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Chuy-s_Smaller-Menu-Q2-2022.jpg Ron Ruggless
Chuy's Holdings Inc. expects to continue with pared-down core menu.

Chuy’s expects to add specials as it continues with pared-down menu

Tex-Mex casual-dining brand plans to continue offering value options with barbell higher-priced items

Chuy’s Holdings Inc. expects to continue offering a pared-down menu of 44 to 45 items, which it reduced during the pandemic, and start adding in higher-priced barbell items as limited-time specials, executives said Thursday.

The Austin, Texas-based Tex-Mex casual-dining concept noted that consumers and restaurants are both dealing with inflation, so value remains a large focus of the menu, said Jon Howie, Chuy’s chief financial officer.

Prices increases ran slightly less than 7% in the first half of the year, while commodity inflation in the second quarter was 24%, Howie noted. Chuy’s traffic has surpassed that of the casual-dining sector as a whole, Howie said, citing Blackbox Intelligence comparisons.

That position gives the Chuy’s brand some open pricing power, said Steve Hislop, Chuy’s CEO and president, on an earnings call for the second quarter ended June 26.

“The existing menu — at that 44-, 45-item level —offers a lot of choice and a lot of variety,” Hislop said. “Starting in the fourth quarter, you are going see us add two to three items a quarter that will run six weeks in the quarter. … One might be an old favorite that we used to have. One might be an old special that we ran over the last 10 years.”

Hislop said that as Chuy’s moves into 2023, specifically the middle part of the year, the brand can take a different approach with what he called these “Chuy’s Knockout” items.

One of the two or three limited-time items “will always probably have a barbell approach” at a higher price, Hislop added, and those items will be to excite both consumers and employees.

“We're very comfortable with the size of the menu currently with just top of the three specials every quarter,” he said, “and that's how we continue to move forward.”

Hislop said that despite the inflationary environment, Chuy’s was able through cost management and operational efficiencies to produce a restaurant-level operating margin of more than 19%.

For the second quarter ended June 26, Chuy’s reported net income of $7.9 million, or 41 cents a share, down from $11.5 million, or 57 cents share, in the year-ago period. Second-quarter revenue increased 2.6%, to $110.9 million, from $108.2 million in the prior-year period.

Off-premises sales were about 27% of the total during the quarter, the company noted.

Chuy’s, founded in 1982, Chuy's owns and operates more than 90 full-service restaurants across 17 states.

During the second quarter 2022, Chuy’s opened one new restaurant in Midland, Texas. The company reduced its range of new restaurants in fiscal 2022 to four from a range of four to six, citing construction labor and other constraints.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless


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