RUTH: GLANCE AT THE 2Q MENU

Here is a look at RUTH’s guidance going into earnings tomorrow.

Earnings and Same-store Sales

  • RUTH needs to post company-owned same-store sales of +4.4% to maintain two year trends
  • Per reuters estimates, company-owned same-store sales are expected to come in at +4.7% and franchise same-store sales are expected to be +4.7% 
  • The street’s estimates imply an acceleration in same-store two-year trends
  • Over the past three and six months earnings revisions have trended higher, but little changes in the past month

Guidance

  • Opening one franchise Ruth’s Chris Steak House in May
  • Opening one Mitchell’s Fish Market late in the second quarter
  • Food and beverage costs are projected to be between 29% and 30% of restaurant sales
  • Marketing spend is expected to be between 3% and 3.5% of total revenues
  • G&A expenses are expected to be in the 25% to 30% range
  • CapEx spending is projected at 7 to $8 million
  • Free Cash Flow is expected to be in the 18 to $20 million range
  • 50% of prime beef is locked for 2010, slightly below average 2009 cost
  • 10% of tenderloins are locked for 2010
  • In the market trying to lock down price given the elevated beef prices…too early to speculate for 2011
  • Locked in on shrimp for 2010

General

  • In March and April, sales growth was in the mid-single digit range
  • “Movement away from the Ruth’s Classis with 39.95, 49.95 price fix promotion has not led to a fall-off in mix which continues to be in the 30% range” – it will be interesting to see how mix has continued to hold up
  • Half of beef is tender, half is prime, and beef represents 35% to 40% of their total cost of goods sold

RUTH: GLANCE AT THE 2Q MENU - ruth

Howard Penney

Managing Director