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Chuys_4Q19_Delivery_AddisonTX_ RR.jpg Ron Ruggless
Chuy's is watching guest-count trends before accelerating restaurant development.

Chuy’s watches guest counts before accelerating development

Q4 closures part of brand’s ongoing looking at ‘bottom 10%’ says CEO Steve Hislop

Chuy’s Holdings Inc. is watching guest counts to see if they increase before accelerating restaurant development, company CEO Steve Hislop said Thursday.

The 101-unit Austin, Texas-based casual-dining Tex-Mex brand close four restaurants in the fourth quarter, which impacted its earnings.

“We always are going to take a look at our bottom 10% stores and make sure that it makes sense for us to continue on with those from a human resource standpoint and obviously a financial standpoint, because markets do move a little bit at times,” said Hislop on fourth-quarter analyst call.

During the fourth quarter, Chuy’s closed four units, one each in Warrenville, Ill.; Cumberland, Ga.; Tuscaloosa, Ala.; and Annapolis, Md. For the entire year, the company opened six units and closed six to end the year at 100 units. In this year’s first quarter, Chuy’s has opened a restaurant in Frisco, Texas.

While the company expects to add five and seven new Chuy’s units in total this year, Hislop said customer traffic trends will determine when the company will accelerate new-store development.

“I need to see a return of increased guest counts before I really jump in and say I'm going to accelerate it in 2021,” Hislop told analysts. When guests counts show increases, he added, “then you'll see us probably get into the low double digits on real estate and openings.”

For the fourth quarter ended Dec. 29, Chuy’s swung to a loss of $1.4 million, or 9 cents a share, from net income of $3.4 million, or 20 cents a share, in the same period a year ago. The fourth quarter included impairments, closed restaurant costs and legal settlement charges, the company said. Revenue increased 5.4% to $102 million from $96.8 million in the same quarter last year.

Chuy’s same-store sales in the fourth quarter were up 2.9%

Andy Barish, an analyst with Jefferies, said in a note Friday that Chuy’s is continuing to work “on several op[erations] initiatives to improve the guest experience, such as a new table management system, and testing pay-at-the-table and handheld ordering devices.”

Hislop said the paid-at-table device was being testing in a high-volume restaurant.

“We believe this device could potentially relieve a lot of the frustration taking time from an extended wait for a ticket following a great dining experience,” he said.

“Our second test involves the use of a handheld ordering device with the goal to enhance our hospitality by keeping our waiters and waitresses on the floor more to improve guest engagement,” Hislop added. “While both of these devices are still in early stages, the feedback so far has been very favorable.”

Chuy’s was founded in Austin in 1982.

Contact Ron Ruggless at [email protected]

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TAGS: Operations
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