Earnings call transcript Q2 2023

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Operator

Good day, everyone, and welcome to the Chuy's Holdings Second 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. second 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

them. remarks, our therefore, undue will that guarantee today need to forward-looking of not you a statements. put These future Before part formal remind on our and of should we not reliance I begin are performance, discussions include everyone forward-looking statements

statements to to future that materially condition. financial We These subject for could detailed of cause to from expect. a uncertainties also risks and filings discussion you the are numerous we recent results of actual differ refer our risks operating and SEC more impact our that results all what could

plan Chuy's and to With market the our like to call release X XXXX turn the I'd third closed. November Thursday, earnings way, President ahead, the Looking CEO, to we Steve. on after that of out quarter over

Steven Hislop

you, Thank today. everybody, for you our thank us and on joining call Good Jon. afternoon,

quarter results second quarterly comparable sales. another growth of a strong improvement performance restaurant with X%, in marked X.X% over Our including revenue

we top are results all growth comparable solid Moreover, our thus far and periods. seen we've quarter. strong During sales pleased third quarter, line the continued, saw has the momentum across we with the into

of level represents as level point dollars which over by basis over margin generated percent up margin industry-leading grew operating year. In improvement terms profitability, restaurant restaurant XXX we of XX% and of a an last XX.X%, a revenue

continued we drive in we've that and various the testament accomplish what are during profitability. We a making sustainable growth able put quarter progress was on the are results of to and line to are proud to these top place believe our team initiatives the

drivers. growth our to on Moving

Creamy and Grupo menu Tex-Mex introduced our items, and April, Bowl, Chile through than Grilled to April several Chicken resonate to our with platform. percentage guests incremental Green performance at continue previous our on focus traffic our Burrito of menu including sales CKO mix our Knockouts, higher our continues we as the Tacos drove CKO We Chuy's to guests a Enchilada. innovation In CKOs. exciting The CKO the

we excitement Hatch CKO recent this Green Burrito in been Chile Steak upon most Early our far late Chicken Bowl Tinga July, very build guests launched has Burger, our To encouraging. with feedback from thus Enchiladas. and

growth XX% also The year as Our very sales a at well mixing increase the approximately sales, XX% helped compared of approximately off-premise of performed last during delivery volume, quarter, ago. points at XX% mixing XXX XX.X% increase in a an of versus with to over second our off-premise now channel basis year. channel drive quarter total our approximately

saw out markets, we basis last points we X.X% quarter our addition, catering a an second sales, our channel of significant our to versus catering year. as improvement In build of continue in increase representing approximately XX

Over total off-premise will time, X% we of sales. approximately least sales mid-XXs catering at X% to contributing continue our to of our the business the with represent believe

differences defining influencer our partnership advertising This restaurant. terms video every media to our the food drink and strategy at value and made-from-scratch In of differentiated includes offerings DoorDash. optimized overall CKO advertising TikTok, use and marketing on YouTube Chuy's the our exciting communicates our from our digital initiatives, and of incredible with Facebook, Instagram organic experience effectively for our programs promotional

update plan. our on me development let provide some Lastly,

recent additional we our openings to successfully opened quarter, the restaurant X second performed City, opened of we restaurant end quarter, the Heights, have in Subsequent During that second Texas. We're Oklahoma all Hawker to expectation. in the to pleased new Oklahoma. report of X our

to the a quarter, restaurant to of exit expect satellite was This no we Illinois. and closures. not unique a the second the in the company, closed cost X do of strategic lease in Additionally, any opportunity we location currently state additional at

the we growth already for expected opportunities ahead, about look to outside to X XXXX for which due new and organic remain fourth and are control, we restaurants, of open units inspection our permitting of X opened the delays have continued quarter. now our remaining As we the excited that are scheduled

proven a long-term brand Unit piece AUVs where growth remains concept core model with strategic has and markets our our focus awareness. of our growth on high is with

achieve continue in growth be steps there. believe over XXXX the will we expect to unit can achieve time XX% important to XXXX we We get and growth and to

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

Jon Howie

Steve. to of for the our same XXXX. The million X.X% in related opened second increase improvement comparable to an restaurant quarter year. last to in well the quarter as operating second from primarily increased Thanks, to compared $XXX as quarter sales XX the weeks additional restaurants subsequent new Revenues $XXX.X million was

in customers. the the partially just was shy quarter for by pricing in XX% had a total, of X%. X,XXX Effective increased In X.XX% to X.X% sales year. a Comparable restaurant as XX% year year, increase in second pricing to approximately the offset the the to quarter approximately remainder decrease average approximately we we of of during off-prem X.X% revenue quarter total versus last driven a by during carry And X.X% sales check, primarily of operating were average expect second XXXX compared and X.X% weekly ago. weeks

expect on sales continue fiscal to as Turning increases as overall points inflation expense. as driven quarter. the deflation a during commodity approximately flat leverage of the of well Labor XX.X% primarily as percentage digits Cost the current commodity of as deflation improvement well points conditions, hourly revenue staffing compared due the our approximately as the cost to basis XX.X%, hourly revenue percentage single decreased in comparable incremental menu at basis Based price of levels of on X% increased for we to year. by to quarter. of XX our inflation to XXX as restaurants low third X% for a last with year labor to approximately market

to increases This was XXXX. menu taken subsequent quarter of second partially offset by the price

driven continue of increases. level to and increased of expect to Operating service labor a basis rate an sales hourly costs quarter inflation as to XX.X% offset by for staffing revenue delivery by third utilities a higher and addition the year. to year-over-year leverage partially on last XX in increase in delivery lower mid-single in percentage fiscal costs, points sales of increase costs digits and compared and We year charges higher maintenance repairs as insurance continuation from

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

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

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

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

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

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

also during quarter of $X a purchased XX,XXX common We the stock our for of total shares million.

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

on With update that, let outlook. me our provide an

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

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

Steven Hislop

Jon. Thanks,

provide year-to-date. we are four-wall growth, and of Our continued food operational is opportunity positioned with on always this We well performance reflected an high-quality, value. incredible our our ahead focus passion believe exciting and Chuy's Through through clearly to excellence, capitalize our experience unit by our at our pipeline thoughtful positive been offered of on capital made-from-scratch guests unique drinks the to allocation vast has us. the and momentum

that, open I'd for like work and dedication to member day. every earning Most line single every answer thank any and we're importantly, dollar questions. Chuy's for questions. happy to the team please to hard the their With Operator, each

Operator

[Operator Instructions].

Stephens. with first from question comes Long Joshua Our

Joshua Long

perspective perhaps that environment. underlying underlying think your what about could comps mentioned you're kind think of kind maybe of and the you the that, and other would given Steve, feels consumer? you the mix in talk reported, It we seeing like you have When consistent, your of the what in just terms the strong if pieces they're there curious how was the if the is, current at then the any reads you from piece using I through traffic environment be I concept. piece the update look that about solid results just And quarter. Curious you

Steven Hislop

we you've -- last we pretty rebound X in back, year, in consistent seen mix. a but haven't of haven't probably our in whole slightly seen the been a bit. , X.X that We little years, bar pullback since area, few bowls, seen any -- we've been a bunch and And maybe on slightly it's X months added over

haven't had last differences any real as track over far issue So really our year. we the seen as main our

Joshua Long

XQ in some strength progressing of in if maybe you all about it April you maybe on Got attribute how seems share talk like your out awareness, guests. incremental in there we about in platform. or you the anything that when that versus Can helpful. you innovation, curious but that to that culinary of could it. And of above, the just some that's the terms think I'm just... called the just expectations? period CKO That's brought And

Steven Hislop

the our ever our the answering -- just the above. Yes, Thanks finished of a say, our we finished for the all obviously, probably third by one all realized question. little We've fourth for And CKOs. just Yes, X.X% of entering traffic, third, us. above. we X%, I'd of bit

level so is And excited people really then obviously, doing of far first. our some really on trying there. starting digital marketing new And that's that our with out all excitement about a it's got people so we're getting and stuff

Like items run run X that for in before, total of weeks. X usually our -- X stores, X will weeks to we so we mentioned a

that a do in of of X a to see the in item So you'll barbell talk we're quarter, a that's will where excitement quarterly to have to fourth bit in pretty things basis. on built excited some start it's approach some nice yes, up. a little coming it's But about really, change those. X, with the we're CKO Coming up to nice quarter a and new going about

Joshua Long

into the just It the you it. about lot curious I'll peers Appreciate one When overall one, heard that. your just being something mean be development And primary then think think kind development of you're then additive? unit friction. now? units we've your about from permitting hop slipped development similar have queue. a to then X just of how of But might in you seems And year they seeing last I just human like we pipeline that terms entire the in point slipping environment. the support guidance. Do sound thinking that to of the does that. to like Or those updated investments overall and part being about push as might next capital specific

Steven Hislop

push the out down quite coming work permits construction That's cost hasn't higher still end yet. definitely been. just still and the some to kind little walking going out, people It's come but of a getting a with flatten bit. bit has first. the the than not with is that's and back units, seen only pipeline it go to the construction, going out that I'll whole And how we've it's the definitely it

back that But we that and at XX% you'll looking to X right also probably rate. that move see of us 'XX is that as kind we in around in growth this long-term our year forward. get we're So to goal then mentioned

Joshua Long

can that of a function, more some absolute do kind this you X can XXXX that you're Got right up the Or there? to accelerate you if it. that you the number think is headwinds One year, there, of do we're step step going in terms? out seeing that that in despite

Steven Hislop

growth, XX% next then I'd I to as get by that ago. say at than X. be and back a to couple We'll XX% looking probably second mentioned more for year a

Operator

David next from Our Baird. comes question Tarantino with

David Tarantino

trends. on sales is question First recent the

know in if could with you elaborate I what in that you think, you're QX. have wondering I on so seeing far less pleased were was QX. what you've had seen you than more you mentioned I Steve, you specifically. pricing

color helpful. any So be would

Steven Hislop

trending really in fairly It's range, PX X-plus X that similar to X. to

David Tarantino

the Okay. And total comp? that's

Steven Hislop

Yes.

Jon Howie

as And yes. X%, X.X% pricing comp, total mentioned, you had The we roll off. about

that's talking about traffic you're possibly, X% -- a yes. So talking negative

David Tarantino

if then looks on you've like shared previously. and end least had That's I high year look your of margin, good. high at the the target That's not And performance above long-term it guidance the Jon, maybe be shaping up you to that at helpful. restaurant end, if this at

plus about the you can structure look was thinking the I frame And restaurant it margins business? how to XX% you as is at think you're about longer if margin term? of So wondering kind type up possible

Jon Howie

all kind we're volumes quarters. with seeing rest of We're first related of the coming those the we've out. sales mean, leverage how have X prices But quarter Well, in the going that we're and had the year, to I the the to in what off. shake for it's third those looking not

the see we're a here margin going to so quarter. less third And little in

over obviously, fourth then rolling we're but the have our the quarter, week, extra delivery the we in the quarter. And fourth addition extra in partner of also

a to So that flatten little out as well. going that's bit

basis seeing XX% than now. that above, XX% mean, will to So that I term, range. that still But the we're a in think so what temper long little margins bit looking XXX I at we're right points

Operator

question from comes with Brian next Piper Sandler. Mullan Our

Aisling Grueninger

your kind has coming it This actually what that off-premise Aisling question catering is for to business own recent business? and of on your had Brian. about is internal expectations is versus how that? My your along impact And of

Steven Hislop

catering, states, how the XX We're many we're excited. on in markets well, we're excited, obviously, currently -- XX and

in about I think points prepared basis mentioned the than XX are year. we my I statement, higher

refill catering continue number And next the our be so add But to very that over X% and few continue long some that trucks range we markets we're very, as certain X% term, years. excited that. forward. about we believe We'll we believe can to of in

Operator

Brian with Your Raymond next question comes from James. Vaccaro

Brian Vaccaro

specifically? Jon, on are back where And wanted driving just color And on beef provide circle commodities. favorability could I you're to recent items on also deflation? that on you you the some seeing more us contracts remind

Jon Howie

Sure.

but of a So rest in the contracted beef. the Beef, spillover I'll we're just not start the with just through the year, much. little next year,

it's are through And So just of really last less rest little the basically than year. the those at prices a year.

also as of year, So all-time from the our and that's significant deflation, deflation. seeing in deflation off of as coming We're of most in highs some obviously, dairy some think that I well are then seeing chicken, produce. last people

those of We're in really items. kind are we of some grains our third the But things But that in in of oils expect always big basket. our here the kind up fourth and jumps kind and quarter. produce grocery seeing of and inflation also the

Brian Vaccaro

increasing on levels, think driving And lot could be you're average able And that on some tangible benefits seeing makes more continues better you dynamic dining speak to of might a were that? I maybe just -- about perspective just in guest you bit? But satisfaction, tenured you to teams Maybe sense turnover? how which any provide that increasing are what of of broadly, just Great. labor, terms cetera? other to or quantify just hours little more et any talked seeing staffing And up to I speak ops, recover. as much you way a Okay.

Jon Howie

XXX% help hours experience as over little as over far have full-time year. standpoint, XX%, far fresh for doing as you obviously, the from a when to hourly kind don't last I'll been them which speak I lot replacing as you the the But overtime what increase we're figure is a going we that's management our guest have of that a and an with well. standpoint, to still replace positions of people, XX% as turnover. hourly, over the little now, with Turnover, a from

So as much don't have overtime. you

fully continuing experience. on get we're also each that the every staffed and shift helping to and customer that's out, helps So but

Brian Vaccaro

All just been Obviously, horizon? on pressured maybe of think level the as of terms unit pipeline just front. shoots on great. you're build-out on just to front And set that economics lastly, you any XX as XX relief recent in you months? could your about the the And then green have right. underwriting next in years. Are you That's development that seeing costs

Jon Howie

Well, continue new dollars. to far a construction seeing . net as not of kind landlord in, We're we're cost down. But All costs that We're but the cost to in we unit at underwrite. seeing of come what yet It's looking out of the cost in starting flatten standpoint. as it. a

somebody we these think heard want to else to saying I used developers get don't I've prices. these

hopefully, pricings. can we we're of as competitive trying And so to get in as some these

So But can bring costs not it. we right seeing now, we're those down.

Operator

from Benchmark question comes next Todd with Brooks Company. Your

Todd Brooks

left to to brutal there to I you the is which crushing X% the to actually ask. been July is geographic wondering full from I'm you question, to were use the underlying at much referred and Jon, roll-off maybe of just this able with in very summertime? able normally And Quick they trends the talked is heats of stronger demand to seasonally the a sense a heat, footprint your you extent have use have do patios being in restaurant? keeping would think Steve, that result. just have But with -- July you impressive X% might June, you you not for range, the sized about, the them pricing the kind --

Steven Hislop

XX-something and again. but over think we this you days really the It's XXX, of ago if -- we're just talked time, a remember year been at I Yes. that a exactly about is while,

similar So a in patio some XXX affects it's obviously, patio at definitely degrees. And no and sitting one's in out of Texas, definitely ago. yes, very to the elsewhere, the it year sales,

So that's definitely similar it's to a this time. an very effect. But ago year like particular I at said,

Operator

with Our Securities. next from Setyan Nick Wedbush comes question

Nerses Setyan

are around of QX to expectation, a see disclosure Or we the the ask I'm we of what's appreciate kind X%. of sequentially basket In it to continuing Or maybe this, missed terms but versus terms QX inflation, way expectation. down? the -- go is I are down commodity QX the I in QX, it What's is? better if and flattish sorry

Jon Howie

that flattening we're year looking like to the you're deflation us the now. to think deflation basically think I single-digit I year, -- back in looking flat said fourth third over gets I it the is how now. something and mean We we're to last for similar half quarter, if it's kind of the we low look at for looking flattish right which quarter.

Nerses Setyan

just the big about seems there like on sort the given that inflation so, of way the lower Because Is a to right be just mid-XX% will jump And it QX. math and from pricing COGS. is the think QX? a

Jon Howie

Yes. at. kind of of looking It's what that's we're -- kind

Nerses Setyan

Okay.

terms the in And of little margins, QX week. extra historically, bit lower, unit-level have QX but a we just Okay. is QX,

So I high mean, in do of they each the bit of may to other, end be up XX% being a range? them closer little both sort

Jon Howie

QX? that the level back what again margins. saying Come on unit Is for you're

Nerses Setyan

this that to to But does QX year? tends given lower for that kind QX of extra QX up help week, closer come it be historically. than

Jon Howie

bit Yes. It over little QX. a it actually increased

Operator

Barish Jefferies. comes with question next Our Andy from

Andrew Barish

room see some versus consumer Wondering behavior been do know seating there? out an I traffic given if hours. set just to us on you shifting of pre-COVID. the But on give that opportunity, can some trying level you there's changes as sort in dining of big And and that. update just an

Jon Howie

increasing our are they what we've of Well, dine-in XX% traffic other sales, consistent percentage pretty prior about the XX% then with still right sales again, our standpoint, of addition service that a at still a and delivery that. with from to to from our were pandemic and been of

we some productivity put those back standpoint. As seats of haven't out those and still taken from in, you know, just we have a

hours we hours, Those been haven't those we've haven't either. the those also -- very And back profitable as that well. brought hours deemed

traffic yes, we're off-premise grown our that XX% still little has perspective, dine-in in from at a to So bit. but a XX%

Andrew Barish

Is on then back that up new And media spend? so you're side, channels there marketing looking waiting at sales. that or Okay. X.X% I any or to kind for the know of you're of up about

Steven Hislop

things happy bit are at we're doing and obviously TV, at Yes. so looking Right -- the that is during lot I and everything. always the we're a couple that. on, of things with statement, we're my things percent. mentioned little using. a all we're and We're pretty prepared with but a other programmatic, But that redistributing, Yelp on now, pretty as doing -- pleased of a And few change, we're top stuff that looking but fairly new we're mediums with of

Andrew Barish

along I few a doing to mean, balanced? in seems of outdoor, in just effectiveness back, again, values, or certain years pre-pandemic, lines Okay. keeping highlighting have some you core it were which those the And guys anything kind markets

Steven Hislop

and Yes. local have a do those local do initiatives have do We the we that always that. of bit part store store will a I continuing. local in No, fund and of consider that a quite profile. lot outdoor of that from are and we store that's we marketing that

Operator

[Operator Instructions].

question Our O'Cull Chris Stifel. with from next comes

Christopher O'Cull

development. My to question relates

to just and company's not accelerate position, unit try cash given 'XX Just beyond performance a in the why of growth locations. sizable strong handful

Jon Howie

to we're with of environment. the going given a mean of permitting open that. I mean it's getting deemed things as reasonable matter matter sites, as I those finding sites grow the right now, not like Well, and fast a it's

and But if saying we'd So bit. to bit. permitting that of kind down of some right around little where the costs we looking we're the of of to turn that stuff little now come the a now, right some that's until see construction and we -- can like we're kind a also

Steven Hislop

areas. Yes, those maybe some relief in

Christopher O'Cull

with in Chicago struggled Denver. like you certain guys know openings and markets I have

development just plans wondering So those the experiences shaping I'm your of next are years. how over couple

Jon Howie

better as we're Chris, I [indiscernible] we're quite focusing that have in recognition we states in states those we're on other brand And states, margin standpoint, on in looking of X X high from standpoint. at a they're to why focusing states, I X currently very brand focus of great because But getting the that's think Well, those we're and kind business to some from of X honestly, think a period on recognition. years. those favorable AUVs, the

states to the are on years. next we're the focusing X X in those So

Christopher O'Cull

Is the strategy into brand to close more go going a more as newer be of follow in because markets proximity just that -- markets? from market awareness you need you contiguous

Jon Howie

you think up so. back of new into lot think And but a I XXXX, I go if to -- we markets. I bring hate to of jumped kind

we'll we guess, branching at So slowly, take new I X into more not year. that when start and in markets once all

recognition these continue states open to have state some of that and new contiguously we'll So ones. brand high opening that we the to next in

Steven Hislop

and next about the growth a the little over that next the bit was over states years we're X that's And talking and -- our beyond.

room. So plenty of

Christopher O'Cull

that you of on Okay. the returning and maybe or are cash missed to position did maybe aggressively? the but for And comment more deploying what I apologize company Jon, you it, if just cash guys considering I shareholders

Jon Howie

Yes. we $XX million to But that the like in that in to obviously balance little we continue to be buying opening again, But opportunistic then on sheet, back and to aggressive to we'd continue We I million still we mean the back $X did buying but this in have be about stock, opportunistic somewhat want want stock $XX back. million quarter. a buy as somewhat well. stores. more get

Operator

this remarks. to no over closing at for floor are questions Steve hand Hislop the time. now further I'll There

Steven Hislop

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

Operator

Thank you. a This Have concludes conference. great All may today's evening. parties disconnect.

Chuy's (CHUY) 3 Aug 232023 Q2 Earnings call transcript