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My first visit to a Chuy's



May 07, 2014 – Comments (1) | RELATED TICKERS: CHUY

Today I made my first visit to a Chuy's location; this one in Lexington, KY. Chuy's (CHUY) is a promising up-and-coming Tex-Mex restaurant -- initially founded in Austin, now with approximately 50 locations throughout the Southeast region -- which specializes in preparing fresh Tex-Mex food from scratch. 

My mom and I arrived at the Lexington, KY, location, at 6:30PM tonight (Tuesday). The parking lot was packed; I only counted three open parking spaces surrounding the restaurant. I believe this location opened in August 2011. 

There were people inside and outside waiting for a table. We put our names down and were told the wait time was probably 20-25 minutes. Not to worry: Chuy's has a free "nacho bar" where you can load up on freshly made chips and tasty salsas and sauces. We had a table after roughly 15 minutes of waiting. 

Our waitress was very helpful and friendly. Being vegetarian and gluten free, we are not exactly the easiest customers for a restaurant (let's just say we keep things interesting wherever we go). The waitress was honest with us and let us know which items were "created" in an area where gluten products are also put together.

My mom loved the restaurant's decor, calling it "original but tasteful." She also noted that Chuy's is a sort of cross between a Mexican restaurant and a classic 1950's diner. (As they say, "When you've seen one Chuy's... you've seen one Chuy's.") In other words, Chuy's is not your stereotypical Mexican restaurant. The originality of each location brings its own charm. 

Our food arrived within 15 minutes, and the food tasted great. I went with the nachos, and must say they are some of the best nachos I have eaten at a restaurant. The nachos were $7.99 -- a great price compared to other restaurants, especially when considering the superior quality. My mom, in all seriousness, says they are the best nachos she has seen in her entire life. 

All in all, Chuy's was a great experience at a very reasonable price. The place was bustling with activity, although it started to clear out as time moved closer to 7:30PM. I think there is a lot of potential for this brand, particularly if the business can begin to produce positive free cash flow on a consistent basis. 

Today Chuy's reported 1Q 2014 results, with revenue increasing 19.8% YOY and comps increasing 4.2%. Once it is available I'll be curious to explore the 10Q to see how Chuy's fared with its cash flow production. 

1Q 2014 earnings report:

Conference call transcript:

Chuy's continues to sit toward the top of my watchlist. If the stock gets knocked to a P/E closer to 40 (currently it sits around 53) I will be tempted to open a small position. My new investing capital is limited, so I am carefully exploring numerous possibilities to open/add positions in my portfolio. 

I hope this "Chuy's channel check" was helpful. For others who have visited Chuy's, how does this compare to your experience? 

David K

1 Comments – Post Your Own

#1) On May 07, 2014 at 10:36 AM, Teacherman1 (< 20) wrote:

Good article David.

There is a Chuy's board on SA, but has not been real active as of late. Maybe you can post your findings there to see if it stirs up some interest.

Being from the Austin area, and having lived here off and on for many years, I have eaten at Chuy's many times over the years and have always come away satisfied.

When they first did their IPO there were some who thought they would become another Chipolte's, and some who thought that was a long shot.

While I cautioned against "biting" on the IPO, I wish I had done so now, but they still have a long way to go, and I will continue to watch for a possible RL buy in the future when their base gets a little more solid.

JMO and worth exactly what I am charging for it.  

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