Ruth’s Hospitality Group Inc. has snagged development rights to expand its presence in the greater Philadelphia area, Long Island, N.Y., and parts of New Jersey, the company announced Friday.
The company also said it is poised to open at least five new restaurants through 2020.
The Winter Park, Fla.-based steakhouse operator said the development deal in the East Coast was made possible after the company acquired three franchise restaurants in those territories from longtime franchise partner Marsha Brown, who was the former banker for company founder Ruth Fertel.
The combined restaurants generate roughly $15 million in revenue a year.
“This is a unique acquisition of prized territory that will help us solidify our overall growth strategy of three to five new company-owned restaurants per year,” CEO Cheryl Henry told investors during the company’s first-quarter conference call.
When Henry was promoted from chief operating officer to CEO last June, Ruth’s Hospitality had reported a slip in same-store sales for company-operated and franchised locations.
In its last three quarters, both company and franchise locations have seen mostly gains, with the exception of a 0.1% decline in company same-stores sales in the fourth quarter of 2018. The dip was tied to New Year’s Eve falling outside the quarter.
As expected, that holiday shift, gave company restaurants a lift in the first quarter ended March 31. Same-store sales at company restaurants increased 1.8% compared to 1.1% decline in the first quarter of last year. The average check increased by 1.8%.
Same-store sales at franchise locations increased 3.1%, compared to a 0.8-percent decline last year, same quarter.
The company closed the quarter with 76 franchise locations, and 78 company restaurants. Henry said three company restaurants are expected to open this year in Columbus, Ohio, Washington D.C. and Somerville, Mass., while a fourth in Oklahoma City is scheduled to open in 2020. A franchise location is expected to open in 2020 in St. George, Utah.
The company told investors that store refreshes are continuing with an emphasis on expanding bars and private-dining space. Henry said about eight restaurants will complete makeovers this year.
For the quarter ended March 31, Ruth’s reported total revenue of $119.7 million, up 2.8% from $116.5 million in the first quarter of 2018. Net income was $13.9 million, or 47 per share, compared with $13.6 million, or 45 cents per share, in the same quarter last year.
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