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Ignite tests ideas to build traffic at Joe’s Crab Shack

Ignite tests ideas to build traffic at Joe’s Crab Shack

Brand tries walk-up takeout window, new lunch model

Ignite Restaurant Group Inc. is testing a number of traffic-building initiatives, including a walk-up takeout window, to stem slipping sales at its 138-unit Joe’s Crab Shack concept, executives said last week.

Ray Blanchette, president and CEO of the Houston-based parent to Joe’s and Brick House Tavern + Tap, told analysts in an earnings call Thursday that the casual-dining seafood concept is testing a walk-up window at a restaurant in Houston, trying a new lunch model at other locations and simplifying its fried seafood platter categories.

Second-quarter same-store sales fell 4 percent at Joe’s Crab Shack and increased 2.8 percent at the 23-unit Brick House, the company reported for the quarter ended June 29. The quarter included the completion of the $7.3 million Romano’s Macaroni Grill sale on April 17.

Blanchette said the Joe’s walk-up window test is among other initiatives that he called “some really slick stuff.”

“We’re very encouraged by what we’re seeing from a guest-count standpoint,” he said, adding, “This is the type of initiative I want to make sure we get a few laps around the track and that we've a really good understanding of how incremental this traffic is to the brand.”

Blanchette said other initiatives would roll out this month.

“I really would rather not talk about the specifics,” he said. “It's kind of something I would like to keep a little bit secret until we know that we've got a really big idea. All I can tell you is it's fun stuff, it's really interesting and as soon we know we’re on to something we’ll get in the loop just as fast as possible.”

Blanchette did say that Joe’s has “simplified our fried seafood platter categories to improve our execution without sacrificing variety,” made “much-needed capital investments in some of our top-producing restaurants,” and executed some management changes.

New management aimed to reverse Joe’s slipping sales, he said.

“We put a new management team in place at Joe's, focused on increasing sales and traffic while improving our operating margins,” he said. “It's obvious that we still have some work to do.”

Blanchette noted that the Joe’s brand is well differentiated from casual-dining competitors and “has a very defendable position in the casual seafood space,”

“I'm convinced that the key to returning Joe's to same-store sales growth is identifying new growth layers,” he added.

Sales growth, Blanchette said, can come at lunch for both brands.

“I believe Joe's can and should compete very differently at lunch as it does at dinner, so we’re testing a new lunch model and then very pleased with the early results,” he said.

In addition, “I think the Joe's business can become an even more compelling proposition for celebrations and very unique dining destination for young families and so we’re working in that area,” he said.

Ignite has opened two new Brick House restaurants this year and sees more opportunity.

“We’re currently evaluating several new sites for Brick House, including a few Joe's locations that we believe can operate more profitably as a Brick House,” Blanchette said. “We’re still hoping to get one to two Brick Houses opened before the end of the year, but realistically they could slide in our first quarter of 2016. In 2016 we intend to get back to opening six to 10 new restaurants a year, with the majority of those being new Brick Houses.”

Ignite chief financial officer Brad Leist said the company was offering guidance of full-year same-store sales at Brick House increasing 3 percent to 4 percent, and at Joe’s decreasing 3 percent to 6 percent.

Ignite reported Thursday second-quarter net income of $86,000, which included losses related to the Macaroni Grill sale. Income from continuing operations was $1.7 million, or seven cents a share, compared with $2.3 million, or nine cents a share, in the same period a year ago. Revenue was essentially flat, at $143.2 million, falling slightly from $143.3 million in the same quarter a year ago.

Contact Ron Ruggless at [email protected].
Follow him on Twitter: @RonRuggless

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