Restaurant stocks are always a hot favorite among people as there are lots of opportunities. A great player in this industry is Chuy's Holdings Inc. (CHUY, Financial).
This restaurant chain has posted excellent quarterly results, including a 14.9% increase in total revenue. During the quarter and fiscal 2015, the company has expanded its store base by 17%.
Founded in 1982, Chuy's Holdings is a full-service restaurant concept company offering a menu of Mexican and Tex-Mex food. Chuy's owns and operates 67 full-service restaurants across 14 states. Chuy's offers lunch and dinner, which includes appetizers, soups and salads, tacos, burritos, enchiladas, fajitas and combination platters. Each of its restaurants also offers a variety of homemade sauces, including Hatch green chile and creamy jalapeno sauces.Â
Strong fourth-quarter results
On March 1, the Austin, Texas-based company reported its financial results for the fourth quarter and full year ended Dec. 27, 2015. The company’s revenue increased 14.9% to $71 million compared to $61.8 million in the year-ago quarter. Comparable restaurant sales increased 3.2% year over year.
Net income (on a GAAP basis) for the fourth quarter of 2015 was $200,000, or 1 cent per diluted share, compared to $2.3 million, or 14 cents per diluted share in the year-ago quarter. Adjusted net income increased 28.7% to $3 million. Further, Chuy’s restaurant-level EBITDA increased 34.5% to $13 million.
In the reported quarter, Chuy’s total restaurant operating costs as a percentage of revenue decreased to 81.7% from 84.4% in the year-ago quarter. General and administrative expenses increased 26.10% to $3.72 million. The chart below provides Chuy’s cash and cash equivalents and debt for the reported period compared to 2013 and 2014.
Compared to December 2014, the company has nearly doubled its cash and has eliminated all debt.
Attributes for the fourth-quarter results
- Revenues increased due to incremental revenue of $8.8 million from an additional 107 operating weeks provided by 11 new restaurants opened during the fourth quarter.
- Comparable restaurant sales increased primarily by a 3.2% increase in average check and flat average weekly customers.
- Total restaurant operating costs as a percentage of revenue decreased due to lower food and labor costs.
Fiscal 2015 results
For fiscal 2015, Chuy’s comparable restaurant sales increased 3.1% and restaurant level EBITDA margin was 19.7%, compared to 17.3% for the comparable prior year period. Further, a chart has been provided below to show the company’s different metrics for fiscal 2015.
Projections for fiscal 2016
For fiscal 2016, Chuy’s expects its comparable restaurant sales growth of approximately 2.0% and restaurant pre-opening expenses of $5 million to $5.9 million. General and administrative expenses are expected to be in the range of $17.2 million to $17.8 million. Net capital expenditures and annual weighted average diluted shares outstanding are expected in the range of $33.0 million to $38.0 million and 16.8 million to 16.9 million shares. Chuy’s also plans to open 11 to 13 new restaurants.
Growth
The company has enhanced its restaurant development strategy which includes developments in major markets, and plans to double its restaurant base in the next three to five years.
From 2010 to 2015, Chuy’s restaurant revenue and total restaurants grew at a CAGR of 24.7% and 24.5%. Further, from 2010 to 2015, restaurant-level EBITDA and adjusted EBITDA grew at a CAGR of 25.2% and 24.5%.
(Source: Company website)
On a concluding note
Overall, Chuy's Holdings is a rock-solid company with consistent cost of sales management, strong cash flows with no debt levels, highly experienced management team, flexible business model with industry-leading unit economics, considerable dining value with broad customer appeal, and a deep-rooted and inspiring company culture. Further, the company has a proven concept with over a 30-year history and has provided 22 straight quarters of comparable restaurant sales growth.
With the recent quarterly release, the company is aiming for a better future and is all set to deliver a healthy menu to its investors. It is expected to create greater shareholder returns.
Disclosure: I do not hold any position in the company.
