If the chain’s executives are right, the 0.8% year-over-year decline simply means customers are getting back to their normal routines, governed by work schedules and summer vacations that have traditionally made the 680-unit steakhouse chain a bit less busy in the warmer months.

“It really has felt like we’ve got back to a more seasonal process,” said CEO Jerry Morgan during an earnings call with analysts Thursday evening.

Despite the dip, the chain’s dining rooms are as full as ever: Dine-in traffic in the period was up 3.8%, meaning the decline came entirely on the takeout side of the business. To-go accounted for about 13% of average weekly sales, down from 14.8% the previous quarter.

“While our to-go percentage declined throughout the quarter, we are comfortable knowing that part of this decline was driven by a year-over-year increase in the number of guests dining in our restaurants,” said CFO Tonya Robinson.

She speculated that some customers might be moving from to-go back to dine-in. “I think some of that is just a function of being able to get into the restaurant during the week because wait times sometimes are so long,” she said.

The boost to dine-in did not hurt: Check average was up 8.4% as dine-in guests ordered more food and drinks, and people in general sprung for higher-priced entrees, Robinson said.

Still, the chain is continuing to invest in driving takeout as the channel remains well above pre-pandemic sales levels, Morgan said. It’s putting dedicated to-go areas in new restaurants and is rolling out a new “online ordering switchboard” that eases the flow of to-go tickets into the kitchen.

Overall, same-store sales for the quarter rose 7.6% year over year, and executives said demand remains strong.

“We’re pleased that we haven’t seen any signs of guest pushback or negative mix from the price increases that we have taken over the last 12 months,” Morgan said, adding that the chain will continue to be “cautious” on pricing. It hasn’t decided yet whether it will raise prices again this year.

Restaurant margins for the quarter were 16.6%, down from 17.7% a year ago, due mainly to commodity inflation of 11.8%. Robinson noted that beef costs slowed later in the quarter, which led the chain to lower its full-year commodity inflation forecast to 12%.

“That felt really great to see, especially after those prices spiking the way they did in Q3 and Q4,” she said.

Just as sales have returned to seasonal rhythms, she said, margins could too—and the third and fourth quarters tend to be softer. Robinson noted there are still a lot of “moving pieces” weighing on margins, including whether the chain decides to raise prices, but that the goal is to eventually get them back to 17% or 18%.

“A lot of the expectation about when that happens, it’s just going to be driven by the commodity outlook and labor outlook and what sales continue to look like,” Robinson said. “I don’t know if that will be a ’23 possibility. It will be great if it is, but that is still definitely a goal and we think it’s achievable.” Source: Restaurant Business.

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