The final weeks of March 2020 were a dark time in the five-decade history of J. Alexander’s.
Sales plummeted 85 percent as intense restrictions completely shut down society. It was truly a moment of crisis. But that’s the key—it was a moment. As CEO Mark Parkey said, the fine-dining brand didn’t waste any time adapting to a new business model, restricted capacities, daily sanitation protocols, enhanced technology, rapid product development, and staffing challenges.
The chain’s perseverance was rewarded in April, as sales lifted 5 percent compared to 2019—the first positive result since the onset of the pandemic. J. Alexander’s ended Q1 with 75 percent average capacity across its system. By May 16, that grew to 85 percent.
“We’re optimistic that we will continue to build on the tremendous momentum we’ve experienced in the first few months of 2021 throughout the remainder of the year and are anxiously awaiting the day when each of our locations will once again be operating at full capacity,” Parkey says.
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At J. Alexander’s and Redland Grill, average weekly same-store sales per restaurant in Q1 grew 3.1 percent year-over-year to $106,600, and at Stoney River Steakhouse and Grill, average weekly same-store sales lifted 4 percent year-over-year to $75,300. And that’s with an approximately $500,000 loss in net sales due to winter storms during February.
As seen through most of the industry, sales were fueled by larger average check as opposed to traffic. For J. Alexander’s and Redland Grill, average weekly guest counts dropped 6.7 percent compared to 2020, and average check increased 10 percent to $36.30. For Stoney River Steakhouse and Grill, average weekly guest counts decreased 3.5 percent while average check rose 7.7 percent to $44.97.
Although dine-in sales are rising as capacity increases, off-premises still remains a meaningful part of business. Sales outside the four walls represented roughly 16 percent of total net sales in Q1, or $720,000 in average weekly off-premises sales. That’s only $10,000 fewer than what J. Alexander’s saw in Q4 2020.
Sales results in Q1 were aided by a price increase and packaging fee on carryout orders implemented in the second half of 2020. This helped food and beverage costs, which were 29.8 percent of net sales in the first quarter compared to 32.6 percent last year. Markey said that if beef, seafood, or other items narrow margins in 2021, J. Alexander’s has room to take price increases on certain menu items if needed. But the company also believes it can manage food and beverage costs through its extensive feature program and active menu and recipe management.
J. Alexander’s operates 47 restaurants across 16 states. In late March, the brand opened its first ground-up build of a Redlands Grill restaurant in San Antonio. The company recently began construction on a new J. Alexander’s restaurant in Madison, Alabama, which is expected to open early Q4.
The brand also spent $46,000 in transaction expenses related to its ongoing evaluation of strategic alternatives. This process dates back nearly two years ago, when J. Alexander’s was considering, a merger of sales, a strategic investment accompanied by a significant share repurchase, or the acquisition of complementary concepts to increase the revenue base and operating leverage.
Several months later, J. Alexander’s decided to seek a sale, but talks were shelved in light of the COVID pandemic. Lonnie J. Stout, executive chairman of the board of directors, said in March that that the brand will “pursue completing that process prudently this year.”
