction transactional of around right from are think from We dining. around like the a still a level we’re XX%, XX%, high --

Paul Hao

one have and some flowing we a through. your just given tends labor And the higher think think more do sales weekly should that average question, and QX, inflation? you QX about to margin, incremental costs how how And quarter, food increases you price be about

Jon Howie

Well, that’s a great question.

quarter So period. highest yeah, our is indexing, second

you’re at when looking you prepared in looking to like three. starting in So we -- that, at -- that X.X% price we’re quarter would our in remarks, in increases said quarter X.X%

commodities, XX% when we’re we that standpoint. believe don’t have about in wouldn’t and said be XX% so And -- as a our in at and remarks, two increase looking those commodity we from increases to on prepared quarter mid then XX% looking think -- I I as price you’re far at labor

Paul Hao

much. it. Thank so got you Okay,

Steve Hislop

Thank you.

Operator

And Todd from Brooks with Company. Benchmark next you. we’ll The hear Thank

Todd Brooks

Few pressure that just Mexico wondering commodity guys. out evening, an because Jon, limes? the of much -- the it, hopefully, be Hope right? transitory good Hi, of is you’re seasons growing should And you’re about just of regions with the that element spike in questions; and second least at how changing and talking avocados for well. the that XX% basket quarter,

Jon Howie

avocados that me about get part front X.X% that is here. about really of and let right just -- -- but me limes, here, is in and of see the -- of big as second of let that you Yeah, XX%, the that beef though, a is Yeah, the it now, about piece chicken know, of X% on of is me –

Steve Hislop

both. X.X% Todd,

Jon Howie

Yeah.

Todd Brooks

obviously, value consumer, of then increase the second Thanks. taking and necessitated your the inflation you by they just know, build utilization mindful changes Great. for less party very delivering And I price you seeing? you’re you wondering, or delivery? Steve, seeing tickets third of are at you as or as health? look but to you’re frequency What Are watching are consumer behaviors customer. What in any as how far maybe and

Steve Hislop

much week XXXX. or incidence not of but stays currently we and on our out has of exact appetizers just And do and in that value same the week incidences -- no, mentioned we’re remained beverage yet seeing similar go Not improve. statement, on like improved. stay as number any I level I’m to because spread prepared have, in We’ve the the pretty also the since the that anticipating seen

and So to compared now, hold XX% any range. XX%, is -- seen for we except which XX, that haven’t big year us last to to XX change on grow volume to period XX a that to XXXX, that

Todd Brooks

great. housekeeping Thanks. Okay, of kind final then Jon. one, And

QX? the kind impacts labor standpoint, with the costs sales hit or outbreak from dealing the from in talked from from staffing in and cost line but we Omicron there the one was the same-store time quarter, With either the about in other Omicron anything this operating line of

Jon Howie

have have -- and for store did staffing that that. the might because some the too, things did some of related little because mean, of reason that a to No, we like we tracing I closures have been

like to were and we obviously only better percentages. -- which go So we that, down staffing went has things

Todd Brooks

Okay, in queue. I’ll great. Thanks. back jump

Operator

Thank you. conference And for or We’ll additional over further at closing are no this turn questions Hislop back there to any remarks. time. Mr. the

Steve Hislop

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

Jon Howie

you. Thank

Operator

day. That Have conference. thank your today’s a does participation. for We wonderful conclude you

Chuy's (CHUY) 8 May 222022 Q1 Earnings call transcript