This Shrinking Steakhouse Chain May Finally Be Bouncing Back
Ruth's Chris Steak House is ranked as one of the most popular chain restaurants in America, and one with a supremely loyal customer base. And speaking in superlatives, it is among the most widespread and recognizable names among fine-dining steakhouse brands, with more than 150 locations across the world, and over 100 of them in the U.S.
But Ruth's Chris Steak House has seen its fair share of ups and downs in recent years. For one, it has been shrinking, shuttering locations even in typically steak-loving markets like Chicago, San Francisco, and the D.C. area. Then amid public scrutiny, the chain was asked to return the forgivable loan it had received from the Paycheck Protection Program during the pandemic.
However, the beloved chain seems to finally be bouncing back, with big plans for growth and a strategy for success. Its upswing started in 2021 when diners returned to restaurants for "pent-up celebratory occasions" and boosted the company's earnings, with same-store sales rising as much as 46%. The steakhouse kept that momentum going through the end of the year, accruing even more gains in the third quarter compared to the second. Now, it is in a far better financial position to renew growth plans for 2022 and 2023.
After closing 23 U.S. locations in the immediate wake of the pandemic, the chain plans to open five to seven new locations a year going forward, according to its most recent earnings call. Growth will also involve buying restaurants from franchisees in order to better ingratiate into different markets and introduce more customers to the brand. It's something the company began employing in recent years on the East Coast and in Hawaii.
In order to offset supply chain issues, labor shortages, and high costs connected to new locations, the chain said it is "value-engineering" the new restaurants. This involves adjusting their size and design, being hyper-selective about where said locations emerge, and more carefully incorporating into new markets and communities.