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Financial Overview — January 2010

  • HUNTINGTON BEACH, Calif. – BJ’S RESTAURANTS INC., based here, late last week said it had preliminary, unaudited revenues of $112.6 million for the fourth quarter ended Dec. 29, up 13.4 percent from the same period a year earlier. Comparable-store sales at the casual-dining chain were off 0.20 percent in the quarter, compared to a 0.70-percent decline a year earlier, it said. For the full fiscal year, BJ’s said revenues increased 14.1 percent, to $426.7 million, as the year-over-year number of restaurants grew by 12.2 percent to 92, versus 82 in fiscal 2008. Full-year comparable store sales fell by 0.80 percent, compared with a 2008 decrease of 0.30 percent, it said. “We expect to open as many as 10 to 11 new restaurants during 2010 and have targeted an approximate 13-percent increase in our total restaurant operating weeks for the coming year,” BJ’s chairman and chief executive JERRY DEITCHLE said.
  • DEERFIELD, Ill. – COSI INC., parent of the 145-unit Cosi sandwich and salad chain, completed last week a shareholder rights offering that will raise about $5 million. Cosi will issue 10 million shares to stockholders that exercised their privileges, and executive officers and outside directors are expected to purchase about 286,173 shares in a separate private placement. “Given the current state of the economy, we feel it is important to shore up our financial resources and provide some resources to continue to improve our product offering and broaden our customer reach,” said Cosi chief executive JIM HYATT.
  • MARYVILLE, Tenn. — RUBY TUESDAY INC., parent of the 672-unit casual-dining chain, reported this week that it swung to a profit in its latest quarter from a year-ago loss with help from better sales and traffic trends. The improved performance, according to the company, is a result of Ruby Tuesday’s brand reimaging, which includes new menu items, a new restaurant design, revamped bar areas and a focus on service. The chain’s repositioned branding effort began in 2007 and was completed about a year ago. For the three months ended Dec. 1, the chain boasted an increase of 1.8 percent in year-over-year guest traffic, its third consecutive quarter of positive guest trends. Same-store sales remained negative, down 1.7 percent at corporate locations and down 4.7 percent at franchised units. Ruby Tuesday earned $400,000, or 1 cent per share, for the quarter, compared with a net loss of $37.4 million, or 73 cents per share, for the same quarter a year ago. The year-ago quarter included charges of $56.1 million, or 71 cents per share, for the restructuring of the company’s property portfolio and the write-off of its goodwill. Revenue for the second quarter fell 5.6 percent to $273.5 million, mainly because of the closures of 43 units and a same-store sales drop.
  • CARPINTERIA, Calif. – Winter weather and the continued economic slump hurt sales at CKE RESTAURANTS INC., the company said Wednesday, leading to same-store sales decreases of 8.9 percent at Carl’s Jr. and 3.2 percent at Hardee’s.Those results reflected a worsening sales picture for both chains compared with their November numbers. CKE operates or franchises 1,221 Carl’s Jr. locations and 1,913 Hardee’s units.
  • OKLAHOMA CITY — SONIC CORP. said Tuesday it has fallen victim to the high levels of unemployment and the deep discounting in the fast-food sector during its November-ended first quarter, forcing it to reduce expectations for the full year. The parent company to the drive-in chain with more than 3,500 locations posted double-digit declines in both revenue and profit for its first quarter, and now expects earnings per share for its August-ending year to remain unchanged from 2009, or at about 72 cents per share. Prior guidance had called for 2010 per-share earnings to increase between 10 percent and 12 percent. Sonic said its reduced guidance is based on expectations of a systemwide same-store sales decline of between 4 percent and 6 percent compared with prior expectations for flat sales. For its quarter ended Nov. 30, Sonic posted a 13-percent decline in net income to $6.2 million, or 10 cents per share, from $7.1 million, or 12 cents per share, in the same quarter last year. Latest-quarter revenue fell 26 percent to $136.5 million, which reflected both the sale of 205 corporate restaurants during 2009 and negative same-store sales. Systemwide same-store sales fell 6.5 percent and reflected drops of 6 percent at franchised locations and 9.1 percent at drive-ins in which Sonic holds a majority ownership.
  • HEATHROW, Fla. – RUTH’S HOSPITALITY GROUP INC.’s share price closed about 4 percent down, at $2.32, in after-hours trading Monday, following the company’s disclosure that sales for the fourth quarter ended Dec. 28 fell 10.5 percent to $83.7 million. Earlier, RHGI saw its share price climb 15.79 percent to end regular trading at $2.42 after analysts at PIPER JAFFRAY upgraded the stock’s rating from “underweight” to “neutral.” The operator of 86 full-service restaurants and franchisor of 65 said the quarterly sales decline was fueled by comparable-store sales decreases of 11.2 percent at company Ruth’s Chris Steakhouse units – an improvement over the 18.7-percent drop in 2008’s fourth period – and 2.6 percent at its Mitchell’s Fish Market division. RHGI said it would release audited final results and comment on 2009 performance and 2010 strategic plans in February. Chief executive MIKE O’DONNELL said the company expected “to meet targets for cost of goods sold, general and administrative expenses and capital expenditures.”
  • NEW YORK – Unlike in 2008, when the majority of restaurant stocks covered by the NATION’S RESTAURANT NEWS STOCK INDEX saw annual price declines, the majority of the 58 public restaurant firms tracked posted increases in 2009. Some stocks more than doubled in value from historic lows, such as those of Caribou Coffee Co., Ruby Tuesday Inc. and O’Charley’s Inc. Other stocks recorded 100-percent-plus price gains, including those of Carrols Restaurant Group Inc., Steak n Shake Co., Starbucks Corp., The Cheesecake Factory Inc. and DineEquity Inc. The largest price decliners included shares of Western Sizzlin’ Corp., Burger King Holdings Inc. and Sonic Corp. Read the 2009 Top 10 winners and losers and analysts’ insights at http://tinyurl.com/nrn-stocks.
  • HOUSTON – LUBY’S INC., operator of 95 cafeterias and contract feeding operations, said that for its fiscal 2010 first quarter ended Nov. 18 its net loss widened by about 70 percent to $3.7 million, or 13 cents per diluted share, compared with a loss of 8 cents a share a year ago. The Houston company, which in October closed 25 underperforming restaurants, said late last week that revenues from continuing operations were down 13.8 percent to $51.7 million, as quarterly same-store sales fell 13.3 percent.
  • ORLANDO, Fla. —DARDEN RESTAURANTS INC. reported Thursday a nearly flat second-quarter profit of $60.3 million, compared with year-ago earnings of $59.7 million. Its per-share earnings remained at 43 cents. The company’s revenue fell slightly to $1.64 billion for the quarter ended Nov. 29, versus revenue of $1.67 billion in the second quarter a year ago. Domestic same-store sales fell 1.4 percent at OLIVE GARDEN, 8.4 percent at RED LOBSTER and 6.2 percent at LONGHORN STEAKHOUSE, the company’s largest chains. Darden Restaurants, which in total operates about 1,789 restaurants, also owns The Capital Grille and Bahama Breeze chains. Same-store sales fell 14.2 percent and 6.1 percent at those chains, respectively.
  • SCOTTSDALE, Ariz. — The board of directors at P.F. CHANG’S CHINA BISTRO INC. has authorized a share repurchase program that will allow the company to buy up to $100 million in its common stock through Dec. 15, 2011. The company said it would use cash on hand for the repurchase program, but that it would also need to amend its credit agreement, which had restricted future share repurchases. The details of P.F. Chang’s credit amendments were not outlined as of press time. On Thursday, J.P. Morgan securities analyst JOHN IVANKOE said the performance of P.F. Chang’s namesake brand was running close to expectations for the fourth quarter, which means still negative sales trends but improving costs. The chain also is expected to open seven units this year and five more next year.
  • SCOTTSDALE, Ariz. — STAR BUFFET INC. reported Wednesday a third-quarter net loss that widened on closed restaurants, sales drops and impairment charges. For the third quarter ended Nov. 2, Star Buffet posted a net loss of $866,000, or 27 cents per share, compared with a year-ago loss of $18,000, or one cent a share.Revenue fell 25.1 percent to $15.6 million in the third quarter, which the company blamed on a $2.1 million decrease in sales from eight closed restaurants and a $3.4 million drop in same-store sales. The Scottsdale based company operates several proprietary and franchised concepts, including HomeTown Buffet, JB’s restaurants, KBOB’S Steakhouses, Casa Bonita Mexican restaurants and Pecos Diamond Steakhouse. Star Buffet ended the quarter with 62 restaurants in operation and six non-operating units.
  • DALLAS – Dave & Buster’s Inc., with 56 casual-dining restaurants, this week said that for the third quarter ended Nov. 1 it had a net loss of $5.5 million, versus a loss of $5.7 million a year earlier. Total revenues were off 2.1 percent to 117.2 million, officials said, as a 7.4-percent decrease in same-store sales was largely offset by sales contributions from six restaurants opened since 2008’s third quarter.
  • LOUISVILLE,Ky. – PAPA JOHN’S INTERNATIONAL INC. said 2010 likely will remain challenging for the third-largest pizza brand, with same-store sales expected to range from an increase of 1 percent to a decrease of 1 percent. Through 2009, Papa John’s domestic same-store sales have remained basically flat from year-ago levels. Papa John’s said its total revenues should increase in 2010 mainly because of expected overall unit growth of between 140 and 180 restaurants, including between 40 and 60 net openings in the U.S.; a 0.25-percent increase in the domestic sales royalty rate to 4.75 percent; and anticipated commodity cost increases that will lead to higher commissary sales. It said it is forecasting a 20- to 25-percent increase in earnings per share, which are expected to total between $1.70 and $1.90, excluding the impact of its consolidated and franchisee-owned cheese purchasing company. Louisville-based Papa John’s and its franchisees operate more than 3,400 units worldwide.
  • WINSTON-SALEM, N.C. — KRISPY KREME DOUGHNUTS INC. narrowed its third-quarter net loss on reduced impairment charges, lower interest expense and positive same-store sales, which the company has been able to log each quarter this year. For the quarter ended Nov. 1, Krispy Kreme posted a net loss of $2.4 million, or 4 cents per share, compared with a year-ago loss of $5.9 million, or 9 cents per share. A year ago, Krispy Kreme booked about $345,000 in lease termination and impairment charges, as well a charge of about $900,000 related to a loan to a franchisee. In the latest quarter, impairment charges were reduced to $109,000. Revenue for third quarter totaled $83.6 million, down 11 percent from the same quarter a year ago.The reduction is mainly because of a reduced number of corporate locations. Krispy Kreme has been reducing its domestic store count for years through the closure of underperforming unit and a near halt to expansion. Third quarter same-store sales, however, increased 5.1 percent, following gains of 5.9 percent in the second quarter and 2.1 percent in the first quarter. The upswing is based on comparisons to a year ago, when the chain still was posting negative comparable sales. Krispy Kreme and its franchisees operate 563 locations worldwide.
  • OAK BROOK, Ill. – For the second straight month, MCDONALD’S domestic same-store sales slipped slightly compared with a year earlier, as prolonged high unemployment has eaten into budgets for core quick-service users, especially at breakfast. While global same-store sales for Oak Brook-based McDonald’s rose 0.7 percent in November, led by a 2.5-percent uptick in its European division, same-store sales at the chain’s restaurants in the United States fell 0.6 percent, compared with last November. Same-store sales decreased 1 percent in the Asia/Pacific, Middle East and Africa division. JIM SKINNER, chief executive of the chain’s parent, McDonald’s Corp., said its strategy to diversify the menu would pave the way for a recovery in sales.The company operates or franchises more than 32,000 restaurants worldwide.
  • CARPINTERIA, Calif. – CKE RESTAURANTS INC. Tuesday said its net income for the third quarter ended Nov. 2 rose 14.8 percent to $6.2 million, or 11 cents per diluted share, compared with the same period a year ago. The improvement reflected, among other factors, favorable commodity costs and lower occupancy and interest expenses, company officials indicated. However, CKE said revenues decreased 3.7 percent to $324.2 million despite additional system restaurants, as same-store sales at company units fell 5.2 percent at Carl’s Jr. and 1.8 percent at Hardee’s. Chief executive ANDREW PUZDER blamed deteriorating sales on high unemployment among the young males targeted by the company and in its core California market. He said CKE would attempt to restore restaurant volumes by promoting premium sandwiches and healthier menu items and by launching a new line of entrée salads at Carl’s Jr. later this month.At the end of the quarter, Carpinteria-based CKE operated or franchised to others 1,221 Carl’s Jr. locations and 1,913 Hardee’s stores.
  • LOUISVILLE,Ky. – YUM! BRANDS INC., operator and franchisor of KFC, Pizza Hut, Taco Bell, Long John Silver’s and A&W, Friday said same-store sales for the December-ending quarter are expected to decline 3 percent in mainland China, typically the company’s strongest region, and fall 1 percent in other international markets. Same-store sales are expected to drop 8 percent in the U.S.“Our biggest challenge continues to be driving same-store sales growth in the difficult consumer environment,” chief executive DAVID NOVAK said. “All indications are that 2010 will be another challenging year …”The company nonetheless reaffirmed its guidance for 2009 earnings per share, which it said will increase by 12 percent from 2008, excluding special items. More than 1,400 new restaurants in the Yum Restaurants International division and the China division drove earnings growth. Favorable commodity costs, a lower tax rate and productivity gains also helped results,Yum said. Yum operates or franchises more than 36,000 restaurants in 110 countries.
  • IRVINE, Calif. – DIEDRICH COFFEE INC. directors reaffirmed in Friday regulatory filings their belief that the Dec. 1 all-cash acquisition offer of $35 per share by suitor GREEN MOUNTAIN COFFEE ROASTERS INC. is superior to a rival $32.50 cash-and-stock offer by PEET’S COFFEE & TEA INC. Emeryville, Calif.-based Peet’s has until 5 p.m. today to counter Green Mountain’s offer, Diedrich said.
  • MIAMI – BENIHANA INC. Monday reported a net loss of $839,000 for its fiscal second quarter ended Oct. 11, compared with profit of nearly $2 million a year ago. It cited a 9.9-percent decline in same-store sales and costs tied to restaurant remodels and menu changes at its flagship teppanyaki chain. Revenue fell 0.9 percent to $69.3 million. The company said the weak results forced it to renegotiate its credit agreement with Wachovia, which waived Benihana’s noncompliance but reduced the amount it can borrow through 2011 from $60 million to $40.5 million. Benihana, which said it hired Chris Ames as its new chief operating officer, operates 98 teppanyaki and sushi restaurants and franchises 22 teppanyaki units to others.
  • LEBANON, Tenn. – CRACKER BARREL OLD COUNTRY STORE INC., for the first quarter of fiscal 2010 ended Oct. 30, said net income rose 40.5 percent to $18.0 million, or 78 cents per diluted share, versus $12.8 million, or 57 cents a share, a year ago. Reporting Tuesday, the Lebanon company credited the gain to a 16.7-percent improvement in operating income and lower interest expense. It said quarterly revenue grew 1.3 percent to $581.2 million, as comparable-restaurant sales rose 0.6 percent. Menu prices climbed, on average, 2.7 percent, officials said, and same-store guest traffic dropped 1.4 percent. Cracker Barrel ended the quarter with 591 restaurants, up 10 from the same 2008 period.
  • EMERYVILLE, Calif. – PEET’S COFFEE & TEA INC., based here, Sunday upped its Nov. 2 bid for DIEDRICH COFFEE INC. from $26 per share to $32 a share in cash and stock. The move came after GREEN MOUNTAIN COFFEE ROASTERS INC. late last week bettered Peet’s initial offer with a $30 cash-per-share proposal. Peet’s latest offer to Irvine, Calif.-based Diedrich raises the transaction value to about $264 million. The market reacted by pushing Diedrich’s stock price up 29.47 percent from its Friday close to $33.65 a share at the end of trading Monday. Waterbury, Vt.-based Green Mountain’s share price rose 0.66 percent to $65.44, while Peet’s price dropped 13 percent to $33.06. Peet’s operates 195 coffee bars and supplies grocers, foodservice companies and office-coffee purveyors.
  • SAN DIEGO – JACK IN THE BOX INC., based here, this week said same-store sales for the fourth quarter ended Sept. 27 dipped 6.0 percent at company operated Jack in the Box restaurants and 3.1 percent for the Qdoba Mexican Grill system. It forecast fiscal 2010 same-store sales erosion of from 3 percent to 7 percent at Jack in the Box and from 3 percent to 5 percent at Qdoba. The company, which operated or franchised 2,212 Jack in the Box restaurants and 510 Qdoba locations at Sept. 27, said fourth quarter net earnings grew 51.05 percent to $40.6 million, or 70 cents per diluted share, on a 7.27-percent decrease in revenue to $540.3 million. Proceeds from the sale of company restaurants to franchisees, a greater number of company Qdoba units and better cost controls contributed to earnings growth, officials indicated.
  • TAMPA, Fla. – OSI RESTAURANT PARTNERS LLC reported a loss of $20.2 million for the third quarter ended Sept. 30, compared with a loss of $46.6 million a year earlier. It said lower-priced offerings, including $9.95 meals, are building traffic at Outback Steakhouse. Revenue fell 11.3 percent to $841.8 million at OSI, which, at quarter’s end, operated or franchised 971 Outback restaurants, 233 Carrabba’s Italian Grill units, 152 Bonefish Grill locations, 64 Fleming’s Prime Steakhouse & Wine Bar sites and 58 branches of other concepts. Systemwide quarterly same-store sales fell 11.1 percent at Outback, 7.5 percent at Carrabba’s, 5.8 percent at Bonefish Grill and 18 percent Fleming’s. OSI has added chicken, beef and pork dishes at the seafood-oriented Bonefish, which has helped trim same-store sales declines, the company said.
  • MELVILLE, N.Y – SBARRO INC., operator or franchisor of 1,056 Italian quick-service restaurants worldwide, Tuesday detailed a net loss of $24.5 million for the third quarter ended Sept. 27, compared with a loss of $1.2 million in the 2008 period. The loss, Melville-based Sbarro said, included goodwill and other intangible asset impairment charges of $31.5 million offset by an income tax benefit of $9.8 million. About $22 million of the impairment charge related to the company’s trademark, officials indicated. They said revenue dipped 6.96 percent to $85.5 million, primarily as a result of comparable-store-sales declines of 5.2 percent at company restaurants, 7.1 percent at domestic franchised locations and 27.3 percent at overseas franchised outlets. The decreases in comparable-unit sales largely reflect lower mall traffic throughout the United States as a result of the economic downturn, Sbarro said.
  • NEW YORK – Activist hedge-fund manager WILLIAM ACKMAN, through his PERSHING SQUARE CAPITAL MANAGEMENT fund based here, has acquired a 23.7-percent stake in LANDRY’S RESTAURANTS INC. and will oppose the company’s $1.2 billion buyout deal, U.S. Securities & Exchange Commission filings indicate. On Nov. 3, the Landry’s board accepted a buyout offer from company chairman and chief executive TILMAN FERTITTA for $14.75 per share, which values the Houston company at about $238 million. The remainder of the deal value is based on debt. Fertitta owns more than 55 percent of Landry’s shares, but those shares will not be counted in a vote about the buyout. In other Landry’s developments last week, shareholder Ralph Biancalana filed a lawsuit in district court of Harris County, Texas, seeking class-action status and claiming that Fertitta’s buyout bid was “unfair and grossly inadequate.” Landry’s owns such chains as Landry’s Seafood House, Saltgrass Steak House, Chart House and Rainforest Cafe as well as hotel, entertainment and casino properties.
  • COLUMBUS, Ohio – For the second quarter ended Oct. 23, BOB EVANS FARMS INC. reported net income of $15.5 million, or 50 cents per share, up 36.5 percent from year-ago net income of $11.3 million, or 37 cents a share. A $897,000 decline in interest expense contributed to the gain. Bob Evans produces pork sausage and convenience foods and operates 570 namesake family-dining restaurants and 144 casual-dining Mimi’s Cafe outlets. Second quarter samestore sales fell 2.8 percent at Bob Evans and slipped 6.8 percent at Mimi’s Cafe. Revenue fell 2.4 percent to $424.8 million, which reflected a 3.3-percent slide in the company's restaurant sales and 1.6-percent uptick in food product sales. For fiscal 2010, Bob Evans said it expect same-store sales to fall 3 percent to 4 percent at its namesake chain and to decline 6 percent to 7 percent at Mimi's Cafe.
  • CARPINTERIA, Calif. – CKE RESTAURANTS INC. Wednesday said that for the third quarter ended Nov. 2 same-store sales fell 5.2 percent at its Carl’s Jr. chain and declined 1.8 percent at its Hardee’s division. The company, which will release full results Dec. 8, blamed high unemployment in core markets and deep discounting by competitors for deteriorating unit sales. Carpinteria-based CKE operates or franchises 1,212 Carl’s Jr. and 1,915 Hardee’s restaurants.
  • OAK BROOK, Ill. – MCDONALD’S domestic same-store sales for October dipped 0.1 percent compared with a year earlier, marking the Oak Brook-based chain’s first negative U.S. result since March 2008. Global same-store sales rose 3.3 percent in October, versus growth of 8.2 percent in October 2008, officials said. McDonald's executives Oct. 22 said domestic same-store sales in October would be flat to slightly negative, due in large part to difficult comparisons, as they had risen 5.3 percent a year earlier, as well as unseasonably cold weather early in the month. The global same-store sales increase at McDonald’s, which operates or franchises about 32,000 restaurants worldwide, was led by a 6.4-percent jump in Europe.

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