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With sales down 61%, J. Alexander’s reconsiders delivery

The polished casual dining chain is testing the service, potentially ending a long-held prohibition.
Photograph: Shutterstock

With same-store sales down more than 61% in May at its two main polished-casual brands, J. Alexander’s is caving on its refusal to consider delivery.

But the multi-concept operator is sticking with its decision to hold off on a sale of the company to a strategic buyer until 2021, according to a securities filing.

The operator of the J. Alexander’s Grill and Stoney River Steakhouse and Grill chains had refused to follow its competitors into takeout and delivery before the COVID-19 pandemic struck. Management asserted that the experience of dining within its restaurants is a major point of distinction for the brands’ success and could not be distilled into a packed meal dispatched for at-home consumption. Similar sentiments were aired at the time by several competitors, including Texas Roadhouse and Del Frisco’s Grille.

When dining rooms were closed by a government mandate to slow the virus’ spread, J. Alexander’s dropped its opposition to takeout and developed a curbside delivery program. It also found itself with a glut of pricey aged beef and opted to sell the meat uncooked to consumers.

Executives warned investors that the programs would only generate between 10% and 20% of units’ former sales. The figure proved to be 18%.

Now, with the recovery of the J. Alexander’s and Stoney River brands falling behind the rebound of several other casual chains, their parent company is beginning a test of delivery. Management did not reveal the scope or location of the sales trial.

J. Alexander’s same-store sales for May were down 61.5%, while Stoney River’s were negative by 62%. The figures reflect the partial reopening of dining rooms in Georgia, Texas, Tennessee, Florida, Ohio and other states where the brands have a presence. As of June 9, all 46 of the company’s restaurants have resumed some degree of dine-in service.

For the first quarter, the company posted a net loss of $17.6 million, compared with a year-ago net income of $3.8 million, on net sales of $57 million, down 12%.

Last summer, the company announced that it would explore “strategic alternatives,” explaining to investors that it was hamstrung by being a small company competing against multi-billion-dollar operations. Efforts to find a strategic buyer were suspended when the pandemic hit.

“The board currently believes it will be sometime in 2021 before the company can conclude its evaluation of strategic alternatives, focusing on the potential sale of the company,” J. Alexander’s said in releasing its financial results.

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