The Habit Burger Grill is shifting more development emphasis to drive-thru locations, executives said Wednesday.
As many as 10 new restaurants this year will incorporate drive-thrus, said Russell Bendel, president and CEO of the brand’s parent, Irvine, Calif.-based Habit Restaurants Inc., in an earnings call.
“We don't have a lot of history with drive-thrus, but we continue to be very pleased with how they are performing,” Bendell said.
“This year, we expect 8 to 10 of our total new stores to be drive-thus, of which I believe five are already open for the year,” he said. “So we feel very nice about that.”
In guidance for all of 2017, Habit Burger said it expected to open 31 to 33 company-operated restaurants and five to seven franchised units.
With more drive-thru restaurants being built, Bendel indicated development costs might be higher than in traditional fast-casual units.
“That will probably be more of a significant impact on development cost than anything,” he said.
Bendel added that construction and real estate costs have been outpacing inflation in the past several years as the company develops stores fairly evenly divided between the East Coast and the West Coast.
“We would hope, while we don't know yet, that those numbers would start to come more in line with inflation,” he told analysts.
The company opened 10 stores in the second quarter ended June 27, and franchisees opened one.
Second-quarter net income fell 6.6 percent, to $1.1 million, or five cents a share, compared to $1.2 million, or seven cents a share, in the same quarter last year. Revenue rose 17.2 percent, to $83.3 million, compared to $71.1 million in the second quarter of 2016.
Bendel said the restaurant environment remained “choppy.”
Same-store sales at company-operated restaurants increased 0.1 percent, including a 0.3 percent increase in transactions offset by a 0.2 percent decline in average transaction amount.
Executives said part of the transaction decline was due to a giveaway promotion.
“We exclusively offered CharClub members a free Charburger with cheese to celebrate the Father's Day graduation time in June and into the first week of July,” Bendel said. “While we do not anticipate using this tactic frequently, limited-time offers like this allow us to leverage the power of our database, while bringing guest loyalty and driving traffic.”
The Habit Burger Grill, which first opened in Santa Barbara, Calif., in 1969, has more than 190 restaurants in 10 states as well as two international locations.
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