Traffic is starting to normalize after a challenging Omicron stretch.
As Omicron cases continue to decline and on-premises dining picks back up, Chuy’s plans to replenish its menu and revamp marketing efforts.
The brand will bring back eight menu items, mostly combination plates, in an effort to offer more value for customers. Chuy’s will also introduce a new happy hour in February as traffic system-wide begins to return to more normalized levels.
Catering will also be reevaluated this year, the company said. Chuy’s ended 2021 with catering in 14 markets after halting expansion at the onset of the pandemic. The Tex-Mex restaurant plans to spread catering throughout the whole system by the end of 2022.
On the marketing front, Chuy’s will lean heavily into digital channels as both a way of introducing and highlighting menu items, as well as a means of recruiting new talent.
YouTube videos and TikToks will be used as advertising, while platforms like Instagram will be deployed as part of an “organic influencer program.” All of these initiatives are designed to reach a broader audience with the end goal of connecting with both new and returning guests.
Other marketing initiatives include a promotional advertising partnership with DoorDash and the launch of a new website.
As far as numbers go, staffing issues related to the Omicron variant and a quiet holiday season led to Chuy’s experiencing mixed results during the final quarter of fiscal 2021.
Comp restaurant sales increased over 20 percent compared to 2020. However, they were down 0.7 percent versus 2019. President and CEO Steve Hislop said the timing of winter holidays impacted performance.
“It's worth noting that our fourth quarter 2021 performance is negatively impacted by the timing of Christmas compared to a fiscal 2019,” he said during a conference call. “Excluding this Christmas shift, our fourth quarter comparable restaurant sales would've increased approximately 0.2 percent compared to 2019.”
Despite a slow Christmas, Chuy’s saw profitability increase by 100 basis points compared to last year and 700 basis points over 2019. Hislop says the brand anticipates margin improvement of 300–350 basis points over 2019, even after factoring in current inflationary pressures.
Revenues for Q4 were up 25.4 percent to $98.7 million versus $78.7 million in the same quarter last year. Vice president and CFO Jon Howie attributed the growth to “an increase in customer traffic as we continued to relax indoor dining capacity restrictions for all our restaurants.” He added $3.6 million of incremental revenue was generated from new restaurants that opened during fiscal 2021.
Off-premise sales were about 28 percent of total revenue during the quarter, down from 33 percent in 2020 and 14.6 percent in 2019.
Chuy’s wrapped up the year with $396.5 million in total revenue, up 23.5 percent from 2020. Comp restaurant sales for the calendar produced mixed results. Comp sales were up more than 20 percent compared to 2020, but down 4 percent compared to 2019.
Overall, Hislop says he feels good about how the company is positioned.
“Despite the current challenges of the external environments, we believe that our business is now better and stronger than it has ever been pre-pandemic,” he said. “We are now, more than ever, set up for long term success.”
When it comes to labor, like most others in the industry, Chuy’s continues to struggle with staffing and has yet to reach 100 percent systemwide. Hislop says the company is roughly 85 percent staffed.
“We're still right around 85 percent, which, during Omicron, we felt pretty good about,” he said. “But we're moving forward and I think we're better than most out there, but we still got a lot of ways to go.”
Even though Chuy’s has struggled to get staffing to 100 percent, the brand managed to retain workers. Management and hourly turnover were lower in 2021 than pre-pandemic 2019. The CEO credits initiative likes retention bonuses.
“Our management and hourly turnover are some of the best in casual dining sector,” he said. “We believe that when you stabilize your management team, you'll also stabilize your hourly team members, which generally leads to higher performing stores. We have found that to be the case in practice.”
In terms of growth, Chuy’s expects to open between five and eight restaurants over the course of 2022. That number has been adjusted from the previous goal of six to eight, due largely to ongoing uncertainty around pandemic related construction delays.