Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Ruth's Hospitality Group (NASDAQ:RUTH)

Q1 2011 Earnings Call

April 29, 2011 8:30 am ET

Executives

Robert Vincent - Chief Financial Officer, Principal Accounting Officer, Executive Vice President, Corporate Secretary and Member of Executive Committee

Michael O’Donnell - Chairman, Chief Executive Officer and President

Analysts

Nicole Regan - Piper Jaffray Companies

Jeffrey Omohundro - Wells Fargo Securities, LLC

Andrew Barish - Jefferies & Company, Inc.

Jason West - Deutsche Bank AG

Howard Penney - Prudential Equity Group

Bart Glenn - D.A. Davidson & Co.

Operator

Hello, good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Ruth's Hospitality Group First Quarter 2011 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to Mr. Bob Vincent, Chief Financial Officer. Please go ahead, sir.

Robert Vincent

Thank you, and good morning. We need to remind everyone that part of our discussion today may include forward-looking statements. These statements are not guarantees of future performance and therefore, undue reliance should not be placed upon them. We refer all of you to our recent filings with the SEC for a more detailed discussions of the risk that could impact future operating results and financial conditions. Finally, I would like to remind you that today's call may not be reproduced in any form without the express written consent of Ruth's Hospitality Group Inc.

I would now like to turn the call over to Mike O'Donnell, Chief Executive Officer of Ruth's Hospitality Group.

Michael O’Donnell

Thanks, Bob, and good morning, and thank you all for joining us today as opposed to watching the wedding of the century. Our first quarter sales performance at Ruth's Chris Steak House underscores the positive momentum we have experienced over the last several quarters, and these improved sales volumes have allowed us to expand our restaurant operating margins despite the commodity pressure we faced during the quarter. Comparable sales at Ruth's Chris Steak House increased 5.2% versus the first quarter of 2010, while comparable sales at Mitchell's Fish Market decreased by 2.7% versus the prior year. Our Mitchell's sales performance was negatively impacted by approximately 50 basis points, as Easter was celebrated in late April this year. The calendar shift resulted in three fewer Lenten Fridays in March, and those Fridays are typically fish-eating opportunities for those observers of Lent. Currently, comparable trends in April are positive at both brands. Ruth's Chris sales are up in the mid-single-digit range and Mitchell's sales are flat, as the Easter shift I just mentioned is reversed.

By geography, Ruth's Chris two largest markets, Florida and California, both generated positive sales, as Florida sales rose 1.1%, while California sales improved by 6.8%. Across the entire Ruth's Chris portfolio of 64 company locations, we were pleased that a full 54 restaurants reported positive comparable sales during the first quarter.

Entrées, which serve as our proxy for traffic, increased by 3.9% during the first quarter. And we have now been positive for 5 consecutive quarters. Our average check was also up 1.2% in the first quarter. Compared to the Knapp-Track index benchmark for the Steak House segment, Ruth's Chris sales were lower relative to the index by 250 basis points and 388 basis points in traffic. We continue to believe the gap is driven by competitive discounting.

Private Dining at Ruth's Chris Steak House increased approximately 13% during the first quarter, continuing the momentum we've experienced during the holiday period. Although we did not employ any major new initiatives during the quarter, we continue to benefit from the interest in our Catering business, the use our professional services and the hard work of our people. Within the Ruth's Chris franchise system, domestic comparable franchise-owned restaurant sales increased 8.8%, while international comparable franchise-owned restaurant sales increased 11.7%. System wide, our franchisees had a blended comparable restaurant sales increase of 9.3%.

Turning to Ruth's Chris brand, we began testing TV spots late in the first quarter as part of our new experience-focused advertising campaign. We believe that the TV campaign, combined with an improved social media presence, will create even more enthusiasm from our broader customer base. To the extent that we get traction from TV compared to the other media alternatives, we are likely to devote more resources to television in the second half of the year.

In terms of the menu, our Ruth's seasonal classics pre-fix remains our featured promotion and continues to comprise roughly 30% of our sales mix. We believe that our diverse guest base appreciates the option of the pre-fix classics, and this strategy has supported our five consecutive quarters of traffic growth. With renewed enthusiasm for high-end dining, this pricing strategy only reinforces the value that Ruth's Chris offers its guests.

At Mitchell's, we continue to work on fine-tuning our brand positioning. While sales trends were disappointing, we continue to be positive on the concept, and view menu innovation as one of the factors in determining our long-term success. We currently are featuring a lobster duo for $24.95, which consists of cold water rock lobsters served with a choice of lobster pot pie, lobster mac and cheese or sautéed lobster and shrimp cake. Given the seasonality of seafood, we are using pre-fix features and time-limited offers, so that our guests always have something new to experience when dining with us.

Our marketing efforts at Mitchell's are primarily focused on online and social media, although we have also increased our grassroots campaign through greater community involvement. More broadly, we're also working on developing and continuing to define a new brand campaign. With respect to company restaurant development, we remain active in evaluating real estate opportunities for 2012. I would say active and aggressive, but do not have any signed leases at this time. Our Ruth's Chris Franchising business is projected to have 2 openings in the second half of the year. Inclusive of these locations, we currently have 17 commitments for future franchise restaurants over the next several years. And this pipeline should allow us to continue to generate consistent franchise income of $11 million to $12 million annually.

I'd now like to turn the call over to Bob.

Robert Vincent

Thank you, Mike. For the first quarter ended March 27, 2011, we generated total revenues of $98.8 million, an increase of $4.1 million or 4.4% compared to last year. Total company-owned restaurant sales increased to $95.3 million or approximately 4.5% compared to the $91.2 million in the first quarter last year. Restaurant operating weeks were 1,131 versus 1,118 last year. Average weekly sales for all company-owned Ruth's Chris Steak House restaurants were approximately $90,000 in the first quarter compared to approximately $85,600 in the same period last year. Ruth's Chris Steak House comparable sales increased by 5.2% and consisted of an average check increase of 1.2% combined with an increase in entrées of 3.9%. As Mike said, our fifth consecutive quarterly increase in entrées.

Average weekly sales at the Mitchell's Fish Market were approximately $68,500 compared to approximately $70,500 in the same period last year. Comparable restaurant sales at Mitchell's Fish Market decreased 2.7% as our average check increased 3.5%, while entrées decreased 6.1%. Franchise income increased approximately 4.3% to $3.1 million from $2.9 million last year.

In terms of our cost structure as a percentage of restaurant sales, food and beverage cost increased 140 basis points year-over-year in the first quarter, primarily driven by unfavorable beef cost. We also experienced pressure in dairy and produce during the quarter. As we've mentioned on our last call, we rolled out a 50 basis point increase in late March, which is helping to mitigate the impact of overall commodity inflation. Although we believe that we have additional pricing power, we intend to be prudent with respect to future increases. Also at this time, we have no forward contracts for our 2011 beef requirements.

Restaurant operating expenses as a percentage of restaurant sales decreased 190 basis points from the first quarter last year to 49.4%. This decrease was driven primarily by positive sales leverage. Marketing and advertising costs increased to $3 million from $2.5 million, and as percentage of total revenue, increased by 30 basis points to 3%.

G&A expenditures increased by approximately $300,000 to $5.9 million in the first quarter. Operating income was $10 million in the first quarter of 2011 compared to $9.8 million in the prior-year first quarter. The first quarter of 2010 included a one-time $600,000 restructuring benefit for which there was no comparable benefit this year. Interest expense was $800,000 in the first quarter compared to interest expense of $1.3 million for the same period last year.

We had net income available to preferred and common shareholders of $5.9 million or $0.14 per diluted share on a share base of approximately $43 million in the first quarter of 2011 compared to $6.5 million or $0.20 per diluted shares on a share base of approximately $32.5 million in the first quarter of 2010. Excluding a one-time $300,000 net benefit in discontinued operations, net income in the first quarter of 2011 was $0.13 per diluted share. Net income for the first quarter of 2010 included a $700,000 income tax benefit and a one-time $400,000 net restructuring benefit. Excluding these adjustments, net income in the first quarter of 2010 was $0.16 per diluted share.

With regards to our balance sheet, long-term debt as of March 27 was $45 million, a reduction of $6 million for the quarter. In terms of our outlook for 2011, based on current information, we are reiterating our previous outlook, which included the following: Cost of goods sold of 30.5% to 31.5% of restaurant sales; marketing and advertising spend of 3% to 3.5% of total revenue; G&A expenditures of $23 million to $25 million; and effective tax rate of 25% to 30%. We fully anticipate diluted shares outstanding between 43 million to 44 million shares. CapEx spending is projected at $10 million to $12 million. And lastly, we are projecting our free cash flow to be in the range of $21 million to $23 million.

I'd like to turn the call back to Mike.

Michael O’Donnell

Thanks, Bob. Once again, we're encouraged by the traffic gains that our Ruth's Chris brand is experiencing and intend to build on this momentum by continuing to deliver great sizzling steaks, genuine Southern hospitality and memorable experiences for our guests. Our Ruth's Chris franchise partners, which are the heart and soul of the brand, are equally committed to these objectives, and they too stand to benefit from greater interest in upscale dining from the businessperson and special occasion diner alike. And while trends in Mitchell's have been mixed and not necessarily up to our expectations, we still believe strongly in its potential.

As always, we appreciate your interest in our company and are now available to take any questions.

Question-and-Answer Session

Operator

[Operator Instructions] We'll take our first question from Jeff Omohundro with Wells Fargo.

Jeffrey Omohundro - Wells Fargo Securities, LLC

Just a question on the pricing strategy, and I understand and respect your desire not to be too aggressive there, but when considering the broad commodity price increases the industry is experiencing, maybe you can share with us a little bit more about the philosophy about what might lead, for example, to you taking additional pricing later in the year. Is it balancing the cost inputs against traffic? Maybe just expand a little bit more about on your thinking on that please.

Michael O’Donnell

Let me try and kind of frame it up for you a little bit. I mean in an analogous sort of position, I like being the least expensive house in the wonderful neighborhood. And so the idea that we can keep our pricing down is something that we think has been contributing to the increase in traffic. And so, I mean, while, as Bob said, we think we have some opportunity, we want to use that judiciously. I think that the organization needs to develop all its opportunity to be efficient. And it's the last thing I want to do is try and take price or pass that along to the consumer. Now having said that, I mean if we were to see sort of increasing, rising commodity costs past what we think those opportunities are, then we would rethink that. And we've done some work around that. We've done some testing around that and we think we know what our parameters are. But again, I feel good about the fact that we're having traffic gains, that we're not doing aggressive discounting in order to do that and that taking that kind of a strategy makes sense. Look, 30% of our revenue is coming out of a promotion that says $39.95, $49.95. So there's clear preference for people that see that price certainty and that sort of a price point as being a good thing. So for us to be very thoughtful about it, but primarily, our bias is to be as modest as we can be.

Jeffrey Omohundro - Wells Fargo Securities, LLC

And on Mitchell's, in terms of the menu strategy there, and the performance in the quarter I understand was clouded a bit by the Easter calendar impact and perhaps, I don't know if you had any sense of it, if there was any shift in seafood preference related to the Japanese crisis. But perhaps you can elaborate a little bit on menu strategy and opportunities there to pick up the traffic.

Michael O’Donnell

Yes, Jeff, I think, no. I don't think there's any impact from the situation in Japan. I think that we continue to do a lot of work around this. We're very proud of the work that our people are doing, and people in the field are working very hard. We've got some challenges around sort of non-seafood items and how much we've done on the non-seafood side. We get very high marks for seafood, but we've historically had a fairly limited amount of non-seafood items on the menu. We're doing some testing around that. We're seeing some menu shift as a result in the tests where we're doing it that we think is favorable. So sort of answering the veto vote. I think that we've got some speed of service issues that we're working on. I think that we've got the balance between complexity of some of our items and the simplicity of the ability to deliver. Having said that, again, we still have, as I think Bob said, we're operating in average unit volumes that are pretty substantial numbers. And so I still feel very good about where the business is. I think the challenge around menu development, we're getting closer to figuring out where that balance ought to be.

Operator

Our next question will come from Jason West with Deutsche Bank.

Jason West - Deutsche Bank AG

Just a few here. I guess if you’d give a little more color, Bob, on the beef inflation, what you saw in the quarter and what you expect for the full year. And maybe if you have an all-in inflation number, would be great as well.

Robert Vincent

I would say on the beef side, I don't think we have experienced any surprises here in Q1. Again, we've spoken about our full year outlook, which is in the 6% to 7% range. Go to Q1 itself, specifically, that was the lowest point a year ago in terms of pricing. And so on a year-over-year basis, our tenders were probably up in the mid-single-digit range, and prime cuts were probably up in the low-double-digit range. Kind of blending that kind of keeps us in our defined guidance, if you will, of 6% to 7%. The first half of the year is going to be the tougher overlaps. As we move into the second half of the year, I think that again, if there's nothing crazy that takes place in the marketplace, we should be able to mitigate some of the year-over-year increases. Just as an example, in Q1, tenders were actually probably $1 lower in cost than they were in Q4. And as so we come along to overlap that, I think we'll get back to our full year guidance in the 6% to 7% range.

Jason West - Deutsche Bank AG

Okay. And then in terms of pricing, what was the effective pricing you guys had in the first quarter? And then what would it be now after the 50 basis points? I believe you had said you're running about 20 basis points or so going into the first quarter?

Robert Vincent

Yes. We had a price increase in August of 2010 of approximately, on an annualized basis, of about 40 basis points. So that's embedded in Q1. The second price increase we took, the 50 basis points, was really in the last week of the quarter. So there is no real benefit there. So on a go-forward basis, we'll start to realize some of that.

Jason West - Deutsche Bank AG

Okay, got it, that's perfect. And just I'm a little confused about the Knapp numbers that you guys give every quarter. And it seems like you're always kind of lagging the industry on sales and traffic. And I know there's some discounting and things going on out there, but is there anything unusual about that index that you guys are giving us? Does it include some lower-end concepts maybe? Because it seems like your comps have been pretty solid relative to the public companies that we see out there. I don't know, just it's not good to see market share losses, but I don't know if that index is a great representation of the upscale steakhouses?

Michael O’Donnell

Yes, Jason, this is Mike. First, I mean I'll go back to what we said earlier and that is that I think that some of our competitor -- it's a very small segment. The specific steakhouse category is a very small segment in terms of the people that make up that category. And there's been some much more aggressive discounting from some of our competitors, and some of the people that are in that are non-public companies. So I can tell you that I can see where some of their comp store sales have improved, I can't tell you what's happening in the profitability. And in terms of whether it's through market share, that's not necessarily the case. I mean it's not clear that because you're going down, and they're going up, it may actually be coming in or out of independents. There's other places that, that goes. We clearly think about it. We clearly look at it. We're thoughtful around it or we wouldn't talk about it. But I'm comfortable with the fact that we're showing high mid-single digits, that our margins have expanded and that our customers continue to show increase in traffic and that's been a 5-consecutive quarter basis. And in the frequency by which you dine in a steakhouse, the frequency of our customer purchase pattern, some of the decisions you make around pricing, you're not going to see the benefit or the detriment for a long period of time. And so it may be six months later that somebody doesn't come back because of the pricing. I think as you look across the universe today, there's a great deal of concern around value, and no matter whether it's in the food business or whatever it may be. And I think that we are trying to be very consistent around that. And while again, I think that it's important to look at, and we look at and talk about what's going on in the marketplace. But I have competitors that I'm getting direct mail pieces from American Express that if you spend around $150, you get a $50 discount. If that drives traffic, then that drives traffic, that's not something that I would care to do.

Jason West - Deutsche Bank AG

Okay, that's helpful. And then just the last thing, the Florida number looked a little low for the quarter. Just wondering kind of what happened there, if that's a new trend in Florida or there was some anomaly this quarter?

Robert Vincent

Yes. It's hard for us to draw our conclusion on one quarter. The Easter shift, which has an impact on some of the spring break vacations. So a little unclear. It looks like probably the spring breaks that moved again according to the Easter or consistent with the Easter holiday, so I think it's probably some noise around that. But I think it's too early to draw any conclusion.

Michael O’Donnell

And I think further, we had some restaurants that performed really well, and we had some that showed some surprising weakness that had historically not been. But again, 54 of the restaurants were up in positive comps. So we had very good -- we followed through with great distribution around that. As Bob said, depending on where Easter comes is when the snow birds migrate back and forth between the north. And then further you've got spring break issues. So obviously, there's a difference and we pay attention to it. But I don't think there's anything that's specific. There has been greater challenges in Florida and in California around real estate value, but again, I don't think that there's anything significant in what that's telling us.

Jason West - Deutsche Bank AG

Is Florida a bit better in April back on -- more in line with the average or...

Michael O’Donnell

Jason, you know we don't talk about that kind of stuff.

Jason West - Deutsche Bank AG

Okay.

Michael O’Donnell

I mean I think, as I said, we're continuing to see mid-single digits across-the- board and feel good about that.

Operator

Our next question comes from Andy Barish with Jefferies.

Andrew Barish - Jefferies & Company, Inc.

Just a couple of things on some of the tests you're working on. TV, it sounds like maybe you're getting some data that might move you ahead to make some shifts in marketing in the back half or is it still premature to assume that? And then on the price fix, some of the menu changes you've looked at there, is that still something you want to keep in your back pocket as you evaluate as well?

Michael O’Donnell

Andy, relative to television, again, it's early. But, clearly, television's always been a powerful medium. And to the extent that we have markets that end up benefiting from that, then I clearly would make that investment. But I think it's too early to say that. At this point, I wouldn't say that it's conclusive at all. And there's just as good a chance that we're going to continue on our same path as there is that we're going to make a change. But if it does show to be favorable, we will. And in terms of pricing, there's a substantial amount of pricing opportunities -- well, the pricing opportunities exist by market. It's not the same. For instance, in New York City, we were just up in New York, very vibrant, and there may be more opportunities for pricing in New York City than there is in some of the other markets that we're in. So we're really evaluating that on a market-by-market basis. We think the pre-fix continues to be a very strong proposition for us. It's particularly good when we talk about our Private Dining and Catering business and things like that. And so maybe in some markets, we make some small price changes there, but the philosophy sort of stays the same.

Andrew Barish - Jefferies & Company, Inc.

And then just one quick one on remodels, obviously, you did a big remodel in New York. Any other kind of, I guess, I would term, major remodel projects on restaurants this year?

Michael O’Donnell

Well, Andy, yes, we have a number of -- consistent with our brand repositioning, really, is the work that we're doing around our remodel work. And some of it is significant like New York was that we're very excited and proud of. And some of it is based on the fact that the restaurant may be a newer restaurant and only needs lesser amounts. But we're systematically going through the entire chain or system to determine which restaurants need that, and we expect that we will do probably in the neighborhood of 12 to 15 restaurants this year in terms of remodels at various levels. And like I said, some of them rather modest and some of them more significant, but inside of the CapEx structure that we've given. And to the extent that we have less or do not have CapEx needs for the new builds, then that's where maybe some additional remodels may take place. But some of the remodels, and let me make sure I'm real clear about this, some of the remodels are really, are very defensive, meaning that in a place like New York, where it's a high-volume restaurant force, it's done very well, our remodel there, while we expect it will see returns and feel very good about that restaurant, and I know that you've been in there, it's something that it needed to be refreshed and needed to have part of the revitalization take place. So we're doing what we should do on an ongoing basis to the entire system.

Operator

We'll take our next question from Bart Glenn with DA Davidson.

Bart Glenn - D.A. Davidson & Co.

Yes, I was curious, could you maybe give us a little more color on why the franchise comps were so much stronger than the company-owned comps? Was just curious if maybe they're taking a greater pricing.

Michael O’Donnell

Now, Bart, I think that's a very good question. And I think that there's a number of things that take place. First of all, we all recognize that we don't dictate what the franchisees charges. We don't dictate their pricing. We share with them what our philosophy is, they adopt, follow, they change, they make their own decisions. In some cases, our franchise community have been in a lot of smaller markets and have historically had pricing that was below where we were. In some cases, they have pricing that's been at par and some at a premium. And so in some cases, they have elected to make some decisions around pricing that have been a little bit more aggressive. Traffic numbers are relatively the same. But when we're talking about pricing, and they take a little more aggressive pricing increases. Now, again, I would caution, as I've cautioned them, I would say the same thing that I said earlier, that some of the decisions we make around pricing, maybe we don't see that until the tail end or 6 months or so later. Now having said that, our franchisees are smart people. They're thoughtful. They know their markets very well. They were aggressive in taking price corrections and in doing the things that we did in terms of pre-fix, et cetera, during the economic downturn. As things have gotten stronger, where some of the markets have gotten stronger and they feel really good about where their traffic patterns are, they think like they can take a few more and a little more pricing. And so really the shorter answer to it is that the traffic comparables are about the same, the pricing piece has been more aggressive on their side.

Bart Glenn - D.A. Davidson & Co.

That's very helpful. And just as a follow-up, if maybe 6 months from now, you see that the incremental pricing that some of the franchise stores have taken isn't negatively impacting traffic when you have a greater period of time to kind of monitor that, would that provide you with increased confidence to maybe reconsider taking a little bit more pricing on the company-owned locations?

Michael O’Donnell

I guess, again, Bart, you have to go back to the notion of, are you taking price for the moment? Are you taking price for the long-term building of the enterprise? There's a lot of different variables to that, and then given what's going on in the economy at that time. But I'm not opposed to taking price, but again, I like the notion that I've got consistent traffic growth, that we’re resonating with our customers around that, that they have the notion of pre-fix is then price certainty, is something that we get a lot of feedback. It's very favorable. So I think a week does not go by we are not in conversation around pricing on almost the market-by-market basis, and we'll continue to make those decisions as we go.

Bart Glenn - D.A. Davidson & Co.

That's great. And then just one follow-up, just wanted to clarify the gross margin guidance, would that be based on not taking additional price the rest of the year?

Robert Vincent

Yes, our overall outlook, Bart, does in fact, include just what we've done to date.

Operator

We'll take our next question is from Howard Penney with Hedgeye Risk Management.

Howard Penney - Prudential Equity Group

When you think about TV, I was wondering if you could sort of articulate sort of how you're looking at the returns you get them the money spent. And more importantly, I don't think I've ever seen a company that hasn't flipped the switch on TV and it hasn't been a benefit in year one, but the problem comes in year two, when you can't comp the comps, so to speak, because you can't raise enough money to increase the spending. So I was wondering if you could sort of talk about that philosophically? But also if there's a return metric or how you're looking the money spent and the returns you get from that?

Michael O’Donnell

Yes. I think you're spot on. The notion of the television advertising and advertising itself become like heroin, you need more and more every year that comes down the pike. And that is really part of the fundamental test. And meaning that, we are looking at how television and in this case, we've got 15-second spots that we're using and how efficient we can be in terms of cable buys that can support the other efforts that we have, and does it give us the kind of, sort of boost that would be sort of a bed to lay underneath other advertising, not to be a strategy in and of itself but to be part of something else, so that we would not get ourselves in that position. And so, what we're doing now, honestly, is looking at, what does it do to traffic, what does it do to sales. And more importantly, by virtue of doing work around ads and usage, what does it tell us our consumer says? Because we would be one of the few sort of high-end restaurants that are out there advertising. And we don't want to sort of devalue the brand by doing that. So we're doing research around that. There are a lot moving parts that make that make sense. I don't want to suggest that, for instance, we find that this works and all of a sudden, we now are going to advertise like a major casual theme restaurant. That's not the case. This is an issue around does this fit as part of the strategy that has community outreach, that has other methods of delivering our brand. And all of this, and even the television is around the brand experience. It's not at all around anything that has to do with price, and so it's really an underlier to a strategy.

Operator

We'll take our final question from Nicole Miller with Piper Jaffray.

Nicole Regan - Piper Jaffray Companies

So one thing, it sounded like you said 13% up on the Banquet sales in the quarter; was that the figure?

Michael O’Donnell

Yes.

Nicole Regan - Piper Jaffray Companies

Okay. So can you give us a little color, how does lunch compare to dinner, weekday to weekend? And what's the next catalyst for Banquet sales?

Robert Vincent

In terms of some of the day parts, if you will, at Ruth’s Chris we have very limited restaurants who serve lunch, so it's really not a meaningful factor. In terms of dinner, early week versus weekend, last year, we kind of saw a shift. In the beginning of 2010, we had a stronger Sunday through Wednesday segment than the weekend. But probably in late summer, early fall, that started to shift a bit, and we started to get kind of equal distribution between the Sunday through Wednesday and then the Thursday, Friday, Saturday, and that's kind of continued here in the first quarter. So we view that as a good indicator. And it's really, as we've said before, we have 3 different buckets of consumers, if you will, be it the business travel, be it the affluent or our regulars and be it special occasional diners. And we think all 3 are actually growing pretty well. And so those splits, the Sunday through Wednesday, the Thursday, Friday, Saturday support that theses that we really are getting growth in all of our customer segments.

Nicole Regan - Piper Jaffray Companies

And when you look at some of your peers exiting the market completely, like by closing stores and that some of the recovery, the corporate side is during lunch, would you consider opening any more of your restaurants for lunch?

Michael O’Donnell

Yes, Nicole, we have less presence than some of our competitors in sort of urban markets, and that's really where we've -- the small number of restaurants that we open for lunch -- we have some restaurants in California that open for lunch on Fridays, and we do a compressed amount of business. If we open 5 days, we’d do the same business we would've done on Friday. So we try to be efficient with that. We've evaluated again market-by-market, we are currently not planning on opening any other restaurants for lunch. But clearly, downtown markets like New York and Boston, we're open for lunch because there's business there. But to the extent that we are in other markets outside of that sort of business opportunity, we really wouldn't contemplate that.

Nicole Regan - Piper Jaffray Companies

That actually make sense, Michael, yes.

Michael O’Donnell

Let me go back, just one other thing, in one of the questions you asked and make sure -- and I think Bob answered a great deal of it. But I think the catalyst for the continued growth in our Private Dining and Catering business, really, we spent the last year and a half or so really putting some great sales and marketing people into the restaurants that are out developing that business. And so the groundwork, a lot of that groundwork has been laid. We're now doing repeat business. We're seeing people come back to do further meetings and private dining and benefit from the satellite program. So when you had asked about what's the impetus, I thought part of your question was around the Catering and Private Dining business, and that continues to grow. And it's really not that we have new initiatives, it's that we're staying consistent with our old.

Operator

And at this time, I' like to turn the conference back over to Mr. Vincent for any additional or closing remarks.

Michael O’Donnell

Thank you, operator. This is Mike O'Donnell. I thank everybody for participating. Thanks, Nicole, for coming in after the kiss. And as always, it's a great day to go out and eat steak and fish. Thank you very much.

Operator

Thank you. That does conclude today's presentation. Thank you for your participation.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Ruth's Hospitality Group's CEO Discusses Q1 2011 Results - Earnings Call Transcript
This Transcript
All Transcripts