In March 2020, J. Alexander’s CEO Mark Parkey said the brand was “concerned about the disruption that the COVID-19 outbreak has caused.”
The chain later reported same-store sales dropped 37 percent in March, 81 percent in April, and 61.5 percent in May—an absolutely brutal stretch experienced by concepts across the industry.
It’s important to note, however, Parkey began that March 2020 statement by saying “our long-term outlook remains positive.” And a year later, it appears the optimism is winning out.
J. Alexander’s captured 75 percent and 85 percent of 2020 sales in January and February, respectively. Compared to 2019, the chain captured 78 percent and 88 percent of sales. The improving figures came in spite of winter storms that closed restaurants in Alabama, Illinois, Kentucky, Louisiana, Missouri, Ohio, Tennessee, and Texas. The weather resulted in a total of 54 closed days and $500,000 in lost sales in February.
On February 7, restaurants were operating at an average capacity of roughly 60 percent. As of March 12, the average capacity has risen to approximately 70 percent.
“Given the recent announcements easing capacity restrictions in various states, we are optimistic that sales will continue to build toward pre-pandemic levels,” Parkey said in a statement.
J. Alexander’s is in a much better position than it was earlier in the winter. In October and November, same-store sales declined 11.2 percent and 20.4 percent, respectively. In December, comps dropped 28.9 percent—a total that would’ve been lower if it weren’t for the extra calendar week.
In Q4, average weekly same-store sales per restaurant dropped to $90,500, or a 21.4 percent slide, while average weekly same-store traffic dropped 26.7 percent. Average same-store check increased 7.1 percent to $35.50.
The chain’s other brand, Stoney River Steakhouse and Grill, experienced similar trends. Same-store sales decreased 10.3 percent in October and 21.1 percent in November, but then lowered 36.2 percent in December. For all of Q4, average weekly same-store sales per restaurant slid to $63,500, or a 24.9 percent plunge. Average weekly same-store traffic dropped 26.3 percent and average same-store check grew 1.7 percent to $44.16.
Off-premises accounted for 20 percent of net sales in Q4, representing roughly $730,000 in average weekly off-premises sales. During the final six weeks of the quarter, the company averaged $850,000 per week. For comparison, J. Alexander’s averaged between $600,000 and $700,000 in off-premises each week in Q3.
“We are optimistic that in 2021 after the vaccines become broadly available to the general public, consumer confidence continues to build, and governmental restrictions are rolled back, our restaurants will return to serving dining rooms filled with loyal guests,” Parkey said. “While we are excited to continue and further develop our off-premise business, we certainly look forward to the days when each of our 46 locations will once again be operating at full capacity.”
The chain is scheduled to open its first ground-up build of a Redlands Grill restaurant on March 29 in San Antonio, and also debut a new J. Alexander’s store in Madison, Alabama, in Q4 of 2021.
The net loss for 2020 was $22.5 million compared to net income of $8.8 million in 2019. Adjusted EBITDA for 2020 was $1.6 million, a decline from $25.6 million last year.
J. Alexander’s is still evaluating strategic alternatives, which began in 2019. At the time, the chain mentioned multiple pathways, including a merger or sale, a strategic investment accompanied by a significant share repurchase, or the acquisition of complementary concepts to increase the revenue base and operating leverage. The chain thought it had a potential buyer in 2020, but the COVID pandemic interrupted the process.
Lonnie J. Stout, executive chairman of the board of directors, said in February that the brand will “pursue completing that process prudently this year” as stores move toward full capacity and sales reflect the brand’s true potential.
