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Breathing Room for Sales Growth

Patios Provide Breathing Room for Sales Growth During Coronavirus Pandemic

Chuys sales on outdoor verandas increase ‘substantially’ to 10%-13%, CEO Steve Hislop says

Chuy’s Holdings Inc. is finding customers increasingly choosing to dine on its patios as it reopens restaurant dining rooms in the coronavirus pandemic, the full-service company said Thursday.

Executives at the Austin, Texas-based Tex-Mex casual-dining brand, in releasing second-quarter earnings, said off-premise sales are continuing to be strong as it reopens restaurant dining rooms with limited capacity. But the wide-open out-of-doors has shown growth.

“Our patio business used to be 7.9% of sales,” said Steve Hislop, Chuy’s president and CEO, on an earnings call, “and right now it’s running in that 10% to 13% of sales, and so that has increased substantially.”

Like most full-service concepts during the pandemic’s state and local restrictions on indoor dining, Chuy’s in March pivoted to a take-out and delivery business.

“In May 2020, the company began the process of reopening dining rooms in accordance with new government restrictions,” Chuy’s said. As of June 28, the company had reopened dining rooms to varying degrees of operating capacity in 92 of its 101 restaurants. Nine restaurants remained temporarily closed.

But infection surges in such states as Florida and Texas have paused or rolled back opening capacities.

“There is still a lot of uncertainties around the continued effect of COVID-19 on the business and how soon the company will be able to reopen the restaurants at full capacity or whether the company will have to revert back to an off-premise only operating model at some or all of the restaurants,” the company said in a statement.

Chuy’s said off-premise sales were more than double pre-COVID-19 levels, comprising about 35% to 40% of all revenue in June and July 2020.

“Even with the reopening of our dining rooms, our off-premise sales remain strong and continue to perform at a rate more than double its pre-COVID-19 levels,” Hislop said. “Despite recent rollback reopenings of our dining rooms from increased COVID-19 cases in various states, including Texas and Florida, we are very pleased to see our sales volumes remained solid thus far in the third quarter.”

Chuy’s did trim back its menu when it was relying on off-premise sales, and that will continue, Hislop said. Before the pandemic, Chuy’s had about 60 items on its menus.

“Through the remainder of the third quarter, you’ll still see the limited menu where it is currently,” he said. “You’ll probably see us, in the fourth quarter, have a handful of items pop back on to the menu in the fourth quarter with a reprint of what will be our existing menu in next year.”

Hislop said next year Chuy’s will probably maintain a menu with fewer than 60 items, as the pared down offering has eased operations and helped labor costs.

Chuy’s, founded in 1982, owns 101 full-service Tex-Mex restaurants across 19 states.

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