J. Alexander’s Holdings, Inc. Reports Recent Trends and Steps Taken to Address the Coronavirus Outbreak
March 24 2020 - 8:27AM
Business Wire
J. Alexander’s Holdings, Inc. (NYSE: JAX) (the Company), owner
and operator of J. Alexander’s, Redlands Grill, Stoney River
Steakhouse and Grill and other restaurants, today reported same
store sales changes for a portion of the first quarter of fiscal
2020 as well as certain measures that have been taken in response
to the novel coronavirus outbreak (COVID-19).
Q1 2020 Sales
Same store sales(1) increase
(decrease) for the first 12 weeks of fiscal 2020 are estimated as
follows:
January
February
March*
(4
weeks)
(4
weeks)
(4
weeks)
J. Alexander’s/Grills restaurants
+3.0%
+1.3%
(24.8%)
Stoney River Steakhouse and Grill
restaurants
+0.5%
(3.1%)
(25.6%)
* Note that the Company’s first quarter of
fiscal 2020 ends on March 29, 2020.
Like other full-service, casual dining operators across the
United States, the Company’s restaurants in various markets were
required to either close their dining rooms or substantially reduce
their occupancy capacity beginning March 16, 2020. Over the course
of the following week, all but one of the Company’s 47 restaurants
were ultimately mandated to close their dining rooms and, effective
March 22, 2020, 45 of the Company’s restaurants have converted
their guest service model to a carry-out platform. The Company’s
Lyndhurst Grill restaurant has temporarily closed due to traffic
limitations unique to that specific location. Management
anticipates that average weekly sales under the modified carry-out
model will total approximately 10%-20% of the historical volumes
and that margins associated with such sales will be reduced from
historical levels as a percent of net sales.
Steps Taken to Address COVID-19
In response to the situation outlined above, the Company has
taken certain actions including, but not limited to, the
following:
- The Company has drawn down the remaining $17,000,000 available
under its lines of credit and, when combined with existing cash on
hand, the Company currently has approximately $26,000,000 of cash
in its cash reserves.
- The Company has implemented an Hourly Team Member Emergency
Sick Leave Policy (“ESLP”), which provides for up to two weeks of
paid leave for hourly team members who are either infected by
COVID-19 or employed at a restaurant that closed in response to the
COVID-19 outbreak. Company management estimates that the cash
expense associated with the ESLP, including applicable payroll
taxes, would be approximately $1,225,000 per week assuming all 47
restaurants were closed. Under the terms of the ESLP, hourly
employees will be paid the higher of their normal hourly rate or
the federal minimum wage for the average hours worked over the
previous eight-week period. In addition, hourly employees will be
able to use any available vacation or state mandated sick leave
accrued.
- The Company intends to utilize each restaurant’s management
team, with several key hourly personnel, to staff the carry-out
function over the duration of the mandatory closure of dining room
operations. Personnel at the restaurant will hand-cut steaks and
prepare and package the carry-out meals being offered on a limited
menu customized for each location. All locations utilizing the
carry-out program will provide a complimentary dessert for every
two entrees ordered. Restaurant management labor averages
approximately $425,000 per week including applicable payroll
taxes.
- Approximately 3,400 hourly employees that will not be assisting
with the Company’s carry-out program have been furloughed until the
Company resumes dine-in operations.
- Capital expenditures have been curtailed unless absolutely
necessary relative to a restaurant’s safe operation. The two new
restaurants scheduled to open in the latter part of fiscal 2020 are
at the front end of the construction cycle and management intends
to negotiate with the parties involved to defer any cash outlays
possible relative to these new restaurants.
- Company management currently believes that the distribution
channels necessary to fulfill the limited menu being offered for
carry-out business will be able to meet the demands associated with
such a program. Company management anticipates that the beef
inventory currently in place should be adequate to meet the demand
related to the carry-out business for the next 4-5 weeks and
management will be closely monitoring events nationally over the
next several weeks in order to ramp up applicable inventory levels
once it is apparent that the mandated closures are going to be
lifted.
- Resy, the Company’s reservation system partner, has implemented
a new feature on the Resy application whereby guests are able to
select from four set dinner packages online, select the time they
desire to pick up the carry-out order at the restaurant and pay for
the order online. This feature will be available at all of the
Company’s restaurants currently utilizing the carry-out model and
will allow for curbside service at any of these locations.
Under the structure outlined above, the Company estimates that
cash on hand would be sufficient to fund required cash obligations
through the late summer to early fall back-to-school timeframe.
Depending on any future legislative developments and any
governmental relief programs, the Company’s expenses could be
diminished and/or the Company’s costs could be reimbursed, which
could potentially expand the Company’s liquidity. In addition, the
Company owns 18 of its restaurant sites, of which 6 are currently
unencumbered and could be used to secure incremental borrowings.
However, there can be no assurances that any of the foregoing will
come to fruition.
The Company may adapt the responses and policies listed above in
response to changes in federal and state laws, regulations,
policies or guidance or in response to other developments.
The Company also noted that given the uncertainties in the
business community, the restaurant industry and the financial
markets, the ongoing review of strategic alternatives by the
Company’s Board of Directors will not be completed until these
uncertainties are resolved.
Chief Executive Officer’s Comments
“Over the past few weeks, our focus has been centered on making
sure we were doing everything possible to take care of our valued
guests and team members,” said Mark A. Parkey, President and Chief
Executive Officer of J. Alexander’s Holdings, Inc. “While we have
historically focused our guest experience on in-restaurant dining,
we recognize that there is a need for us to expand our to-go and
carry-out dining in each of the communities we serve. I could not
be prouder of the teams at each of our restaurants, along with our
veteran operations leadership group, for the way they have
responded and adapted in these unprecedented times. Based on that
response, I am confident that we will survive the current storm.
However, I am also aware of the pain and uncertainty that all of
our team members are experiencing in the midst of this ordeal and
pledge that we will do our best to manage the business in such a
way that we can, as a family, regroup once we reach calmer
waters.”
Parkey continued, “In addition to our internal efforts during
this rapidly evolving environment, the National Restaurant
Association is advocating for our industry, and we will be mindful
of opportunities for our company and our employees as we go
forward.”
(1)Average weekly same store sales per restaurant is computed by
dividing total restaurant same store sales for the period by the
total number of days all same store restaurants were open for the
period to obtain a daily sales average. The daily same store sales
average is then multiplied by seven to arrive at average weekly
same store sales per restaurant. Days on which restaurants are
closed for business for any reason other than scheduled closures on
Thanksgiving and Christmas are excluded from this calculation.
Sales and sales days used in this calculation and amounts of other
“same store” figures in this release include only those for
restaurants in operation at the end of the period which have been
open for more than 18 months. Revenue associated with reduction in
liabilities for gift cards, which is recognized in proportion to
guest redemptions based on historical redemption rates and commonly
referred to as gift card breakage, is not included in the
calculation of average weekly same store sales per restaurant.
Average weekly same store sales are computed from sales amounts
that have been determined in accordance with U.S. generally
accepted accounting principles (GAAP).
About J. Alexander’s Holdings, Inc.
J. Alexander’s Holdings, Inc. is a collection of restaurants
that focus on providing high quality food, outstanding professional
service and an attractive ambiance. The Company presently operates
47 restaurants in 16 states. The Company has its headquarters in
Nashville, TN.
For additional information, visit
www.jalexandersholdings.com
Forward-Looking Statements
This press release issued by J. Alexander’s Holdings, Inc.
contains forward‐looking statements, which include all statements
that do not relate solely to historical or current facts, such as
statements regarding our expectations, intentions or strategies
regarding the future. These forward‐looking statements are based on
management's beliefs, as well as assumptions made by, and
information currently available to, management. Because such
statements are based on expectations as to future financial and
operating results and other events and are not statements of fact,
actual results may differ materially from those projected and are
subject to a number of known and unknown risks and uncertainties,
including the health and financial effects of the COVID-19
outbreak; the Company’s ability to maintain satisfactory guest
count levels and maintain or increase sales and operating margin in
its restaurants under varying economic conditions; the effect of
higher commodity prices, unemployment and other economic factors on
consumer demand; increases in food input costs or product shortages
and the Company’s response to them; the number and timing of new
restaurant openings and the Company’s ability to operate them
profitably; competition within the casual dining industry and
within the markets in which our restaurants are located; adverse
weather conditions in regions in which the Company’s restaurants
are located; factors that are under the control of third parties,
including government agencies; the Company’s evaluation of
strategic alternatives; as well as other risks and uncertainties
described under the headings "Forward‐Looking Statements," "Risk
Factors" and other sections of the Company’s Annual Report on Form
10‐K filed with the Securities and Exchange Commission on March 13,
2020, and subsequent filings. The Company undertakes no obligation
to update any forward‐looking statements, whether as a result of
new information, future events or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20200324005405/en/
J. Alexander’s Holdings, Inc. Jessica Hagler Chief Financial
Officer (615) 269‐1900
J Alexanders (NYSE:JAX)
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