Ruth’s Chris CEO Cheryl Henry remains positive about the future, and much of that optimism is derived from the performance of two dozen restaurants this summer.

There were 24 company-owned restaurants that operated open dining rooms for all of June. At those units, same-store sales reached 81 percent of prior year levels. Also, each one had positive cash flows and margins consistent with 2019. Sixteen of the 24 had better margins than last year.

Henry said the success of these restaurants provides an early, but meaningful insight into the near-term performance. She gave credit to the workers at the restaurants for managing P&L in a low sales environment. 

“Some of this has been us taking a good look at where there’s opportunities, so I’d say there’s a mix,” Henry said during the company’s Q2 earnings call. “I think there are some things that we’ve done inside the restaurant, inside the four walls, that will carry on through this around staffing and the structure of our staffing in the restaurants.”

CFO Arnie Haak said the higher performance of the 16 units can be seen across P&L—food costs, labor efficiencies, and other operating costs. To Haak’s point, food and beverage costs decreased $21 million and restaurant operating expenses lowered $24.9 million.

Henry made the point that despite the environment, guest satisfaction scores remain high.

“I think the takeaway there is that we can make some of these changes,” Henry said. “Some for safety and health reasons as far as the number of people that are touching tables, and others to understand what’s truly required at that level of sales. And that’s probably where we’ve seen some significant opportunities around the margins.”

As of Tuesday, 88 percent of company-owned restaurants (71 of 81) are open. Fifty-two have open dining rooms, 15 are operating outdoor only, and four are doing off-premises only. Quarter-to-date, corporate stores—both open and closed—are down 47 percent, with average weekly sales of $53,700. Excluding the impact of the 10 closed units, comps would be down roughly 42 to 43 percent.

In addition, 93 percent of franchises (68 of 72) are open. Sixty-six have operating dining rooms, one has outdoor seating only and another is doing off-premises only.

Since May, units with open dining rooms have averaged 75 to 80 percent of prior year sales, and Henry said trends are slightly better than July than in June.

These sales, of course, were earned with capacity limits ranging from 25 to 75 percent.

“As we looked at it going in, several options—including outdoor dining spaces and expanding where we could, using private dining spaces, really reworking the entire floor plan of the restaurants to ensure the safety standards are being met, but at the same time, allowing for a different approach to seating, including shoulder times that maybe start a little early,” Henry explained. “As you can imagine, guests were certainly interested in understanding when they were first venturing out to dining rooms that if they wanted to come as early as 4:30 that restaurants are open and available for them and then some later at night, as well.”

In regard to its two biggest markets—Florida and California—Henry said units in Florida are holding steady as far as performance. With closed dining rooms in California, sales have softened, but Henry praised the team for transitioning rapidly to outdoor dining.

“Our team responded with speed and innovation and have now created some beautiful outdoor dining venues where none existed before,” Henry said.

The steakhouse has come a long way since the pandemic began. Comps sank 87 percent in April and 80 percent in May. As dining rooms reopened, same-store sales improved to a decline of 54 percent in June. Average weekly sales went from $19,200 in April to $30,500 in May. That figure then tripled in June to $60,000.

For Q2 overall, comps at company-run stores declined 74 percent and average weekly sales stood at $36,300. This breaks out to a 68.6 percent decrease in traffic and 17.4 percent slide in average check. Q2 revenue was $28.4 million compared to $110.2 million in the year-ago period. Net loss was $17.6 million, down from a net income of $9.3 million in 2019.

At restaurants with open dining rooms, comps were down 23 percent in May and 19 percent in June. That equals average weekly sales of $70,750 in May and $84,000 in June.

Ruth’s Chris permanently closed five company-owned stores and terminated leases at two of the seven new units it was planning to open. One franchise restaurant in Charleston, South Carolina, permanently closed, as well. Haak said there are at least five additional locations that could close if the pace of recovery slows or the restaurant isn’t able to reach a resolution with the landlords.

“There were a handful that were underperformers and then you have some that had lease expirations and were at the end of their term anyway, and there wasn’t too much of a prize to rebuild the sales in those restaurants only to eventually close them a couple of years from now,” Haak said.

When it comes to the timing of the 10 closed corporate stores reopening, Henry said it involves discussions with landlords, validity of the marketplace in the next couple of years, and limitations in the jurisdiction.

“We’re reviewing them on a daily basis,” Henry said. “We obviously want our dining rooms open and we want our teams back in those dining rooms, but as we look at the viability and understanding the financials within the four walls of those locations we’ll continue to monitor it.”