The Tex-Mex brand has more changes in store.
Chuy’s is looking toward key pieces of technology to boost its customer experience.
The company is testing a pay-at-the-table device and a handheld ordering device. The first is intended to reduce wait time for checks and the other is expected to free up time for the wait staff.
“While both of these devices are still in early stages, the feedback so far has been very favorable,” said CEO Steve Hislop, during the company’s Q4 and annual review.
Chuy’s move is in line with the rest of its segment. According to a report by the National Restaurant Association, 57 percent of operators in the casual-dining segment will devote more resources to consumer-facing technology in 2020, such as tableside ordering systems. Sixty-two percent of consumers said this type of technology is a good idea, as well. In addition to consumer-facing tech, Chuy’s continued to use a new table management system to improve front-of-house efficiency and gather customer data as a foundation for a future loyalty program.
A LOOK BACK
The brand ended 2019 on a high note with a 2.9-percent same-store sales increase, (88 units in comp base) the seventh straight positive quarter. That breaks out to a 3.9-percent jump in average check and 1 percent dip in traffic. For the year, comps rose 2.6 percent, with a 3.7-percent increase in average check and 1.1-percent decrease in traffic. Revenue lifted 5.4 percent to $102 million in Q4 and 7.1 percent to $426.4 million in 2019. Six restaurants opened in 2019 (all in existing markets) and six closed, bringing the unit total to 100 across 19 states.
Regarding off-premises, Chuy’s rolled out its catering platform in two new markets in Q4, helping raise that channel’s revenue to $2.2 million, compared to $600,000 in Q4 2018. The goal is to add two markets each quarter and reach 19 by the end of 2020.
The brand also made DoorDash its systemwide delivery provider. The third-party service is expected to be completely rolled out by the end of Q1, including 32 units that don’t have third-party delivery set up yet. Chuy’s added Dispatch, as well, a system that streamlines the process and allows ordering to originate on the brand’s website. Hislop believes the partnership between DoorDash and Chuy’s will reduce delivery costs, and a portion of those savings will be reinvested in to-go packaging.
Tracking same-store sales
- Q4 2019: 2.9 percent
- Q3 2019: 2.6 percent
- Q2 2019: 1.9 percent
- Q1 2019: 3.2 percent
- Q4 2018: 0.9 percent
- Q3 2018: 0.5 percent
- Q2 2018: 1 percent
- Q1 2018: –1.5 percent
- Q4 2017: 1.3 percent
- Q3 2017: –2.1 percent
- Q2 2017: –1 percent
- Q1 2017: –0.7 percent
The CEO said the chain is prepared if the removal of other providers affects sales.
“Well, we've got some controls in place to combat that as far as we're going side-by-side for 90 days and with a lot of marketing behind the DoorDash, so that we can make sure that doesn't happen,” Hislop said. “So the transition with DoorDash is good. Also, we've got kind of something written in the agreement that if we were to decrease on the DoorDash, we can go ahead and bring in another service provider or bring back the other service provider. And so, hopefully we're not—we're not going to be in a situation where that decreases, per se.”
Another major initiative is the company’s marketing strategy, which will be more targeted this year. Each quarter, Chuy’s will focus on two markets—one existing and one new—with an increased use of digital platforms like YouTube, Hulu, Waze, paid search, and paid social media campaigns. The first quarter will focus on the Dallas and Washington, D.C., markets.
During the earnings call, Hislop received a handful of questions concerning the effects of the coronavirus, but the CEO said that while the company is taking precautions, it hasn’t witnessed any material changes to sales or operations. He did note that to-go orders have trended upward, and he expects the same for delivery once it’s fully rolled out.
In 2020, Chuy’s plans to open between five and seven new restaurants, primarily in current markets. Growth could accelerate to low double-digit openings in 2021, but Hislop said traffic must trend positively over a few quarters before that decision is made. Comp sales growth is expected to be between 2 percent and 3 percent in 2020.
“We are pleased with the health of our business and believe that the initiatives we put in place will continue to strengthen our overall performance,” Hislop said. “We look forward to capitalize on this momentum and we—as we enter 2020—will remain focused on taking care of our customers through our exceptional service and high quality, made from scratch food, and drinks.”