Financial postings from the industry’s largest restaurant chains show that big brands are settling into a new normal. For small-cap operations, particularly in the full-service sector, the environment is proving far rockier.
Chuy’s: Big boost in margins
The 92-unit casual Tex-Mex chain boosted its restaurant-level profit margin during the fourth quarter of 2020 to 20%, from a year-ago level of 14.3%, boosting aggregate unit-level profits to $16 million. A significant portion of the savings came from the elimination of Chuy’s signature chips-and-salsa buffet, a complimentary spread known as the Nacho Car. Buffets and other self-serve stations were largely banned early in the pandemic because of fears they’d facilitate the spread of COVID-19.
Unit-level employee furloughs early in the pandemic also brought down labor expenses for the year.
Sales climbed on a same-store basis during Q4 to within 81.7% of pre-pandemic levels, and improved by almost another four points during the week ended Jan. 24.
Chuy’s reported a net income for Q4 of $1.8 million, compared with a year-ago loss of $1.4 million. Revenues for the period totaled $78.7 million, down 22.9%.
Taco Cabana, Pollo Tropical: Oh, those drive-thrus
The double whammy of the pandemic and bad weather caused some rocky times for the parent company of Taco Cabana and Pollo Tropical. But Fiesta Restaurant Group said during a Q4 call with analysts call late Thursday that its drive-thrus have been a saving grace
Dallas-based Fiesta reported total revenue decreased 6.6% to $148.9 million during the quarter ended Jan. 3. Same-store sales at Pollo Tropical fell 8.2% and declined 10% at Taco Cabana.
Taco Cabana, which has many restaurants in Texas, is expected to have lost up to $3 million during last month’s snowstorm in which about 125 locations were hit with problems ranging from minor issues to major pipe, water and equipment damage, the company said.
Both fast-casual brands saw drive-thru same-store sales growth of at least 24% year-over-year, helping to partially offset the loss of sales from dining room closures due to COVID. The operator is working on drive-thru enhancements to improve throughput.
Ruth’s Chris: Q4 comps down 39.4%, mostly due to traffic
Parent Ruth’s Hospitality Group posted indications that its expense-account-dependent steakhouse brand hasn’t bounced back as strongly as have less-pricey casual-dining brands. Sales for the fourth quarter ended Dec. 27 were down on a comparable basis by 39.4% at company-operated restaurants. Same-store sales climbed to within 74.4% of pre-COVID levels during February.
Net profits for Q4 totaled $1.4 million, down 90.1% from a year ago, on revenues of $77.4 million, down 42.7%.