Since that transaction, the steakhouse has opened two company-run locations in the Northeast territory.
“We continuously say we look for the opportunity,” Henry said. “We're talking to our franchisees as we come out of the pandemic to understand where they are. We've done a great deal of work around addressable market and understanding what markets going forward are franchise versus company and if there's an opportunity in that as we're talking with them. We'll take advantage of it, but no specific plan at this point.”
Sales trends are boosting the steakhouse’s confidence. Same-store sales rose 2.8 percent in October and 6 percent in November compared to 2019, but fell 5.3 percent in December as Omicron took hold. Still, the chain finished the quarter with 0.5 percent same-store sales growth. Comps were impacted by approximately 640 basis points due to underperformance of restaurants in Boston, Manhattan, and Hawaii.
For 2021 overall, comps dropped 3.6 percent against 2019.
Comps felt pressure throughout January, but witnessed a strong rebound in February, with same-store sales rising 4.3 percent through the first eight weeks of the first quarter.
Food and beverage costs were 34.1 percent in Q4, or roughly 39 percent higher than 2019. In January, the company saw decreases in beef costs, but CFO Kristy Chipman said it will take a few weeks for that to take shape in the P&L as the chain works through its higher-cost inventory. Cost of goods sold is anticipated to be between 32.5 percent and 33.5 percent in the first quarter.
Staffing costs improved 321 basis points in Q4 compared to 2019, with Ruth’s Chris benefiting from efficiencies in hourly and management labor.
The company is continuing to methodically add back managers into restaurants to support teams and protect the guest experience, Chipman said. Ruth’s Chris expects to have an average of five managers in each store by mid-2022. As those employees come back into the fold, the chain stands by its guidance of 200 basis points of improvement in labor against 2019 levels.
“These are kind of utility managers,” Henry said. “They are great at any position in the restaurant, they can work front of house, back of house, bar area, but really what we expect our managers to do is lead the excellent leaders in the store. And that's where you'll see them focused—around the other team members and ensuring we're delivering the experience we've been known for, for almost 57 years now.”
To offset higher costs, the steakhouse carried 6.4 percent pricing into 2022, and will take an incremental 3 percent bump in March.
“Based on our analysis, we believe that price increase will be accepted by our guests as they understand the value they are getting when dining in our restaurants,” Chipman said.
Total revenues for the quarter were $126.7 million compared to $77.4 million in 2020, while company-owned restaurant sales increased to $118.7 million versus $72.2 million in the prior year. Franchise income for Q4 was $5.5 million, up 50.2 percent year-over-year, while operating income was $2.6 million.
