Financial Overview — March 2009
OAK BROOK, Ill. – McDonald's comparable-store sales rise 1.4% in February. Gain reduced by shorter month compared with leap year March 10, 2009
McDonald’s Corp., hurt by one less selling day because last year was a leap year, said comparable-store sales increased 1.4 percent in February but would have been up 5.4 percent without the calendar effect.
The Oak Brook, IL based fast-food company also warned that the dollar's current strength will pinch per-share earnings in the first quarter by as much as 9 cents a share.
McDonald's comparable-store sales measure results at restaurants open at least 13 months.
In the US, comparable-store sales on an unadjusted comparison were up 2.8 percent, or 6.8 percent excluding the calendar issue.
Systemwide sales, which include the contribution of outlets open less than 13 months, were down 4.6 percent because of negative foreign-currency translation effect caused by the stronger U.S. dollar.
In the U.S., with no currency impact, systemwide sales were up 3.7 percent.- OAK BROOK, Ill. – MCDONALD’S CORP. said first-quarter results will be hurt by volatile foreign currency exchange rates and undisclosed higher commodity costs, even as sales surge. If foreign currency rates remain at current levels, McDonald’s indicated, currency translation will reduce first-quarter revenues by at least $600 million and earnings by between 7 cents and 9 cents per share compared to 2008. Global February same-store sales rose 1.4 percent, and U.S. same-store sales for the month increased 2.8 percent, according to the Oak Brook company.
- NEW YORK – Consumers may soon again look favorably at restaurants, given ongoing negative economic news, an analyst said Monday. “At some point it seems battle fatigue sets in and, as a protective conditioned response, consumers look for an escape,” said BOB DERRINGTON of MORGAN KEEGAN & CO. “Restaurant dining can provide that escape.” He said restaurant sales will hold up better than sales for retailers and automakers, among other consumer segments. Analyst JEFF OMOHUNDRO at WACHOVIA CAPITAL MARKETS LLC, looking at a three month average through January, said retail sales have fallen 10.8 percent, while restaurant sales have risen 2 percent.
- PORTLAND, Ore. — Connecting with guests to improve what MCCORMICK & SCHMICK’S SEAFOOD RESTAURANTS calls its “price-value experience rating” will be a top priority for the upscale chain as it attempts to turn around declining traffic. The seafood restaurant chain last week reported a 13.5-percent drop in same-store sales for the Dec. 27-ended quarter, despite a 2.6-percent menu price increase and a 1.4-percent benefit from changes in product mix. The company, which owns 94 restaurants, reported a net loss of $73.4 million, or $4.99 per share, compared with a loss of $1 million, or 7 cents per share, in the year-earlier quarter. Revenues for the quarter fell 0.7 percent to $98.8 million.
- OKLAHOMA CITY — Sales trends at SONIC CORP. remained negative for its February-ended second quarter, despite the chain’s late-December introduction of a value menu to spark customer traffic. Estimated same-store sales for the quarter, which Sonic said is its slowest time of the year, are expected to drop between 3 percent and 4 percent systemwide and fall between 5.5 percent and 6.5 percent at corporate restaurants, the company said last week. The prior quarter’s systemwide same-store sales declined 3.6 percent, which led Sonic to debut a permanent Everyday Value Menu to help drive sales. Sonic said that the new menu, which features 11 items for $1 each, helped improve sales during the quarter and will continue to boost sales in coming months. Sonic operates or franchises about 3,500 restaurants.
- DALLAS — BRINKER INTERNATIONAL INC., parent to the Chili’s Grill & Bar and other casual-dining chains, said Monday it has entered into a new $215 million revolving credit facility. The new unsecured, three-year facility replaces the company’s existing credit line, which was set to expire in October. Brinker said it had about $50 million funded on the new facility, compared with $90 million funded in its previous facility. The company said it reduced the size of the facility as it anticipated fewer borrowing needs after the December sale of a majority interest in Romano’s Macaroni Grill, the reduction in corporate restaurant development and its focus on debt repayment. The reduction also was driven by efforts to improve operating efficiencies and to “prudently deploy capital in order to maintain a strong credit profile,” Brinker said.
- ATLANTA — WENDY’S/ARBY’S GROUP INC. posted a net loss of $393.2 million for its fourth quarter, as impairment charges and continued slow sales at the ARBY’S chain weighed down results. The parent company to both Wendy’s and Arby’s reported on Monday improving sales trends at Wendy’s, but weak results at Arby’s. The latter was blamed on competitor discounting. Arby’s posted a systemwide samestore sales drop of 8.5 percent for the quarter ended Dec. 28. Officials said it would look to drive sales with its new Roastburger sandwich line, introduced last week, as well as ew roasted chicken, shakes and iced fruit teas.The chain also will test value-priced products, which officials did not detail. The negative sales trends, coupled with “the deteriorating economy and adverse stock market conditions,” drove the company to take a non-cash impairment charge of $460.1 million against Arby’s corporate restaurants. Arby’s system includes 1,176 corporate and 2,580 franchised units. The Arby's write-down led to a corporate fourth-quarter net loss of $393.2 million, or 84 cents per share. Because this is the first quarter of results for the combined Wendy’s/Arby’s Group, there is no year-earlier comparison. Latest quarter corporate revenue more than doubled, to $896.5 million, from $320.6 million, as a result of the merger. For the full year, Wendy’s/Arby’s posted a net loss of $479.7 million, on revenues of $1.82 billion. Arby’s is promoting the Roastburger line on Facebook with the offer of a coupon to try the sandwich for free with the purchase of a soft drink on March 8.
- HEATHROW, Fla. – Declining same-store sales and impairment and restructuring charges led RUTH’S HOSPITALITY GROUP INC. to a fourth-quarter loss of $60.7 million, it said. That compared to a profit of $4.1 million in the same quarter a year earlier, said the company that operates or franchises to others about 150 table-service restaurants. For all of 2008, Ruth’s reported a net loss of $53.9 million on revenue of $405.8 million, versus net income of $18.1 million, on revenue of $319.2 million in 2007. The latest quarter included an $81.3 million loss on impairment and $8.9 million in restructuring costs. Excluding those charges Ruth’s would have earned 4 cents per share, it said. The company said fourth-quarter revenue increased 12.1 percent, to $99.8 million, including $19.4 million from Mitchell’s Fish Markets and Mitchell’s Steakhouses acquired in February 2008. Quarterly same-store sales fell 18.5 percent at corporate Ruth’s Chris units and average weekly sales at the Mitchell’s units fell by about 16.0 percent, to $67,900, compared to a year earlier, it added.
- GLENDALE, Calif. – DINEEQUITY INC., parent of the IHOP and Applebee’s chains, reported Wednesday a widened fourth-quarter loss because of $148.3 million in after-tax charges related to write downs in the value of Applebee’s goodwill and intangible assets. The net loss for the quarter ended Dec. 31 swelled to $137.1 million, or $8.15 per share, from $14.3 million, or 94 cents a share, in the same year-earlier quarter largely because of the Applebee’s charges. Excluding those charges, the company reported profits of $5.7 million, or 34 cents per share, for the quarter, beating analysts’ expectations and pushing the stock up more than 13 percent Wednesday to close at $6.67. DineEquity’s stock has traded between $5.24 and $53.50 in the past 52 weeks. DineEquity officials said they expect challenging times to continue in 2009, with same-store sales at Applebee’s projected to fall between 2 percent and 5 percent. IHOP’s same-store sales are projected to grow or contract by 1 percent. Revenues for both brands, which together boast about 3,400 restaurants worldwide, totaled $355.5 million during the fourth quarter, compared with $213.6 million during the same quarter the prior year. Full-year 2008 revenues were $1.61 billion compared with $484.6 million in 2007 when DineEquity booked less than five weeks of revenue from newly acquired Applebee’s.
- NEW YORK — Investment funds affiliated with NELSON PELTZ, the well-known activist investor and nonexecutive chairman at Wendy’s/Arby’s Group Inc., have snatched up stock in quick-service and snack brands, and dumped holdings in casual-dining companies. According to the latest filings from Peltz’s various Trian funds, which covered holdings as of Dec. 31, KRISPY KREME DOUGHNUTS INC. and CKE RESTAURANTS INC. are in, while P.F. CHANG’S CHINA BISTRO INC. and THE CHEESECAKE FACTORY INC. are out. Trian currently holds about 2 percent of Krispy Kreme shares, or about 1.5 million of the doughnut franchisor’s 67.5 million outstanding shares. At CKE, which franchises the Carl’s Jr. and Hardee’s burger chains,Trian holds about 4 percent of corporate shares, or 2.2 million of the 54.6 shares outstanding.
- LOUISVILLE,Ky.— Amid general market gains on Tuesday, TEXAS ROADHOUSE INC. stock fell 5.6 percent to $7.98 per share after the casual-dining operator reported a 15-percent drop in fourth-quarter profit Monday, and also said it would not yet raise menu prices. Some say the move to halt price hikes may reflect further erosion in guest traffic among price-sensitive consumers who typically frequent lower-priced dinnerhouses like Texas Roadhouse. Analysts said they expected the 300-unit chain to raise menu prices this month after previously testing price hikes between 2 percent and 5 percent.The company said it would postpone its pricing decisions given the current economic environment. For the fourth quarter ended Dec. 30, net income totaled $6.1 million, down from earnings of $7.2 million in the same quarter a year earlier. Per-share earnings remained the same, at 9 cents, because of a reduction in the number of shares outstanding. Revenue rose 26 percent to $234.2 million, driven by six corporate unit openings and one acquisition from a franchisee during the quarter. Same-store sales fell 4.7 percent at corporate restaurants and 5.5 percent at franchise locations. For the full year, Texas Roadhouse earned $38.2 million on revenues of $880.5 million, compared with the year-earlier earnings of $39.3 million on revenues of $735.1 million. Annual same-store sales fell 2.3 percent at corporate; and 3.6 percent at franchise units.
- LEBANON, Tenn. — CRACKER BARREL OLD COUNTRY STORE INC., the operator of 588 restaurants and gift shops, posted Tuesday a 9-percent drop in its fiscal 2009 second-quarter profit on slowed sales.The company also refined its forecast for the full fiscal year, which ends in July, to include nearly flat revenues that would reflect negative samestore sales, but maintained earnings guidance. Cracker Barrel said it would execute two sale-leaseback deals to garner between $55 million and $60 million, which would be used to pay down debt. The transactions will include 15 restaurants and its retail distribution center and are expected to close by the fiscal year end. The family-dining operator also said it would slow store development to seven locations in fiscal 2010, down from the 11 units already opened in the current fiscal year. For the second quarter ended Jan. 30, Cracker Barrel posted net income of $18.4 million, or 81 cents per share, compared with $20.2 million, or 85 cents per share, in the year-ago quarter. Quarterly revenues fell 1 percent to $630.2 million, and reflected a same-store restaurant sales declines of 1.5 percent and a same-store retail sales drop of 7.0 percent.
- TAMPA, Fla. — Steakhouse parent OSI RESTAURANT PARTNERS LLC reported Monday a fourth-quarter net loss of $506.4 million on a 10-percent drop in corporate revenue and millions in asset impairment charges for reduced goodwill and closed restaurants. OSI, which operates or franchises 1,491 restaurants, booked a net loss of $23.5 million in the fourth quarter a year earlier. The casual-dining company, which operates the 978-unit Outback Steakhouse brand, along with Carrabba’s Italian Grill and others, has had a difficult fiscal 2008 filled with negative same-store sales, increased costs and a heavy debt burden.For the full year ended Dec. 31, the company posted a net loss of $739.4 million, compared with a loss of $22.6 million the prior year. Corporate revenues for the year fell 4.9 percent to $3.96 billion. Asset impairment and restaurant closure provisions in 2008 totaled $716.5 million, and the company’s interest expense totaled $159.1 million. A private company, OSI files results with the Securities and Exchange Commission because the company holds publicly traded debt. The company’s systemwide sales fell 9.9 percent for the quarter to $1.04 billion and by 4.5 percent for the year to $4.44 billion.
- SPARTANBURG, S.C. — DENNY’S CORP. said that its revenues in 2009 will fall from 2008 levels, and that same-store sales are expected to remain negative, despite the family-dining chain’s massive marketing efforts. Citing “unprecedented economic uncertainties,” Denny’s said 2009 revenues would total between $605 million and $623 million, compared with $760.3 million recorded in 2008. Also hurting its top-line performance is Denny’s on-going transition to a more-franchised business model, which reduces corporate sales. The parent to more than 1,500 restaurants also predicted that 2009 same-store sales would fall between 3 percent and 5 percent at franchised units and between 1 percent and 3 percent at corporate restaurants. Earlier this month Denny’s served 1.5 million customers a free Grand Slam breakfast to jump start new marketing efforts aimed at luring back lapsed customers. For the December-ended fourth quarter, Denny’s recorded a net loss of $3.2 million, or 3 cents per share, compared with a profit of $14.7 million, or 15 cents per share, the year-ago period. Denny’s booked charges totaling about $3.7 million in the latest quarter. Revenues fell 16 percent to $184.7 million, mainly because Denny’s operated 131 fewer corporate locations as a result of refranchising. Fourthquarter same-store sales fell 7.2 percent at franchised stores and 3.2 percent at corporate locations.
- TAMPA, Fla. — OSI RESTAURANT PARTNERS LLC, which operates the Outback Steakhouse chain and other brands, on Wednesday reported that sharply negative samestore sales, the current recession and reduced expectations for future earnings will lead the company to take a goodwill charge of as much as $540 million in its fourth quarter. Systemwide same-store sales for the quarter ended Dec. 31 fell 9.5 percent at Outback Steakhouse, 7.4 percent at Carrabba’s Italian Grill, 14.0 percent at Bonefish Grill and 19.6 percent at Fleming’s Prime Steakhouse and Wine Bar. Fourth-quarter corporate revenues fell 10.2 percent to $928.3 million.
- GREENWOOD VILLAGE, Colo. — A nearly 10-percent drop in guest traffic that led to negative same-store sales, as well as impairment charges on two restaurants, resulted in a 43-percent plunge in fourth-quarter earnings for RED ROBIN GOURMET BURGERS INC. The company said Thursday that same-store sales for the December-ended quarter fell 7.4 percent at corporate restaurants. A 2.2-percent increase in the average guest check did little to offset a 9.6-percent decline in customer counts. Red Robin operates 294 units and franchises 129 locations. Company executives said they are working to improve service and will focus on local marketing to drive traffic. Net income for the quarter fell to $5.8 million, or 38 cents per share, compared with $10 million, or 60 cents per share, for the year-earlier quarter. A charge totaling 5 cents per share was booked in the latest quarter for the impairment of two locations, the company said. Latestquarter revenue rose 8.0 percent to $198.6 million, aided by the openings of seven new restaurants.
- RICHMOND HEIGHTS,Mo. — PANERA BREAD, looking to maintain its sales momentum, said Friday it plans to unveil in 2009 several new menu items and combo deals designed to drive add-on, bulk and impulse purchases across all dayparts. Officials of the parent company to 1,252 bakery cafes operating under the Panera Bread and St. Louis Bread Co. brands, said they currently are testing both a spicy and healthful breakfast sandwich, as well as steel-cut oatmeal, which they plan to rollout later in the year. Other new menu items to come include a chopped Cobb salad, an improved chicken salad with grapes, oven-baked macaroni and cheese, and an open-face beef brisket sandwich. The company also is testing a you-pick-four option, which would allow patrons to order a soup, salad or sandwich, or a you-pick-two option, and add on a beverage and a baked good at an attractive price, said RON SHAICH, Panera’s chairman and chief executive. Shaich laid out Panera’s game plan for 2009 after Panera reported a 43-percent jump in fourth-quarter net income that was aided by a calendar shift and price increases. Net income for the 14-week quarter ended Dec. 30 was $25.5 million, or 84 cents per share, up from $17.8 million, or 56 cents per share, from the same year-earlier quarter, which was only 13 weeks. The fourth–quarter results included 3 cents per share for write offs related to a strategic cash investment, the roll out of the company’s new coffee program and an increase in reserves associated with legal settlements. Revenue for the fourth quarter was $357.8 million, up 19 percent over the year-ago quarter. Systemwide same-store sales rose 2.7 percent for the quarter, reflecting a 1.9-percent increase at company-owned stores and a 3.3-percent increase at franchise-operated units.
- LOS ANGELES — The CHEESECAKE FACTORY INC.'s fourth-quarter profit plunged more than 46 percent as slowed sales and $3 million in asset impairment charges took their toll on the casual-dining powerhouse. The company, which operates 145 namesake restaurants and 13 Grand Lux Cafe units, said Thursday that net income for the fourth quarter ended Dec. 30 was $7.1 million, or 12 cents per share, compared to $13.3 million, or 19 cents per share, in the year-earlier quarter. Excluding impairment charges for three underperforming restaurants, the company said that net income would have been $9 million, or 15 cents per share, which topped the average analyst estimate of earnings of 14 cents a share, according to Thomson Financial. Revenues for the quarter were $400.4 million, down 1.5 percent from $406.3 million in the year-ago period. Same-store sales fell 7.1 percent in the fourth quarter, the company said. For the year ended Dec. 30, net income was $52.3 million, or 82 cents a share, down more than 29 percent from nearly $74 million, or $1.01 a share, the year earlier. Fullyear revenue rose nearly 6 percent to $1.6 billion.
- DENVER — After hefty prices increases failed to overcome rising costs and falling traffic in its fourth quarter, CHIPOTLE MEXICAN GRILL INC. said it would hone its marketing message and look to improve its kitchen operations in order to thrive during the difficult economy. The company, which operates more than 830 fast-casual restaurants, cited troubling economic conditions as it forecast same-store sales gains in the single digits for 2009. In its fourth quarter ended Dec. 31, Chipotle reported net income of $17 million, or 52 cents per share, down from $17.5 million, or 53 cents per share, during the year-earlier quarter. Revenues jumped 19.5 percent to $345.3 million for the quarter, driven by a 7-percent increase in menu prices along with new store openings. Same-store sales for the fourth quarter rose 3.5 percent. For the full year, Chipotle reported net income of $78.2 million, or $2.36 per share, compared with $70.1 million, or $2.13 per share, in fiscal 2007. Revenues for the year were $1.3 billion, up 22.7 percent from $1.1 billion the year earlier. Same-store sales for the year were up 5.8 percent.
- LOS ANGELES — CALIFORNIA PIZZA KITCHEN INC. cited slow sales and heavy impairment charges as it booked a $5.3 million loss in its fourth quarter. Facing "unprecedented economic times," the parent of the 254-unit casual pizza chain predicted that negative sales trends would continue in its current fiscal year and said it would slow expansion to only five new company-owned stores. For the fourth quarter ended Dec. 28, CPK reported a net loss of $5.3 million, or 22 cents per share, compared with a profit of $3.5 million, or 12 cents a share, in the year-earlier quarter. Excluding the impact of more than $13 million of impairment charges and other one-time items, CPK said it would have earned $3.1 million, or 13 cents a share, in the fourth quarter. Fourth-quarter revenue was down 0.7 percent from a year ago to $161.8 million. Same-store sales fell 7.2 percent in the fourth quarter. For the full year, CPK reported net income of $8.7 million, or 34 cents a share, compared with previous-year profit of $14.8 million, or 50 cents a share.Annual revenue rose nearly 7 percent to $677.1 million. Same-store sales fell 2 percent. For the current fiscal year, CPK predicted same-store sales would fall between 5.5 percent and 6.5 percent. In addition to five new corporate stores, franchisees were expected to open another 10 units in 2009.
- MINNEAPOLIS — BUFFALO WILD WINGS INC., operator or franchisor to 567 casual-dining restaurants, reported an earnings increase of 29 percent, a revenue increase of 33 percent and a corporate same-store sales jump of 4.5 percent for the fourth quarter. The numbers contrast sharply with competitors in the casual-dining sector, which has been hit hard by reduced guest traffic as consumers cut spending. Buffalo Wild Wings also said same-store sales at corporate restaurants were up 8 percent so far this first quarter.The company reiterated its annual goals of 15-percent unit growth, 25-percent revenue growth and between 20-percent and 25-percent earnings growth. For the quarter ended Dec. 28, Buffalo Wild Wings earned $7.7 million, or 43 cents per share, compared with $6.0 million, or 34 cents per share, in the same quarter a year earlier. Revenues in the latest quarter totaled $121.2 million. For the full year, the company earned $24.4 million, or $1.36 per share, versus $19.6 million, or $1.10 per share. Fiscal 2008 revenues rose 28 percent to $422.4 million.
- OAK BROOK, Ill. — MCDONALD'S continued its sales momentum into January with a global same-store sales increase of 7.1 percent for the month, including a 5.4-percent rise in the United States. The burger giant also reported that same-store sales rose 7.1 percent in Europe and 10.2 percent in the Asia/Pacific, Middle East and Africa region. Global systemwide sales rose 2.6 percent in January, or 9.1 percent in constant currencies, McDonald's said. In the U.S., McDonald's cited its value items and breakfast menu as key sales drivers. Sales in Europe were aided by both premium and value offerings, and convenient hours and Chinese New Year promotions boosted results in Asia/Pacific, Middle East and Africa. McDonald's January results follow solid sales results in its December-ended fourth quarter, when the company posted a global same-store sales rise of 6.9 percent, including increases of 4 percent in the United States, 8.5 percent in Europe and 9 percent in Asia/Pacific, Middle East and Africa. McDonald's operates or franchises about 32,000 restaurants worldwide.