Earnings call transcript Q1 2023

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Operator

Good day, everyone, and welcome to the Chuy's Holdings First Quarter 2023 Earnings Conference Call. Today's call is being recorded. [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, Inc.

At this time, I'll turn the call over to Mr. Howie. sir. ahead, go Please

Jon Howie

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

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

I Chuy's Hislop. the of turn would the to that and With President way, out like to CEO, over call Steve

Steve Hislop

you, of into Thank quarter in We're fourth momentum continuing everyone, today. the for year, you new growth the call earnings our thank proud us from and on comparable results with joining restaurant top first for quarter quarter X%. line Good resulting sales of the our Jon. afternoon,

ahead In points industry. Chuy's. dining Combined addition, XX.X%, year-over-year, us, of among ahead about for we basis have best achieved unit what we more in casual excited with opportunity store-level up which growth be XX of operating never margins lies extensive the continues been to the

weather and Omicron January comparable quarter, across first periods growth variant comparisons. February with from the saw benefiting positive the sales During we and favorable all

and value food and continued believe are Ultimately, has the we behind with growth. spectrum force across our April. incredible fresh, resonate and made-from-scratch our Importantly, to guests income our our driving the positive momentum drink continue into

new start our well Wild fan-favorite, the introduction innovation. the Veggie with our to drivers, January Chuy's of as Beef through Knockout Hatch Turning menu Tacos saw as Enchiladas growth our we'll Burrito our and return of platform.

CKOs our during that X.X% traffic six-week of mix We and continue entrees in with sold period, iteration at Chicken which drove the Burrito line April Chuy's added Grouper incremental menu to as platform the about Tacos Tex-Mex be to Green approximately Grilled Bowl, is iteration third in Creamy our excited saw And late and first Enchiladas time. limited all for our October. Chile the a

by While only we weeks the we've are period, into thus current seen encouraged we the two CKO far. remain results

of also continued Our the XX% our this sales of represents with momentum quarter. channel, total growth which off-premise

is thrilled term, Long in with by sales last modestly mix down driven approximately off-premise the we we off-premise reduced X%. with our mix represent the continued believe to mid-XX% off-premise compared year, the of off-premise will are our contributing X% dine-in dollars improvement our up While to to catering are see year-over-year sales.

terms and from advertising CKO made-from-scratch overall DoorDash. allowed our and YouTube put TikTok, to have digital every from introduced food emphasis communicate newly initiatives to a incredible value, in and These media, differences restaurants. initiatives, promotional our Instagram, the us at advertising drink including of defining Chuy's video on offerings effectively our on Finally, of heavy our experience unique use influencer programs partnership marketing we organic continue with the to

the results point best ability ongoing Chuy's our and of believe the our operating restaurant-level profitability, to is strong representing among these efficiencies in margin, Moving We management generate showcase restaurant-level XX.X% improvement focus a margin strength year-over-year. in the industry. operational and XX-basis cost on that resulted to a brand

to to level a our strong demonstrated profile the is our As able as quarter. we by January, value took solidifying this we of We with appropriate results our the to proposition were at approximately consumers end margin reminder, pricing. believe X.X% balance achieve the this

to update call plan. the you turn on me let Lastly, development before Jon, I

quarter, bringing Arkansas, restaurants. our During total to successfully one the XX Fayetteville, first opened in restaurant new we

about growth remain for ahead, the brand the organic excited opportunities we expansion. through ahead Looking accelerated unit

For new and on focused anticipate concept markets with brand XXXX, our proven high where AUVs six we restaurants is opening our to awareness. continue seven to

call With our quarter to that, I'll CFO, in now first detail. turn over Howie, results our the discuss to Jon greater

Jon Howie

XX% quarter approximately quarter our subsequent Thanks, The off-premise Steve. XXXX. operating improvement the and to opened were X,XXX Revenues comparable sales was million increased increase $XXX.X total, to restaurants In total sales restaurant new had during quarter $XXX.X of for from XX% weeks to to in weeks an the in revenue. first the related approximately first XXXX, million as compared same year. primarily we of additional operating of quarter XX the first last

versus in a just shy sales of increased X% by during check. and in restaurant a primarily increase pricing X.X% last in was average the the first weekly average driven quarter X.X% year, quarter Effective customers increase Comparable X%.

to Turning cost inflation. menu with XX.X%, to X% driven by quarter single the to positive expecting of by XX XXXX, are inflation points sales we deflation to of commodity subsequent taken price slightly Based a of partially commodity conditions, expenses, offset decreased of increases low for for the digits the market approximately basis first quarter. currently the flat second current revenue on as fiscal year, percentage

XX year. revenue staffing at incremental to taken first to improvement the last as approximately restaurants points partially Labor by hourly increased to XX.X%, XXXX. our costs menu as of comparable This due increases levels X% basis well price was to as of subsequent as offset compared of labor quarter a in inflation percentage primarily approximately hourly

both the staffing the continuation increases. of We fiscal year-over-year hourly and second mid-single a digits expect level rate inflation to for quarter in addition of year

of see a off-premise by from driven mix we XX to-go revenue the as continue to percentage lower XX.X%, basis supplies lower as costs improved decreased points sales. Operating quarter dine-in during to

points as costs. of leverage percentage result as a fixed X% Our on decreased revenue sales basis occupancy a of cost XX to occupancy

as a held expense revenue steady Marketing at percentage of X.X%.

driven in the million to mainly first higher quarter the by in million performance-based $X.X bonuses. year, expenses $X.X period administrative General last from increased and same

a increased G&A of X.X% during year. the to same revenue, last from X.X% period As percentage

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

first incurred we in of other closed restaurants $X.XX in compared the closed $X.X previously same XXXX, period restaurants. diluted impairment, $X.X year. the per paid the decrease in and a or million million costs quarter rent share to to on per share The related During $X.XX diluted reduction last was primarily or

net period $X.X last compared the million first $X.X was $X.XX of million that or for per $X.XX account, Taking year. into adjusted share to per quarter income in same the diluted share XXXX or diluted

and under our cash as $XX.X and the sheet, and revolving of facility. of end no quarter, million available we to balance equivalents, liquidity had $XX credit our outstanding Moving cash debt the million in

impact to seven to weighted – $X to $X.XX approximately now are capital approximately of expenses million rate restaurants, positive million approximately expenses, shares our based per preopening XXXX. outlook, the XX.X XX share million. net annual fourth adjusted to million, million, XX%, to or XXXX in million to $XX expense XX.X XXXX on in of $XX million, $X.X to which expecting G&A million versus of new quarter EPS restaurant XX% an an assumptions. part following weeks to $XX expenditures estimated annual Turning to of is diluted weeks six effective containing of This outstanding $XX $X.XX of the we tax to $X.XX includes due fiscal $X.XX, XX annual of

And to I'll the over that, turn back with call Steve.

Steve Hislop

improvement with restaurant XXXX Thanks, top ahead. maintained of beyond. capital path We've Jon. Together allocation, in line momentum, put driven by the on our disciplined margins in ahead and our to long-term further remain an we have pipeline growth opportunity we've Chuy's value We shareholder excited believe extensive for Chuy's. and a maximize unit

answer we're for line to happy any questions. open Operator, With please questions. that, the

Operator

with with [Operator the of Please is Instructions] your you. Securities. Our Thank coming question first question. Setyan line Wedbush Nick proceed from

Nick Setyan

has become Congrats on incredible routine. quarter. another so It

Steve Hislop

appreciate Thanks, Nick, it. I

Nick Setyan

I in don't the April what far April, so trends interest comment given congratulations in even order. lot to I willing Would of seen you in a you've become just data. routine industry It's April? the so guess on a now. be have

Jon Howie

seeing. I come in March and a mean down look to little April. progression, bit similar a you everybody if down what Sure. think, saw bit come else the continue then in We I it's little is at to that

a that. X.X% saw and April. in March stayed after we So about And then X% those in consistent trends somewhat have

Steve Hislop

stabilized. has that Yes,

Nick Setyan

Okay.

two percentage or we so. about That's are So right now. where

Jon Howie

I that. that's mean Around trending – yes.

Steve Hislop

right. Yes,

Jon Howie

Lower than that.

Nick Setyan

Got it.

the transactions to happened – The expecting so I during mix so debt were mean, just something Okay. is positive? the of the and that quarter, negative – quarter? that to Or into mix you kind be the be heading

Jon Howie

and maybe quarter but so Well, and as sure little rolling we that, of for bit especially you February January and Omicron, positive traffic we're February. going over mainly are I and in January the know, rolling over mean, into March, a expecting

Steve Hislop

Omicron, quarter – the had we last fourth after last year, third fourth pretty and some fever period were and year. period why then us strong third for pent-up quarter And the

Nick Setyan

And the in into is, dining shift room? just that the traffic the it negative the room. guest dining is just mix Is what

Jon Howie

do mean you the do negative What – sorry, you... What shift?

Steve Hislop

have don't negative a We shift.

Nick Setyan

The negative mix.

Jon Howie

you On mean? sales,

Nick Setyan

the comp, just Well, within same-store within sales growth.

Jon Howie

Nick, – you Because like talking are – projects... you I'm price? sorry, the okay, we the are you have Are talking

Nick Setyan

Yes.

Jon Howie

Okay.

and little So a yes, mix of we then have X% the about price decreased bit. has

of yes, of we've a the appetizers. little bar a and the seen that also that on that And is attachment rate bit the surprise. Some was

Nick Setyan

million, year? $XX.X was Was of about for then the And that should And again, Okay. sales, think below the we relative level that of how to into well expectation? the on coming going the forward quarter? your rest cost that

Jon Howie

cost we Well, year. that. think for because to actually, what mid-single now, And we're commodity a digits. now expected, to we little But we're expecting that that think, what inflation expecting lower said, be positive be to obviously, came the slightly I margin like seeing, are I we flat were a the than and I little in in higher of

quarter we So third this in here fourth continuing price low over increase. don't the the quarter second of at see pricing we quarter, at that and for making in we on second that kind until are – roll single-digit another intend roll the the we we and point, seeing least deflation probably,

know, about took year July X.X%. increase we last a As you of price in of

Nick Setyan

it. Got

you Okay. very Thank much.

Steve Hislop

Thanks, Nick.

Operator

Thank you.

coming proceed Our with question. Slagle with Please next question Jefferies. of your is the line Alex from

Alex Slagle

thanks. Hey

about just may have I it's the flipped up just little Nick's about before, you prepared and on thinking a come on I down much which guess, following been thinking. that that your get to check the earnings hours bit the confusion. performance a remarks but just you there quarter of kind of first your for pretty additional opportunities changed the of and that think to or cost so that to may traffic and how outlook, questions same, also not But line the the something some and little reinvest deflation I'm pricing of year on the business, goods a I in experience. or labor is raising the maybe beat are – the the savings commodity on in surprising think, that looking outlook how wondering elsewhere have $X.XX enhance take guest

Steve Hislop

looking our line And everything all little forward always we're at bit not working statement if more. and much are now, look on over invest we right bit little people our that. as to of so we'll we'll are you've work in on the what then last increase But to move quarters, of a at We and balance labor a that on in do, that. we And noticed and saying. continue it's a [indiscernible] couple to continue continue

Jon Howie

Alex. thanks, And

are make to You I that. I sure correct right. want

an in average increase customers increase average X.X%. check and X.X% of apologize. then I have weekly did of we So in

Steve Hislop

Couldn't catch Alex. by

Alex Slagle

could you are the to versus question versus of dining the dine-in fill a what kind look how on ahead. where XXXX looking and the then of we as room margin kind the the implications of opportunity traffic that's and or And base and so further maybe be

Jon Howie

so in in running mid- we to upper kind what of now traffic we're XXXX. Yes, XXs did of right the

As you by number XX%. open about with restaurants tables know, and we've of XX%, in the our that, reduced we've been very

reduction those the in staff tables. kind in that's of running the table So, really related in line reduction and to with

we'll build So, continue to that.

we've with that. there's in kind build table of talked with to think about in running there couple we're what turns kind that years. of our last opportunity line of new the is an I But base

Steve Hislop

was to key we at it the have, that that to now, last the maintaining long pre-COVID, it that we all XX% range. right said that we expect number mid-XXs. And is to-go the term, in in And And which XX% was be of XX%. quarter,

Alex Slagle

best working evolved, check. on working, thinking just has the And Knockouts performance how Great. opportunities kind what's how your to of follow-up a frequency you've the and and and it's well drive seen date, to

thoughts any you're at. Just looking on what

Steve Hislop

in then our and just started of first the we little a Yes, We one it fourth second we're the a the in weeks the and actually started and started performed pleased couple did we've actually than third we actually two. first, quarter we quarter really just bit one. that that ago, we're higher excited

So servers on as more we're them the learned stores and we've those pretty about our excited is them. selling about view in operational as them. point from What an all of excited far getting of everybody obviously

it's been really us. So for good

ability whole you see a these, we're going the probably we barbell on higher the see, see one. to a a have because price see through, on bunch mix us one forward. that fourth and PPA move of that approach move quarter, bit the little as you're As and have CKO you'll continue will three. out items one maybe to what to little It your of of we a that's start as bit we to is change will the you But shouldn't in talking

Alex Slagle

great. That's Thank you, congrats.

Steve Hislop

you. Thank

Jon Howie

you. Thank

Operator

Thank you.

Our coming next question proceed from Todd question. Benchmark Company. with with Please The Brooks your is

Todd Brooks

Hey, thanks. my congratulations. add And I'll

results. Just great

Steve Hislop

you. Thank

Jon Howie

you. Thank

Todd Brooks

longer of term. questions, one A quick couple

I year. units seven think we're talking to this six

a to for to construct that estate do step this we're of things year? XX% unlock we you and Or ease your beyond being change of growth know XXXX? As see or readiness, Do the need in is growth operational we I of to time. further kind over achievable Steve, the environment can current the to back really either at like cost before ability construct real unit next to goal looking get

Steve Hislop

XX% line easing supply It's Yes. XX yes still though. it's any until delays. on that for done to construction hard to basic permits. it, of XX work real it's on XX to – I'd and get easier up that. it but not get any because dollars right another I'd now, just say added construction, all easier a on our not line, an job the the we time to seen on us have to in say the chain. of probably going to days I've not We're looking XX at XX% But seen we've up flat construction

get like an a But things make with to ability little it happen. and dollars all – I'd I as move operating perspective I'd we supply be really want to construction people-wise see to environment get this settle a come anything it pipeline we just chain. the But still far permits like bit. whether from to tough watch. out for our construction some down the as see have It's to forward. or some done as of these cities,

Todd Brooks

Great, thanks.

Steve Hislop

Thank you.

Todd Brooks

the the maybe think any to there Jon, – we versus balance X% of Or year? X.X% kind think spend in variances accrued the we number was look to year-over-year year? upcoming to this bonus use X.X% the how that and in of just last G&A to range bonus still is at need right the is for as using quarter, are about on that trying quarters,

Jon Howie

should X.X% between the sorry, the Actually, around to to for comp somewhere there, that you're including always – back. add the I'm probably rest you average. of year Are use stock Actually, including on X% I've in you right? got

Todd Brooks

was, I yes.

Jon Howie

Yes.

So to X%. yes, that that X.X% comparable pretty right is around

Todd Brooks

one. Okay, great. And one final then

a big now? level the were across talking part is off-premise, catering How business the is Just when You've you it. markets. I about mid-XX% out maintaining accelerating for know that the that all of rolled

business? out did You're Thanks. trying little we build this stand in those in do building getting relationships. that And it on how mix Where a to tenure quarter?

Jon Howie

were end about up... like X.X% the year you were the year. setting at We're last at – of we as know, We Yes.

Steve Hislop

for just quarter, How Jon? about the

Jon Howie

the And For year. million quarter. about about We're last in last quarter X.X% quarter at up $X a we're sales over this just same standpoint, the year. from percentage X.X% versus

Todd Brooks

Great, thanks.

Steve Hislop

And and in as existing four add year, to – more have I'd trucks more markets one opportunity we continue a catering do to off-market. the we couple couple three say a this

in three to next years. that the X% number like will we've long-term So, And we four as is over to that. number, we some said, more then improvement X% mentioned, have a catering

Todd Brooks

Okay, thanks.

Jon Howie

is Yes. catering to last biggest said perspective. the X.X% mention, put in to Also, fourth our That quarter in year. quarter that we

Operator

you. Thank

coming Our King. of Please with from your proceed is Wolf question. CL the next question Andrew with line

Andrew Wolf

of Thank the sense rest us the rolls you. for was was you sort last said cadence Can pricing at it of the a year? thing said. you – think of give X%, As guess, does pricing this January I quarter of X.X%. sort the When you I off,

Steve Hislop

Yes.

Andrew Wolf

So off. just sort how it of rolls

Steve Hislop

more from anticipate mentioned, at X.X% all. don't the At we will price taking this Sure. we just X% the any of roll off year and June, end

So you'll half level. average that But year the for in that X.X% level. X.X% the in probably of be the year, second will

Andrew Wolf

thank out comp. taking that just Okay, you. And for check amount first quarter, of the the the April using

more X%, the chart restaurant – cost? if traffic the around is down delivery? at So the the equally is from of coming of and the dining dispersed is Or that between kind that extra delivery because

Steve Hislop

I'm I trying Yes, to understand. understand. don't

Jon Howie

Where X%, at you're about up think where being coming a it down down time. X.X%, from? equally it's pretty So actually, traffic standpoint, saying quarter the transaction X% from that I assuming XX.X%, delivery, as about as we're is was now far delivery. where this was traffic delivery dispersed. for think, in year I I last you're is mean

So, continues to our increase. delivery

Steve Hislop

Yes, from it increased quarter. the fourth

Jon Howie

Yes.

Andrew Wolf

April, Yes, paying is Because right. is it of was per asking have starting but more you consumers whatever that's order, what value-conscious maybe to... front $X for data that we're in I you. hearing or about extra don't all Okay, right the

Jon Howie

but in the in same see continue to trends even we April. Yes, delivery

Steve Hislop

grow. moving. it's continuing to Yes, It's

Andrew Wolf

great. Okay,

Steve Hislop

you. Thank

Andrew Wolf

share of – might for how if know Fayetteville it's but think, productivity, us you are either too – store you – comp base. give that because you restaurants the in soon on tell the opened, could you metric way don't to not new two is store kind there other could I lastly, And I the metrics any

Jon Howie

hitting pleased. if very definitely numbers, them. We're the been We've not exceeding

with been that great the in. to So pleased in openings. five yes, to great those states development five seven recognition states And states and really operate great we've as we our know, very brand AUVs, they're focused and we've you – have

hitting are targets. those they So,

Steve Hislop

side sales on Yes, the profitability side. the and on

Andrew Wolf

And thank the Okay, you. on congratulations quarter. also

Steve Hislop

you, Andrew. Thank

Operator

you. Thank

with question is from Please Long Our with Stephens. proceed next question. coming Joshua your

Daniel Breen

questions. my for Hi, Daniel Long. Josh Thank Breen this is for on taking you

and So, earlier advertising reinstating you marketing. digital talked about digital heavily leaning into

any far what you've front share retention can a from customer as So, seen so acquisition as are learnings on there far standpoint? that you customer and

Steve Hislop

very since Again, in it's it basically consistent been middle last year. we the brought back of

So a and it's there, digital been our out that very, we making How well. differences. again, very lot it's just defining share And out is is of really through that view I all voice little seen getting on the some which sure the programmatic-type acquisitions TikToks get main we've our out people on are YouTubes, videos. there. Where the is a customer thing more bit

– seeing where again, So But been the that's we're last really movement. quarters. three consistent some we're over it's just

Daniel Breen

helpful. delivery? of third-party thank on of That's mix, coming then from And that is mid-XXs you. much off-premise Okay, how that

Jon Howie

I third-party delivery mean, quarter. Well, is, say, this XX.X%

XX So I looking over currently, XX%. mean, XX% to you're –

Daniel Breen

rest development we Okay. unit year? And timing think it for the about cadence, the should the of on of then how the like

Steve Hislop

in year, I'd fourth probably of the the do, quarter at probably second I'd bulk of What quarter. them will the the end then in come look and one

Daniel Breen

have, and congrats quarter. all That's Okay, the thank I on you.

Steve Hislop

Josh. Thanks,

Operator

you. Thank

Baird. proceed Our question. your Please coming from of North with next question is Drew with line the

Drew North

Thanks for unpack just further. a margin I restaurant-level question. the the was could bit hoping QX taking you

on to margin you within maybe, if specifically it's step-up are you margin, think you the elaborate I with some sales and But cost wondering guardrails how seasonality, guess, the as see on lines clear relates could thinking around line. other margin, there. it setting about typically overall QX and restaurant-level a I the I quite of in expectation was the

Jon Howie

Sure.

QX there fourth think see could range maybe the saw you as QX a probably the over about that minus little margin, to in And those fourth we there look when I the in the if you a bit week price XX looking or from apply quarter, have right you going expansion you plus down at QX, remember, extra more then that of then in those year. increases be we that margin because And back that points. basis that around could come margins to same lap enhanced will at quarter. in in enhance the in it's you're half little

Drew North

And Okay, in you on the hoping guess the I drivers elaborate that's commodities, seeing then was could biggest helpful. on I of just you're deflation QX.

the the et overall I half? think commodities first the to is maybe you in And What visibility cetera? much chains. how back outlook, among heard it's there guess, the I lower your today, just inflation we've percent are fixed restaurant

Jon Howie

which sure about Yes. XX% from basket. biggest we we're our I'm hit standpoint of mean last are hearing. seeing We commodity is year, What in highs is deflationary fix I generally all-time you the a chicken. driver chicken,

And locked a our in seeing year. whole prices we are cheese then better in little year We than well. last decrease as for slightly at the beef

biggest your are those So, drivers.

us then Right for it's whole a now. don't are we but that anticipate fluctuates And I part and providing down. inflation wildcard biggest deflation, right produce kind up the drivers because now, year that most then groceries it's the – our of is And for little out a mean, there.

Drew North

helpful. Very

Operator

of remarks. question-and-answer to turn like to our Hislop Mr. and gentlemen, Thank the I have for reached Instructions] we the would session. closing Steve end back you. over [Operator Ladies floor

Steve Hislop

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

Operator

this gentlemen, does teleconference. and our Ladies conclude

You participation. this thank may you your time. at your disconnect for lines We

Chuy's (CHUY) 4 May 232023 Q1 Earnings call transcript