Chuy's Holdings, inc (CHUY) Q2 2021 Earnings Call Transcript

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Chuy's Holdings, inc (CHUY -1.31%)
Q2 2021 Earnings Call
Aug 5, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen and welcome to the Chuy's Holdings Second Quarter 2021 Earnings Conference Call. Today's call is being recorded. At this time, all participants are placed in listen-only mode and we will take your questions after the presentation. On today's call, we have Steve Hislop, President and Chief Executive Officer and Jon Howie, Vice President and Chief Financial Officer of Chuy's Holdings, Incorporated.

At this time, I'd like to turn the conference over to Mr. Howie. Please go ahead, sir.

Jon Howie -- Vice President & Chief Financial Officer

Thank you, operator, and good afternoon. By now, everyone should have access to our second quarter 2021 earnings release. If not, it can be found on our website at Chuy's.com in the Investors section. Before we begin our review of formal remarks, I need to remind everyone that part of our discussions today will include forward-looking statements. These forward-looking statements are not a guarantee of future performance and therefore, you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. We refer all of you to our recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.

With that out of the way, I'll turn the call over to Steve.

Steve Hislop -- President & Chief Executive Officer

Thank you, Jon. Good afternoon, everyone, and thank you for joining us on our second quarter earnings call today. I hope everyone is staying safe and healthy. Let me begin by saying how pleased I am with the solid improvements we've made during the second quarter. I truly believe this was a direct testament to the hard work and dedication of each of our team members as we continue to navigate this environment. For the second quarter, most of our restaurants, while open, were still operating under various capacity restrictions. Despite this fact, we grew our topline by over 64% compared to last year and further narrowed our comparable sales gap to negative 1.4% compared to pre-COVID 2019.

The COVID-19 pandemic has given us an opportunity to reset our business model with continuing restaurant level operating margin improvement. This ongoing focus on cost management and operating efficiencies during the quarter resulted in another company record and restaurant level profitability both on a dollar and margin basis. With our business trajectory heading toward the right direction, we are all eager to return our business to more normalized operations and increasing our dining capacity is back to 100%.

To that end, we are focused our efforts on retaining and recruiting our existing employees, not only to ensure that our restaurants are properly staffed, but also stay ahead of the curve as we are facing industrywide labor availability challenges. One of the ways we're doing this is through our management retention program, which we described last quarter and it includes an investment in our managers in the form of bonus payments to be paid in the second and third quarters of this year. In addition to staffing, we believe it's more important than ever for our team members to focus on our three key pillars that have resonated well with our guests throughout the pandemic, safety, convenience, and value.

Safety will always be at the forefront of our minds and during the second quarter, we continue to invest in ways to minimize touch points between our team members and guests. We expanded our pay at the table, our QR-code payment, and pay-by-text solutions to two additional restaurants during the quarter. While we are still improving the overall processes, we believe these investments with further improve our in-restaurant peace of mind from our guests. Our off-premise offerings also resonated well with our guests during the second quarter, providing them additional convenience to enjoy a high quality made from scratch food and drink. This is reflected in our strong off-premise mix at approximately 27%. As we've mentioned in the past, we believe we can maintain a low to mid-20s off-premise mix going forward given the enhanced level of convenience and how well our food travels.

Lastly, with streamlined menu including convenient family meal and beverage kits, our guests really appreciate value in our current offerings. Looking ahead, our plan is to maintain our current menu until the end of the year. We will then slowly add back some items off menu, starting in the fourth quarter with a goal to return to our new menu by the middle of the first quarter of 2022. Again, our menu has always been value-oriented and it will stay that way.

Turning to new restaurant development, we successfully opened two new restaurants during the quarter, one in Southport, Indiana and one Amarillo, Texas and are pleased with the initial reception. We also have one more restaurant slated to open at the end of August in Brentwood, Tennessee, which will bring our total openings year-to-date to four restaurants and complete our development for the current year. Although it's still early, we currently expect to open between six to eight new restaurants in 2022, utilizing a smaller prototype that will be more efficient to operate and will allow us to better serve off-premise guests while still providing them with the same unique dining experience.

With that, I will now turn the call over to our CFO, Jon Howie, to discuss our second quarter results in greater detail.

Jon Howie -- Vice President & Chief Financial Officer

Thanks, Steve.

Revenues for the second quarter, ended June 27, 2021, increased 64.7% to $108.2 million compared to $65.7 million in the same quarter last year. The increase was primarily related to growth in customer traffic as we continue to relax indoor-dining capacity restrictions for all of our restaurants as well as $3 million of incremental revenue from new restaurants opened during fiscal year 2021. For the second quarter of 2021, off-premise sales were approximately 27% of total revenue compared to approximately 61% in 2020 and 13% in 2019. In total, we had approximately 1229 operating weeks during the second quarter of 2021. Comparable restaurant sales increased 60% during the second quarter versus last year and included a 55.2% increase in average weekly customers and 4.8% increase in average check. For a more accurate picture of our sales recovery, second quarter comparable restaurant sales declined 1.4% versus 2019 and improved sequentially from the first quarter as compared to 2019.

Turning to expenses, cost of sales as a percentage of revenue increased 10 basis points to 23.6% primarily due to overall commodity inflation of approximately 5%, largely offset by a decrease in the mix of the [indecipherable] family kits sold as compared to the prior year. Based on current trends, we are currently expecting commodity inflation of 3% to 5% for the remainder of fiscal 2021 due to increase in cost pressures. Labor as a percentage of revenue increased approximately 160 basis points to 28%, largely because of increased hourly and manager labor as the company reopened all of its dining rooms in reinstated the reduced manager salaries as compared to 2020. The company has also incurred $0.8 million of incremental manager bonuses in conjunction with its $1.6 million manager retention program with the remaining $0.8 million to be paid in the third quarter of fiscal 2021.

Hourly labor inflation for the second quarter at comparable restaurants was approximately 1% and was lower than what we were experiencing in rate because of the increased hourly mix to the front of the house stations. However, we expect our hourly labor cost to increase through the second half as we continue to staff our restaurants to full capacity and expect hourly inflation to increase to approximately 5% to 7% as the mix normalizes and is more comparable to the back half of 2020.

Operating costs as a percentage of revenue improved 160 basis points to 14.7% due to decreases and delivery service charges and To-Go supplies as we reopened our dining rooms as well as leveraged on fixed restaurant operating costs. This was partially offset by an increase in liquor taxes, driven by higher bar sales mix as compared to the same period last year. Marketing expense as a percentage of revenue increased 50 basis points to 1.1% as we resumed our digital advertising campaigns systemwide. Occupancy cost as a percentage of revenue decreased 390 basis points to 6.9% primarily because of sales leverage on fixed occupancy expenses, partially offset by higher percentage rent as well as occupancy expenses related to three new stores opened during fiscal 2021.

General and administrative expenses increased to $6.7 million in the second quarter from $4.8 million in the same period last year, primarily driven by lower expenses in 2020 due to the reduced corporate employee staff and salaries during the COVID-19 pandemic as well as higher performance-based bonuses and travel expenses in 2021 as a percentage of revenue, G&A declined 100 basis points to 6.3%. The company recorded income tax expense of $2.3 million in the second quarter of 2021 compared to a benefit of $0.6 million during the same period in fiscal 2020. The increase in income taxes was driven by an increase in estimated annual net income and a $1.1 million tax benefit recorded in 2020 related to the CARES Act administrative correction related to depreciation.

In summary, net income for the second quarter of 2021 increased 156% to $11.5 million or $0.57 per diluted share compared to $4.5 million or $0.26 per diluted year share in the same period last year. During the second quarter of 2021, we incurred $1.4 million, $1.1 million net of tax or $0.05 per diluted share in impairment, closed restaurant, and other costs. These costs included closed restaurant costs such as rent expense, utility, and insurance costs required to maintain our closed locations. Taking that into account, adjusted net income for the second quarter of 2021 increased 215% to $12.6 million or $0.62 per diluted share compared to $4 million or $0.23 per diluted share in the same period last year.

Moving to our liquidity and balance sheet as of the end of the quarter, we had $135 million in cash and cash equivalents, no debt and $25 million of availability from our revolving credit facility. However, subsequent to the end of the quarter, we completed our new credit facility with JP Morgan-Chase Bank, which will provide the company with a $35 million revolving credit facility that can be expanded to $60 million based upon certain requirements. This credit facility will mature in July of 2024.

Lastly, while I'm still not in a position to provide our usual financial guidance, I will give you some directional metrics that I hope will be helpful. As Steve mentioned earlier, we are now planning to open just four restaurants in 2021. Net capital expenditures, net of tenant improvement allowances are now expected to be $15 to $17 million versus approximately $15 to $25 million previously. We still expect restaurant preopening expenses of $2 to $3 million in 2021 and lastly, our effective quarterly tax rate is expected to be approximately 16% to 18% for the remainder of fiscal 2021.

With that, I'll turn the call back over to Steve.

Steve Hislop -- President & Chief Executive Officer

Thanks, Jon.

Let me reiterate that we are optimistic about our business, given our continued sales momentum and increased operating efficiencies. Through our focus of our three key pillars; safety, convenience, and value, we will continue to work on increasing our dining-in capacity as we continue to increased staffing. Of course, none of these would've been possible without our team members who are working hard every day to ensure that we can provide the unique experience our guests have come to expect from Chuy's.

In summary, as we look toward the remainder of the year, we remain operationally and hospitality focused.

With that, we are happy to answer any questions. Thank you.

Questions and Answers:

Operator

Thank you, ladies and gentlemen. [Operator Instructions] We'll pause just a moment to give everyone opportunity to signal for questions. We'll take our first question from Nick Setyan with Wedbush Securities. Please go ahead.

Nick Setyan -- Wedbush Securities -- Analyst

Thank you and congratulations on another amazing quarter. As we kind of look at this over 800 basis point margin improvement versus Q2 of 19, you're thinking changed at all in terms of the margin opportunity longer term? I know, historically, you've talked about 300 to 350 basis points and it just seems like every quarter, you are getting better at this and so, is it possible that maybe instead of 300 or 350, it might even be a little bit more?

Steve Hislop -- President & Chief Executive Officer

Nick, it's important to know that through quarter to maintain basically [indecipherable] since that we went into COVID at the beginning of 2020 and so, we're still in the process of having a reduced menu. As I mentioned, you'll see us do some add-ons in that off-menu starting in the fourth quarter to going back to what our right-sized menu will be in February of next year. We also still have our reduced hours and I think what we've been saying is we're still in that 300 and 350 on a conservative basis. We believe that's still where we'll end up.

Nick Setyan -- Wedbush Securities -- Analyst

You had talked about being at reduced capacity. What capacity in July? If you were at full employment or full staffing, what do you think the sales impact in July of not being fully staffed may have been?

Steve Hislop -- President & Chief Executive Officer

As we just came out, we probably went to a 100% capacity four to six weeks ago and with that, obviously, what I mentioned to you at the last call, when we were at 70% approximately capacity, we were probably staffed about 85% to 90%. Obviously, we want that. We've obviously started hiring up there. So, we're not all the way back up. We're probably about 85% staffed currently and so not sure if that's answering your question, but that's where we're at.

Jon Howie -- Vice President & Chief Financial Officer

Well, all restrictions at our restaurants probably about the second week in June, second or third week in June and been without restrictions. So, our bars are now open, however, like Steve said, we're at 85% of employment right now to get staffed 100%. So, we've got about 15% to go.

Nick Setyan -- Wedbush Securities -- Analyst

Jon, lastly, how are you thinking about G&A in the second half?

Jon Howie -- Vice President & Chief Financial Officer

G&A in the second half, if things progress, we're going to have similar probably performance bonuses in there. So, you're looking at something similar to probably this quarter versus the first quarter was a little high. Something in that with the [indecipherable] probably something in the mid-six's for the rest of the year.

Nick Setyan -- Wedbush Securities -- Analyst

Okay, thank you very much.

Operator

Thank you. We'll take our next question from Chris O'Cull with Stifel. Please, go ahead.

Unidentified Participant

Thanks, guys. This is Patrick on for Chris. First, I wanted to see if you could quantify the impact of the July 4th Holiday shift in the July's quarter-to-date result? Then also managing turnover in this environment, especially in your managers, how is that going? Have you seen any change in that since you implemented this bonus program? How does that have implications for making sure you've got the staff you need to ramp up development next year to get these stores appropriately staffed? Thanks.

Jon Howie -- Vice President & Chief Financial Officer

Great questions. I'll answer the first and I'll turn the second over to Steve. As far as the impact on 4th of July for the 7th period is about 40 basis points. So, instead of the 17, you're probably looking at a 13. The other thing we didn't really call out, but we had a Cinco impact as well as far as favorable and that was about 40 basis points in the second quarter as well. They have the impact of 40 basis points on the whole quarter and what I said on 4th of July was 40 basis points, just on the period-7 and that was negative. Cinco was positive. With that, I'll turn it over to Steve.

Steve Hislop -- President & Chief Executive Officer

We were doing great turnover and what we need to do is during the pandemic, obviously, we went down to four managers a unit and we furloughed the rest and we brought most of those back. I'd say, we're probably two weeks from being in that 100% staffed on managers and we have a pipeline of over 35 managers in training currently. So, we're looking pretty good and we've been there before as far as ramping up for our growth. We're pretty well set and we have a good plan on moving forward to be able to do the six to eight stores and be in front of it throughout 2022 and then obviously when we said that 2023, we'll get back to around that 10% growth rate and we'll be ramping up for that also. So, we're in good shape with a good plan.

Unidentified Participant

Great, thanks. Then, I just wanted to clarify one thing you said earlier. As you get back to full capacity here without the 6-feet distancing, is this sort of the quarter or we should expect in inflection in that labor line and at least start to see it normalize. I know, you're still running with minimal menu, but from at least a labor standpoint, is that something you're expecting to see in 3Q or do you think we would see that as we move on down the line.

Steve Hislop -- President & Chief Executive Officer

I'd say, between rolling through the third and fourth quarter, get us back to what we've always said about 300 to 350 basis point improvement by probably near the end of the fourth quarter.

Jon Howie -- Vice President & Chief Financial Officer

It will gradually go back. I think once we put the full menu back in in the first quarter, that's when you're going to see that the biggest impact.

Steve Hislop -- President & Chief Executive Officer

Yes, I'd agree.

Unidentified Participant

Got it. Thanks, guys. Thank you.

Operator

We'll take our next question from James Rutherford with Stephens Incorporated. Please, go ahead.

James Rutherford -- Chuy's Holdings, Inc. -- Stephens Inc.

Thank you very much. I want to get back on the margin question we've been kind of going through here. By my math, you're running about 40% more restaurant profit dollars in two years ago doing 5% less in revenue, which is just outstanding especially if you look at the peer group. I'm just curious high level, what is it about your business model, but so different from everybody else and your ability to squeeze out those profit dollars and I mean another way to ask it is with your guidance of low 20s restaurant level margins that you gave last quarter, what was different this quarter that caused you to come in closer to that 26% range.

Jon Howie -- Vice President & Chief Financial Officer

Well James, this is Jon. As far as the low, I mean, we set a new record on a consolidated basis in the last quarter, we tend to leverage more in the second quarter. I think our sales went up a little more than we expected and so we've got a little more leverage on some of those fixed costs that bump that up a little bit. And as far as our labor, our labor came in probably a little better than what we expected as well, we thought that maybe we would get back to staffing our restaurants and getting back to 100% capacity prior to when we did, we actually open those up like I said in the kind of June 2nd or 3rd week of June. So, I think that like Steve says we're running tourniquet mode and that has something to do with that better margin and basically performing and what we generally have as a high-index, what we call a high indexing quarter and it tends to leverage more than any other quarter we have.

Steve Hislop -- President & Chief Executive Officer

Yes. And things that you'll see us in the back side of the year, the second half, third and is really specifically the fourth quarter, you're going to see us obviously bring back a few items that will bring little bit more than a handful of new items will be, our existing items would be coming back on. You'll also see us as Jon has mentioned in past calls that we no longer have the Nacho cart [Phonetic] but you will see us introducing by the end of -- by definitely the fourth quarter some increases in our happy hour food, we will be doing some specials on that that will be put something in and obviously that will add a little bit of labor as you continue to do that along with adding menu items and so forth.

And then, we're also going to look hard, again we're still at the reduced hours and we'll be looking at that for the rest of the year and making some adjustment on ours as we move forward, that we haven't done any of that since we went into the pandemic and that's basically been our tourniquet mindset that we've been in since last March.

James Rutherford -- Chuy's Holdings, Inc. -- Stephens Inc.

Okay. Jon, I know you'd probably get in a pattern of giving quarter-to-date thoughts on margins and so forth, but just given everything is so dynamic and for our modeling purposes. Can you share what kind of restaurant margin you ran in July.

Jon Howie -- Vice President & Chief Financial Officer

You're right. I don't want to get into the forward. But again, I mean we're expecting probably in the low 20s like we were referring to previously as like we said, we've opened up the capacities to a 100% now and now we're just trying to get staffed up. And so as we get stepped up, we'll see a little decrement in those margins, but I still think will be in the low 20s.

Steve Hislop -- President & Chief Executive Officer

Yes. And then another thing that will happen there obviously, you get the back to school, which is definitely affects our average unit volumes quite a bit and put a clamp on labor during that period in time.

James Rutherford -- Chuy's Holdings, Inc. -- Stephens Inc.

Okay, thank you so much. I'll pass it on.

Operator

We'll take our next question from Andrew Strelzik with BMO. Please go ahead.

Andrew Strelzik -- BMO -- Analyst

Great, thank you and good afternoon. Just one capacity clarifying question, I know you're at full capacity now, I think you said 70% as of the last conference call, but what was your average capacity effective for the quarter, just if I missed it.

Steve Hislop -- President & Chief Executive Officer

It was right in that 70% to 72% percent because again, we were just talking about the last two weeks, specifically of the quarter where we were at 100%. And again, even with the 100% because of our staffing issues, we were probably in that 85% range as we open them up.

Andrew Strelzik -- BMO -- Analyst

Got it. Okay. And then, I wanted to ask a philosophical kind of pricing question. Obviously the margins are so strong and you're talking about incremental inflation in the back half of the year. I'm just curious kind of where is your thinking right now on pricing as a lever? Is the inflation at a point at which you feel like you'd like to do something with that or given the margin strength you're kind of willing to support the value and let the margins fall where they may?

Steve Hislop -- President & Chief Executive Officer

Yes, that we won't definitely looking at any price for the rest of this year, maybe incremental, but none of this year and we usually take price increase once a year. It's usually at the end of the first period of 2021 and 2022, which will be in February. And we'll look at that, but right now we're in a studying each of our markets. All our competitive set to see what's going on out there, but that would be the earliest would look at it, but right now we're just run our restaurants with exactly how we're doing currently with no price increase for the rest of the year.

Andrew Strelzik -- BMO -- Analyst

Okay and then just one last one for me. Now that you're back to full capacity, dinning obviously recovering. I'm just curious if you've been able to look at how much overlap you see it from the customer perspective from the off-premise business in the dinning. You have a sense for how much overlap there is or how much switching is going on.

Steve Hislop -- President & Chief Executive Officer

We don't have that information Andrew, that's a great question though as far as people that are transitioning, I think what your question is people that are transitioning that we're just using our to-go now coming into our dining rooms, I don't have that answer, but I will say that our to-go yes it has come down to 27%, it's in that mid-20s now, but from a dollar standpoint, it's still in the low 20s per week per store. And so it hasn't come down significantly on a dollar basis. So, I think a lot of those people that were using the off premises continues to use that and then a lot of our raving fans are coming back in dining room.

Andrew Strelzik -- BMO -- Analyst

Thank you very much.

Steve Hislop -- President & Chief Executive Officer

Thanks, Andrew.

Operator

We'll take our next question from Mary Hodes with Baird. Please go ahead.

Mary Hodes -- Baird -- Analyst

Good afternoon and thanks for taking the question. One more on the staffing dynamic; if their restaurants are staffed at 100%? and if so, can you see that the sales in those restaurants are outperforming the system average? I guess said differently, do you think that improved staffing can be a driver of better sales momentum as the second half unfolds?

Steve Hislop -- President & Chief Executive Officer

Yes. Probably, as we get into the fourth I'm saying, right now as we mentioned to you earlier when our restaurants were at capacity, we were right around that 70%. So everybody had some of the staffing to do and so we have very few that would tell you at our 100% currently. And as we move forward we do that, but I think it will be more toward the end of the year that you will see that the capacity restraints of the 100% [indecipherable] get us where would be flat to '19.

Mary Hodes -- Baird -- Analyst

Okay, great. Thank you. And then just one on the unit development side. The guidance for 2021 is now at the low end of your prior range, can you talk about what are some of the drivers of the decision to come in toward the low end. Was that due to external delays or an internal decision to kind of pull in just slightly and then just any perspective that you have on how the development pipelines coming together as you look ahead to future years and just anything on what you're seeing in terms of availability, cost competition, anything like that would be helpful.

Steve Hislop -- President & Chief Executive Officer

Sure, sure. That's a great question. Let us deal with the first part, first here. Just to remind everybody, these four stores are basically in the ground and mostly built in 2020 when we stopped our growth, and as I was looking for opportunities that we'll be looking at for 2021. We felt and we thought there might be some opportunities of some restaurants that might have gone under during the pandemic, and we were looking at some opportunities and to be honest with you in our markets, we didn't see a whole bunch, there wasn't a lot of store closures on site that I'd like to do so, we're going to do A-site [Phonetic] popped up we will do, if it didn't, we weren't going to push the issue and move forward with the sites, the four stores that we basically had in the ground for 2020.

Our pipeline is good. As we've mentioned in the past that we over the next three years you're going to see us probably stay in the markets that we're currently already in and where we have good name, recognition and good awareness and you'll see that over the next 3, probably the next 3 years. And our pipeline is looking pretty strong, we're working and good 12 to 14 units currently to move in for 2022 and for 2023 and as we mentioned earlier, we're in that 6 to 8 number for 2022, and we're not seeing any reduction in prices for landlords or anything like that through 2022 and of course everybody is always going after the 8 sites, so we haven't seen it loosen up there at all.

And as far as construction costs go, we're looking, the probably an increase about that 18% to 20%, we are here and lumbar [Phonetic] coming down and so forth; and we'll continue to do that. But we think that will start maybe in the beginning part of next year start possibly coming down a little bit, but that's we're sitting for us currently. I hope I got all those questions. I hope I get all, most of them.

Mary Hodes -- Baird -- Analyst

Yes, thank you so much for the context that's it from me.

Operator

Thank you. [Operator Instructions] We will take our next question from Todd Brooks with C.L. King & Associates.

Todd Brooks -- C.L. King & Associates -- Analyst

Hey, thanks for the questions, guys. I've got a few there more often now with the removal of the six-foot restriction and the normalization of capacity staffing allows; Steve, I was wondering if kind of going into the pandemic you talked about some increased cadence and the limited time offers in the barbell approach around that. I guess, what is the right time that you're thinking is starting to flow some of that LTO activity back into the calendar?

Steve Hislop -- President & Chief Executive Officer

Yes, great question. Let's kind of go through the process and will go, you'll see us add some off menu items probably like I said in the fourth quarter that you'll see added on to the menu probably around price increased time which is about the second period of 2022, we will run those and get everybody up to speed, because obviously when you change, you make an operation that we have some get it into the training and make sure you can execute it long-term and then probably late second quarter early third quarter you'll see us start introducing LTOs and some newer items on to our menu, probably the whole second half of 2022 and you will see us from a marketing standpoint, probably get a little bit more aggressive this year's fourth quarter as we're introducing these off menu items in the fourth quarter. You'll see us do through the whole pandemic you've been seeing us do paid search and paid social and we'll probably start going and introducing a few other things in the fourth quarter.

You'll see us probably us do some new media with like TikTok and some Snapchat that you'll see us do in the fourth quarter. You'll see us [indecipherable] the pay advertising with some showcase adds probably in the fourth quarter. You'll see us do some Yelp [Phonetic], going backwards on pay advertising and DoorDash marketing, dollars will be spending and again why I'm picking the fourth quarter, is there is as kind of the timeframe that we can spend this rest of this quarter making sure we're getting staff and properly trained to make sure the level of hospitality is right where we want it to be before we really start throwing a lot of stuff out there in the fourth quarter.

Todd Brooks -- C.L. King & Associates -- Analyst

That's great. And that leads to my next question. Pre-pandemic you really gearing up to try to attack the catering opportunity I guess, as you look at the world now and we're recovering, but it can see in fragile sometimes with some of those variant stuff, thoughts on pushing catering this holiday or do you think that's more of a fiscal 22 type of effort.

Steve Hislop -- President & Chief Executive Officer

Two weeks ago, I would have said we are pushing, however, with the variants going little bit nut so with the media over the last two weeks and so on, but right now, our plan is by the fourth quarter to get back to the 13 markets that we had catering in, when we actually the pandemic started after the first quarter of 2020, so we'll be adding those catering markets back on and get ready now, the one thing that's still not happening is obviously the demand isn't as high as it was back in 2019 yet, those are need to get back on and still moving, but definitely looking at in the fourth quarter, we'll get some up and running and then expanding that specifically if they everything make sense, gets rid of these variants and as we move into 2022.

Todd Brooks -- C.L. King & Associates -- Analyst

Okay, great. And then, one for you, Jon, just, you talked about getting the new credit facility done after the end of the quarter. Balance sheet is pristine always you're starting to build up at the amount of cash on the balance sheet, I guess given the environment is there a level of cash that you want to maintain. Now that this facility has done versus any sort of other use for the cash or returning it to shareholders. Thanks.

Jon Howie -- Vice President & Chief Financial Officer

Now, that's a great question. And we've had several discussions on that very topic, kind of where we settled right now is to keep it on the balance sheet, to remain flexible to really get on the other side of this variants other things and maybe take another look at it toward the middle to the end of next year and then decide kind of where we want to go with that. But I think that gives us some flexibility on the balance sheet to possibly be more flexible in real estate, be more flexible on buybacks and things like that. So, especially with how the market is treating restaurants right now that may be an opportune time to by some buyback. So that's kind of our thinking. We'll have more to that next year.

Todd Brooks -- C.L. King & Associates -- Analyst

Okay, great. Very helpful. Thanks and congrats on the quarter guys.

Jon Howie -- Vice President & Chief Financial Officer

Thank you.

Operator

Ladies and gentlemen, this concludes today's question-and-answer session. At this time, I'd like to turn the conference back to your presenters for any additional or closing remarks.

Steve Hislop -- President & Chief Executive Officer

Thank you all so much, Jon and I appreciate your continued interest in Chuy's and we will always be available to answer any and all questions. Again, thank you everybody. Stay healthy and have a good evening.

Operator

[Operator Closing Remarks]

Duration: 36 minutes

Call participants:

Jon Howie -- Vice President & Chief Financial Officer

Steve Hislop -- President & Chief Executive Officer

Nick Setyan -- Wedbush Securities -- Analyst

Unidentified Participant

James Rutherford -- Chuy's Holdings, Inc. -- Stephens Inc.

Andrew Strelzik -- BMO -- Analyst

Mary Hodes -- Baird -- Analyst

Todd Brooks -- C.L. King & Associates -- Analyst

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