Ruth’s Chris yields bigger revenues with new locations
The Winter Park-based parent company of Ruth’s Chris Steak Houses delivered 3.6 percent sales growth in the first quarter and 2.6 percent higher profits year over year, the company reported Friday.
But same-restaurant sales for the upscale steakhouse chain and Ruth’s Hospitality Group were weak, just 0.7 percent higher at company-owned restaurants. It’s a trend across the industry, as the number of total restaurants falls, prices rise and customer spending isn’t growing fast enough.
Revenues for the first quarter were $105.5 million with $11 million in net income. Operating income dropped 1.2 percent to $16.2 million. Still, earnings for Ruth’s Hospitality (NASDAQ: RUTH) came in above analysts’ estimates as the company managed to cut costs, even while customer counts fell. Earnings per share were 36 cents, 3 cents above Wall Street estimates.
“We delivered a solid start to the year, achieving both sales and earnings growth during the first quarter,” CEO Michael O’Donnell said in a statement. “Our results continue to be driven by execution against our total return strategy, through which we strive to maintain a healthy core of restaurants, grow our base in a disciplined fashion, and return excess capital to shareholders.”
Ruth’s Chris has 150 restaurants across the country and opened three more during the quarter.
Customer traffic at companyowned stores fell 1.7 percent during the quarter compared to the first quarter of 2017. That was bolstered by a 2.4 percent increase in average check prices.
Franchise income for the 81 Ruth’s Chris restaurants owned by others was down 2.5 percent compared to first quarter 2016. The decline was because of a decrease in development fees for new restaurants that opened in 2016. Comparable franchise restaurant sales increased 3.6 percent from a year earlier.
Ruth’s Hospitality Group also declared a dividend of 9 cents per share.
Investors reacted well to the earnings, boosting shares about 6 percent to close at $21 Friday.