Ruth's Hospitality Group, Inc.

For the fourth quarter ended December 25, 2022, GAAP net income was $12.4 million, or $0.38 per diluted share, versus $13.8 million, or $0.40 per diluted share, last year. Non-GAAP diluted EPS was $0.38 versus $0.34 in the prior-year quarter, and adjusted EBITDA was $24.0 million versus $21.4 million. Total revenue grew 9.2%, including company-operated restaurant sales growth of approximately 9.6%; comparable sales rose 4.5% versus 2021 and 5.5% versus 2019, and average weekly sales were $130,000. Franchise income was $5.8 million, up 6.1%, and food and beverage costs improved 93 basis points to 33.2%. For the full year, adjusted EBITDA was $83.8 million. Looking to 2023, the company expects to open five company-operated restaurants, including one in a casino resort in Michigan, complete one relocation in Q2, and do as many as 10 remodels and refreshes. Management said it expects about 4% full-year pricing after a 3% price increase in late Q1, and it is not guiding COGS for Q1 or the full year because of feed-market volatility.

Cheryl Henry framed 2022 as a year of solid execution across demand, operations, and capital allocation, saying the company delivered high single-digit top-line growth and double-digit adjusted EBITDA growth in Q4. She emphasized the success of new and relocated restaurants, especially Winter Park, and pointed to the digital transformation program as a key driver of guest experience and productivity. Her tone was confident and forward-looking, with 2023 described as another year of openings, remodels, technology investment, and brand refresh work.

Kristy Chipman walked through the quarter’s financials, including GAAP net income of $12.4 million, non-GAAP EPS of $0.38, and adjusted EBITDA of $24.0 million. She highlighted that food and beverage costs improved to 33.2% as beef prices declined about 4%, while labor expense increased 200 basis points year over year because hourly wages rose about 9.5% and management labor increased. She also noted $23 million in cash at quarter-end, $30 million of debt outstanding, a subsequent $15 million debt paydown, $14.7 million spent repurchasing about 905,000 shares in Q4, and $4.6 million paid in dividends. For 2023, she said non-beef basket inflation is expected to be down mid-single digits based on contracts, pricing should be about 4% for the full year, and the company expects mid-single-digit wage inflation.

Analysts focused on Winter Park’s remodel economics, the 2023 remodel pipeline, pricing, beef inflation, labor, and the Manhattan closure. Management said about 50% of the portfolio could likely take some Winter Park-style elements without major structural changes, but it did not provide ROI guidance beyond saying it would expect roughly 20% returns over time on the larger investments. On beef, Cheryl said the herd size remains down, February beef costs eased from January highs, and the company does not have any significant beef lock in place right now. On Manhattan, Kristy said the restaurant is about an average-volume unit at $6 million to $6.5 million in annual sales, and January comp sales were about 17% but that was just January-specific.