Upscale steakhouse operator Ruth’s Hospitality misses first quarter expectations and suspends dividend
Upscale catering company Ruth’s hospitality (RUTH 1.41%) reported first-quarter earnings of $0.09 per share, far missing the $0.29 per share analysts expected. Income has also been insufficient.
Ruth’s owner Chris Steakhouse said the coronavirus pandemic had hit business hard, and while the impact was felt late in the quarter, it still resulted in a significant drop in business which is impacting the second trimester.
No place at the table
Ruth’s Hospitality said the downturn first started with its franchise operations in Asia, but quickly spread globally, causing all of its dining rooms to close. Where it could, it switched to its recently launched Ruth’s Anywhere takeout and delivery program, but nearly 40% of its restaurants, whether company-owned or franchised, have been closed completely.
Indicative of the quarter ahead, comparable sales in April fell 83.5% at company-owned restaurants that were open for take-out and delivery, and average weekly sales are just $19,200 per unit. Average weekly sales in the second quarter of last year were $102,600 per unit.
While Ruth’s plans to reopen restaurants as permitted, it shows the difficulties facing chains where results are based on in-restaurant experience. Ruth’s was fortunate to pilot its Ruth’s Anywhere program, which enabled it to switch to take-out and delivery in certain places.
The steakhouse reported first-quarter revenue of $108.5 million, down 9.4%, which delivered adjusted earnings of $0.09 per share from $0.45 per share a year ago. year.
Ruth’s Hospitality also announced that it was suspending its quarterly dividend of $0.15 per share as well as its stock buyback program.