Chuy’s Holdings, Inc. (NASDAQ:CHUY) Q1 2024 Earnings Call Transcript

Steve Hislop: Yes. Sequentially, yes.

Operator: Our next question is from Todd Brooks with the Benchmark Company.

Todd Brooks: Just 2 quick ones. Jon, you gave us what the pricing was in the quarter. Could you let us know what average check ran for Q1?

Jon Howie: Yes. The average check was actually down to 2.6% or up 2.6% and that price give me a second 1941. Yes, 1941.

Todd Brooks: 1941. Okay. So you said up 2.6%, Jon, it’s only like a 3, a 30 basis point drag from mix in the quarter.

Jon Howie: Correct. Yes.

Todd Brooks: Okay. Perfect. And then my second question, in thinking about CKO is proving ground for items coming back from the menu, Steve. How much broadening in the menu are you comfortable with, with these customer favorites coming off the CKIos? How many would you expect to be on the menu by year-end? And are you kind of rationalizing anything off them and you try to maintain some of that simplicity that you built in over the course of the Pandemic.

Steve Hislop: Great question. Exactly what you just said, yes. These ones, we felt great about adding the bowls because it’s really a burrito that we currently pretty much almost do, but now it’s in a bowl. So again, it wasn’t adding a lot of prep and a lot of excitement in the back of the house as far as moving around a lot, so that everything is on the station. So we were very comfortable adding those on. But as we have a very disciplined approach as we continue to move forward, as we look at adding any of our CKO because that is a proving ground for possibly some new items as we evolve our menu. We’ll be very disciplined that when we have one come on, we’ll absolutely go look at our product mix, find out where it’s come from and possibly move on another one off. So we’ll be doing that as we do, but we’ll be very disciplined in our approach across all of our stations and how well we can execute all of this.

Operator: Our next question is from Brian Vaccaro with Raymond James.

Brian Vaccaro: Steve, I think you alluded to it earlier, but just in light of the softer environment and one where it seems that you have to have value, but you also need to message it effectively. Could you just elaborate a little bit on just how you’re adjusting your tactics, any changes in your marketing message or your CKO beyond the latest launch that you’re thinking about?

Steve Hislop: Sure, sure. The one thing that we have is value all throughout our menu, not only in our price point, which is our price point spread because of our pricing increases compared to our competitors, we actually increased our value spread over the years. So we’re very great with that. But also, we’ve always said that there’s no white space on our plates, which is also screaming value than our meal kits. So those things that I just mentioned, were actually moved our digital to really talking all about that type of stuff, not only the value of the price point, but also the value of the amount of food that you get and the experience that you get it in. So that’s been, and as you know, Brian, the one thing about digital is you can quickly turn on a dime on your message.

Our message has been always talking about value, but we spent a lot of time talking about our defining differences, whether it be our hand-squeeze lines for our margaritas. So our first product, we have nothing frozen. We don’t have freezers. There will still be in it, but it’s probably going to be a little bit more tainted to specifically our value message in all the mediums that we’re doing. Obviously, we’re on social with Meta Facebook, and we’re on that all quarter. We have, we’re doing search with Google. We’re on new to ball quarter. We’re on TikTok 8 weeks in the quarter. Then we have programmatic CTV, which is some of our videos that really show in our value and some of our price points , we’ll definitely do it on all our e-blast that will do 2 per period.

And then obviously, our CKO has value in the third-party delivery promotions is dealing with value. So that’s pretty much we’re hitting it hard and heavy, and the reason we’re hitting it hard and heavy is if you look at the competitive environment out there, specifically over the last 6 months, you’re now seeing all our competitors and even some fast food and even some quick casual really getting on major medium and talking about their price offs or things like that. And that’s really been back only for about 6 months. And that’s after 2, 2.5 years where they aren’t discounting at all through COVID. So now this is a new phenomenon again. And again, just like 2019, where that was part of their media plan back then, and we’ll start doing that.

And as people go in and net restaurants are going to realize the food hasn’t changed. So again, we feel our message on the value is the right way for us to go.

Brian Vaccaro: All right. That’s helpful. And Jon, summary, if I missed it, just a bookkeeping question, but what were operating weeks in the quarter, if you have that handy?

Jon Howie: Yes, I’ll follow up with you.

Operator: Our next question is from Andrew Wolf with CL King.

Andrew Wolf: I just wanted to ask about the adjustments, the calendarization of Easter and the weather. If we applied that number, it’s almost 2% to the traffic being down 6%. I would making sure I’m doing, thinking along it would be down about 5% would have been the sort of the calendar and weather-adjusted view of your, the traffic, the guest count.

Jon Howie: Well, I mean 6 were down 1.2% with that.

Steve Hislop: Is 1.2 on the sales impact?

Jon Howie: Yes. So the $4.3 million was already adjusted for the calendar. So when we do ours, it’s an operational base from calendar to calendar, not fiscal, we kind of give you the fiscal for your modeling purposes. But it’s…

Andrew Wolf: Then I took another I take the weather out, too.

Jon Howie: The weather and Easter was 1.2 together…

Andrew Wolf: Above sales…

Jon Howie: Above sales. So 6.9 million minus to $1.2 million.

Andrew Wolf: That makes sense. And I guess I read that right. And currently, if you took the 2.2% quarter-to-date, you got to check and assumed it was running up to 6. Now you’re running a little under 5%. So your guest count on this basis has improved whatever, 50, 70 basis points sequentially. Thought about it?

Jon Howie: Yes. Yes.

Andrew Wolf: Okay. And is that, is that Uber Eats or is that more, or your marketing? Or do you think the environment has gotten a little better? And how would you think about that?

Steve Hislop: It’s, I think it’s both. Obviously, it’s both is how we’re looking at it. Definitely, the Uber Eats is a big headwind to roll over and then what we said.

Andrew Wolf: I just mean in the quarter to date, with the guest traffic being a little better. I mean, I was in trouble, but I’m just trying to dig inside that given that’s important is…