Financing

Earnings roundup: One Group, Topgolf, Potbelly, Chuy's, PFG, Bombshells, Olo, Toast

A look beyond the most recent results for big restaurant brands shows customers cutting back nearly across the board.
Topgolf saw pent-up demand for indoor golf abate in Q1. | Photo: Shutterstock

STK and Kona Grill guests trade down

STK and Kona Grill parent the One Group has seen more customers gravitating toward happy hour at its upscale restaurants. The entry-level $3, $6 and $9 price points have been a big draw, CEO Manny Hilario told analysts, and at dinner, some guests are managing their checks by ordering more shareable items. 

But there’s another group that’s opting for pricier entrees such as Wagyu beef. “We do have a little bit of a bifurcated behavior within STK,” Hilario said.That said, the guests who are spending less are outweighing those spending more. One’s same-store sales decline 7.9% in the first quarter. Hilario called the consumer environment “choppy.”

Denver-based One recently completed its acquisition of Benihana and RA Sushi and expects them to add between $348 million and $360 million in revenue for the rest of the year.

Topgolf sees a drop-off from the early post-pandemic surge

Same-store sales for the Topgolf eatertainment chain fell 7% in the first quarter, according to parent company Topgolf Callaway Brands, which attributed the decline to difficult comparisons with results from a year ago.

At that time, Callaway said, sales spiked as pent-up demand drove golf enthusiasts to the facilities after pandemic restrictions were lifted.

Bad weather also dampened results in the most-recent quarter, according to management.

Callaway said the decline in Topgolf’s comparable sales was in line with expectations, but it nevertheless tempered its guidance for fiscal 2024, with comparable sales now expected to be flat or slightly positive.

First-quarter sales for the Topgolf business totaled $422.8 million, a year-over-year increase of $19.3 million or 4.8%. Operating income rose $100,000, to $2.9 million.

Potbelly touts value to snag more business from sporadic guests

Like Starbucks, Potbelly had a problem with its occasional customers during the first quarter.

The Chicago-based chain on Thursday reported same-store sales were down 0.2% at company-owned shops, largely reflecting reduced traffic given menu pricing was up about 4%.

Weather in January was partly to blame, and sales improved through the quarter and turned positive at the beginning of Q2. But CEO Bob Wright said the chain is seeing a slight pullback from infrequent consumers, who appear to be “managing their wallets” a bit more than a year ago, according to a transcript by Alpha-Sense.

“They’re pulling back ever so slightly and probably from a lot of places,” Wright said. “We’re competing with all other restaurants, and we’re competing with the refrigerator. And when people’s entire food budget is under pressure, what they don’t want to do is start compromising on their meal choices.”

Potbelly is focusing on communicating the everyday value of its menu, and will expand on Meal Deal and Pick Your Pair options to increase frequency, Wright said.

He also expects digital growth from the new-and-improved Perks loyalty program, which drove sales, traffic and profitability during Q1. Digital now accounts for 41% of sales, an increase of 200 basis points.

Wright said Potbelly expects to continue expanding restaurant level margins, which hit 13.5% during the quarter, a gain of 150 basis points from reduced labor and commodity costs. With softer sales, however, he said Potbelly may not hit the 16% margin goal for the year.

A new protype unit is coming later this year that will measure about 1,800 square feet, compared with the traditional 2,300-square-foot unit, which will be more digitally centric and feasible for more locations. The company has been pushing for franchise growth as it sets sights on reaching 2,000 units nationwide.

The chain added 32 franchise shops to its pipeline during the quarter, for a total of 642 open and committed shops. Potbelly ended the quarter with 345 company-owned and 82 franchised units.

Revenues were down 6% to $111.2 million, but that reflected the refranchising of 33 units last year. The company reported a net loss of $2.8 million, most of which was driven by the accounting treatment of a debt refinancing. The company replaced a $25 million term loan with a $30 million revolving credit facility.

Chuy’s walloped by weather, weak consumer

Same-store sales at the Tex-Mex chain declined 5.2% year over year, a result of bad weather in January and softer consumer spending. 

Weather and the timing of Easter dealt a 1.2% blow to sales, executives said. Traffic was down nearly 7%.

And yet trends improved through the quarter, and the company still expects same-store sales to finish the year flat to slightly positive, which will require a big improvement going forward.

CEO Steve Hislop said the quarter was somewhat of an anomaly. Aside from the weather, Chuy’s was rolling over same-store sales growth of 8% last year, and comparisons will be easier going forward, he said. Chuy’s is also close to being fully rolled out on the ezCater catering marketplace, which executives expect to help sales.

PFG: Expect single-digit inflation through June

Performance Food Group expects food inflation to remain at single-digit levels through the distribution giant’s fourth quarter ending in June after inching upward in February and March, executives told Wall Street analysts in detailing financial results for the third quarter ended March 30. Prices deflated in January, the officials said, dampening sales.

The company reported that sales were flat overall for Q3 at $13.86 billion, with the volume of shipped cases slipping 0.2%. Executives said the shipments rose sequentially over the period, with a 6% gain in shipments to independent restaurants over February and March.

Profits fell year-over-year by 12.3%, to $70.4 million.

Breastaurant operator RCI Hospitality Holdings sees shrinkage

Same-store sales for the Bombshells breastaurant chain fell 20.4% during the second quarter ended March 30, dragging down total revenues for the group by 10.4% to $12.4 million, parent company RCI Hospitality Holdings revealed Thursday.

Officials stressed to analysts that management and marketing changes intended to bolster the chain’s performance were not implemented until the middle of the period. Ditto for a cost-cutting program, the added.

The company’s other main business, a collection of adult-oriented nightclubs operating under a variety of names, generated a 4.2% increase in revenues for the quarter, to $59.4 million. Management noted that food sales within the facilities grew by 7% during the quarter, and beverage revenues jumped 16.9%.

RCI CEO Eric Langan said he expects the steps taken to bolster Bombshells’ sales and profits should start to deliver better results in Q3. “There's a lot going on in the company right now,” he commented during the analysts’ calls.

RCI continued its practice of inviting analysts to one of its New York City nightclubs after earnings were released so they could experience a piece of the chain’s business for themselves.

Olo adds Dutch Bros to roster

Online ordering supplier Olo landed a big new customer in Dutch Bros, the fast-growing, 450-unit drive-thru coffee chain.

The Grants Pass, Ore.-based chain will use Olo to offer mobile ordering and payment for the first time. Guests will be able to order ahead and pick up at the restaurant.

The deal has lots of potential for Olo as Dutch Bros has charted a course to reach 4,000 locations. The tech is expected to be in place chainwide by the end of this year.

The partnership was part of a flurry of announcements for Olo as it recapped the first quarter. It also inked a deal with sandwich chain Quiznos and announced integrations with a pair of POS suppliers—Qu and NCR Voyix—that will allow restaurants to digitize in-person and drive-thru orders using Olo’s payment product.

Total revenue increased 27% to $66.5 million, and net losses narrowed to $2.4 million from $13.7 million a year ago.

More restaurants join Toast

The restaurant tech company added more than 6,000 net new restaurant locations in the first quarter. More than 112,000 restaurants now use Toast, an increase of 32% year over year.

The company credited its technology and its local salespeople for bringing more restaurants onto the platform, which includes a wide range of tech tools, from POS to online ordering and marketing.

The company’s revenues increased accordingly. Annualized recurring run rate increased 32%, to $1.3 billion. 

Toast’s stock surged more than 18% in the days following its earnings report.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Financing

The Red Lobster bankruptcy is a seminal moment for the restaurant business

The Bottom Line: The seafood chain’s bankruptcy declaration was not surprising after months of closures and Endless Shrimp recriminations. But that doesn’t make it any less notable.

Workforce

The White House has ideas about how all that AI on the Show floor should be used

Reality Check: President Biden issued a set of guidelines Thursday for protecting workers from the digital onslaught.

Financing

How Popeyes changed the chicken business

How did a once-struggling, regional bone-in chicken chain overtake KFC, the formerly dominant player in the U.S. market? With a fixation on sandwiches and many more new restaurants.

Trending

More from our partners