Casual restaurant chain Chuy’s (NASDAQ:CHUY) fell short of analysts' expectations in Q1 CY2024, with revenue down 1.8% year on year to $110.5 million. It made a non-GAAP profit of $0.42 per share, down from its profit of $0.47 per share in the same quarter last year.

Is now the time to buy Chuy's? Find out in our full research report.

Chuy's (CHUY) Q1 CY2024 Highlights:

• Revenue: $110.5 million vs analyst estimates of $111.7 million (1.1% miss)

• EPS (non-GAAP): $0.42 vs analyst estimates of $0.36 (15.2% beat)

• Gross Margin (GAAP): 20.1%, down from 21.1% in the same quarter last year

• Same-Store Sales were down 5.2% year on year

• Store Locations: 102 at quarter end, increasing by 3 over the last 12 months

• Market Capitalization: $505.5 million

Steve Hislop, President and Chief Executive Officer of Chuy’s Holdings, Inc., stated, “In the first quarter, we experienced the same weather and macro challenges facing the broader restaurant industry leading to top-line growth that was below our expectations. That said, we were encouraged by the sequential monthly improvements in our underlying trends as we moved through the quarter, when adjusted for the Easter calendar shift. In addition, we continued to see growth in our off-premise business as consumers embrace the opportunity to enjoy Chuy’s high-quality, made-from-scratch food from the comfort of their own home. Finally, despite top-line headwinds, our team’s continued focus on four-wall operational excellence allowed us to deliver an 18.8% restaurant-level operating margin which remains among the best in our industry.”

Known for its ‘Big As Yo' Face’ burritos, Chuy’s (NASDAQ:CHUY) is a casual restaurant chain that specializes in Tex-Mex fare, which combines elements of traditional Mexican cuisine with Southern American cooking.

Sit-Down Dining

Sit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.

Sales Growth

Chuy's is a small restaurant chain, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale.

As you can see below, the company's annualized revenue growth rate of 2.5% over the last five years was weak, but to its credit, it opened new restaurants and grew sales at existing, established dining locations.

This quarter, Chuy's missed Wall Street's estimates and reported a rather uninspiring 1.8% year-on-year revenue decline, generating $110.5 million in revenue. Looking ahead, Wall Street expects sales to grow 5.4% over the next 12 months, an acceleration from this quarter.

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Same-Store Sales

Same-store sales growth is an important metric that tracks organic growth and demand for a restaurant's established locations.

Chuy's demand within its existing restaurants has been relatively stable over the last eight quarters but fallen behind the broader sector. On average, the company's same-store sales have grown by 2% year on year. With positive same-store sales growth amid an increasing number of restaurants, Chuy's is reaching more diners and growing sales.

In the latest quarter, Chuy's same-store sales fell 5.2% year on year. This decline was a reversal from the 8% year-on-year increase it posted 12 months ago. We'll be keeping a close eye on the company to see if this turns into a longer-term trend.

Key Takeaways from Chuy's Q1 Results

We were impressed by how significantly Chuy's blew past analysts' gross margin expectations this quarter. We were also glad its EPS outperformed. On the other hand, its revenue unfortunately missed Wall Street's estimates. Lastly, its full-year revenue guidance was in line. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is flat after reporting and currently trades at $29.72 per share.

So should you invest in Chuy's right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.