Chuy’s plans to grow in new markets

Casual-dining chain Chuy’s will expand into five new states this year, parent company Chuy’s Holdings Inc. executives said Monday.

The company, which went public last summer, plans to add eight to nine new locations to its 40-unit, Tex-Mex-themed chain this year, executives said in a fourth-quarter earnings call.

“A lot of them will be in the Southeast market,” said Chuy’s president and chief executive Steve Hislop. “You will see us actually go into approximately five new states this year, which will be the extension of markets that we are already in.”

Hislop said Chuy’s plans to enter the Carolinas from its current Atlanta market and enter Virginia from the Nashville-Knoxville, Tenn., market.

“You will see us continue up into Cincinnati from our Louisville- Lexington-Florence, Ky., market,” Hislop added. “And the big one that we will see is we’ll probably enter by the end of the year into the Kansas City, Mo., market, straight up I-35 all the way out of Austin.”

Growth beyond the Carolinas includes heading into the Richmond, Va., and into the District of Columbia by 2015, he said.

Chuy’s is also seeking to extend its development pipeline to 20 to 24 months, compared with the traditional 18 months. “You will see us do a little backfill, but you will see us entering in all those states and really start penetrating those markets without cannibalizing ourselves,” he noted.

The company is considering 55 new sites in all the markets for 2014, he explained. “We expect again we’ll grow physically at that 20-percent level every single year on top of our growth over the prior year,” Hislop said.

He added that last year Chuy’s launched a second opening team. “It’s actually easier to open eight [restaurants] last year than it was five three years ago,” he said. “We will never grow faster than our people.”

In 2012, Chuy’s opened eight new restaurants, and the company has already opened one in the first quarter of this fiscal year.

Chuy’s chief financial officer Jon Howie said the company projects opening costs for each unit in the $350,000 to $400,000 range.

On Monday, Chuy’s reported that fourth-quarter net income rose to $2.6 million, or five cents per share, from $300,000 in the same quarter a year ago.

Revenue for the quarter, which ended Dec. 30, increased 40.3 percent to $46.7 million, from $33.3 million in the previous year.

Same-store sales increased 5.2 percent. However, excluding from the comparison the positive impact of an extra 1.5 operating days because of the Christmas holiday, same-store sales increased 3 percent, the company reported.

Austin, Texas-based Chuy’s Holdings currently operates restaurants in eight states.

Contact Ron Ruggless at [email protected].
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