Ruth’s Hospitality Group Inc (RUTH) Q4 2022 Earnings Call Transcript

Ruth’s Hospitality Group Inc (NASDAQ:RUTH) Q4 2022 Earnings Call dated Feb. 23, 2023.

Corporate Participants:

Michael Hynes — Vice President, Finance and Accounting

Cheryl Henry — President, Chief Executive Officer and Chairwoman

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Analysts:

Brian Vaccaro — Raymond James — Analyst

Todd Brooks — The Benchmark Company — Analyst

Daniel Breen — Stephens, Inc. — Analyst

Andrew Barish — Jefferies — Analyst

Presentation:

Operator

Good morning, ladies and gentlemen. Welcome to today’s Ruth’s Hospitality Group, Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference call is being recorded.

I would now like to turn the conference over to Mike Hynes, Vice President of Finance and Accounting. Please go ahead.

Michael Hynes — Vice President, Finance and Accounting

Thank you, Tania, and good morning, everyone. Joining me on the call today is Cheryl Henry, our President, Chief Executive Officer and Chairperson of the Board; and Kristy Chipman, our Chief Financial Officer and Chief Operating Officer.

Before we begin, I’d first like to remind you that part of our discussion today will include forward-looking statements. These statements are not guarantees of our future performance, and therefore, undue reliance should not be placed upon them. We would also encourage you to refer to the Investor Relations section of our website at rhgi.com as well as the SEC’s website for copies of today’s earnings press release and our recent filings with the SEC for a more detailed discussion of the risks that could impact our future operating and financial results.

During this call, we will refer to non-GAAP financial measures, including adjusted earnings per share and adjusted EBITDA. You can find a reconciliation of these non-GAAP financial measures in our press release for today’s call.

I would now like to turn the call over to the company’s Chief Executive Officer, Cheryl Henry.

Cheryl Henry — President, Chief Executive Officer and Chairwoman

Thank you, Mike, and good morning, everyone. Our fourth quarter results marked the end to another solid year for our stakeholders at Ruth’s Chris. The amazing efforts of our team delivered high single-digit topline and double-digit adjusted EBITDA growth for the quarter, contributing to adjusted EBITDA of $83.8 million for the year. Driving these results were continued demand from our just-because and special-occasion guests and improvement in our private dining business.

Combined with our team’s ability to manage cost and drive efficiencies, we were very pleased to deliver year-over-year adjusted earnings per share growth of over 13%. Quarterly results aside, 2022 was a year of many accomplishments for the Ruth’s Chris team. If you recall, we started the year with a goal to deliver on our total return strategy for shareholders and that began with organic growth, including new restaurants, remodels and digital technologies. It also included smartly allocating capital on behalf of our shareholders and we believe, we were able to accomplish both.

During the year, we successfully opened four new company-operated restaurants, including one in the territory we acquired from a franchisee on Long Island, New York and relocated and redesigned our Winter Park, Florida restaurant. As a group, these five restaurants have continued to perform above our expectations. We are especially encouraged by the October relocation of our Winter Park restaurant, which has outperformed its former location by over 35% in November and December, combined.

This is due to a new contemporary design that gives our guests different dining room experience options with increased energy from a new bar design and a larger outdoor dining space. Winter Park floor plans and interior and exterior design elements will serve as a model for future new restaurants and relocations as well as remodels as structures allow. We are pleased to report that our data digital transformation project is now well underway, and we are happy to announce that we have completed Phase 1 with great success. Our investments in this area have been important to our total return strategy. And they have enabled us to elevate the guest experience and increased productivity across our entire operation.

One of the most exciting accomplishments this year was the development of a proprietary demand forecasting platform, which seamlessly integrates with our labor management system to create more efficient schedule. We are pleased to report that these efforts resulted in a 10% improvement in hours per entree, translating to approximately 200 basis points of labor improvement over pre-pandemic levels for the year.

It is important to note that we were able to achieve these results despite facing record-high wage increases and adding managers back to most of our highest volume restaurants. In addition, we have implemented new proprietary processes that leverage our data platform, allowing us to improve capacity and table management. This has been especially effective on our busiest days, including Fridays, Saturdays and holidays, resulting in an increase in sales during these peak periods.

Finally, we are excited to share that we have completed the rollout of our hospitality app to all restaurants. Although it is still early days, we are seeing a positive impact on repeat visits. Overall, we are proud of the progress we have made in our data digital transformations, and we are confident that these investments will continue to drive value for our guests and our shareholders in the years to come.

Mark Kupferman, our recently appointed Chief Commercial Officer will spearhead these efforts and ensure that our investments in digital support the evolution of the Ruth’s Chris brand.

The final piece of our total return strategy in 2022 was smartly allocating excess capital. For the year, we repurchased $29.6 million worth of shares. We paid $18.3 million in dividend payments, and we’ve reduced debt by $40 million.

In February, we also announced an increase of our dividend to $0.16, which will be paid in March, and is the highest dividend we’ve ever paid. Along with investments in new restaurants, existing assets and our technology platform, we believe this balanced approach best positions our shareholders for value creation in the long run.

I’m pleased to say our 2023 playbook reads much like 2022. Before I talk about this year’s portfolio development let me quickly touch on the planned closure of our Manhattan location. As you may have heard, after 30 years of serving guests, we are closing our New York City restaurant in April. We’ve decided not to renew the lease due to a shift in the trade area and fully intend to open at least one new Manhattan location by the end of 2025. These plans allow us to relocate and redesign our New York City presence to better serve the market.

In 2023, we expect to open five company restaurants, including one new opening and a casino resort in Michigan. In addition to these new openings, we expect one relocation in the second quarter and as many as 10 remodels and refreshes to our portfolio throughout the year. In addition to this development, we are excited that one of our franchisees will open our first Ruth’s Chris Steak House restaurants in Iowa.

This year, we will also embark on Phase 2 of our digital journey. As part of this effort, we’ll be developing our new inventory platform, which we expect to drive at least 25 basis points of margin improvement over time. The platform is scheduled for testing throughout 2023. In addition, we are launching a new data-driven digital paid media program.

Our third priority in 2023 will be the launch of the first phase of an elevated guest experience. Specifically, over the next 12 to 18 months, we will be rolling out Ruth’s reimagined to the entire system. The program includes new hospitality training and standards, uniforms, table presentation and smallwares. We’ll also introduce a refresh menu and new bar program. Our guests have shown that they want variety, not just in options, but also in price points. In a test of our prior bar menu, we experienced double-digit growth in average checks, as guests trade up to more premium offering.

To conclude, 2023 is an exciting year for us, balancing new unit growth, relocations and remodels along with digital investments and new programs to accelerate both top- and bottom-line growth in our existing fleet and managing excess capital on behalf of our shareholders. While we acknowledge there is some uncertainty around the economy, our strong balance sheet and free cash flow allows us to plan and continue investing in the future. We look forward to keeping you up to date throughout the year as we roll in these initiatives.

With that, I’ll turn the call over to Kristy to cover the specifics of the quarter.

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Thank you, Cheryl. For the fourth quarter ended December 25, 2022, we reported GAAP net income of $12.4 million or $0.38 per diluted share compared to $13.8 million or $0.40 per diluted share last year. Non-GAAP diluted earnings per common share was $0.38 compared to $0.34 in the prior year quarter. Adjusted EBITDA for the quarter was $24 million compared to $21.4 million in the same quarter last year. Please refer to our earnings release for reconciliations of non-GAAP measures.

Our strong quarterly results were driven by total revenue growth of 9.2% including company-operated restaurant sales growth of approximately 9.6%. Comp sales for the quarter increased 4.5% versus 2021 and increased 5.5% compared to 2019. Average weekly sales during the quarter were $130,000 versus $123,000 in 2021 and $118,800 in 2019. Please note, going forward, we will no longer provide 2019 as the comparison period.

Franchise income for the quarter was $5.8 million, up 6.1% versus the same period last year, driven by comparable franchisee sales growth of 2.3%. Food and beverage costs improved versus the prior year quarter by 93 basis points to 33.2% as beef prices declined approximately 4%, partially offset by a 1% increase in the balance of our commodity basket.

To give you a sense of the impact of beef prices on our overall financial performance, we estimate that a 10% change in beef costs would impact EBITDA by approximately $6 million to $7 million on an annual basis, all else remaining equal.

Labor expense for the quarter versus 2021 increased 200 basis points, primarily due to hourly wage increases of approximately 9.5% and increased management labor due to higher wages, as well as more managers per restaurant versus the same time last year. When compared to 2019 management labor expenses was bettered by 105 basis points.

Moving beyond restaurant expenses, combined marketing and G&A as a percent of revenues was 9.7% compared to 11.6% in the fourth quarter of 2021, reflecting the timing of of expenses related to bonus accruals and data digital initiatives. For the quarter, we repurchased approximately 905,000 shares for a total cost of $14.7 million and we paid $4.6 million in dividend payments.

As of December 25, we had approximately $23 million in cash on our balance sheet and our outstanding debt was $30 million. In addition, subsequent to the end of the fourth quarter, we paid down $15 million of debt, leaving $15 million on the balance sheet, as of today.

2022 delivered record revenue for the full year and our start to January was strong, with comp sales of about 17% as we lapped Omicron in January of 2022. Starting in February, and carrying through July, the comparisons get more difficult as we lap against the country’s reopening post Omicron and record-high comp sales from last year.

In the last week of the quarter, we will be taking a price increase of approximately 3%, and as a reminder, we kept 3.4% price during the same week last year. From a cost of goods sold perspective, we will not be guiding for the first quarter or full year given the volatility in the beef markets, which makes up about half of our basket. However. I will say that in January, our cost of goods sold was 33.3% driven by an increase in beef of 12% versus prior year, offset by the rest of the basket, which is down mid single-digits.

With that, I’ll now turn the call back to Cheryl for a few closing comments. Thank you, Kristy. Our success over the past two years is a real testament to the great determination of our team and franchise partners, and their ability to adjust quickly to change. Through their efforts, we’ve achieved record revenue, opened successful new restaurants, invested in new technologies to increase efficiencies, paid down debt and continued to return cash to shareholders and we accomplished this through a global pandemic, generational high inflation and numerous macro towers challenges. Going forward, I believe the next couple of years can be as productive as the past. We believe we can open at least 10 new restaurants and relocate up to three more, utilizing our refreshed and enhanced brand standards. We will also continue to embrace technology as we’ve discussed today and allocate excess capital to shareholders as appropriate. The levers at our disposal, has never been stronger and I’m excited for what our team and franchisee will deliver. Thank you for joining us on the call this morning and we look forward to taking your questions. LaTanya, would you please open up the lines.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Brian Vaccaro with Raymond James. Please proceed.

Brian Vaccaro — Raymond James — Analyst

Hi, thanks, and good morning. I wanted to start out with the Winter Park redesign. I haven’t had a chance to see it yet, but Cheryl many moons ago we had — you had Ruth 2.0. And could you just provide a little more color on some of the key sort of guest facing changes of the new Winter Park redesign? And does it include both interior and exterior elements?

Cheryl Henry — President, Chief Executive Officer and Chairwoman

Thanks, Brian. Yes, and yes, so Ruth 2.0 and then as we were coming and approaching 2020, we had plans put together for the redesign of restaurants as well as some programing changes. And then obviously, COVID hit. So this is exciting for us. This restaurant within plan, we were able to fulfill those plans. And as you can see to a great success. A lot of those changes yeah, so both the exterior and interior, a lot of changes based on guest feedback we had about the next-generation and how they want to dine.

And so specifically, larger patios, better outdoor experience, elevations on the restaurant, explaining who we are as the brands and what we stem inside, modern work done around that, also offering different dining room experiences. So we know we have a loyal and faithful special-occasion guests and we have an opportunity in the restaurant for those folks that want to come and celebrate those moments together in a more formalized comfortable setting.

And then we also have what we are calling this specific restaurant, the Atrium, which is a separate dining room, off the bar, which allows for a bit of a more energized dining experience for those more frequent guests, and it’s working out well. So we’re excited to continue to monitor that, Brian and see how we can then take the elements that work best for us and enroll them into future restaurants as well as remodels.

Brian Vaccaro — Raymond James — Analyst

All right. Great. That’s helpful. And Kristy, on the remodels. What’s the average investment that you expect here on up to 10 in 2023 and what’s sort of the sales, do you expect to achieve? And then or what’s sort of the breakeven on a comp if you need to achieve an ROI on that investment?

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Yeah. So on the investment overall in the 10 that we’re talking about as a combination of both, what we call major remodels, which will be between $1.5 million and $2 million as well as more minor remodels, which include carpet and chairs, and we will be testing a new exterior on a few of those as well this year that will be somewhere between $600,000 and $1 million, depending on what we can do with that exterior and how much we need beyond just carpet and chairs in these restaurants, to make sure we provide a refreshed experience for the guests.

So that’s reflected in the capital guidance that we gave. We’re very encouraged by the information that we’re seeing out of Winter Park, and we just completed late in the fourth quarter, a couple of more remodels. So I’m not going to share any kind of ROI guidance at this point in time. But you would expect over time, as we learn even more about the Winter Park restaurant, we’re going to put the right elements into the restaurants to make sure we deliver those 20% return on investment as we need to given those investment levels.

Brian Vaccaro — Raymond James — Analyst

All right. Great. And circling back if I could just one more on the fourth quarter comp performance. Could you just provide a little more color on what you saw across sales channels and maybe some perspective on how the private dining side of the business performed and kind of how that compared to pre-COVID levels say in fourth quarter ’19, just to frame that a bit for us?

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Sure. So from a private dining perspective, every month in the quarter got better. So just as a reminder, first quarter was down 50% second and third quarter were down about 25% each. As we went into the fourth quarter, we’re still in that down mid-20s range. And as we got to the December we were down 14%. So the total quarter was down 16% versus 2019.

When we look at the other channel, which you might be referring to which is Ruth’s Anywhere, we were at about $450,000 [Phonetic] per restaurant per week. And so that was the overall on the channels.

Brian Vaccaro — Raymond James — Analyst

Okay. And then just one quick clarification. I think you mentioned comps up 17% that was for the five weeks in January. January specific.

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Correct. Just January specific.

Brian Vaccaro — Raymond James — Analyst

Okay. And would you be willing to just level set where average weekly sales are because these comps year-on-year, three-year they gets a little disorienting at times.

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Sure. So, $126,000 for January.

Brian Vaccaro — Raymond James — Analyst

Perfect. All right. I’ll pass along. Thank you.

Operator

The next question comes from Todd Brooks with The Benchmark Company. Please proceed.

Todd Brooks — The Benchmark Company — Analyst

Hey, thanks. Good morning, everybody. Following up on Brian’s question around Winter Park. If you look at the existing base, how many do you think will support a Winter Park type of remodel going forward? And given what that kind of universe looks like does that change the balance of maybe new unit growth versus remodels as we look to ’24 and ’25?

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Yeah, that’s a great question, Todd. So, as we think about the existing portfolio, we probably have about 50% restaurants where you wouldn’t be required to do major structural changes to put some of the elements. And again, I think Kristy described it well. You don’t have necessary to build the exact floorplan and existing restaurants to get some of the benefit of the new programing and new design elements, and that’s really what we’re going to go forward with this year to understand. So how much of that is related to exterior work, how much is related to having the opportunity to have a dining room off the bar. And I’ll give you an example we opened Marina del Rey six years ago now and it has an opportunity for having a dining room off the bar.

So there are some existing restaurants. That has an opportunity to kind flag right into what Winter Park is offering from a programing perspective. So, I do think, coming forward as we put some of these exterior programs to work and we continue to study Winter Park, we’ll talk about what that means for our remodel program. Not prepared to give you that just yet.

Todd Brooks — The Benchmark Company — Analyst

Okay. Great. Thanks. So secondly, if we look at — Kristy, this is just to make sure. So, pricing ran, what level in Q4 and then I think you will roll off about 40 basis points net at the end of March, from what you said earlier in the call. But then, what’s the outlook for further pricing in the remainder of the year?

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Sure. So, pricing versus ’21 in the quarter of quarter four was 4.9%. You’re correct, we rolled off. So, first quarter this year, we lose that 40 basis points you discussed. And for the full year, we expect pricing based on this, only this one pricing increase, which again will look again in about mid-year into September for another opportunity to take price depending on the dynamics of the cost and inflation environment. But based on what we know today and the price increase we’re taking in March, you should expect up 4% full year pricing out for us.

Todd Brooks — The Benchmark Company — Analyst

Okay. Great. And a final one for me and I’ll jump back in the queue also. You gave us some sensitivity around beef cost trends relative to EBITDA from a full year standpoint and Prime, which looks like it or beef, which looks like it was favorable in the fourth quarter, seems to have ticked up here in January, with what you talked about from a COGS standpoint. You talk and is it possible to talk about a full-year outlook for beef yet or maybe the willingness of counterparties to contract and at least like you get some of your needs locked-in going forward to take — to put some stability around a cost level versus being at the whim of kind of how the market moves here?

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Yeah, I can tell you, there’s been a lot of discussion around beef always for us, but even elevated amount of discussion most recently. January did tick up a little bit. I will tell you February has come down from those highs. The reality of the situation with beef is the herd size is down and until we can bring that back up, which will take some time. We are going to see challenges on beef. To your point about, can we lock, we are always actively pursuing where we can lock portions of the basket, and we’re taking smaller locks wherever we can in addition to larger locks where we can, but right now we don’t have any significant locks on our beef right now.

Todd Brooks — The Benchmark Company — Analyst

Okay. Perfect. I’ll jump back in. Thanks.

Operator

[Operator Instructions] The next question comes from Josh Long with Stephens. Please proceed.

Daniel Breen — Stephens, Inc. — Analyst

Hi, this is Daniel Breen on for Joshua. Thank you for taking my questions. First, could you quantify the headwind from the Boston, Manhattan, and Hawaii markets this past quarter?

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Sure, the impact was about 480 basis points.

Daniel Breen — Stephens, Inc. — Analyst

Okay. Okay. Thank you. That’s helpful. And then on your proprietary demand platform, you talked about a 10% improvement in hours per entree, translating to that 200 basis points of labor improvement. Do you think there’s any more incremental labor COGS benefits do you think you could pull out from these initiatives and as we go into 2023? I think you’d sized around 105 basis points of labor, if I heard that correctly.

Cheryl Henry — President, Chief Executive Officer and Chairwoman

Yeah. So, I would tell you that the actual efficiency metric was beyond a few 100 basis points. But obviously, we had average hourly rate increases and adding managers back. And if you look back at the quarter, we started with significantly higher basis point improvement, but we have been adding managers back into the restaurants every quarter in order to protect the guest experience overall.

From a go forward basis, I think our opportunities are much more in the cost of goods line and food and beverage line than they are in the labor line. We obviously are experiencing like everybody changes in staffing, which requires more training costs. I think we are committed to keeping the efficiency in our hours per entree going forward, the ones that we’ve captured already, but I do not see more coming in that particular area for us in the short run.

Daniel Breen — Stephens, Inc. — Analyst

Okay. Thank you. That’s helpful.

Operator

The next question comes from Andy Barish with Jefferies. Please proceed.

Andrew Barish — Jefferies — Analyst

Hey, good morning, everyone. Just wondering on some of the moving parts for ’23. I mean, it sounds like there’s going to be a significant amount of investment going on in experience and digital, paid media tests. Just kind of how you’re thinking about that as it rolls through the P&L. And maybe the extra week is kind of an offset just a couple of those factors, if you could provide a little bit more color, please.

Cheryl Henry — President, Chief Executive Officer and Chairwoman

Yeah. So as we’re thinking about — I think your first question was on capital investments, the $40 million to $50 million we guided it a little tighter, obviously, but on an ongoing basis, especially given the remodels and refreshes that we’re doing which are important to us, the paid media test is complete and so all of the costs associated with that are in the guide that you saw from a marketing perspective. All of the costs associated with launching that paid media program, based on the results of our test are in that number already.

Andrew Barish — Jefferies — Analyst

Got it. And then what about the kind of smallwares, menus, uniforms, stuff like that.

Cheryl Henry — President, Chief Executive Officer and Chairwoman

Got it, yeah. So obviously built into our overall — I’m not going give an exact dollar around per restaurant, but it’s not overly significant. And I would say that as we think about our other office as a percentage of sales, this is where you would find some of the smallwares will be relatively consistent on a percentage of restaurant sales perspective.

Andrew Barish — Jefferies — Analyst

Okay. And then anything else kind of on Phase 2, I guess, Cheryl, that we should be looking for as the year goes on.

Cheryl Henry — President, Chief Executive Officer and Chairwoman

Yeah, so I’ll speak about — turn to Kristy so. We have rolled out the idea of having our data transformation. There are several use cases that were coming forward. And so big one we’re focused on this year and I mentioned it in my comments is around inventory and COGS. I think Kristy followed up on that. And we think that’s an opportunity for us. We look forward to testing that throughout the year. That’s a big one for us this year, getting the Hospitality app and now that it’s fully rolled and understanding how that could impact kind of top line guest experience, guest satisfaction is a big focus for us. And then again, the other the rolling of Ruth’s Reimagined with new bar menu for this year.

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

I’ll just add, and Cheryl mentioned it, 25 basis points of improvement with the inventory. I think many of us believe that that’s a very modest assumption, but we do need to do a detailed test for this. This is a very complicated change for our operators. And we want to make sure we take some of the learnings from the rollout of both our new POS and our labor management system, and spend a little bit more time and tests them, we had originally planned to get this right and make sure that we capture the greatest amount of savings in food, by having this inventory system in place.

Andrew Barish — Jefferies — Analyst

Great. Appreciate the color. Thank you.

Operator

The next question is a follow-up from Brian Vaccaro with Raymond James. Please proceed.

Brian Vaccaro — Raymond James — Analyst

Hi, thanks. So, I just wanted to circle back on margins. And I guess on commodities, Kristy, I think you said that the non-beef basket was up 1% in the fourth quarter. I guess, how do you expect inflation on the non-beef basket to play out moving through ’23, just wondering how much visibility via contracts in place, you have on that non-beef basket.

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Yeah, so we expect it to be down about mid-single-digits for the year based upon those contracts that we have, some of our seafood, particularly seafood products. Obviously, there’s still some exposure in areas like dairy that we have to offset. And based on the visibility we have, we do have local restaurant purchases in some areas, including produce and so we’ll have to see how all that shakes out, but based on the direct visibility that we have down mid-single-digits is what we’re planning for.

Brian Vaccaro — Raymond James — Analyst

Okay. Great. And then on labor, if I could just ask Kristy, I think you said, labor was up about 200 basis points year-on-year. But favorable versus pre-COVID by about 100 basis points. Do you — I think in previous calls, you expressed confidence that you can sustain kind of call it, 200 basis points of labor favorability. Do you still think that’s achievable?

And then I guess the other question is just on wage inflation. What are your expectations? Are you starting to see that moderate. I think you said up 9% or 10%, 9.5% in the fourth quarter. What do you expect on wage inflation through ’23? Thank you.

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Yeah. So we’re 193 basis points better versus 2019 and our 200 basis point guide was always versus 2019. So, we’re going to keep that efficiency, but clearly our ability to take price to offset wages is going to flow through and impact our basis point change for this year on labor. I think we’re in a good place where we feel pretty satisfied that the pricing we’re taking can offset a lot of the wage inflation we’re going to see. But we are still expecting mid- to — probably mid-single-digit levels of inflation in both hourly and management wages as we work through the year.

Brian Vaccaro — Raymond James — Analyst

Okay. So that helps, that clarified. So the total labor was down 190 basis points. It was the management labor, you were saying that was down 100 basis points. Perfect. Okay. Thanks so much.

Kristy Chipman — Chief Financial Officer and Chief Operating Officer

Thanks, Brian.

Operator

Our next follow-up question comes from Todd Brooks with Benchmark. Please proceed.

Todd Brooks — The Benchmark Company — Analyst

Hey thanks. Just a couple of quick follow-ups, if I can. I know that we’ve been talking about Manhattan as one of the three laggard markets. But can you walk through the impact of closing that store and maybe just how should we think about what type volume store was at, what type of hit should that be to revenues for back half of the year?

Cheryl Henry — President, Chief Executive Officer and Chairwoman

The value — the post-COVID value, we were giving it to you in percentages before. I’d say it’s about an average volume restaurants. So $6 million to $6.5 million overall. Obviously, there’s — I’m not going to give the exact ROI number that one did. But you can do the math on what we’re getting from an restaurant operating income perspective there.

Todd Brooks — The Benchmark Company — Analyst

Okay. Great. And then I want to follow-up just — we didn’t touch much on the consumer and how they behaved across holiday, how they built checks, attach rates on apps, desserts, alcohol, any changes in behavior there. And as a follow-on to that, any color you can give us on gift card sales year-over-year, if that’s changed or accelerated at all. Thank you.

Cheryl Henry — President, Chief Executive Officer and Chairwoman

So from a check perspective, we were still seeing some trade-offs into more app, higher cuts of beef, et cetera. That has moderated a bit from what we were seeing earlier in the year. But adding size, et cetera. So that’s still a positive to us from a check perspective overall. From a gift card perspective, we were up low-single-digits from ’21.

Todd Brooks — The Benchmark Company — Analyst

Okay. Great. Thanks.

Operator

Thank you. At this time, I would like to turn the call back over to management for closing comments.

Cheryl Henry — President, Chief Executive Officer and Chairwoman

Thank you everyone for joining the call this morning and for your questions and we look forward to updating you again soon.

Operator

[Operator Closing Remarks]