Business is booming. That's the latest word from upscale restaurant operator Morton's (NYSE: MRT ) .
Roughly 80% of the company's revenues come from customers on business. So when business travel is up, as the latest numbers from JetBlue Airlines (Nasdaq: JBLU ) suggest, and with RevPAR (revenue per available room) up sharply for major hotel operator Marriot (NYSE: MAR ) , there's a decent chance that Morton's is in store for a well-done quarter. That's exactly what it served up.
Net revenues for the second quarter hit a company record of $85.6 million, or 9.8% higher than the same period a year ago. Even more impressive were sales from those locations that have been open for more than a year -- comparable same-store sales rose 4.4% for its Morton's locations. On the whole, comps were higher by 4.3%, as Morton's strong growth was partially offset by a 1.2% decline at Bertolini's locations.
A 2.5% increase in menu prices, accrued over the past 12 months, drove comps growth. Additionally, increased customer traffic as well as a shift in product mix -- at least partially attributed to the success of its Bar 12-21 store-in-store concept -- helped boost comps.
Overall, Morton's second-quarter figures look pretty good, consisting of a nice mix of brisk sales and steady margins. Looking out into next quarter, the management team is calling for a slight pullback in comps to a range of 2% to 3%. During the period, the company will also open three new Morton's locations, which will be followed by two more openings in the fourth quarter; all new locations will be fitted with a Bar 12-21. Meanwhile, it continues to retrofit 10 older locations with Bar 12-21s.
"Disciplined new restaurant growth." That was the characterization of its expansion strategies as outlined by CEO Thomas Baldwin during the company's second-quarter earnings conference call. The tactic appears to be quite effective. The nine new restaurants opened between 2005 and 2007 averaged 19% more revenue than the existing restaurants in the comp group.
You will not see high double-digit growth coming from Morton's as you might have come to expect from a casual dining steakhouse like Texas Roadhouse (Nasdaq: TXRH ) . Nonetheless, with only 74 Morton's locations in 65 cities around the world, there are plenty of growth opportunities both domestically and internationally.
And if it can keep tying disciplined growth with consistency on an operational level, investors should continue seeing positive returns like they have over the past 12 months.
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