Casual-dining Mexican brand sees long-term potential after Q4 launch
Chuy’s Holdings Inc., the 98-unit casual-dining Mexican brand, had never had limited time offers until the fourth quarter of 2022, and it now plans them quarterly, executives said Thursday.
The Austin, Texas-based casual-dining company, which released earnings for the Dec. 25-ended fourth quarter, said the LTO Chuy’s Knockouts platform was launched in October.
“Chuy's Knockouts, through quarterly specials, introduced our guests to exciting new menu innovation, while also reintroducing our guests to old favorites for a limited time,” said Steve Hislop, Chuy’s CEO and president. “We plan to offer Chuy's Knockouts once per quarter for a six-week period of time.”
Hislop reiterated that the first Chuy’s Knockout, or CKO, drove incremental traffic and mixed at about 2.5% of entrees sold during the six-week period.
“Importantly, we did not see consumer demand trail off in the latter weeks of the CKO period as you do with many limited-time offers,” Hislop said, adding that the longevity gave Chuy’s “increased confidence in the platform longer term.”
Hislop said Chuy’s is still experimenting with the platform to see what resonates with customers.
“Following the success of our first CKO, late January saw a return of our fan favorite Veggie Enchiladas as well as an introduction of our new Wild Burrito and Hatch Beef Tacos,” Hislop said Thursday. “While we are only three weeks into the CKO period, we're excited about the results we've seen thus far.”
Hislop said new Chuy’s Knockout offerings were being marketed with a “heavy emphasis on digital media, including the use of TikTok, organic influencer programs on Instagram, YouTube video advertising and a promotional advertising partnership with DoorDash.”
For the fourth quarter ended Dec. 25, Chuy’s net income was $2.5 million, or 14 cents a share, down from $6 million, or 30 cents a share, in the same period a year ago. Revenue increased 5.5% to $104.1 million compared to $98.7 million in the prior-year quarter.
Fourth-quarter same-store sales increased 3.4% primarily driven by a 6.1% increase in average check, partially offset by a 2.7% decrease in average weekly customers.
For the fourth quarter 2022, off-premises sales were about 29% of the total, Chuy’s said.
Hislop said the delivery channel help drive off-premises sales “as consumers embraced the opportunity to enjoy Chuy's high-quality made-from-scratch food from the comfort of their own home.”
Hislop said Chuy’s planned to fill out its existing catering markets and had opportunities to expand in several other new markets in 2023, which would complete the rollout of the catering program systemwide.
Catering represented nearly 4% of Chuy’s fourth-quarter sales and about 2.6% of annual sales, Hislop said. “We continue to believe that off-premises will represent a low to mid-20s of our sales over time with catering contributing approximately 4% to 6%,” he said.
During the fourth quarter, Chuy’s opened two new restaurants in its core markets of Tennessee and Texas. That brought total development to three restaurants during the year, and one restaurant was closed at the end of its lease term, Hislop said. Chuy’s, founded in 1982, ended fiscal 2022 with 98 restaurants.
“For 2023, we've developed a robust pipeline now consisting of six to seven new restaurants, focused on markets where our concept is proven with high AUVs and brand awareness,” Hislop said. “This includes our Fayetteville, Ark., restaurant, which is slated to open in late February-early March.”
Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless
