In its first quarterly report since going public last month, Ruth's Chris Steak House (NASDAQ:RUTH) delivered the beefy results that its new investors were banking on. The company earned $0.11 a share, reversing a loss from last year's second quarter. Revenues rose by 11% on a robust 10% gain in comparable restaurant sales at its company-owned units and a 7% spike at its franchised locations.
The comps rose despite the widespread belief that higher fuel prices will keep restaurant diners away. Between the convenience of eating at home and the financial bite of higher prices at the pump eating away at disposable income, Ruth's Chris believes that it is mostly sheltered from those trends given the high-end clientele at its upscale chophouses.
It expects comps to continue to grow through the rest of the year. Ruth Fertel's 40-year-old company also reported an improvement in operating margins caused by lower beef prices. However, that doesn't mean that the company isn't in a state of flux at the moment.
The company, headquartered in the New Orleans suburb of Metairie, La., until last week's storm hit, was clearly affected by Hurricane Katrina. While its three-story office held up relatively well (with its corporate records high and dry on the top floor), the company is now in the process of relocating to Orlando, Fla. All of the company's key executives will be making the move. Its two restaurants in New Orleans suffered damage, and adding insult to injury, what would have been its newest eatery at the Hard Rock in Biloxi, Miss., obviously didn't open last week as originally planned. Most of the company's losses should be covered by insurance, but it is still expecting to report some one-time hits in the third quarter as a result of its tactical repositioning.
For investors, this is a great start for Ruth's Chris as a public company. Restaurants can be tricky, especially when it comes to steakhouses. For every Outback (NYSE:OSI) and Texas Roadhouse (NASDAQ:TXRH) that hits it out of the park after their IPOs, you have others like Smith & Wollensky (NASDAQ:SWRG) and Roadhouse Grill that have struggled to prove themselves worthy.
That's why it was important for Ruth's Chris to deliver the goods early. Wall Street won't view August's stock offering as an exit strategy, since it now sees a company where the future appears to be even brighter than its past.
Ruth's Chris weathered Katrina. Things can only get better from here.
Longtime Fool contributor Rick Munarriz has eaten at Ruth's Chris before, but he does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
