Ruth’s Hospitality Q3 Revenues Up 2%

Ruth’s Hospitality Group, Inc. (NASDAQ: RUTH) today reported unaudited financial results for its third quarter ended September 25, 2011.

Highlights for the third quarter of 2011 compared to the third quarter of 2010 were as follows:

• Total revenues rose 2% to $80.2 million compared to $78.6 million in the prior year.
• Net income available to preferred and common shareholders of $85 thousand, or $0.00 per diluted share, compared to a net loss of $477 thousand, or ($0.01) per diluted share, in the third quarter of 2010.
• Company-owned comparable restaurant sales for Ruth’s Chris Steak House increased 2.6%. Company-owned comparable restaurant sales for Mitchell’s Fish Market decreased 0.7%.
• Food and beverage costs, as a percentage of restaurant sales, increased 120 basis points to 31.1%, driven primarily by unfavorable beef costs in addition to higher dairy, oil and grain-based products.
• Restaurant operating expenses, as a percentage of restaurant sales, increased 40 basis points to 56.3%, primarily due to increased health insurance costs which offset the benefit of increased sales leverage.
• All other operating costs were down 7% primarily due to reduced marketing expense.
• At the end of the third quarter of 2011, the Company had $39.4 million in debt outstanding under its senior credit agreement down from $67.0 million a year ago. This contributed to a $300 thousand reduction in interest expense year-over-year.

Michael P. O'Donnell, Chairman, President and Chief Executive Officer of Ruth's Hospitality Group, Inc., stated, “We’re pleased to have delivered our sixth consecutive quarter of comparable sales growth and our seventh consecutive quarter of traffic gains in the Ruth’s Chris brand, despite what turned out to be a challenging external environment. While our profit was modest this quarter, it was significant in that it was our first profit in four years in what is our seasonally weakest quarter from a sales perspective. I am grateful for the efforts of our team members and would like to thank them for their extraordinary effort and continued dedication. By focusing on high-level execution and creating great value for our guests, we believe we have strengthened and stabilized our brand. Our balance sheet remains strong and we continue to be prudent in evaluating our development opportunities.”

Review of Operating Results

Total revenues, which include Company-owned restaurant sales, franchise income, and other operating income were $80.2 million compared to $78.6 million in the third quarter of 2010.

Company-owned restaurant sales increased 1.9% to $77.1 million for the third quarter of 2011 from $75.7 million in the same quarter last year. Total operating weeks decreased 0.2% to 1,103 from 1,105 due to the relocation of our Portland restaurant.

Average weekly sales for Ruth’s Chris Steak House were $72 thousand in the third quarter of 2011 compared to $70 thousand in the third quarter of 2010. Average weekly sales at Mitchell’s Fish Market were $66 thousand compared to $67 thousand in the prior year third quarter.

For the third quarter of 2011, Company-owned comparable restaurant sales at Ruth’s Chris Steak House increased 2.6%, which consisted of an entrée increase of 1.2% along with an average check increase of 1.4%. Comparable restaurant sales at Mitchell’s Fish Market decreased 0.7%, which consisted of an entrée decrease of 2.4% and an average check increase of 1.8%.

Franchise income increased 10.7% to $2.9 million in the third quarter of 2011 from $2.6 million in the prior year third quarter. Comparable franchise-owned restaurant sales increased 6.1% with strong growth in the international markets. In September, we opened a franchised restaurant in Grand Rapids, MI in the historic Amway Grand Hotel.

Operating income was $1.7 million in the third quarter of 2011 compared to $1.7 million in the prior year third quarter.

Net income available to preferred and common shareholders was $85 thousand, or $0.00 per diluted share, compared to a net loss of $477 thousand, or ($0.01) per diluted share, in the third quarter of 2010.

Financial Outlook

The following statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer all of you to our recent filings with the SEC for a more detailed discussion of the risks that could impact future operating results and financial conditions.

Based on current information, Ruth's Hospitality Group, Inc. is updating its previous 2011 outlook:

• Cost of goods sold of 30.5% to 31.5% of restaurant sales
• Marketing and advertising of 3.0% to 3.5% of total revenues
• General and administrative expenses of $23 million to $25 million
• Effective tax rate of 30% in the fourth quarter resulting in a full year rate of 13% to 15%
• Capital expenditures of $8 to $10 million, down from $10 to $12 million in its previous outlook
• Free cash flow of $23 to $25 million, up from $21 to $23 million in its previous outlook
• Fully-diluted shares outstanding of 43.0 million to 44.0 million

About Ruth’s Hospitality Group, Inc.

Ruth’s Hospitality Group, Inc. (NASDAQ: RUTH) is a leading restaurant company focused exclusively on the upscale dining segment. The Company owns the Ruth’s Chris Steak House, Mitchell’s Fish Market, Mitchell’s Steakhouse and Cameron’s Steakhouse concepts. With more than 150 Company- and franchisee-owned locations worldwide, Ruth’s Hospitality Group, Inc. was founded in 1965 and is headquartered in Winter Park, Fla.

Reader Comments:

Be the first to leave a comment for this article

Tweet