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Delivery, higher menu prices drive sales at The Habit

Delivery, higher menu prices drive sales at The Habit

Same-store sales up 3.6 percent despite decline in visits

Higher menu prices and delivery sales sparked a 3.6 percent increase in third-quarter same-stores sales at The Habit Restaurants Inc.

In late May, the Irvine, Calif.-based Habit Burger Grill increased menu prices by 3.9 percent to partially offset labor cost pressures in California. As result, the company’s average check went up 7 percent for the quarter. That, plus the rollout of third-party delivery, helped drive sales for the third quarter ended Sept. 25.

Though spending per transaction was up, the chain still struggled with traffic – a common theme in the oversaturated restaurant industry.  Transactions dropped 3.4 percent for the quarter. The company said lower foot traffic was tied to the elimination of a June freebie promotion this year.

Bendel said scrapping the burger promotion improved margins amid lower transactions, which he noted were on par with industry trends.

“I think if you look at us relative to the rest of the industry that has negative traffic, I don’t feel like we’re a big outlier relative to kind of the trends that we’re seeing in the rest of the sector,” he said.

By the end of the quarter, roughly 200 company operated restaurants and 11 franchised restaurants were offering delivery, or about 87 percent of the system. Bendel said it is still too early to analyze long-term impact on sales. But, so far, he likes what he sees.

“We continue to see good results with our average delivery time and we are also getting great reviews from our guests,” he said. “We are also seeing a higher check for delivery compared to dine-in or carry-out.”

Drive-thru restaurants, which are concentrated in the West, also continue to perform well for the brand. The chain’s first East Coast location will open in early 2019 in New Jersey with a drive-thru.

The company opened eight restaurants in the quarter to end the period with 242 total locations, including 219 company-operated units and 23 franchised units. Of the eight new restaurants, half were drive thru locations.

For 2019, The Habit plans to open 21 to 23 company-operated locations. Roughly half of those units will have drive-thrus.

The company reported a net loss of $0.6 million, or a loss of 3 cents per share, compared to net income of $0.4 million, or 2 cents per share, for the same quarter last year. Revenue increased 23.7 percent to $104.6 million, compared with $84.6 million in the same quarter a year earlier.

Contact Nancy Luna at [email protected] 

Follow her on Twitter: @FastFoodMaven

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