Ruth’s Hospitality Loss Widens

Ruth’s Hospitality Group, Inc. (RUTH - Snapshot Report), one of the leading upscale dining operators, recently reported third-quarter 2009 results. The company reported a loss of 4 cents a share compared to a loss of 1 cent delivered in the prior-year quarter due to a sharp fall registered in the top-line. The Zacks Consensus Estimate for the quarter was a loss of 2 cents a share.

Total revenue tumbled 21.4% to $77.8 million. Company-owned restaurant sales fell 20.8% to $75.6 million, whereas franchise income slipped 30.5% to $2.4 million.

The owner of Ruth’s Chris Steak House and Mitchell’s Fish Market restaurant concepts continues to face the brunt of the recession as cash-strapped consumers looking for cheaper dining options continue to trade down to quick service restaurants like McDonald’s Corporation (MCD - Analyst Report), Yum! Brands Inc. (YUM - Analyst Report) and Chipotle Mexican Grill (CMG - Analyst Report). Moreover, the fall in business travelers has also hurt Ruth’s traffic count.

Comparable restaurant sales at Ruth’s Chris Steak House dipped 24% driven by 3.3% decline in average guest check and 21.5% fall in entrées, whereas comparable restaurant sales at Mitchell’s Fish Market slipped 12.3% driven by 2.8% fall in average guest check and 9.7% decline in entrées.

Offsetting the decline in sales, were food and beverage costs (down 29.2%), restaurant operating expense (dropped 14.7%), marketing and advertising (fell 48.5%), general and administrative expenses (dipped 19.2%) and depreciation and amortization (slipped 8.7%).

During the quarter, Ruth’s Hospitality opened one franchised Ruth’s Chris Steak House restaurant in Durham , North Carolina , and closed one franchised location in Las Vegas , Nevada . Management expects to open five to six Ruth’s Chris Steak House franchise locations in fiscal year 2009. Capital expenditure for the year is expected in the range of $5 million to $6 million.