With most of its restaurants now open, Ruth’s Chris saw same-store sales improve each month of the third quarter, indicating guests are returning in places where that’s possible.
Restaurant-level margins were up year over year despite lower sales, thanks to streamlined menu and labor, executives said. The success of individual units depended heavily upon local coronavirus restrictions.
“The green shoots of demand reflect the regulatory environment of the markets that they’re in,” said CFO Arne Haak on an earnings call with shareholders Friday morning. The chain is working to balance a safety-first strategy with the need to generate cash flow, he said, maintaining social distancing even in markets like Florida where it could extend capacity to 100%.
And as restaurants reopened, Ruth’s hung on to some of the off-premise business it launched earlier in the pandemic under its Ruth’s Anywhere program.
“As we open restaurants, we see we're keeping about half of that. So I still think it's a viable option for some people,” CEO Cheryl Henry said. “But I'm also seeing, I guess on the flip side, it's great to see that people trust us, and they're willing to come back and have the experience in our restaurants.”
The steakhouse chain still faces a steep climb back to positive comps, with same-store sales for company-owned restaurants down 36.7% for the quarter ended Sept. 27. However, it made up significant ground in that period: July same-store sales were negative 43% year over year; in September they had improved to negative 28%.
And executives highlighted that 20 of those restaurants were limited to outdoor dining and five were temporarily closed. Among restaurants offering indoor dining, but still facing capacity limits of 50% or more, same-store sales were negative 21.6%.
The chain reported a net loss of $5.3 million compared to a profit of $4.5 million a year ago.
Overall, 72 of the chain’s 77 company-owned restaurants are now open, with all but one offering limited-capacity sit-down service. And 71 of its 72 franchised locations are open, with restrictions.
Ruth’s permanently closed four restaurants during the quarter, bringing total closures for the year to nine.
Nonetheless, executives expressed a cautious optimism Friday, saying restaurant-level leadership and guest loyalty during the pandemic has given them hope despite current conditions.
“Do we think based on what we've learned, understanding the strength of the team and the strength of the brand and our guest size, that there's an opportunity to grow this brand in the future? Yes I do,” said Henry. “It’s too early to say exactly how or when ... but that opportunity is in front of us.”
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