Financial Overview Februray 2007
MIAMI — BURGER KING HOLDINGS INC., parent of the No.2 burger brand, posted a 41-percent year-over-year surge in net profit for the Dec. 31-ended second quarter of fiscal 2007 on a 9-percent rise in corporate revenues to a record $559 million. Revenues were driven by positive same-stores sales worldwide, up 3.7 percent overall from a year earlier, and restaurant openings, especially in international markets, the company said. In the United States and Canada, same-store sales rose 4.4 percent, driven by the chain’s BK Value Menu and sales of Xbox games featuring the chain’s advertising character, the King, the company said. For the quarter, Burger King Holdings earned $38 million, or 28 cents per share, versus $27 million, or 24 cents per share, a year earlier. Adjusting for the prior second quarter’s one-time items, including $3 million in management fees, Burger King’s latest-quarter income would have risen 9 percent to $38 million from $35 million a year ago, the company said. Separately, Burger King said it would pay its first shareholder dividend as a public company. The per-share payment of 6.25 cents is to be paid March 15 to shareholders of record as of Feb. 15. The mostly franchised Burger King system comprises 11,184 restaurants.
ATLANTA— AFC ENTERPRISES INC., franchisor of 1,822 POPEYES CHICKEN & BISCUITS restaurants and operator of another 56 units, reported a 3.1-percent decline in domestic same-store sales for the fourth quarter ended Dec. 31, versus year-earlier results. Domestic systemwide same-store sales increased 1.6 percent for all of 2006, AFC reported. Global newrestaurant openings for 2006 totaled 142 locations, compared with 123 in 2005. However, the Popeyes system closed 94 restaurants during 2006. AFC said it expects fiscal 2007 samestore sales to rise 1.5 percent to 2.5 percent. In the first quarter, same-store sales are expected to be negative but then improve throughout the year, the company added.
OAK BROOK, ILL. — MCDONALD’S CORP.’s fourth-quarter profit more than doubled from a year earlier to $1.24 billion, or $1 per share, on gains from the CHIPOTLE spinoff and strong global sales. Per-share profit from continuing operations was 61 cents, up 30 percent from a year earlier. Corporate revenues for the quarter, ended Dec. 31, rose 11 percent to $5.63 billion as global samestore sales increased 6.3 percent, aided by U.S. breakfast and Snack Wrap sales and the strongest sales results in Europe in 15 years. For the full year, McDonald’s earned $3.54 billion, or $2.83 per share, as revenues rose 9 percent to $21.6 billion.
DALLAS — BRINKER INTERNATIONAL INC., operator or franchisor of 1,712 restaurants, including the 1,275-unit Chili’s Grill & Bar chain, reported a 3.1-percent increase in second-quarter income on a 6.1-percent rise in revenues, versus the same period in fiscal 2006. For the 13 weeks ended Dec. 27, Brinker earned $44.2 million, or 35 cents per share, on revenues of $1.07 billion. A year earlier its quarterly profit was $42.9 million, or 33 cents a share. Excluding one-time items, which included a $6.7 million asset impairment charge for the evaluation of underperforming locations, per-share profit would have been 40 cents for the latest quarter, up from 31 cents a year earlier. However, same-store sales continued to dip as all Brinker chains posted negative results for the second quarter, falling1.2 percent at Chili’s, 4.9 percent at Romano’s Macaroni Grill, 3.6 percent at On the Border Mexican Grill & Cantina and 1.3 percent at Maggiano’s Little Italy
WINSTON-SALEM, N.C. — KRISPY KREME DOUGHNUTS INC. filed with regulators late last week its overdue financial results for the second and third quarters of fiscal 2007, which ends Jan. 28. As previously reported, Krispy Kreme had net losses for both periods on falling revenue from slowed retail and wholesale sales and reduced sales of doughnut mix and equipment to franchisees. The company also had closed 48 stores in the nine months ended Oct. 29, according to its filings with the Securites and Exchange Commission. For the third quarter, Krispy Kreme lost $7.2 million, or 12 cents a share, versus a loss of $29.7 million, or 48 cents a share, a year earlier. Revenue for the quarter fell 9.1 percent from the same period the year before, to $117.1 million. Krispy Kreme currently is operator or franchisor of about 390 doughnut shops.
DALLAS — PIZZA PATRÓN, operator or franchisor of 60 pizzerias serving Latino markets in several states, said fourthquarter same-store sales surged an average 34.6 percent from a year earlier, driven by the “Lista” menu of ready-to-go pizzas and snacks, drive-thru windows and improved unit-level operations. The Lista program, begun last year, includes a large pepperoni pizza and 8-piece Fiesta Wings for $4.99. Pizza Patrón added that fourth-quarter results were not aided by the chain’s controversial “Pizza por Pesos” promotion, which began Jan. 8, allowing payment in Mexican pesos. The company said its chain has more than 40 new locations under development.
CINCINNATI — FRISCH’S RESTAURANTS INC., operator or franchisor of 118 Frisch’s Big Boy restaurants and franchisee of 34 Golden Corral units, recorded a 66.9-percent surge in secondquarter profit on increased sales and reduced food and payroll costs. Net earnings for the period were $2.8 million, or 54 cents per share. In the prior year’s second quarter, Frisch’s earned $1.7 million, or 33 cents a share. For the most recent quarter, ended Dec. 12, Frisch’s revenues rose 2 percent to $68.3 million. Samestore sales increased 0.9 percent at the company’s Big Boy restaurants and 0.6 percent at Golden Corral locations, snapping a string of negative same-store sales for its branches of the grill-buffet chain. For the first six months of its fiscal 2007, Frisch’s earnings increased 18.6 percent from a year earlier to $5.1 million, or 98 cents per share, as revenues rose 2 percent to $156.5 million.
GLENDALE, Calif. — IHOP CORP., parent of the 1,302-unit brand, said the 99-percent franchised chain boosted its systemwide same-store sales by 2.5 percent for the year ended Dec. 31, aided by increased guest traffic and a higher average check. Same-store sales rose 0.4 percent for the fourth quarter. IHOP said annual sales exceeded $2 billion for the first time in its history.
LOS ANGELES — CALIFORNIA PIZZA KITCHEN INC. raised by 2 cents its fourth-quarter per-share profit forecast on better- than-expected same-store sales and revenues for the three months ended Dec. 31. CPK, which operates or franchises 205 namesake restaurants, reported a 16.4-percent jump in revenues to $146 million and a 6.9-percent same-store sales gain. Earnings per share will be 15 cents to 17 cents for the quarter, it said. In November, CPK reduced its quarterly outlook, previously 25 to 27 cents per share, mainly because of new-unit opening costs. The company earned 29 cents per share in the prior fourth quarter.
LOUISVILLE, Ky. — PAPA JOHN’S INTERNATIONAL INC. reported a 0.2-percent same-store sales uptick for December, but a 0.5 percent decrease for the fourth quarter ended Dec. 31. For the full year Papa John’s systemwide same-store sales rose 3.1 percent, the company reported. The operator or franchisor of 3,026 Papa John’s Pizza outlets also said it expects full-year, per-share earnings to be near the high end of its targeted range of $1.45 to $1.49.
DEERFIELD, Ill. — COSÌ INC., operator or franchisor of 123 namesake fast-casual sandwich restaurants, said Wednesday it expects to narrow its fiscal 2006 net loss and post a profit for fiscal 2007. The company’s fourth-quarter revenues rose 11.3 percent to $31.8 million, aided by a same-store sales gain of 0.4 percent and net new openings of 10 corporate restaurants. While the quarterly revenue increase was below Wall Street expectations, full-year revenues for 2006 rose 8.3 percent to $126.9 million, which would yield a full-year net loss of 18 cents per share, versus Così’s 28 cents-pe-share loss a year earlier. Full-year samestore sales rose 0.3 percent. Così said its fiscal 2007 per-share earnings could total between 8 cents and 12 cents, excluding stock-based compensation expense, on revenues from corporate stores totaling $150 million to $155 million. “Despite the continued development and EPS misses… we remain confident that Così remains the best-positioned concept to secure the No. 2 spot in the premium convenient sandwich category,” said securities analyst PAUL WESTRA of COWEN AND CO. in New York.
MARYVILLE, Tenn. — RUBY TUESDAY INC., operator or franchisor of 926 namesake casual-dining restaurants, posted a 4.1-percent drop in second-quarter profit on revenues that rose 14.2 percent to $336.8 million. For the three months ended Dec. 5, Ruby Tuesday net earnings were $16.7 million, down from $17.4 for the same period a year earlier. Per-share earnings were unchanged at 28 cents, because of fewer shares in the latest quarter. Same-store sales for the quarter dipped 0.2 percent at corporate units but rose 4 percent at domestic franchised locations, the company said. However, from Dec. 6 through Jan. 8, same-store sales increased 2 percent at corporate outlets and 6.2 percent at franchises. In addition, Ruby Tuesday authorized the repurchase of an additional 5 million shares, which will be added to its current 5.2 million-share buyback plan. The company projected per-share earnings of 52 cents to 54 cents for the current third quarter. In the prior third quarter, Ruby Tuesday earned 50 cents per share.
CALABASAS HILLS, Calif. — THE CHEESECAKE FACTORY INC. logged a 0.8-percent uptick in year-overyear systemwide same-store sales for its fourth quarter ended Jan. 2, driven mainly by a 7.8-percent gain at secondary chain concept Grand Lux Cafe and a 0.4-percent boost at its namesake concept. The company operates 123 Cheesecake Factory restaurants and eight Grand Lux Cafes. The improved sales trends in the latter parts of the fourth quarter helped the company post an 18-percent jump in total revenues to $360.4 million. “We are very pleased with our improving sales trends at The Cheesecake Factory,” the company said. “The positive comparable sales for the quarter gives us more confidence as we head into fiscal 2007.”
OVERLAND PARK, Kan. — APPLEBEE’S INTERNATIONAL INC. reported higher-than-expected same-store sales results for December and the fourth quarter, prompting the company to say that its fourth-quarter, per-share earnings would be “at or slightly above” the high-end of its expectations, which totaled between $1.10 and $1.13. Systemwide domestic same-store sales for the fourth quarter ended Dec. 31 decreased 1.1 percent. In December, systemwide domestic same-store sales increased 0.2 percent. For the full year, Applebee’s reported a systemwide same-store sales drop of 0.6 percent. Applebee’s operates or franchises 1,930 namesake casual-dining units.
TAMPA, Fla. — OSI RESTAURANT PARTNERS INC., parent company to Outback Steakhouse, Carrabba’s Italian Grill and seven additional concepts, recorded a 41.4-percent plunge in profit for its third quarter ended Sept. 30, as charges for impaired assets and restaurant closures weighed down a revenue increase of 8.9 percent. OSI, which operates or franchises 1,388 restaurants, earned $17.3 million, or 23 cents per share, versus year-earlier earnings of $29.5 million, or 38 cents a share. Revenues for the third quarter totaled $950.6 million. Systemwide third-quarter same-store sales fell 2.5 percent at Outback and declined 2.6 percent at Carrabba’s. Same-store sales fell 0.4 percent at Bonefish Grill, declined 1 percent at Roy’s, and increased 2.8 percent at Fleming’s Prime Steakhouse & Wine Bar.
OAKVILLE, Ontario — TIM HORTONS INC., operator or franchisor of 2,637 namesake fast-casual restaurants in Canada and 305 additional restaurants in the United States, posted samestore sales increases of 9.3 percent and 8.3 percent for units in Canada and the United States, respectively, for the fourth quarter ended Dec. 31. The results lapped strong increases in the fourth quarter a year earlier, when same-store sales rose 5.8 percent at Tim Hortons in Canada and 6.7 percent at U.S.-based locations.
DUBLIN, Ohio — WENDY’S INTERNATIONAL INC. reported year-over-year, same-store sales gains of 3.1 percent at U.S.-based corporate stores and 2.7 percent at U.S.-based franchised units for the fourth quarter ended Dec. 31. In December, same-store sales rose 6.1 percent at domestic corporate outlets and increased 5.6 percent at domestic franchised locations — the strongest monthly results in two and a half years, Wendy’s noted. In addition, Wendy’s said average unit volumes at corporate restaurants reached an all-time high of $1.4 million at yearend. Separately, Wendy’s said it will showcase a new Cranberry Pecan Chicken Salad between Jan. 22 and mid-March as part of a health-oriented promotion that also involves tie-ins with Curves, the women’s fitness chain. The salad, with 350 calories and 10.5 grams of fat, contains a mix of romaine and iceberg lettuce, chopped in the restaurants; all-white meat chicken; Mandarin oranges; dried cranberries; pecans; and berry balsamic vinaigrette dressing on the side. The suggested retail price is $4.29. As part of the tie-in with Curves, the health-club chain will provide members with Wendy’s reload-able Salad Gift Cards. Two-week trial memberships will be provided to women who bring in a Wendy’s cash register receipt showing purchase of an entrČe salad.
OKLAHOMA CITY — SONIC CORP., operator or franchisor of 3,224 namesake drive-in units, reported a 7-percent drop in its fiscal 2007 first-quarter net income despite a 9.4-percent increase in revenues to $174.8 million. For the quarter ended Nov. 30, Sonic earned $15.3 million, compared with $16.4 million in the year-earlier first quarter. Earnings per share in the fiscal 2007 quarter rose to 19 cents from 18 cents a year earlier, mostly because of a 12.2-percent lower share count in the latest quarter, which was due to Sonic’s repurchasing of a total of $405.9 million of its common stock, including $366.1 million repurchased through a tender offer. To fund the tender offer, Sonic negotiated a new $586 million credit agreement. Systemwide same-store sales for the fiscal 2007 first quarter rose 3.4 percent.
SCOTTSDALE, Ariz. — P.F. CHANG’S CHINA BISTRO INC. reported same-store sales declines of 0.9 percent and 0.7 percent at its namesake chain and Pei Wei Asian Diner chain, respectively, for the fourth quarter ended Dec. 31. Both concepts increased menu prices between 2 percent and 3 percent during the quarter, P.F. Chang’s noted, which signifies that traffic was negative at both chains. In fiscal 2006, same-store sales at the company’s Bistro chain have been negative since the second quarter, and they have been negative every quarter at Pei Wei. Total fourth-quarter revenues, however, rose 17.9 percent to $252 million, the company reported. The company’s flagship chains include 152 Bistro locations and 107 Pei Wei units.
ORLANDO, Fla. — DARDEN RESTAURANTS INC. said December same-store sales increased about 8 percent from a year earlier at its Red Lobster concept, but remained flat to up 1 percent at its Olive Garden chain. For the five weeks ended Dec. 31, guest traffic increased between 2 percent and 3 percent at the 681-unit Red Lobster but declined 2 percent at the 595-unit Olive Garden, Darden reported. Red Lobster’s check average rose between 5 percent and 6 percent in December, while Olive Garden’s check average increased between 2 percent and 3 percent. Darden operates more than 1,440 restaurants under the Red Lobster, Olive Garden, Bahama Breeze, Smokey Bones and Seasons 52 brands.
CARPINTERIA, Calif. — CKE RESTAURANTS INC., parent of the Hardee’s and Carl’s Jr. brands, on Friday said it had purchased 2 million shares of its common stock from its largest shareholder, PIRATE CAPITAL LLC, for $18.53 per share, the closing price last Thursday. The $37.1 million transaction was funded by CKE’s revolving credit facility, the company said. Pirate, which last year unsuccessfully pressured Outback Steakhouse parent OSI Restaurant Partners to divest noncore holdings before Pirate sold all its OSI shares, still owns 5 million CKE shares, or about 7.2 percent of its equity. CKE’s buyback represented about 3 percent of its shares outstanding and brought to more than 4.5 million shares the number repurchased over the past year, at a cost of about $79.3 million, or approximately $17.56 per share. CKE chief executive ANDREW PUZDER said the operator or franchisor of more than 3,100 restaurants has enjoyed “improved operating results and reduced debt balance” that enabled the transaction. CKE, which recently converted more than 85 percent of its convertible notes into equity, “remains poised” to act on other opportunities to increase shareholder value, he added.