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Financial Overview — September 2009

  • WINSTON-SALEM, N.C. — KRISPY KREME INTERNATIONAL INC. nearly broke even in its latest quarter, helped by lower commodity costs, the closure of underperforming stores and a same-store sales increase at corporate locations. The operator or franchisor of 548 Krispy Kreme locations, said it would continue to open stores with a smaller footprint as well as additional overseas locations. The company also said it would focus on menu items that would grow traffic across dayparts, such as its Kool Kreme soft-serve ice cream product now in test in 10 locations.For the second quarter ended Aug. 2, Krispy Kreme posted a net loss of $157,000, or nil cents per share, compared with a loss of $1.9 million, or 3 cents per share, in the same quarter a year earlier. Latest quarter revenue fell 12.2 percent to $82.7 million. Krispy Kreme closed nine locations during the quarter. Same-store sales at corporate stores rose 5.9 percent, versus a decline of 4.1 percent last year.
  • MIAMI – Pointing to the downturn, BENIHANA INC. Monday said that for its first quarter ended July 19 net income plummeted 50.2 percent to $1.1 million, or 5 cents per share, from $2.2 million, or 12 cents per share, a year earlier. Quarterly same-store sales dipped 10.1 percent companywide, officials noted, as the Benihana teppanyaki chain experienced a 13.1-percent decrease and the HARU sushi brand, a 14.8-percent falloff. The RA SUSHI BAR group saw same-store sales rise 3.5 percent for the quarter, sources at the Miamibased company reported. Benihana said its latest-quarter revenue rose 1.6 percent to $96.0 million, on the openings of three new restaurants. Last month it announced plans to regain sales momentum by enhancing foods, beverages and service and heightening marketing and branding activities. Benihana owns 98 restaurants in the United States, including 64 Benihana units, 25 RA Sushi outlets and nine Haru locations. It franchises 22 Benihana restaurants, about half of which are in the U.S.
  • NEW YORK – Credit rating agency STANDARD & POOR’S revised upward its short-term look at STARBUCKS CORP.’s rating, citing cost controls and the reduction of debt. S&P said Friday the coffeehouse company’s rating, which is BBB, one that is just three notches below the highest rating of AAA, was affirmed and given a stable outlook, up from a negative one. “The ratings are based on Starbucks’ leading market position and excellent brand recognition in the specialty coffee market in the U.S., as well as a history of strong cash flow generation,” said S&P’s analyst JACKIE E. OBEROI. “Weak top-line growth due to the U.S. recession tempers these strengths.” Starbucks cut $175 million in expenses during the latest quarter ended June 28, and officials said they expect to see $550 million in savings by the fiscal year’s end. It also reduced its total debt by nearly 57 percent, to $549.8 million.
  • MEMPHIS, Tenn. – PERKINS & Marie Callender’s Inc., for the second quarter ended July 12, reported a net loss of $5.9 million, compared with a net loss of $8.1 million in the same quarter a year ago. Second-quarter revenue for the family-restaurant specialist dipped 6.9 percent to $121.9 million, as same-store sales fell 8.3 percent at company-owned Perkins units and 5.3 percent at company-owned Marie Callender’s restaurants. Citing lower commodity costs fro eggs, dairy and oils, the company said food costs in the second quarter decreased to 26.3 percent of sales, compared with 30 percent of sales in the year-earlier period. Perkins & Marie Callender’s Inc. owns 163 Perkins restaurants and franchises 316 Perkins units. It also owns or operates under partnership agreements 91 Marie Callender’s restaurants and an East Side Mario’s location, and franchises 40 other Marie Callender's to others.
  • EMERYVILLE, Calif. — JAMBA INC., parent to the 735-unit JAMBA JUICE chain, reported this week that sales trends continued to suffer during its latest quarter, especially in its home state of California, leading to double-digit declines in revenue and same-store sales. The company posted a smaller net loss because of cost-cutting measures and a favorable comparison to year-ago results. For the quarter ended July 14, Jamba reported a net loss of $5.1 million, or 10 cents per share, compared with a net loss of $89.2 million, or $1.69 per share, in the same quarter a year ago, when the company booked about $53 million in impairment charges. Revenue for the latest quarter fell 15.1 percent to $83.2 million. Same-store sales for corporate locations fell 13.7 percent.
  • ATLANTA – AFC ENTERPRISES INC., parent of the POPEYES LOUISIANA KITCHEN quick-serve chicken chain, said this week its same-store sales performance for the second quarter ended July 12 was its best in three years. The Atlanta company said quarterly net income fell 3.03 percent to $6.4 million, compared with $6.6 million a year ago. Revenues declined by 9.2 percent to $35.7 million, which AFC attributed to the refranchising or sale of 36 corporate stores. Based on its stronger sales, AFC said it now expects full-year earnings of between 66 cents and 70 cents per share, up from previous guidance of 62 cents to 67 cents. Its stock rose 11.9 percent Thursday to close at $8.93 per share. The company said its use of national media in the quarter drove year-over-year ad awareness increases of 14 percentage points, boosting traffic. Domestic same-store sales increased 4.3 percent, compared with a 1.7-percent decrease in the second quarter a year ago, AFC said, and international same-store sales rose 3.9 percent. Chief executive CHERYL BACHELDER said two well-received value promotions helped fuel that same-store sales growth. Popeyes, she said, is committed to speeding up drive-thru service by using new timers and headsets and offering better training. AFC said Popeyes ended the quarter with 1,905 restaurants worldwide, up from 1,901 in 2008.
  • GOLDEN, Colo. – GOOD TIMES RESTAURANTS INC. said last week it formed a board committee and hired financial advisory firm MASTODON VENTURES INC. to explore ways to “enhance shareholder value” and “reduce the cost burdens of being a publicly held entity.” The action could mean a sale or alternative move to go private, among other possibilities, for the Golden-based parent of the 52-unit Good Times Burgers and Frozen Custard chain. For the first nine months of fiscal 2009 ended June 30, GTRI had a net loss of $1.2 million, or 37 cents per share, versus a loss of $746,000, or 19 cents a share, a year earlier. Its revenue for the latest nine months fell 8.9 percent to $17.5 million, as same-store sales dipped 13.8 percent from a year ago. Good Times Restaurants noted that the market for its stock on the Nasdaq Small Cap exchange is relatively inactive. The stock has traded between 75 cents and $3.50 per share during the past 52 weeks.
  • OVERLAND PARK, Kan. – Sales from acquired Pizza Hut restaurants helped NPC INTERNATIONAL INC. post a 70-percent increase in second-quarter net income despite a big drop in same-store sales, the company said Friday. NPC, the largest Pizza Hut franchisee with 1,153 units in 28 states, reported net income of $3.4 million for the quarter ended June 30, compared with net income of $2.0 million a year earlier. Sales in the second quarter increased 35.6 percent to $223.8 million. Between September 2008 and February 2009, NPC purchased 393 Pizza Huts from franchisor PIZZA HUT INC. and another franchisee and sold 112 units to Pizza Hut Inc. NPC said samestore sales fell 12.6 percent in the second quarter because of lower consumer spending and a difficult comparison with last year's second quarter, when Pizza Hut's Tuscani Pasta rollout helped drive a 7.1-percent surge in comparable-store sales.
  • TAMPA, Fla. – OSI RESTAURANT PARTNERS, parent of the 972-unit OUTBACK STEAKHOUSE chain, on Friday reported a second-quarter net loss of $88.1 million as same-store sales at its four concepts fell. The company, with 1,477 restaurants in all, said it cut expenses and experienced lower beef and dairy prices to reduce losses in the second quarter, which ended June 30, from the same period a year ago, when it reported a loss of $177.4 million. Revenue for the second quarter fell 10.9 percent, to $905.8 million, the company said. OSI said customer traffic was up slightly in the quarter, but comparable store sales fell 22.4 percent at its high-end FLEMING’S PRIME STEAKHOUSE, 10.4 percent at Outback, 8.2 percent at BONEFISH GRILL and 5.9 percent at CARRABBA’S ITALIAN GRILL. The company recorded a $46 million second-quarter impairment charge tied to the planned sale of its CHEESEBURGER IN PARADISE group.
  • MELVILLE, N.Y. Reduced mall traffic and higher tax expenses widened second-quarter and six-month losses at SBARRO INC., the 1,062-unit Italian quick-service chain said Thursday. For the quarter ended June 28, Sbarro reported a net loss of $6.5 million, compared with a net loss of $5.0 million in the year-ago quarter. Tax expenses rose $3.2 million in the latest period. Domestic quarterly same-store sales fell 5.1 percent at company units and 4.5 percent at franchised stores. Same-store sales at international franchised units dropped 23.2 percent primarily from the strengthening U.S. dollar, Sbarro said. Revenues for the second quarter were $80.1 million, down 6.2 percent from a year ago. For the six months ended June 28, Sbarro reported a net loss of $12.2 million, compared with a net loss of $7.7 million in the same period a year earlier. Sbarro said first-half tax expenses climbed by $5.1 million. Six-month revenues were $159.7 million, down 5.3 percent from 2008.
  • CYPRESS, Calif. – REAL MEX RESTAURANTS INC. last week reported a 12.1-percent drop in same-store sales in its second quarter, versus an increase of 1.4 percent a year earlier. Real Mex, which operates 189 restaurants under the ACAPULCO, CHEVYS FRESH MEX, and EL TORITO brands, among others, reported a net loss of $4.1 million in the June 28-ended second quarter. That compared with a loss of $31.8 million in the year-ago quarter, when the company booked a non-cash, goodwill impairment charge of $34 million. Second-quarter revenue fell 10.9 percent to $135.9 million. The company operates 155 of its 189 restaurants in California, where the unemployment rate was 11.6 percent in June, up from 7.1 percent a year ago. For the six months ended June 28, Real Mex said it had a net loss of $13.1 million, versus a loss of $34.0 million in 2008. The year-ago loss included the $34 million impairment charge related to the 2006 merger of Real Mex with RM RESTAURANT HOLDING CORP., a subsidiary of SUN CAPITAL PARTNERS. Revenue for the first six months of 2009 decreased 8.9 percent to $264.4 million, Real Mex said, as same-store sales dipped 10.7 percent.
  • COSTA MESA, Calif. — High unemployment in California and deep-discounting by competitors, as well as its own promotional activities, took a toll on EL POLLO LOCO INC., which reported Thursday a significantly widened loss for the second quarter. For the quarter ended July 1, the company reported a net loss of $27.2 million, compared with a net loss of $5.6 million for the same quarter last year. Items including increased interest expense, higher occupancy costs and increased advertisement expenses each hurt the bottom line. In addition, slowed sales and promotional giveaways that hit the chain’s average check were not beneficial, the company said. Marketing initiatives going forward will “focus on striking the right balance between value and check performance,” said STEPHEN CARLEY, El Pollo Loco’s chief executive. During the quarter, El Pollo Loco’s primary rival KFC debuted its grilled chicken line with a free giveaway in April throughout the 5,200-unit chain. El Pollo Loco responded with its own giveaway and launched a chicken fight in the media asking consumers to vote for their favorite grilled bird, using viral videos to challenge KFC’s grilling technique and raise questions about ingredients in the larger’s chain’s marinade. Despite the brouhaha, El Pollo Loco’s second-quarter systemwide same-store sales fell 6.8 percent. Total revenue fell 4.9 percent to $72.7 million. El Pollo Loco ended the quarter with 167 corporate stores and 250 franchised units.
  • GREENWOOD VILLAGE, Colo.— Thinning customer traffic contributed to a second-quarter drop in profit for RED ROBIN GOURMET BURGERS INC., and the casual-dining company expects little improvement for the remainder of the year, despite a return to national advertising, the company said Thursday. Last year, Red Robin ran 23 weeks of brand building and awareness commercials on cable TV. But the spots did not draw crowds and the company suspended its national advertising for the first half of this year. The commercials returned in June and focused on product news, such as Red Robin’s re-introduction of its Steak Sliders. However the spots came too late in the second quarter to make an impact, the company said. For the quarter ended July 12, same-store sales fell 11.5 percent at corporate restaurants, the company reported. Net income fell 19 percent to $6.4 million, or 41 cents per share, versus $7.9 million, or 49 cents per share, in the same quarter last year. Latest-quarter revenue fell 2.6 percent to $201.1 million. The chain ended the quarter with 304 corporate locations and 131 franchised units.
  • DEERFIELD, Ill. — COSÌ INC., parent to the 144-unit fast-casual chain, said this week it narrowed its net loss in the second quarter as successful cost controls offset severe sales dips, especially from its catering operation, which saw sales fall 27.5 percent. Systemwide same-store sales fell 12.2 percent for the quarter ended June 29, reflecting a 12.7-percent drop at corporate restaurants and 9.8-percent dip at franchised units.At corporate locations, traffic fell 9.8 percent and the average guest check declined 2.9 percent. The company posted a second quarter net loss of $969,000, or 2 cents per share, compared with a loss of $1.7 million, or 4 cents per share, in the second quarter of 2008. Reduced expenses for food and labor and a near halving of general and administrative expenses helped the bottom line, the company’s report showed. Latest-quarter revenue fell 13.9 percent to $31.6 million.
  • INDIANAPOLIS — STEAK N SHAKE CO., which operates or franchises 502 family-dining restaurants, on Monday reported a profit in its third quarter versus a net loss in the same quarter a year ago. For the quarter ended July 1, Steak n Shake reported net income of $3.8 million, or 13 cents per share, compared with a net loss of $9.8 million, or 35 cents per share, in the same year-earlier quarter. In last year’s third quarter, the company booked $14.1 million in asset impairment charges related to underperforming or closed restaurants. Latest-quarter revenue rose 1.4 percent to $146.3 million, Steak n Shake said. Last month, the company said samestore sales in the third quarter increased 5 percent on a 13.4-percent jump in year-over-year guest traffic, indicating a lower average check.
  • OAK BROOK, Ill. – MCDONALD’S CORP. Monday said global same-store sales rose 4.3 percent in July, including a 2.6-percent increase in the United States. Same-store sales increased 7.2 percent in Europe and 2.1 percent in the company’s Asia/Pacific, Middle East and Africa division. Systemwide sales fell 0.3 percent, reflecting negative impact from foreign currency translation. In constant currencies, sales rose 6.2 percent, McDonald’s said. McDonald’s kept busy with a steady stream of product news in the United States in July. The chain of nearly 14,000 U.S. locations debuted the Angus Third Pounder nationwide after two years of testing in selected markets. It also gave away free samples of its McCafe Mochas, which debuted nationally in May, every Monday from July 13 to Aug. 3. The company said strong sales growth in France and the United Kingdom, as well as the chain’s tiered-menu approach and local summertime offerings, led to the same-store sales gain in Europe. In the Asia/Pacific, Middle East and Africa division, it said, ongoing sales momentum in Australia was partially offset by slowness in China. The primarily franchised McDonald’s system has more than 32,000 restaurants worldwide.
  • HOUSTON – MEXICAN RESTAURANTS INC., parent to the Case Ole, Mission Burrito and other concepts, said the dismal economy and effects of swine flu contributed to a net loss of $207,937, or 6 cents a share, in the second quarter ended June 28. That compares with net income of $359,059, or 11 cents a share, a year earlier. Revenue in the latest quarter fell 3.4 percent to $18.1 million. The Houston company said same-store sales dipped 6.6 percent at corporate stores and 1.2 percent at franchised units. During the quarter, Mexican Restaurants sold its operating assets and liabilities in the five-unit La Senorita restaurant chain in Michigan for about $2.6 million. Proceeds from the sale were used to pay down long-term debt. Mexican Restaurants operates 54 restaurants and franchises or licenses 19 to others.
  • LOS ANGELES, Calif. – CALIFORNIA PIZZA KITCHEN INC. Thursday said that net income for the second quarter ended June 28 fell 7 percent to $6.1 million, or 25 cents per share. That compared with earnings of $6.6 million, or 26 cents per share, in the same quarter a year ago. Latest-quarter revenue dropped 3.2 percent to $170.9 million, as same-store sales at full-service restaurants dipped 6.5 percent, the company said. In the midst of the industry’s sales slump, CPK said it has been able to drive its earnings through cost controls, including a reduction in labor expenses and food costs. Even so, “we understand the need to drive traffic and revenue,” co-chief executives RICK ROSENFIELD and LARRY FLAX said. In the current third quarter, the company has launched an advertising campaign, a new loyalty program and an internal sales-building program to “drive the average revenue per employee,” the chief executives said. Company officials projected that third-quarter same-store sales would decline between 6.5 percent and 7.5 percent. Based in Los Angeles, CPK operates or franchises 252 restaurants under the California Pizza Kitchen, CPK ASAP and L.A. FOOD SHOW brands.
  • DALLAS – BRINKER INTERNATIONAL INC. on Thursday said same-store sales in the fourth quarter ended June 24 fell 9.4 percent at CHILI’S GRILL & BAR, 9.2 percent at MAGGIANO’S LITTLE ITALY and 5.8 percent at ON THE BORDER MEXICAN GRILL & CANTINA. Brinker said it expected same-store sales in fiscal 2010 to be down 2 percent to 4 percent and that adjusted annual earnings could fall 10 percent to 20 percent. The Dallas company’s shares were down more than 16 percent in midday trading Thursday following the report. Brinker said profit in the quarter was $42.1 million, or 41 cents a share, compared to a loss of $1.5 million, or 2 cents a share, last year. Quarterly revenue fell 22.7 percent to $829.4 million from nearly $1.1 billion in the same quarter in 2008. Since last year, Brinker has closed 55 restaurants and sold 198 others, most of which were Macaroni Grill units.For the year, Brinker posted net income of $79.2 million, or 77 cents a share, compared with profit of $51.7 million, or 49 cents a share, in fiscal 2008. Fiscal 2009 revenue was $3.6 billion, down 14.5 percent from last year. For the year, same-store sales fell 5.6 percent at Chili's, 4.4 percent at On The Border and 7.3 percent at Maggiano's. At quarter’s end, Brinker owned or franchised 1,485 Chili’s, 160 On The Border and 44 Maggiano’s restaurants.
  • CHARLOTTE, N.C. — FALFURRIAS CAPITAL PARTNERS, a private-equity firm with a controlling interest in BOJANGLES’ RESTAURANTS INC., said Wednesday it has secured $70 million in refinancing for the 449-unit fastfood chicken chain. The deal would allow Bojangles’ to reduce its debt and lower interest costs, Falfurrias said. A banking group led by Bank of America Corp and Wells Fargo & Co. provided the senior-term loan and credit facility for the refinancing. As part of the transaction, Bojangles’ reduces its overall debt level, in part by repurchasing existing debt at a significant discount, Falfurrias said. In addition, the company received a lower interest rate. Falfurrias was part of an investment group, including Carolina Panthers owner JERRY RICHARDSON, that purchased a controlling interest in Bojangles’ in 2007. According to Falfurrias, sales were up 7 percent at Bojangles’ for the first half of the year. The chain had systemwide sales of $608 million in 2008.
  • LOUISVILLE, Ky. — Shares in PAPA JOHN’S INTERNATIONAL INC. rose more than 7 percent Wednesday, the day after the pizza company reported second quarter results that included higher profit and positive same-store sales. For the quarter ended June 28, Papa John’s recorded net income of $14.2 million, or 51 cents a share, compared with net income of $7.6 million, or 27 cents a share, in the yearearlier second quarter. Results included an after-tax benefit of $4.2 million, or 15 cents a share, from the consolidation of the results of Papa John’s franchisee-owned cheese purchasing cooperative, BIBP Commodities. Excluding the BIBP consolidation, second-quarter earnings would have totaled 36 cents per share, compared with 41 cents a share a year ago. Second-quarter revenue fell 2.4 percent to $276.6 million, which the company attributed in part to the sale of 62 company restaurants to franchisees in last year’s fourth quarter. Domestic systemwide same-store sales rose 0.1 percent, Papa John’s said. The company narrowed its earnings outlook for the year, raising the low end of the guidance from $1.36 per share to $1.38 per share, while maintaining a top target of $1.44 per share, excluding the impact from the consolidation of BIBP results. Papa John’s slightly raised its expectations for domestic samestore sales for the year to range from flat to a decrease of 1 percent. Previously, the company expected same-store sales to be flat to down 2 percent. At the end of the quarter, Papa John’s had 612 company-owned and 2,806 franchised units.
  • SPARTANBURG , S.C. — DENNY’S CORP. continued to battle falling sales in the second quarter as rising unemployment and reduced consumer confidence took a toll on customer traffic at the 1,544-unit namesake chain. For the quarter ended July 1, Denny’s reported net income of $9.3 million, or 9 cents a share, compared with profit of $3.1 million, or 3 cents a share, a year ago, when the company booked $6.4 million more in restructuring charges. Revenue fell 18.1 percent to $155.8 million. Company officials attributed the drop in revenue to soft sales and 97 fewer company-owned restaurants. Second-quarter same-store sales decreased 2.7 percent at company stores, which reflected a 4.9-percent decline in guest counts partly offset by a 2.3-percent higher average check. Same-store sales dropped 4.7 percent at franchised locations. Denny’s focused much of its value efforts in the quarter on breakfast with an Everyday Value Slam for $3.99 in June and a Grand Slamwich giveaway in April. Officials said the promotion “helped produce the strongest comp-sales track we’ve had in four years.” For the year, Denny’s reaffirmed earlier projections of continued negative same-store sales ranging between 1 percent and 3 percent at company stores and 3 percent and 5 percent at franchised restaurants. Adjusted income before taxes is expected to range between $15 million and $20 million in 2009, compared with $23.2 million last year.
  • SAN DIEGO – For the third quarter ended July 5, San Diego based JACK IN THE BOX INC. reported earnings of $32.9 million for continuing operations, up 11.53 percent from $29.5 million in the prior-year quarter. Quarterly revenues fell 3 percent to $575.7 million. The results included a pre-tax loss of about $2.4 million tied to the expected sale of low-performing Jack in the Box units, according to the company. It said company restaurant margins improved to 18.4 percent of sales, from 16.7 percent, reflecting a 3.3-percent increase in menu prices at Jack in the Box and lower commodity expenses, among other factors. Sales of company restaurants to franchisees brought in about $4 million less in the latest quarter, officials indicated. At quarter’s end, Jack in the Box had 2,199 systemwide namesake restaurants, up from 2,148 a year earlier, and its QDOBA MEXICAN GRILL system had 491 locations, for a year-over-year gain of 53 units. Third-quarter same-store sales for company-operated Jack in the Box units dropped 1 percent compared with a year-ago decrease of 0.4 percent. For Qdoba, systemwide same-store sales declined 2.8 percent, compared with an increase of 0.5 percent a year ago. For the fourth quarter, officials projected that same-store sales would decline between 2.5 percent and 4.5 percent at company-operated Jack in the Box units, and by 2 percent to 4 percent within the Qdoba system.
  • SYRACUSE,N.Y. — CARROLS RESTAURANT GROUP INC., the largest Burger King franchisee, reported Monday that same-store sales at its BK units fell 4.7 percent for its quarter ended June 2, versus the same quarter a year ago, when same-store sales rose 5.9 percent. The negative result is the latest evidence that fast-food chains are suffering from the domestic recession and reduced consumer spending just like their full-service competitors have. Carrols results also offered insight into sales trends for Miami-based BURGER KING HOLDINGS INC. The franchisor in April said it expected “flat to slightly positive” results for its latest quarter, though some analysts expect less. Burger King is expected to report its fiscal 2009 results later this month. At Syracuse-based Carrols, which also operates its own TACO CABANA and POLLO TROPICAL chains, corporate cost controls, more favorable commodity costs and lower interest expense from debt reduction helped offset the slow sales. Second-quarter net income more than doubled to $7.1 million, or 32 cents per share, from earnings of $3.3 million, or 15 cents per share, in the same quarter a year ago. Total revenue fell 3.2 percent to $203.9 million. Same-store sales fell 3.1 percent at Pollo Tropical and 3.8 percent at Taco Cabana. Carrols’ 559 restaurants include 314 Burger King units, 154 Taco Cabana restaurants and 91 Pollo Tropical locations.
  • HEATHROW, Fla. – RUTH’S HOSPITALITY GROUP INC., based here, parent of the RUTH’S CHRIS STEAK HOUSE and MITCHELL’S FISH MARKET chains, Friday said that net income fell 16 percent to $2.3 million for the second quarter ended June 28, compared with the year-ago quarter. Latest-quarter revenue fell 18 percent to $88.4 million from the same period in 2008. Quarterly same-store sales for corporate restaurants fell 23.4 percent at Ruth’s Chris, and by 9.8 percent at Mitchell’s Fish Market. The company said that lower beef costs and corporate cost controls helped profits, which even though down from a year ago, beat Wall Street expectations. Ruth’s Hospitality registered a share offering with securities regulators during the quarter.
  • OAK BROOK, Ill. — MCDONALD’S CORP. stock was downgraded on Thursday by Morgan Stanley securities analyst John Glass who said the company has a limited future upside beyond its recent highs. Other quick-service stocks with more potential include Yum! Brands Inc. and Wendy’s/Arby’s Group Inc., Glass noted. “[McDonald’s] still has much going for it,” he said, “including best-in-class sales and a nascent beverage strategy. Our downgrade is mostly a function of finding greater upside elsewhere.” McDonald’s has for nearly two years surpassed its peers in quick service and was one of just three publicly traded restaurant companies that saw its stock price rise in 2008, including PANERA BREAD CO. and BUFFALO WILD WINGS INC. So far this year, McDonald’s is off of its peak, down nearly 13 percent since January. The stock price was adjusted for a 50-cents-per-share dividend in June. Glass said in his report that McDonald’s may have limited opportunity to further expand margins and holds an increased risk of a same-store sales slowdown.
  • RICHMOND HEIGHTS,Mo. – PANERA BREAD CO., based here, Tuesday reported a 28-percent year-over-year increase in net income to $20 million, or 65 cents per diluted share, for the second quarter ended June 30. Panera officials said quarterly comparable bakery-cafe sales were off 0.7 percent at company units and down 0.2 percent at franchised locations, compared with the same 2008 period when company and franchised units had comparable-sales growth of 6.5 percent and 4.8 percent, respectively. Latest-quarter net income was reduced by 2 cents per share for the write-off of smallwares and by 2 cents per share for reserves tied to a state sales tax audit, officials said. For the twentysix weeks ended June 30, net income was $37 million, or $1.21 per diluted share, an increase of 33-percent over the same period a year earlier. Panera, which had 566 company-operated bakery-cafe restaurants as of June 30, and franchised to others another 779, said second-quarter revenue rose 3 percent to $330.8 million, compared with the same 2008 period. Revenue for the first 26 weeks rose 4 percent, compared with the prior year, to $651.5 million, the company added.
  • MINNEAPOLIS — Citing unit growth and same-store sales improvements, BUFFALO WILD WINGS reported Monday a 24.2-percent increase in second-quarter earnings, continuing the 601-unit chain’s anomalous momentum within the casual dining sector. Net earnings for the quarter ended June 28 were $7.0 million, or 39 cents per diluted share, compared to $5.6 million, or 31 cents per diluted share, in the year-earlier quarter, the company said. Same-store sales rose 2.8 percent at company restaurants and 3.7 percent at franchised locations during the quarter, and officials noted that upward trend was continuing. Officials credited the company’s focus on “building key sales opportunities,” such as the late-night daypart, as well as menu innovation, and the return of proven sales builders, such as the chain’s “Margarita Mayhem” promotion. For the quarter, revenue climbed 32.4 percent to $129.6 million year-over-year. That gain was driven in large part by a 34.6-percent hike in corporate restaurant sales fueled by higher same-store sales and the addition of 46 company stores at the end of the quarter. Also a factor was a 14-percent increase in franchise fees and royalties to $11.9 million tied to higher same-store sales and the addition of 37 franchised locations.
  • GLENDALE, Calif. — Value-oriented promotions and cost controls helped DINEEQUITY INC., the parent company of the IHOP and APPLEBEE’S NEIGHBORHOOD GRILL & BAR chains, turn a profit in the second quarter, officials said Tuesday, but discounting by competitors continues to take a toll on sales. Separately, officials also filed a shelf registration statement with the Securities and Exchange Commission that would allow the company to sell up to $200 million of common and preferred stock, as well as debt and other securities. For the quarter ended June 30, the company recorded net income of $24.8 million, or $1.09 per share, compared with a loss of $19.4 million, or $1.42 per share, a year ago. Second-quarter revenue fell 18 percent to $349.7 million, the company reported. Same-store sales dipped 0.6 percent for IHOP due to declining store traffic. Applebee’s domestic same-store sales dropped 4.3 percent for the quarter systemwide, which reflected a 4.2-percent decline at domestic franchise units and a 4.8-percent drop at company-operated locations. Guest traffic was also down at Applebee’s but was offset by a cumulative price increase of about 3 percent, the company said.
  • HUNTINGTON BEACH, Calif. — BJ’S RESTAURANTS INC., continuing to defy the odds against it as the recession lingers, on July 23 reported a 52-percent increase in profit and touted the continuing growth of the 85-unit chain. During the second quarter, BJ’s rolled out a comprehensive menu overhaul, expanded beer offerings, and tested a new kitchen display system. Three new BJ’s restaurants have opened so far this year, and another seven are under construction. For the quarter ended June 30, BJ’s reported net income of $4.4 million, or 16 cents per diluted share, compared with $2.9 million, or 11 cents per diluted share, in the prior-year quarter. Samestore sales were down 1.3 percent — reflecting a 4.3-percent decline in traffic that was offset by a 3-percent price increase — compared with an increase of 0.6 percent the same quarter last year. Revenues for the quarter were up 17 percent to $107.7 million, compared to $92.2 million the prior year.
  • CALABASAS HILLS, Calif. — THE CHEESECAKE FACTORY INC. reported a 13-percent slide in second-quarter profits last week, but officials said results were better than expected and guest traffic appears to be stabilizing. For the quarter ended June 30, the casual-dining chain reported net earnings of $16.6 million, or 28 cents per diluted share, compared ith $19.1 million, or 29 cents per diluted share, in the prior-year quarter. Consolidated same-store sales were down 3.2 percent, an improvement over the first-quarter drop of 3.4 percent. Officials said guest traffic counts were down only 3.8 percent for the quarter, compared with the previous quarter decline of 4.3 percent. By brand, the 146-unit namesake brand saw same-store sales fall 3 percent, and the 13-unit Grand Lux Café saw same-store sales fall 5.4 percent. Revenues were nearly flat for the quarter, totaling $407.9 million.
  • OAK BROOK, Ill. – MCDONALD’S CORP. Thursday said its profit for the second quarter ended June 30 totaled $1.09 billion, down 8 percent from year-ago earnings of $1.19 billion. The company said global currency translations reduced its latest-quarter earnings by 9 cents per share. Second-quarter corporate revenue fell 7 percent to $5.65 billion. Excluding the effects of currency conversion, revenue would have increased 4 percent, the company noted. It said quarterly same-store sales increased 3.5 percent in the United States and by 4.8 percent globally thanks, in part, to the chain’s new McCafe premium coffee drinks. Chief executive JIM SKINNER said McDonald’s expects “July [same-store] sales similar to or better than June,” when U.S. same-store sales grew 1.8 percent. Oak Brook-based McDonald’s operates or franchises about 31,000 locations worldwide.
  • ATLANTA – DICK HOLBROOK and SAM HADDOCK have bought out their partners in the J. CHRISTOPHER’S familydining chain, which has a new parent: J. Christopher’s Restaurants LLC. Financial terms were not disclosed. Holbrook and Haddock’s former partners, J. Christopher’s founders JEFF MCCANN and CHRIS BROGDON, will continue to operate 18 J. Christopher’s stores under a licensing agreement and have franchise-development rights for the Nashville, Tenn., area.
  • SCOTTSDALE, Ariz. — P.F. CHANG’S CHINA BISTRO INC. reported Wednesday that cost-cutting efforts helped the company book improved second-quarter earnings despite a continued decrease in sales. The company also increased its full-year earnings expectations. For the quarter ended June 28, P.F. Chang’s earned $11.6 million, or 49 cents per share, compared with earnings of $9.4 million, or 39 cents per share. Latest-quarter total revenue fell 0.6 percent to $301.4 million. Same-store sales fell 6.8 percent at the company’s P.F. Chang’s casual-dining concept and declined 0.1 percent at its Pei Wei Asian Diner fast-casual brand. The company, which operates 351 restaurants under both brands, said it was able to boost earnings mainly through reduced costs. While P.F. Chang’s said it expects negative sales for the rest of the year, it upped its earnings guidance by 15 cents per share to between $1.60 and $1.65 from continuing operations.
  • CARPINTERIA, Calif. — CARL’S JR. and HARDEE’S both saw company-store same-store sales slip during June and July, but officials with parent company CKE Restaurants Inc. on Wednesday said they nonetheless were encouraged by the success of recent product promotions. For the four weeks ended July 13, same-store sales at company-owned Carl’s Jr. restaurants were down 6.1 percent, compared with an increase of 4.9 percent for the same period last year.At Hardee’s, samestore sales dropped 3.6 percent, compared with a year-ago increase of 5.7 percent. Total revenues for company-owned units dropped by $3 million to $86.4 million for the period. CKE operates or franchises 1,205 Carl’s Jr. and 1,915 Hardee’s locations.
  • ANN ARBOR, Mich.— DOMINO’S PIZZA INC. reported a 22.4-percent drop in second-quarter profit as foreign currency conversions hurt systemwide sales gains and U.S. sales continued to suffer. A change to the company’s stock option plan also hurt corporate earnings by $4.9 million, before taxes, the company said. For the quarter ended June 14, Domino’s earned $14.5 million, or 25 cents per share, compared with earnings of $18.7 million, or 32 cents per share, in the same quarter a year ago.Total revenue fell 5.3 percent to $316.6 million, mainly on the stronger U.S. dollar, which hurts currency conversion rates and the amount of foreign royalties. Domino’s global retail receipts fell 4.7 percent, reflecting a drop of 8 percent in international markets and 2 percent in the U.S. International same-store sales rose 4.1 percent, while domestic same-store sales fell 0.7 percent. The U.S. decline was blamed on negative publicity from a viral video by employees of a Domino’s franchisee doing what chief executive DAVID BRANDON called “inappropriate handling of food.” Domino’s operates or franchises 8,873 units worldwide.
  • SEATTLE – STARBUCKS CORP. Tuesday said that for its third quarter ended June 28 it had net income of $151.5 million, versus a net loss of $6.7 million a year ago. Latest-quarter total operating expenses fell about 15 percent, mainly from reduced restructuring charges that totaled $51.6 million versus $167.7 million in the year-ago quarter, the company said. Those charges stemmed from the closures or planned closures of 800 corporate stores in the United States, the restructuring of the company’s business in Australia, and the closures of 100 corporate locations in international markets. Third-quarter total revenue fell 6.6 percent to $2.40 billion, which the company blamed on a 5-percent decline in global same-store sales. In the U.S., where there are 11,266 Starbucks Coffee locations, domestic same-store sales fell 6 percent, versus an 8-percent dip in the second quarter, the company said. Worldwide, Starbucks operates or licenses 16,729 outlets.
  • DALLAS – TRIBOX LLC, a seven-unit, Dallas area franchisee of the San Diego-based JACK IN THE BOX chain, received $12 million from GE CAPITAL, FRANCHISE FINANCE to buy 14 more Jack in the Box restaurants and refinance debt. GE said Tuesday that the deal closed in June. Neither party disclosed
  • LOS ANGELES – Krispy Kreme Doughnuts franchisee GREAT CIRCLE FAMILY FOODS LLC has exited Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the Central District of California. Great Circle, which now operates 11 Krispy Kreme units employing 240 people in Southern California, said it has restructured its operations and balance sheet. The company has agreed to a “renewed, collaborative and sustainable relationship” with franchisor KRISPY KREME DOUGHNUTS INC., which it once sued, and to further develop its market, it said. Great Circle, once one of Winston-Salem, N.C.-based Krispy Kreme’s largest franchisees with 31 stores and $64 million in annual sales, filed for bankruptcy in 2007. The Krispy Kreme chain has about 400 units.
  • LOUISVILLE, Ky.— YUM! BRANDS INC., the franchisor to Pizza Hut, KFC, Taco Bell and other quick-service brands, posted late Tuesday a 35-percent jump in second-quarter net income, driven by continued growth overseas and a one-time gain from the company’s purchase of the KFC business in Shanghai. In the United States, Yum Brands said it continued to suffer against declines in consumer spending. Domestic systemwide same-store sales fell 1 percent. While Yum no longer reports chain-specific results, it said same-store sales fell 8 percent at Pizza Hut, but were positive at Taco Bell and KFC. The recent introduction of Kentucky Grilled Chicken led to a “substantial positive turnaround” at KFC, Yum said. The company’s U.S. division was able to post an 8-percent increase in operating profit, mainly because of reduced costs. For the quarter ended June 13, Yum’s net income totaled $303 million, or 63 cents per share, versus earnings of $224 million, or 45 cents per share, in the same quarter a year ago.
  • MARYVILLE, Tenn. – RUBY TUESDAY INC., for its fourth quarter ended June 2, said profit rose to $14.4 million, from $13.9 million a year ago. Fourth-quarter revenue fell 7.1 percent to $317.3 million, mainly because the company had 49 fewer restaurants in operation versus last year, including 48 that closed in the third quarter. The operator or franchisor of 901 casual-dining restaurants worldwide said fourth-quarter same-store sales fell 3.2 percent at corporate units and 6.9 percent at domestic franchised locations. In its latest quarter, year-overyear guest traffic rose for the first time in more than a year, sales of higher-end items like lobster increased, and additional local marketing and advertising efforts drove results, the company said. For the full fiscal year, Ruby Tuesday reported a loss of $17.9 million, compared with a profit of $26.4 million a year earlier. The latest-year results included more than $73 million in impairment charges for unit closures and goodwill. Fiscal 2009 revenue fell 8.2 percent to $1.25 billion. Ruby Tuesday said it expects same-store sales for the current fiscal year to decline between 2.5 percent and 3.5 percent.
  • INDIANAPOLIS – THE STEAK N SHAKE CO., which operates or franchises 502 namesake family-dining restaurants, reported a 13.4-percent boost in customer traffic and a 5-percent bump in same-store sales for its third quarter ended July 1. In the comparable year-ago quarter, same-store sales fell 5.8 percent. The group is expected release full results next month.

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