Total revenue decreased 9.9% to $87.4 million compared to $96.9 million in the fourth quarter of 2008.
Highlights for the fourth quarter of 2009 compared to the fourth quarter of 2008 were as follows:
* Total revenue decreased 9.9% to $87.4 million compared to $96.9 million in the fourth quarter of 2008.
* Net loss of $2.7 million, or $0.11 per diluted share, compared to net loss of $60.7 million or $2.59 per diluted share in the fourth quarter of 2008. Excluding charges in both periods and on a tax adjusted basis, net income was $0.11 per diluted share in the fourth quarter of 2009 compared to $0.04 per diluted share in the fourth quarter of 2008. (See attached reconciliation).
* Company-owned comparable restaurant sales for Ruth’s Chris Steak House decreased 11.2%. Company-owned comparable restaurant sales for Mitchell’s Fish Market decreased 2.5%.
* Food and beverage costs, as a percentage of restaurant sales, decreased 340 basis points to 29.1%, which was primarily driven by favorable beef costs.
* Restaurant operating expenses, as a percentage of restaurant sales, increased 70 basis points to 52.7%, as a result of the effect of fixed costs related to lower sales volumes.
* General and administrative expenses increased by $1.6 million to $7.3 million compared to $5.7 million in the fourth quarter of 2008. The increase was driven by an additional $1.5 million in incentive compensation.
* Depreciation and amortization expenses, as a percentage of total revenues, increased 20 basis points to 4.7%.
* Interest expense decreased by $1.7 million to $1.7 million in the fourth quarter of 2009.
* At the end of the fourth quarter of 2009, the Company had $125.5 million in debt outstanding under its senior credit agreement. This represents a reduction of $34.8 million from December 28, 2008, including a $23.0 million pay down during the quarter.
Michael P. O'Donnell, President and Chief Executive Officer of Ruth’s Hospitality Group, Inc., stated, “During the fourth quarter, relatively stable comparable restaurant sales and continued expense control allowed us to generate positive earnings per diluted share compared to last year’s fourth quarter, excluding certain charges. We continued to benefit from favorable beef costs, sustainable cost-savings, and a year-over-year reduction in interest expense due to lower debt levels. To that point, we made significant progress reducing our outstanding debt in 2009, and will further improve our position with funds generated by the recently completed rights offering and subsequent investment by Bruckmann, Rosser, Sherrill & Co.”
O’Donnell continued, “Over the past 18 months, our priorities have centered on expense management and balance sheet improvement and given our recent progress, we are now focused on reenergizing sales. Ultimately, we have two great brands in our portfolio, experienced management in place, and with some stability in the economy, we look forward to continuing our progress in 2010.”
Review of Operating Results
Total revenues, which include Company-owned restaurant sales, franchise income, and other operating income, decreased 9.9% to $87.4 million in the fourth quarter of 2009 compared to $96.9 million in the fourth quarter of 2008.
Company-owned restaurant sales declined 10.5% to $83.8 million for the fourth quarter of 2009 from $93.5 million in the same quarter last year. Total operating weeks decreased 1.8% to 1,118 from 1,138.
Average weekly sales for Ruth’s Chris Steak House were $79.2 thousand in the fourth quarter of 2009 compared to $88.2 thousand in the fourth quarter of 2008. Average weekly sales at Mitchell’s Fish Market were $63.9 thousand compared to $65.5 thousand in the prior year fourth quarter.
For the fourth quarter of 2009, Company-owned comparable restaurant sales at Ruth’s Chris Steak House decreased 11.2%, which consisted of an average check decrease of 2.5% and an entrée reduction of 8.9%, offset by product mix shifts. Company-owned comparable restaurant sales at Mitchell’s Fish Market decreased 2.5%, which consisted of an average check decrease of 3.4% and an entrée increase of 0.9%.
Franchise income was $3.0 million in both periods. Blended comparable franchise-owned restaurant sales decreased 7.2%.
Operating loss was $4.3 million in the fourth quarter of 2009 and $82.1 million in the prior year fourth quarter.
Net loss was $2.7 million in the fourth quarter of 2009, or $0.11 per diluted share, compared to a net loss of $60.7 million, or $2.59 per diluted share, in the fourth quarter of 2008.
Net loss for the fourth quarter of 2009 included $8.3 million in non-cash impairment costs, a $0.8 million loss on the sale of the Company’s corporate headquarters, $0.4 million in severance costs, and a recovery of $0.4 million on a previously written down lease. Excluding these charges, on a tax adjusted basis, net income for the fourth quarter of 2009 was $2.5 million, or $0.11 per diluted share.
Net loss for the fourth quarter of 2008 included $90.2 million in non-cash impairments and restructuring costs, including severance. Additionally, the Company recorded a $0.9 million charge for a mark to market adjustment related to the interest rate swap agreements, and a net of tax benefit of $0.5 million for discontinued operations. Excluding these charges, on a tax adjusted basis, net income for the fourth quarter of 2008 was $0.8 million, or $0.04 per diluted share.
Financial Outlook
Based on current information, Ruth's Hospitality Group, Inc. is providing the following outlook for 2010:
* Cost of goods sold of 29% to 30% of restaurant sales
* General and administrative expenses of $22 million to $24 million
* Effective tax rate of 20% to 25%
* One Company-owned Mitchell’s Fish Market opening
* One to three franchised Ruth’s Chris Steak House openings
* Capital expenditures of $7 million to $8 million
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