Financial Overview — March 2010
CARPINTERIA, Calif. CKE Restaurants Inc. reported mixed results for its two brands in February, with winter weather taking a toll at Hardee's but new products helping sales at Carl's Jr. Blended same-store sales fell 4.2 percent for the four weeks ended Feb. 22, compared with a drop of 0.6 percent the same period last year, said CKE, which recently agreed to a $918 million acquisition offer from a private-equity firm. Carl’s Jr. saw same-store sales trends improve, with a drop of 2.6 percent in February, compared with a 3.6-percent decrease a year ago. CKE credited strong sales of the Grilled Cheese Bacon Burger and the new line of Grilled Chicken Salads for the improvement. At Hardee’s, same-store sales dropped 6.2 percent, compared with a 3.2-percent increase the same period last year. Andrew Puzder, CKE's chief executive, blamed the difficult comparisons as well as severe winter weather in the Midwest and Southeast, Hardee’s core markets. “We believe Hardee’s sales will benefit in the coming months from the launch and advertising campaign for the Grilled Cheese Bacon Burger,” said Puzder. “Regardless of when the overall economy turns around, we remain steadfastly focused on protecting our brand image for the long run, while trying to grow same-store sales in the short run.” Revenues declined almost 2 percent at Carl’s Jr. to $46 million and dropped about 6 percent at Hardee’s to $34.7 million for the period.- GLENDALE, Calif. – IHOP and Applebee’s parent DINEEQUITY INC., based here, for the fourth quarter ended Dec. 31 reported a net loss of $48.2 million, or $2.84 per diluted share, compared with a year-earlier loss of $136.9 million, or $8.15 a share. For the full year, the company said, it had net income of $92 million, or 55 cents a share, versus a fi scal 2008 loss of $169.2 million, or $10.09 a share. The quarter and full year results were impacted by impairment charges primarily related to the write down of Applebee’s intangible assets of $98.6 million and $170.7 million for the fourth quarter of 2009 and 2008, respectively, DineEquity explained, and of $105.1 million and $240.6 million for the full year 2009 and 2008, respectively. Quarterly revenues were off -0.57 percent on a year-over-year basis, to $355.2 million, and decreased by 12.4 percent, to $1.41 billion, for fi scal 2009 versus fi scal 2008. Domestic systemwide same-store sales fell by 4.5 percent for the fourth quarter and the year at Applebee’s, and dipped 3.1 percent and 0.8 percent for the quarter and year, respectively, at IHOP. At year’s end, DineEquity operated, franchised or licensed 1,456 IHOP and 2,008 Applebee’s restaurants.
- ATLANTA – WENDY’S/ARBY’S GROUP INC. reported a net loss of $13.6 million, or 3 cents per share, for the fourth quarter ended Jan. 3, compared with a loss of $393.2 million, or 84 cents a share, a year earlier. After-tax charges totaled 10 cents a share in the latest quarter, compared with 89 cents a share in charges in the year-ago period. Fourth quarter revenue rose slightly to $900.9 million and reflected the impact of an additional week, Atlanta-based Wendy’s/Arby’s said. Wendy’s posted a 3-percent decline in North American same-store sales, compared with an 11-percent drop at Arby’s. Company officials said value would be a major focus at both brands this year, especially at Arby’s, which has expanded its $1 value menu to more than 2,500 units. They said they expect to spend about $165 million in 2010 to remodel 100 stores at each brand and open 12 corporate Wendy’s locations. The company operates or franchises 6,541 Wendy’s and 3,718 Arby’s restaurants.
- CHICAGO – MORTON’S RESTAURANT GROUP, for the Jan. 3-ended fourth quarter, had a net loss of $66.9 million, or $4.21 per share, versus a loss of $7.6 million, or 48 cents per share, in the prior year. It said the latest quarter loss reflected charges related to impaired assets, the settlement of wage-and- hour claims and severance for former chief executive THOMAS J. BALDWIN. Morton’s reported fourth-quarter revenue fell 9.4 percent to $79.2 million, due in large part to an 11.6-percent decrease in same-store sales. Officials said same-store sales began to increase modestly in December 2009, leading them to forecast a 2-percent increase in 2010 same-store sales. For the full year, Morton’s had a net loss of $79.6 million, or $5.01 per share, compared with a loss of $67.7 million, or $4.21 per share, in fiscal 2008. Full-year revenue fell 14.7 percent to $281.1 million, the operator of 76 steakhouses said, mostly due to a 19.5-percent decrease in same-store sales.
ANN ARBOR, Mich. – DOMINO’S PIZZA, which revamped its pizza in late December, said it is carrying positive sales and traffic momentum into 2010 following fourth-quarter bumps in same-store sales and guest counts. Net income for the Jan. 3-ended fourth quarter was $23.6 million, or 41 cents per share, compared with $11.0 million, or 19 cents a share, a year ago. Revenue rose 8.1 percent compared with a year earlier, to $462.9 million, due in large part to fi scal 2009’s 53rd week and growth in same-store sales. In the United States, quarterly same-store sales rose 0.9 percent at corporate units and 1.5 percent at franchised restaurants, Domino’s said. The chain’s international system saw a 3.9-percent jump in samestore sales. For fiscal 2009, Domino’s net income was $79.7 million, or $1.38 per share, compared with $54 million, or 93 cents per share, a year earlier. Its annual revenue dipped 1.5 percent to $1.4 billion. Domestic same-store sales rose 0.5 percent for the year, reflecting a 0.9-percent decrease at company-owned restaurants and a 0.6-percent uptick at franchised units. International same-store sales rose 4.3 percent. Ann Arborbased Domino’s operates or franchises about 9,000 restaurants.
Top-line growth continued to be a struggle for most restaurant companies in the fourth quarter, while profits benefited from cost-cutting initiatives and favorable comparisons to year-ago results. Outlooks for 2010 cited more of the same. PAPA JOHN’S INTERNATIONAL INC. said domestic same-store sales for 2010 are expected to come in between a negative 1 percent and positive 1 percent, about the same as the flat result posted in 2009. CEC ENTERTAINMENT INC., the parent to the Chuck E. Cheese chain, said same-store sales for 2010 are expected to increase between 1 percent and 2 percent, from 2009, when same-store sales fell 2.8 percent. MCCORMICK & SCHMICK’S SEAFOOD RESTAURANTS INC., a high-end operator, said sales will continue to be challenged in 2010, after a 2009 that saw same-store sales decline 15.7 percent. Profits are up at some companies, including CRACKER BARREL OLD COUNTRY STORE INC., where fiscal second-quarter net income jump 38 percent. Cracker Barrel raised its earnings outlook for 2010, despite continued sales softness, as it has benefited from commodity deflation. TEXAS ROADHOUSE INC. saw its profit rise 42 percent in the latest quarter, on margin improvements. More analysis and links to foodservice company results for the fourth quarter and full year at http://tinyurl.com/nrncoresults.- SYRACUSE, N.Y. – CARROLS RESTAURANT GROUP INC., operator of 312 franchised BURGER KING restaurants and two fast-casual chains, did not provide guidance on 2010 sales and profit after reporting fourth-quarter results Thursday. Full-year 2009 same-store sales fell 2.6 percent at Carrols’ Burger King restaurants, including a 3-percent decline in the fourth quarter. The company said it could not predict what 2010 would bring because of “continuing uncertainties with regard to the overall economy and consumer spending, and in particular, a lack of visibility regarding the key drivers of comparable sales for its Burger King restaurants.” For the fourth quarter ended Jan. 3, Carrols earned $4.1 million, or 19 cents per share, compared with earnings of $4.4 million, or 20 cents per share, in the same quarter a year earlier. Latest-quarter total revenue rose 4.4 percent to $209.7 million, reflecting an additional week of operation from a year ago. Samestore sales increased 0.3 percent at Carrols’ 91-unit POLLO TROPICAL chain and fell 4.5 percent at its 156-unit TACO CABANA brand. For the year, Syracuse-based Carrols earned $21.8 million, or $1.00 per share, versus earnings of $12.8 million, or 59 cents per share in 2008, when the company booked $5.5 million in impairment charges and $28 million in interest.
- PORTLAND, Ore. — MCCORMICK & SCHMICK’S SEAFOOD RESTAURANTS INC. posted declining revenue and same-store sales for its fourth quarter, but was able to keep its net income nearly even from a year ago, excluding special charges. For the quarter ended Dec. 26, the company posted a net loss of $16.1 million, or $1.09 per share, which included $19.8 million in impairment charges for eight underperforming restaurants. In the year-ago fourth quarter, McCormick & Schmick’s posted a net loss of $73.4 million, or $4.99 per share, when it booked a $54.4 million charge related to the impairment of trademarks, a $26.2 million charge related to the impairment of goodwill and a $2.8 million charge against two restaurants, among other items. Excluding charges, the company’s pro forma net income totaled $2.8 million, or 19 cents per share, for the fourth quarter, compared with year-a-go pro forma earnings of $2.4 million, or 16 cents per share. Latest-quarter revenue fell 9.7 percent to $89.2 million, which reflected a same-store sales decline of 12.9 percent, including a 7-percent traffic drop. McCormick & Schmick’s operates 88 restaurants in the United States and six in Canada under THE BOATHOUSE brand.
- LEBANON, Tenn. — CRACKER BARREL OLD COUNTRY STORE on Tuesday reported a 38-percent jump in second-quarter net income as lower costs helped offset slight sales declines. For the quarter ended Jan. 29, the company posted net income of $25.4 million, or $1.09 per share, compared with year-ago profit of $18.4 million, or 81 cents per share. Latest quarter revenue was virtually flat at $632.6 million. Same-store restaurant sales dipped 0.2 percent, which Cracker Barrel attributed to severe winter weather. Same-store retail sales fell 3 percent. Cracker Barrel raised its outlook for fiscal 2010, projecting earnings to range between $3.35 and $3.50 a share, up from a previous range of $3.05 to $3.30 per share.
- FORT LAUDERDALE, Fla. — BENIHANA INC. stockholders on Monday gave the Japanese-themed restaurant company’s management the green light to merge with a subsidiary and issue 12.5 million new shares. The proposed merger was opposed by members of the late Benihana founder ROCKY AOKI’s family, which holds about 38 percent of shares in the Benihana of Tokyo trust, and hedge fund Coliseum Capital Management LLC. Both groups said the merger of Miami-based Benihana Inc. into subsidiary BHI Mergersub and a planned increase in shares would dilute their holdings. Benihana has not released the actual vote count from the special shareholder meeting Monday in Fort Lauderdale.
- LOUISVILLE, Ky. — PAPA JOHN’S INTERNATIONAL INC. reported a 7-percent increase in fourth-quarter profit and reaffirmed its outlook for 2010, in which it plans to maintain its franchisee incentives. For the Dec. 27-ended quarter, Papa John’s recorded net income of $13.7 million, or 49 cents per share, which included an 8-cent benefit from finalizing certain income tax issues and the consolidation of results from its franchisee-owned purchasing company BIBP Commodities Inc. That result marked an improvement from a year earlier, when it posted fourth-quarter net income of $12.8 million, or 46 cents per share, which had a 2-cent negative impact from the noted items. Revenue in the latest fourth quarter rose slightly, to $280.5 million from $279.6 million last year, and reflected the sale of 62 underperforming restaurants to franchisees, Papa John’s said. Domestic same-store sales dipped 0.5 percent for the fourth quarter. Company officials also said franchisee incentives introduced last year, including the waiving of some franchise fees on new units and temporary royalty rate reductions, would continue in 2010.
- HEATHROW, Fla. — RUTH’S HOSPITALITY GROUP INC. said Friday that it trimmed losses on reduced charges and cost cutting in the fourth quarter but that traffic was still down at its upper-end restaurants. Ruth’s reported a net loss of $2.7 million, or 11 cents per share, in the Dec. 27-ended quarter, compared with a loss of $60.6 million loss, or $2.59 a share, a year ago, when it booked more than $90 million in impairment and restructuring charges. Excluding charges, Ruth’s said it would have earned 11 cents a share in its latest quarter, compared with 4 cents a share a year ago. Fourth quarter revenue fell 9.9 percent, to $87.4 million. Same-store sales fell 11.2 percent at company-owned RUTH’S CHRIS STEAK HOUSE units and declined 2.5 percent at its company-owned MITCHELL’S FISH MARKET locations. For the full fiscal year, Ruth’s reported net income of $2.4 million, or 10 cents per share, compared with a loss of $53.9 million, or $2.31 per share, for 2008. Annual revenue dipped 12.5 percent, to $344.6 million. Also Friday, Ruth’s named KEVIN TOOMY president and chief operating officer of Ruth’s Chris Steak House, and SAMUEL TANCREDI was appointed president and chief operating officer of Mitchell’s Fish Market.
- Beyond the mixed numbers included in quarterly reports issued
this week, a number of restaurant companies or the analysts who
track them laid out strategies to ignite sales or raised red flags.
* DARDEN RESTAURANTS INC., touted planned makeovers of its Red Lobster and LongHorn Steakhouse chains, which tests suggest may bump traffic by between 3 percent and 5 percent, according to BRAD LUDINGTON of KEYBANC CAPITAL MARKETS.
* At P.F. CHANG’S CHINA BISTRO INC., same-store sales declined 5.2 percent at the namesake casual-dining concept, but jumped 3 percent at the company’s fast-casual Pei Wei units. Ludington expects comps to stay positive at Pei Wei in 2010 and noted that P.F. Chang’s is beginning to report meaningful franchising revenues.
* Regarding DENNY’S CORP., operator and franchisor of family-dining restaurants, STEPHEN ANDERSON, senior analyst at MKM PARTNERS, said, “The company appears to be hanging its hopes on a ‘Right on the Menu’ value promotion now in test markets, but we do not see this as a catalyst [for sales building], and we think promotions like this one could position [Denny’s] for a potential margin squeeze in future quarters.”
* JACK IN THE BOX INC., parent of the namesake quickservice chain, is talking up new products for 2010, including its newly rolled out $3.99 Grilled Sandwich line, as a means of bucking its recent sales slump. First-quarter same-store sales fell 11.1 percent at corporate restaurants. - MIAMI – Ahead of a Monday shareholder vote on BENIHANA INC.’s pending merger with a subsidiary that will effectively issue 12.5 million shares of new common stock and raise $30 million, management and major shareholders were publicly crossing swords. The Miami-based parent to three Japanese-themed chains is seeking approval to merge with its BHI Mergersub subsidiary to help shore up funds and better its balance sheet. But on Wednesday, officials of COLISEUM CAPITAL MANAGEMENT LLC of New York, which holds 9.9 percent of Benihana’s common stock, said they opposed the merger. Benihana “has not provided compelling rationale” for the merger, which would be “significantly dilutive to existing shareholders,” they said. Heirs to Benihana founder Rocky Aoki, who, through a trust, control 38.2 percent of the company’s stock, earlier expressed similar concerns.
- SCOTTSDALE, Ariz. — P.F. Chang’s China Bistro Inc.’s fourth-quarter profit more than doubled from the same quarter a year earlier on a nearly 11-percent jump in revenue, helped by increased traffic at the company’s fast-casual Pei Wei Asian Diner concept. For the quarter ended Jan. 3, P.F. Chang’s profit rose 121 percent to $12 million, or 52 cents a share, from $5.4 million, or 23 cents a share, a year ago. In the prior-year fourth quarter, the company booked $2 million in losses from discontinued operations and more than half a million in interest expense. Latest-quarter revenue increased 10.8 percent to $326.7 million and reflected an extra operating week. Fourth quarter same-store sales increased 3 percent at Pei Wei and fell 5.2 percent at the China Bistro concept.
- ORLANDO, Fla. – DARDEN RESTAURANTS INC. said it now expects fiscal 2010 earnings from continuing operations to increase 5 percent to 8 percent from a year earlier, when it posted earnings of $2.65 per share. Darden’s prior outlook called for earnings to be flat, or rise as much as 4 percent. The Orlando-based company, which operates about 1,790 restaurants under the Olive Garden, Red Lobster, LongHorn Steakhouse, Bahama Breeze, The Capital Grille and Seasons 52 chains, has a May-ending fiscal year. It said its full-year earnings outlook is based on its expectation that combined U.S. same-store sales for Red Lobster, Olive Garden and LongHorn Steakhouse will decline about 3 percent, and it will have opened 50-55 net new units.
- Minneapolis-based BUFFALO WILD WINGS reported a fourth-quarter profit of $8.3 million, up 7.9 percent from a year earlier. Revenue climbed 19.6 percent to $145 million, as same-store sales rose 2.6 percent at company-owned restaurants and increased 2 percent at franchised outlets.
- CHIPOTLE MEXICAN GRILL of Denver posted an 86-percent increase in fourth-quarter net income to $31.6 million. Latest-quarter revenue rose 12.2 percent, to $387.5 million. Same-store sales increased 2.0 percent in the fourth quarter and were aided by price hikes made in 2008.
- PANERA BREAD CO. for the fourth quarter reported a 16.2-percent increase in net income to $29.7 million. Revenue rose 2.6 percent to $367.0 million, as the Richmond Heights, Mo.-based company added a net 10 new restaurants in the period and realized same-store sales growth at company restaurants of 7.4 percent on a calendar basis.
- THE CHEESECAKE FACTORY recorded a net loss of $13 million in its fourth quarter, compared with a year-ago profit, on pre-tax impairment charges of $26.5 million related to four Grand Lux Cafe restaurants. Excluding those charges, the Calabasas Hills, Calif.-based company said it would have earned $17.2 million, compared with a profit of $7.1 million a year earlier. Quarterly revenue edged up 0.05 percent to $400.6 million, as same-store sales fell 0.7 percent at Cheesecake Factory and 3.9 percent at Grand Lux.
- BJ’S RESTAURANTS of Huntington Beach, Calif., said fourth-quarter net income was $1.7 million, compared with a $2.3-million profit a year ago. Revenue increased 13.5 percent to $112.6 million. Same-store sales dropped 0.2 percent, versus a 0.7-percent dip in 2008’s fourth quarter. The quarter’s results included a $1.7 million pre-tax charge tied to the settlement and disposition of the company’s auction rate securities portfolio and legal costs.
- OAK BROOK, Ill. – MCDONALD’S CORP. Tuesday said global same-store sales at its namesake chain rose 2.6 percent in January, reflecting a 0.7-percent decrease in the United States and gains of 4.3 percent in its Europe and Asia/Pacific, Middle East and Africa divisions. Oak Brook-based McDonald’s had closed out 2009 with a 1-percent gain in U.S. same-store sales for December after posting negative comps in October and November. Among other moves to counter the downturn, McDonald’s earlier introduced its Breakfast Dollar Menu, Mac Snack Wrap and rolled out free Wi-Fi. Now restaurants in Southern California are testing an Extraordinary Value Menu with items priced from 69 cents – an ice cream cone – to $4.99 – a 20-piece Chicken McNuggets meal, the ORANGE COUNTY REGISTER reported. Also being tested there are $2.99 Mini Meals that bundle a small fries and a small drink with a Snack Wrap, the Double Cheeseburger or the McChicken Sandwich. The McDonald’s system has more than 32,000 restaurants worldwide, 80 percent of which are franchised.
- COLUMBUS, Ohio – BOB EVANS FARMS INC. swung to a profi t in its fi scal third quarter from a year-ago net loss, despite continued sales weakness that led to negative same-store sales at both the BOB EVANS and MIMI’S CAFÉ chains. Bob Evans returned to profi tability mainly because of comparisons to last year when it booked more than $75 million in charges from goodwill impairment for Mimi’s Café and restaurant closure costs. For the quarter ended Jan. 22, Bob Evans earned $18 million, or 58 cents per share, compared with a loss of $51.4 million, or $1.67 per share. Excluding the impairment charges in the year-ago quarter, Bob Evans said its operating income was $28.4 million in the latest quarter, versus $28.9 million a year ago. Latest-quarter revenue dipped 3.1 percent to $429.8 million. Same-store sales fell 4.2 percent at Bob Evans and 8.3 percent at Mimi’s Café. At quarter’s end, there were 569 Bob Evans restaurants and 146 Mimi’s Café locations.