Ruth's Hospitality Group Reports Third-Quarter Results: Revenue Down 21% Year-Over-Year
-- Restaurants & Institutions, October 30, 2009
(PRESS RELEASE) Heathrow, Fla.: Ruth’s Hospitality Group, Inc. (NASDAQ:RUTH) today reported unaudited results for its third quarter ended September 27, 2009.
Highlights for the third quarter 2009 compared to the third quarter of 2008 were as follows:
* Total revenue decreased 21.4% to $77.8 million compared to $98.9 million in the third quarter of 2008.
* Net loss of $1.0 million or $0.04 per diluted share compared to a net loss of $0.5 million or $0.02 per diluted share in the third quarter of 2008.
* Company-owned comparable restaurant sales for Ruth’s Chris Steak House decreased 24.0%. * Company-owned comparable restaurant sales for Mitchell’s Fish Market decreased 12.3%.
* Food and beverage costs, as a percentage of restaurant sales, decreased 330 basis points to 28.5% primarily driven by favorable beef costs.
* Restaurant operating expenses, as a percentage of restaurant sales, increased 410 basis points to 57.5% resulting from the effect of fixed costs related to lower sales volumes.
* General and administrative expenses declined by $1.3 million to $5.4 million compared to $6.7 million in the third quarter of 2008.
* The third quarter results include $0.4 million in restructuring costs related to lease termination charges for two restaurant locations.
At the end of the third quarter of 2009, the Company had $148.5 million in debt outstanding under its senior credit agreement. This represents a reduction of $11.8 million from December 28, 2008, including a $1.5 million paydown during the quarter.
Michael P. O'Donnell, president and chief executive officer of Ruth’s Hospitality Group Inc. stated: “We continue to face challenges related to consumer spending and third quarter results underscore that fact. For the period, we experienced restaurant sales that were generally in line with the first two quarters of 2009, while favorable commodity costs and ongoing expense initiatives resulted in slightly improved year over year operating margins excluding one-time items in both periods. We also made progress reducing our outstanding debt which has been a priority for Ruth’s Hospitality Group. Through the first nine months of the year, we have reduced debt by approximately $12 million.”
Review of Operating Results
Total revenues, which include Company-owned restaurant sales, franchise income, and other operating income, decreased 21.4% to $77.8 million in the third quarter of 2009 compared to $98.9 million in the third quarter of 2008.
Company-owned restaurant sales declined 20.8% to $75.6 million for the third quarter of 2009 from $95.4 million in the same quarter last year. Total operating weeks decreased 0.3% to 1,118 from 1,121.
Average weekly sales for Ruth’s Chris Steak House were $67.9 thousand in the third quarter of 2009 compared to $88.3 thousand in the third quarter of 2008. Average weekly sales at Mitchell’s Fish Market were $69.5 thousand compared to $79.2 thousand in the prior year third quarter.
For the third quarter of 2009, Company-owned comparable restaurant sales at Ruth’s Chris Steak House decreased 24.0%, which consisted of an average check decrease of 3.3% and an entrée reduction of 21.5%, offset by product mix shifts. Company-owned comparable restaurant sales at Mitchell’s Fish Market decreased 12.3%, which consisted of an average check decrease of 2.8% and an entrée reduction of 9.7%, offset by product mix shifts.
Franchise income decreased 30.5% to $2.4 million from $3.4 million in the third quarter of 2008. This decrease was driven primarily by a decline in blended comparable franchise-owned restaurant sales of 20.0%.
The Company incurred $0.4 million in restructuring costs during the third quarter of 2009 related to lease termination charges for two restaurant locations. These charges relate to the company’s decision in 2008 not to build any new restaurants in 2009.
Operating income was $1.0 million in the third quarter of 2009. Excluding the $0.4 million in restructuring cost related to lease termination charges for two restaurant locations, operating income would have been $1.4 million. This compares to operating income of $1.7 million in the same quarter last year.
Net loss was $1.0 million in the third quarter of 2009, or $0.04 per diluted share, compared to a net loss of $0.5 million, or $0.02 per diluted share, in the third quarter of 2008.
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