Growth in Ruth’s Chris Steak House’s happy hour program and other marketing efforts helped the high-end casual-dining operator post increases in third-quarter sales and profit, executives said Tuesday.
Winter Park, Fla.-based Ruth’s Hospitality Group Inc. on Tuesday reported net income of $802,000, or 2 cents per share, for the quarter ended Sept. 23, compared with $797,000 and zero cents per share in the same period last year. Revenues in the quarter were $84.8 million, a 5.7-percent increase from $80.2 million in the prior-year period.
Same-store sales at 68 company-owned Ruth’s Chris Steak Houses increased 5.9 percent in the quarter, and sales at 19 company-owned Mitchell’s Fish Markets increased 4.6 percent, the company said.
Mike O’Donnell, Ruth’s Hospitality chairman, president and chief executive, credited several promotional programs for the solid earnings.
Growth in the “Sizzle, Swizzle and Swirl” happy hour program, which was introduced late in the first quarter and features menu and drink items for $7 each, was one of the factors that contributed to the results, O’Donnell said in a conference call with analysts. That program “does not compete with our dining room sales,” O’Donnell said. “This offering not only gives us an opportunity to drive incremental sales at the traditional happy hour but turns many first-time guests into Ruth’s Chris regulars.”
The happy hour program is offered in about two-thirds of company-owned restaurants and a third of the franchised locations, according to O’Donnell.
Ruth’s “Seasonal Classics” prix fixe menu was another solid performer, O’Donnell said. “It now comprises 19 percent of sales mix, down 10 percentage points of mix from prior year,” he said. The chain has raised prices from $49 to the low-$50 range on the two “Seasonal Classics” offerings, with about 66 percent of others at a higher priced tier, O’Donnell said.
Those higher-end orders indicate improved consumer confidence, O’Donnell said.
The company has also partnered with Marie Claire magazine to sponsor a speaker series in the restaurants on women and entrepreneurship, which O’Donnell said would continue.
Arne Haak, Ruth Hospitality’s executive vice president and chief financial officer, said, “For the fourth quarter, our menus currently reflect an approximately 2.4-percent price increase. With the current economic backdrop, it is still our strategy to focus on growing sales through traffic gains and maintaining our value orientation.”
O’Donnell said entrees, which serve as a proxy for traffic, increased 3.6 percent in third quarter. And on a regional basis, Ruth’s Chris’ two largest markets — Florida and California — continued to generate positive sales. Florida’s sales rose 7.4 percent and California’s increase 8.2 percent, he said.
As for private dining, O’Donnell said those sales were flat in the third quarter, but he had opened for the holiday season. “We believe private dining will rebound in the fourth quarter and are very encouraged by our early holiday bookings,” he said.
Beef costs in the third quarter rose about 14 percent over the same period last year, Haak said, but fell slightly from the 19-percent increase in the second quarter. “For the fourth quarter, thing’s look pretty consistent with what we’ve seen,” he told analysts.
This year, the company has opened new Ruth’s Chris Steak Houses, including the most recent in Cincinnati on Oct. 15.
Earlier in the year, it had opened a unit in the Harrah’s casino in Cherokee, N.C., as well as international units in Dubai (the second for that United Arab Emirates location), El Salvador and Singapore. For 2013, the company plans to open a new company-owned restaurant in Denver, a relocated location in Houston, and a licensed location at the Harrah’s casino in Las Vegas. Between four and five franchised locations are expected to open in 2013 as well.
Ruth’s Hospitality Group owns the Ruth’s Chris Steak House, Mitchell’s Fish Market, Mitchell’s Steakhouse and Cameron’s Steakhouse concepts. It has more than 150 company- and franchisee-owned locations.