Financial Overview — February 2010
SAN ANTONIO – The STEAK N SHAKE CO., which is based here and led by investor SARDAR BIGLARI, returned to a profit in its first quarter and said it planned to change its name to Biglari Holdings Inc. The company earned $5.5 million, or $3.82 per share in the quarter ended Dec. 23, compared with a year-ago loss of $3.4 million, or $2.43 per share. Revenue rose 13 percent to $147.6 million. The parent of the 485-unit Steak n Shake chain said its planned name change to Biglari Holdings would reflect its new direction as a diversified holding company and would “eliminate confusion among the activities of the holding company and those of our wholly-owned subsidiary, Steak n Shake Operations Inc.” The company has said it plans to acquire an insurance firm and WESTERN SIZZLIN, which like Steak n Shake was taken over by Biglari.- MIAMI — BURGER KING HOLDINGS INC. said Thursday it expects to offer more value promotions like its controversial $1 double cheeseburger as it reported a 13.3-percent jump in second-quarter profit. While Burger King franchisees have sued over the six-month $1 double cheeseburger offer, saying they were losing money on the promotion, the company said it helped drive traffic to its stores. For the quarter ended Dec. 31, Burger King’s net income rose to $50.2 million, or 37 cents a share, from $44.3 million, or 33 cents a share, in the same period last year. Latest-quarter revenue rose 1.8 percent, to $645.4 million on the strength of new restaurant openings and favorable currency translations, Burger King said. However, the more-than 12,000-unit burger brand continued to feel the effects of a weak economy. Global samestore sales declined 2 percent in the second quarter, compared with an increase of 2.9 percent in the same period last year. In the United States and Canada, second-quarter same-store sales fell 3.3 percent. In addition to more value promotions, officials said Burger King would look to build sales with new premium products, like the Steakhouse XT burger, which launches nationally this month.
NASHVILLE,Tenn. — While consumer pressures tied to the recession pushed fourth-quarter sales into negative territory at the three chains of O’CHARLEY’S INC., its namesake brand and STONEY RIVER LEGENDARY STEAKS chain posted their first year-to-year traffic increases in more than three years. The company also posted a narrowed net loss of $15.2 million, or 72 cents per share, for the quarter ended Dec. 27, versus a loss of $68.2 million, or $3.34 per share, in the same quarter a year ago. The improvement was mostly because of year-ago charges, when O’Charley’s booked more than $60 million in impairment for goodwill and restaurant closures. Latest-quarter revenue declined 6.9 percent to $188.9 million, the result of consumers cutting back on spending, O’Charley’s officials said. The company, which operates or franchises 368 restaurants under the O’Charley’s, Stoney River Legendary Steaks and NINETY NINE RESTAURANTS casual-dining brands, had expected sales of between $190 million and $195 million. Still, the company was able to post traffic increases from a year ago. Same-store sales stores slid 7.3 percent at corporate O’Charley’s units, declined 6.5 percent at Ninety Nine restaurants and plummeted 10.3 percent at Stoney River.- LOUISVILLE, Ky. – Sales and profits in China and other overseas markets offset YUM! BRANDS INC.’s weakness in the United States, helping the company post a 6-percent increase in fourth-quarter net income. For the fourth quarter ended Dec. 26, Louisville-based Yum earned $216 million, or 45 cents per share, compared with earnings of $204 million, or 43 cents per share, in the same 2008 quarter. Latest quarter revenue totaled $3.37 billion, a 1-percent decline from a year ago, which was attributed to negative effects from foreign currency exchange rates and refranchising efforts that reduced the number of corporate restaurants. For the full year, the company earned $1.07 billion, or $2.22 per share, on revenue of $10.84 billion. A year earlier, Yum earned $964 million, or $1.96 per share. International development continued at a strong pace with 1,467 new restaurants opened in 2009, including 509 new units in mainland China and 898 new units in Yum’s other overseas markets. Total system sales growth for the fourth quarter totaled 8 percent in mainland China and 2 percent in Yum’s international division, but was offset by a 7-percent decline in the United States. The sales results refl ected a same-store sales decline of 8 percent in the fourth quarter for U.S. operations, including declines of 5 percent at Taco Bell, 8 percent at KFC and 12 percent at Pizza Hut. To turn around U.S. operations, Yum chief executive DAVID NOVAK said the company is “aggressively developing incremental sales layers including breakfast, new beverages and expanded protein options.” Yum Brands operates or franchises more than 37,000 restaurants worldwide.
- ATLANTA – CHICK-FIL-A reported an 8.6-percent jump in 2009 systemwide sales on the strength of 83 new restaurants and positive same-store sales. The 1,480-unit chain posted sales of $3.2 billion in 2009, the first time it surpassed the $3 billion mark, Chick-fil-A said Tuesday. Samestore sales increased 2.5 percent in 2009. For 2010, the Atlanta-based chain said, it plans to open 78 new locations.
- CARPINTERIA, Calif. – CKE RESTAURANTS INC., based here, Wednesday said that for the four weeks ended Jan. 25, and the final month of the company’s 2010 fiscal year, same-store sales fell 9 percent at its Carl’s Jr. chain and 2.8 percent at its Hardee’s group. For the full fourth quarter, also ended Jan. 25, same-store sales fell 8.7 percent at Carl’s Jr. and 2.5 percent Hardee’s. Fourth quarter revenue totaled $236.8 million, down 5.43 percent from $250.4 million a year earlier. CKE operates or franchises 1,221 Carl’s Jr., and 1,913 Hardee’s restaurants.
- CARLSBAD, Calif. – RUBIO’S RESTAURANTS INC. received a letter late last week with an increased buyout offer of $85 million from investor ALEX MERUELO and private-equity firm LEVINE LEICHTMAN CAPITAL PARTNERS, the team that offered $80 million last October. According to Securities and Exchange Commission filings, Rubio’s had yet to respond to the latest offer, which totals $8.50 per share. Rubio’s rejected the October proposal, at $8 per share, saying it was not in the best interest of shareholders. Carlsbad-based Rubio’s operates or franchises about 195 Rubio’s Fresh Mexican Grill restaurants. Its stock price closed at $7.77 Tuesday.
- OAK BROOK, Ill. – MCDONALD’S CORP., based here, Friday reported better-than-expected fourth-quarter profit, released full-year results and noted that January global comparable- store sales trends remain “positive.” Globally, systemwide same-store sales grew 2.3 percent during the fourth quarter, company officials indicated. In the United States, same-store sales declined 0.1 percent in October and 0.6 percent in November, before rising 1 percent in December. Global samestore sales for the full year rose 3.8 percent, reflecting gains of 2.6 percent in the United States, 5.2 percent in Europe and 3.4 percent in the Asia-Pacific, Middle East and Africa division. For the Dec. 31-ended fourth quarter, McDonald’s earned $1.22 billion, or $1.11 per share, an increase of 23 percent over year-ago earnings of $985.3 million, or 87 cents per share. Revenue for the fourth quarter totaled $5.97 billion, a 7-percent increase from the same quarter a year earlier. For the full year, McDonald’s earned $4.55 billion, or $4.11 per share, versus 2008 earnings of $4.31 billion, or $3.76 per share. Fiscal 2009 total revenue fell 3 percent to $22.74 billion, reflecting a 7-percent decline in sales at U.S. corporate locations mainly because of refranchising efforts. McDonald’s said its return to positive territory was aided by heavy advertising of its expanded Dollar Menu and rollouts of McCafé espresso drinks and Angus Third Pounder burgers. At Dec. 31, it operated or franchised 32,478 restaurants worldwide, up 1.6 percent from ‘08.
- Early fourth-quarter sales reports suggest unemployment and anemic consumer spending have continued to hamper sales growth for restaurant chains. With two investor conferences last week, a number of restaurant companies released preliminary sales reports for the final quarter of 2009. Although many reported gains in total revenue from new restaurant openings, declines in same-store sales continued to stain companies’ results. Analysts had largely hoped to see some samestore sales gains in the last quarter of the year because of easy comparisons to the end of 2008. That optimism has faded a bit given the still negative nature of year-over-year sales declines seen in many of last week’s preliminary reports. Even fastfood chains — the lone stalwarts of sales growth in much of the past two years — reported drops in same-store sales. CKE RESTAURANTS INC. reported a 6.5 percent drop in its December same-store sales, for example. SONIC CORP. reported an identical drop in same-store sales for its fiscal first quarter, which ended in November. Still, there were a few positive signs. RUBY TUESDAY INC. said its guest traffic rose year-over-year in its fiscal second quarter. AFC ENTERPRISES INC., which operates the POPEYES LOUISIANA KITCHEN chain, reported an improved dip of 1 percent in its fourth quarter compared to a drop of 2.1 percent in last year’s fourth quarter. Most analysts expect the prevalence of lower menu prices and the focus on value to remain cornerstone for industry operators in 2010, at least until unemployment rates begin to recede and consumers begin to feel more confident in the strength of the economy. An industry uptick most likely won’t come until later in the year, they said.For a selection of results including reports from BENIHANA INC., CALIFORNIA PIZZA KITCHEN and EINSTEIN NOAH RESTAURANT GROUP INC., see www.NRN.com.
- RICHMOND HEIGHTS,Mo. — Citing stronger than anticipated quarterly comparable-store-sales growth at company restaurants, PANERA BREAD CO., based here,Wednesday raised its targeted earnings per diluted share for the fourth quarter ended Dec. 29 to 94 cents to 95 cents a share. That is up from previous estimates of 85 cents to 87 cents a share. The operator and franchisor of 1,380 bakery-cafe restaurants added that for the first 21 days of the January 2010 fiscal month comparable-store sales at company locations were up 9.4 percent compared with the same period a year earlier. “Our 7.4-percent growth in comparable bakery-cafe sales in the fourth quarter, capped by comparable bakery-cafe sales growth in excess of 9 percent in December and in January, to date, validates our commitment to invest in our business to benefit the customer,” Panera chairman and chief executive RON SHAICH said. The company said it will update its fiscal 2010 targeted earnings per share when it releases full fourth quarter results Feb. 11.
- CALABASAS HILLS, Calif. – THE CHEESECAKE FACTORY INC., for the fourth quarter ended Dec. 29, said systemwide samestore sales fell 0.9 percent from a year ago when the chain posted a 7.1-percent decline. The Cheesecake Factory had previously forecast a same-store sales slide between 2 percent and 3 percent. By concept, the company’s namesake brand posted a same-store sales decline of 0.7 percent for the fourth quarter, and Grand Lux Café’s same-store sales fell 3.9 percent. Revenues for the quarter totaled $401 million, compared with $400 million in the same year-ago period. Full results are expected to be released Feb. 11 by the company that operates 146 namesake restaurants, as well as 13 locations of Grand Lux Café and one RockSugar Pan Asian Kitchen.
- LAKEWOOD. Colo. – EINSTEIN NOAH RESTAURANT GROUP INC., based here, this week said comparable-store sales at company bakery-cafe units declined 1.8 percent for the fourth quarter ended Dec. 29, compared with a 3.3-percent drop in the same 2008 period.The company that operates, franchises or licenses approximately 685 Einstein Bros. Bagels, Manhattan Bagel and Noah’s New York Bagels locations said quarterly revenues were down slightly to $103.7 million from $103.9 million a year earlier. Excluding any possible impairment charges, it said, it expects final results to be reported later to include earnings of 22 cents to 23 cents per diluted share, versus 36 cents a share in 2008.
- ATLANTA — AFC ENTERPRISES INC., parent of POPEYES LOUISIANA KITCHEN, said increased value offerings and a better advertising strategy helped the 1,943-unit chicken chain post improved sales in its latest quarter and fiscal year. Popeyes’ domestic same-store sales fell 1 percent for the fourth quarter ended Dec. 27, compared with a 2.8-percent decline a year ago. Global same-store sales declined 1 percent in the fourth quarter, compared with a year-earlier drop of 2.1 percent. However, international same-store sales took a dive, falling 0.8 percent in the fourth quarter, compared with an increase of 4.1 percent a year ago, AFC said. For the full year, global same-store sales rose 0.7 percent, compared with a decline of 1.7 percent in 2008.