Chuy's Leans on Catering, Digital, and Fresh Marketing
Chuy’s off-premises business is regaining momentum. After falling below 2 percent of total sales in 2018, the figure increased to 2.7 percent to start fiscal 2019.
Chuy’s rolled out online ordering through Olo during the fourth quarter of 2018 and customers are responding well. CEO Steve Hislop said 13–15 percent of to-go orders come through online ordering, despite a lack of promotions or advertising. And beginning in May, Chuy’s plans to boost results by rolling out a campaign systemwide to promote awareness.
Hislop views the platform as a foundation piece for Chuy’s future loyalty program, which could launch by year’s end.
While online ordering is an important slice of off-premises, Chuy’s said catering continues to show potential. The company began testing the service last year, slowly adding new markets to see how customers would respond.
Beginning in the second quarter of 2019, two additional DMAs will join. By the end of 2019, six more will be on deck, bringing the total number of catering capable markets to 11, or about 50 percent of locations.
Overall, Chuy’s fared well during the first quarter of 2019. Driven by a 2.9 percent increase in average check and a 0.3 percent increase in average weekly customers, same-store sales lited 3.2 percent.
Revenues upped 9 percent to $102.1 million compared to $93.9 million this time last year. Chief financial officer Jon Howie attributed the gains to comps growth and the addition of 99 new store operating weeks.
Net income came in at $3.2 million or 19 cents per diluted share.
As Chuy’s growth strategy pushes the brand into new markets, the company is leaning into fresh marketing initiatives to educate customers and increase brand awareness. Through paid social media campaigns and location-based mobile advertising, Chuy’s hopes to attract guests who aren’t as familiar with the brand as some built-out areas.
Chuy’s will focus its efforts on some less-mature markets, like Chicago, Houston, and Miami, where has it less than 10 locations.
The company is able to adjust message at the store level to remain agile. In Houston, which has 10 restaurants, for example, the campaign is centered on driving frequency. Customers will see advertisements across digital platforms like YouTube, Spotify, and Hulu, along with social media.
Howie did not go into how much Chuy’s was spending on the marketing push, but he did say the investment is worth it.
Chuy’s new strategy will also help the company as it opens new locations. During Q1, Chuy’s debuted a restaurant in Colorado Springs, Colorado. At the beginning of Q2, stores opened in Hamburg, Kentucky, and Huntsville, Alabama.
“For the full year, we continue to expect to open between five and seven restaurants as part of our strategy to balance new unit growth while driving sales and improving restaurant level profitability,” Hislop said. “All of our new units in 2019 are improving markets with a history of strong AUVs and we're excited to complete our remaining development for the year.”
Hislop said the company is close to finishing a real estate analytics tool that will allow Chuy’s to create a “psychographic profile of our top markets and use it to identify new markets for successful expansion going forward.” Chuy’s hopes to have the tool fully developed and tested by the end of 2020.
“As we look ahead, our goal is to create a solid foundation for sustainable top line growth,” Hislop said. “We believe this is achievable through the initiatives that are designed to not only improve brand awareness in newer markets, but also drive frequency in our existing markets.”