Ruth’s Hospitality Group, Inc. (RUTH), one of the leading upscale dining operators, recently reported third-quarter 2009 results. The company reported a loss of 4 cents a share compared to a loss of 1 cent delivered in the prior-year quarter due to a sharp fall registered in the top-line. The Zacks Consensus Estimate for the quarter was a loss of 2 cents a share.
Total revenue tumbled 21.4% to $77.8 million. Company-owned restaurant sales fell 20.8% to $75.6 million, whereas franchise income slipped 30.5% to $2.4 million.
The owner of Ruth’s Chris Steak House and Mitchell’s Fish Market restaurant concepts continues to face the brunt of the recession as cash-strapped consumers looking for cheaper dining options continue to trade down to quick service restaurants like McDonald’s Corporation (MCD), Yum! Brands Inc. (YUM) and Chipotle Mexican Grill (CMG). Moreover, the fall in business travelers has also hurt Ruth’s traffic count.
Comparable restaurant sales at Ruth’s Chris Steak House dipped 24% driven by 3.3% decline in average guest check and 21.5% fall in entrées, whereas comparable restaurant sales at Mitchell’s Fish Market slipped 12.3% driven by 2.8% fall in average guest check and 9.7% decline in entrées.
Offsetting the decline in sales, were food and beverage costs (down 29.2%), restaurant operating expense (dropped 14.7%), marketing and advertising (fell 48.5%), general and administrative expenses (dipped 19.2%) and depreciation and amortization (slipped 8.7%).
During the quarter, Ruth’s Hospitality opened one franchised Ruth’s Chris Steak House restaurant in Durham , North Carolina , and closed one franchised location in Las Vegas , Nevada . Management expects to open five to six Ruth’s Chris Steak House franchise locations in fiscal year 2009. Capital expenditure for the year is expected in the range of $5 million to $6 million.
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