Earnings roundup: Ruth’s Chris, STK, Chuy’s, El Pollo Loco, RAVE

Sales are up, but inflation and supply chain issues continue to cause stress for smaller, publicly traded restaurant chains.
Earnings season
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Like many of their larger counterparts, sales are up at smaller, publicly traded restaurant chains. But margins continue to be impacted by soaring commodity prices and rising wages, along with ongoing supply chain issues.

Here’s a look at how some of these chains fared during the most recent quarter.

Ruth’s sales soar, and so do beef prices.

Q1 sales at the 129-unit steakhouse chain rose 41.5% year over year and 8.1% vs. 2019, continuing a strong showing for upscale concepts coming out of the pandemic. CEO Cheryl Henry attributed the growth to improving operations and new digital initiatives. 

Beef costs in the quarter were an eye-popping 37% higher than they were during the same period last year, the company said. That was part of an overall 445 basis-point increase in food and beverage costs, which were 32.5% as a percentage of sales.

Speaking of steak, STK is also on a tear.

Sales at the One Group-owned chain increased 66.5% year over year in the quarter and 62.9% compared to 2019.

Its varied-menu sister brand, Kona Grill, didn’t do so badly itself, with sales up 21.9% year over year and 27.5% vs. 2019.

“Interest in dining at our highly differentiated upscale and polished-casual restaurants remains strong,” said One Group CEO Manny Hilario in a statement.

The results help bolster the company’s big development outlook for 2022: It plans to open at least nine locations, its most ever for a single year, including two STKs, three Konas and three ghost kitchens with Reef.

STK currently has 22 locations, and Kona has 24.

Supply chain backups slow development at Chuy’s.

The 96-unit Tex-Mex chain reduced its plans for new restaurant openings this year to four to six from the previously expected five to eight, citing supply chain disruptions and a shortage of construction workers. The openings were slated for the second half of the year and could move into 2023, executives said.

Overall for the first quarter, Chuy’s same-store sales rose 11.4% year over year but were still about 2% below 2019 due to the omicron outbreak in January and February as well as severe weather in the chain’s key markets through most of the quarter.

El Pollo Loco rebounds from an omicron punch.

Fire-grilled chicken chain El Pollo Loco said its sales were “heavily impacted” in January and February by the latest COVID wave, but noted that business improved in the second half of the quarter. That led to a 7.8% increase in same-store sales for the period ended March 30.

The 481-unit chain said its Shredded Beef Birria promotion and new marketing strategies helped drive sales.

For the first quarter, El Pollo Loco’s total revenue increased to $110.1 million, compared to $107.7 million from the year before. The chain reported a 6% increase in average check size and a 3.5% drop in transactions.

Pizza Inn and Pie Five log eight consecutive quarters of profitability.

Rave Restaurant Group, parent company of buffet brand Pizza Inn and fast casual Pie Five, reported total revenue of $2.6 million for the quarter, up about $400,000 from the year before.

The operator, which had previously closed a large number of locations, kept its unit count steady. It finished the period with 128 U.S. Pizza Inn units and 33 domestic Pie Five stores, down one from the prior quarter.

Pizza Inn same-store sales increased 22.8% during the quarter, while Pie Five’s same-store sales rose 21.4%.

CEO Brandon Solano said the company continues to work on menu innovation and will soon debut a new buffet design for Pizza Inn.

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