Chuy’s(CHUY)2024-05-12 00:49Financial Data and Key Metrics - Q1 2024 revenue was 112.5 million in Q1 2023, primarily due to a 1-week calendar shift, which negatively impacted sales by 900,000, and EPS by 0.05 [33][34] - Comparable restaurant sales decreased 4.3% year-over-year, driven by a 6.9% decrease in average weekly customers, partially offset by a 2.6% increase in average check [34] - Cost of sales as a percentage of revenue decreased 30 basis points to 25.2%, driven by commodity deflation of 1.3% [35] - Labor costs as a percentage of revenue increased 110 basis points to 31.4%, primarily due to hourly labor inflation of 3.6% and improved staffing levels [3][35] - Net income for Q1 2024 was 0.40 per diluted share, compared to 0.45 per diluted share, in Q1 2023 [48] Business Line Data and Key Metrics - Off-premise sales accounted for 29% of total revenue, up from 27% in the prior year, with delivery improving by 130 basis points year-over-year [1][34] - Catering sales mixed at 3.5% in Q1, with long-term expectations for catering to contribute 4% to 6% of total sales [28] - The company successfully opened 1 restaurant in New Bronzeville, Texas, and another in Austin, Texas, with plans to open 6 to 8 new restaurants in core markets in 2024 [30][31] Market Data and Key Metrics - The company expects mid-single-digit labor inflation for 2024, with commodity inflation projected in the low single digits [35][48] - Beef costs are locked in through Q2, with potential inflation in Q3 and Q4 due to higher slaughter rates [13] - The company is rolling out the ezCater platform to all restaurants, which is expected to improve catering performance [11] Company Strategy and Industry Competition - The company is focusing on digital media platforms like Meta, Google, TikTok, and YouTube to communicate its brand value and unique offerings [29] - Menu innovation remains a key growth driver, with new CKO (Culinary Knockout) items being introduced and some guest favorites being added to the regular menu [60][62] - The company is committed to maintaining a streamlined menu while using CKOs as a testing ground for new items [62] Management Commentary on Operating Environment and Future Outlook - Management remains optimistic about long-term growth opportunities, emphasizing operational excellence and a strong balance sheet [48][63] - The company expects comp sales to improve throughout the year, with a 2-year stack showing a 3.7% increase in Q1 [67][92] - Marketing efforts are being adjusted to focus more on value messaging, with 80% of the message centered on value and 20% on competitive advantages [121] Other Important Information - The company repurchased 214,659 shares for 13.8 million remaining under its 50 million repurchase program [48] - G&A expenses decreased to 7.1 million in Q1 from $7.8 million in the prior year, driven by lower performance-based bonuses [48] Q&A Session Summary Question: Christopher O'Cull (Stifel) - Comps improvement and quarter-to-date trends - Comps improved during the quarter, with quarter-to-date comps down 2.2% [49] - The company expects comps to be flat to slightly positive for the year, with a 2-year stack showing a 3.7% increase in Q1 [50][92] Question: Jim Salera (Stephens) - Digital strategy and value messaging - The company is focusing on value messaging in digital channels, while still emphasizing its unique product offerings like hand-squeezed margaritas and made-from-scratch food [9][25] Question: David Tarantino (Baird) - Catering and delivery performance - The company is rolling out the ezCater platform to all restaurants, which is expected to improve catering performance [11] - Uber Eats comps are expected to improve as the company rolls over last year's comps in Q2 and Q3 [11] Question: Andy Barish (Jefferies) - Labor and commodity inflation outlook - Labor inflation is expected to be in the mid-single digits, with commodity inflation projected to increase in Q2, Q3, and Q4 [13][94] Question: Nerses Setyan (Wedbush) - Geographic comp trends and cannibalization - The company has seen consistent performance across its stores, with no significant cannibalization from new restaurant openings [20][77] Question: Todd Brooks (Benchmark) - Marketing and value offerings - The company is adjusting its marketing message to focus more on value, with 80% of the message centered on value and 20% on competitive advantages [121] Question: Andrew Wolf (CL King) - Weather impact and comp sales improvement - Weather and the Easter calendar shift negatively impacted comp sales by 1.2% in Q1 [89] - The company expects comp sales to improve throughout the year, driven by marketing efforts and improved delivery performance [120]