Financial Overview June - July 2007
CALABASAS HILLS, Calif. — THE CHEESECAKE FACTORY INC. reported a 15.7-percent rise in second-quarter
revenue to $373.2 million, versus year-earlier results, though same-store sales for its namesake chain increased only 0.8 percent
for the quarter, which ended July 3. Same-store sales at the company’s GRAND LUX CAFE chain rose 5.7 percent, boosting blended same-store sales result to 1.1 percent. The Calabasas Hills-based company said it believed that the positive results “represent [a] competitively strong performance within casual dining given the continued soft operating environment.” During the quarter, two Cheesecake Factory restaurants opened, expanding the chain to 125 locations. The company said it would maintain its
new-restaurant opening pace for fiscal 2007, which calls for the launch of at least 21 restaurants, including five Grand Lux Cafes.
That chain currently has nine branches. The Cheesecake Factory plans to report full second-quarter financial results July 24.
BROOMFIELD, Colo. — New York-based hedge fund OCHZIFF CAPITAL MANAGEMENT GROUP has purchased a minority equity stake in privately held NOODLES & COMPANY for an undisclosed amount, Noodles officials said Tuesday. Noodles, which is based here and operates 123 fastcasual restaurants and is franchisor of another 28 in 14 states, said that it had completed a recapitalization of its business through a stock tender offer by Och-Ziff that began in late May. Och-Ziff’s investment will help the chain in its goal to expand to more than 500 restaurants in the next five to seven years, KEVIN REDDY, Noodles’ chief executive and president, said in a statement. Noodles has opened 14 restaurants this year and expects to add more than 35 additional units by December, Reddy said. Och-Ziff was founded in 1994 by DANIEL OCH, a former Goldman Sachs trader, and members of the Ziff publishing family. The firm, which has offices in New York, London and Hong Kong, currently manages assets in excess of $26.8 billion. Founded in 1995, Noodles & Company features Asian-, Mediterranean- and American-influenced noodle dishes cooked to order.
MIAMI — BENIHANA INC., operator or franchisor of 59 namesake teppanyaki restaurants and 20 other Japanese eateries, posted flat net income for its fourth quarter and fiscal year ended April 1, compared with prior-year results, as strong sales were offset by higher labor, occupancy and remodeling costs. Benihand’s fourth-quarter net income was $4.1 million, versus $3.9 million in the previous year’s same quarter. Full-year net income dipped to $14.5 million, from $14.6 million in fiscal 2006. Annual per-share profit for the recently ended fiscal 2007 was $1.26, versus $1.35 the year before, suppressed by a 7.9-percent average increase in shares outstanding, compared with the prior year. Benihana also said its growth in corporate revenues continued to buck the casual-dining segment’s recent trend of lackluster results. Revenue jumped 17 percent to $71.6 million for the fourth quarter, and rose 11.1 percent to $271.1 million for the full year. Systemwide same-store sales for the quarter rose 5.7 percent, Benihana reported, reflecting gains of 4.7 percent at Benihana, 9.2 percent at sister chain RA Sushi and 9.1 percent at the company’s Haru restaurants. For the full year, systemwide same-store sales jumped 8.5 percent, including increases of 7.4 percent at Benihana, 13.3 percent at RA Sushi and 11 percent at Haru. In the April 2-begun fiscal 2008, Benihana will no longer provide quarterly earnings expectations, but instead will provide guidance based on annualized targets, the company said.
ORLANDO, Fla. — DARDEN RESTAURANTS INC.Tuesday reported an 8-percent increase in fourth-quarter earnings
per share from continuing operations, but posted a net loss of $55.1 million, or 38 cents per share, for the May 27-ended
quarter, because of pre-tax charges of about $245 million for the discontinuance of the Smokey Bones division and other closures.
Darden, parent of the Red Lobster and Olive Garden chains, shuttered 56 of the division’s restaurants on May 5 and
put the remaining 73 Smokey Bones units up for sale, and also closed nine Bahama Breeze branches. Last year the industry’s
largest casual-dining operator had fourth-quarter earnings of $92.3 million, or 60 cents per share. Revenues from continuing
operations rose 3.2 percent for the latest quarter to $1.46 billion, and grew 4 percent for the year to $5.57 billion. But full-year net profit was down 40 percent to $201.4 million. The revenue rise largely reflected Olive Garden’s 51st straight quarterly increase
in same-store sales, of 3.5 percent, and its 2.7-percent same-store rise for the full year, the company said. Annual same-store sales
also rose at Red Lobster and Bahama Breeze. “We had competitively superior financial results from continuing operations this
year in what was clearly a difficult environment for our industry,” Darden chairman and CEO CLARENCE OTIS said.
WASHINGTON — Just days after reporting it acquisition of an 11.3-percent stake in KRISPY KREME DOUGHNUTS INC., a Kuwaiti contract company and the majority owner of a Middle East Krispy Kreme franchisee purchased an additional 71,900 shares of Krispy Kreme stock early this week, boosting its aggregate holding to 11.4 percent, or 7.37 million shares. MOHAMED ABDULMOHSIN AL KHARAFI & SONS WLL is Krispy Kreme’s largest shareholder after increasing its stake steadily since April, when it owned 6.7 percent of the outstanding shares in the Winston-Salem-N.C.-based company, which is operator or franchisor of about 400 doughnut shops. Al
Kharafi & Sons controls the AMERICANA GROUP, Krispy Kreme’s franchisee in the Middle East, which agreed in May 2006 to open as many as 100 Krispy Kreme outlets in the next five years. Two locations are currently open in Kuwait, and key development markets for Krispy Kreme and Americana include Egypt, Saudi Arabia and the United Arab Emirates, the companies have said. Krispy Kreme has said it wants to focus on overseas development as it continues to rebuild its domestic system from more than three years of store closures, falling sales and accounting investigations, some of which have been settled. When Al Kharafi & Sons filed a full disclosure of its securities holdings of Krispy Kreme stock June 8, the company said its equity interest was passive in nature and were “not acquired and are not held for the purpose of … changing or influencing the control of [the company].”
CANTON, Mass. — Dunkin’ Donuts parent DUNKIN' BRANDS INC. has entered into a deal to provide franchisees of its three quick-service brands with financing. The pact with New York-based CIT GROUP INC. would channel “flexible” financing into existing and new markets, the parties said. CIT has about $80 billion in managed assets. Dunkin’ Brands, which has a 50-year relationship with CIT, also is franchisor of the Baskin-Robbins and Togo’s chains.
GREENWICH, Conn. — TUDOR INVESTMENT CORP., a hedge fund here that’s controlled by billionaire PAUL TUDOR JONES II and manages more than $17 billion in assets, has acquired a 6.1 percent stake in WENDY’S INTERNATIONAL INC. in an apparent arbitrage move. Tudor, which sold off its previous holding of 2.42 million Wendy’s shares late last year to reap a profit estimated at up to 15 percent, had bought another 5.33 million Wendy’s shares at undisclosed prices as of June 13, according to Tudor’s filing with securities regulators late Friday as a passive shareholder. Shares of Wendy’s, which is exploring a possible sale of the No. 3 burger brand, gained 10 cents in trading Tuesday to close at $37.45.
DUBLIN, Ohio — A strategy of raising prices to match those of competitors dampened Wendy’s second-quarter sales, yielding
same-store increases of 0.7 percent for WENDY’S INTERNATIONAL owned units and 0.4 percent for franchised branches for the three months ended July 1, the franchisor said Friday. Samestore sales growth “was not as strong as the first quarter as we continue to execute our market-based pricing strategy,” president and chef executive KERRII ANDERSON said. “We believe this is impacting transactions in the short term, but will position us to produce profit expansion in the future.” Still, the results marked Wendy’s 13th straight quarter of same-store sales growth.
SCOTTSDALE, Ariz. — A menu-price increase of at least 2 percent failed to snap a second-quarter decline in same-store sales for P.F. Chang’s China Bistro, leaving it to post a 1.3 percent yearover year dip in comparable-restaurant sales for the 13 weeks ended July 1. P.F.CHANG’S CHINA BISTRO INC. said samestore sales rose 1 percent at its fast-casual Pei Wei Asian Diner chain, which raised its prices by 1 percent to 2 percent during the quarter. The P.F. Chang’s chain’s price hike ranged as high as 3 percent, the company said. Consolidated revenues rose 18 percent to $267.4 million for the company, which opened four bistro units and 10 Pei Weis during the quarter, bringing the system tot 157 P.F. Chang’s, 126 Pei Weis and one Taneko Japanese Tavern.
HEATHROW, Fla. — RUTH’S CHRIS STEAK HOUSE INC. said a consumer spending slowdown restrained the chain’s secondquarter revenues to between $76.9 million and $77.1 million, below analysts’ projection of $78.1 million. Curtailed spending by patrons is applying the same macroeconomic pressures at Ruth’s Chris as at other casual-dining chains, chairman and CEO CRAIG S. MILLER indicated. Sales at the company’s steakhouses rose 28.4 percent to $73.6 million for the quarter, ended June 25, versus year-earlier results. The increase was driven chiefly by 13 new restaurants, the company said. Same-store sales rose 1 percent for the quarter, reflecting a 4.1-percent increase in the average check and a 3-percent hike in menu prices.
LOUISVILLE, Ky. — YUM! BRANDS’ strong international results, especially in China, helped offset lackluster U.S. performances and a slump by Taco Bell to yield an 11.5-percent year to year jump in second quarter profit, the fast-food giant said Wednesday. The parent of KFC, Pizza Hut and other brands earned $214 million, with earnings per share of 39 cents, a 15-percent
EPS increase. Revenues for the three months ended June 16 rose 8 percent to $2.37 billion. Analysts’ consensus expectation
was that Yum would earn 36 cents a share on revenues of $2.28 billion. Same-store sales for the quarter increased 2 percent worldwide,
including a jump of 7 percent in mainland China, whose total sales grew 25 percent for the quarter on a 19-percent increase in outlets. Yum’s non-China international division posted a 5-percent gain in same-store sales and a 15-percent total sales increase.
But blended U.S. same-store sales were flat systemwide and down 3 percent at Yum-owned outlets, reflecting a 7-percent same-store
dive by Taco Bell. Citing strengths in China and elsewhere abroad, Yum increased its full-year EPS growth projection by 1 point to
12 percent, which would yield $1.63 per share for 2007.
CALIFORNIA PIZZA KITCHEN INC., saying its 24-unit California Pizza Kitchen ASAP fast-casual concept needs fine-tuning, on Tuesday reduced the company’s secondquarter per-share earnings outlook by 2 cents because of costs associated with halting the construction of an ASAP branch. The company, while reporting upbeat sales results for the quarter, said it now expects to earn 21 cents per share for the three months ended July 1, down 1 cent from a year earlier. Earnings results are to be released Aug. 9. Excluding the costs for starting then stopping the planned CPK ASAP unit, quarterly earnings would have been 23 cents per share, in line with earlier projections, the company said. Despite setbacks with its fast-casual offshoot, CPK’s top line continues to buck the casual-dining segment’s negative trends. CPK’s second-quarter revenue increased 16.4 percent to $158.6 million as same-store sales rose 5.4 percent. The company, its franchisees and licensees operate a total of 213 restaurants.
DENVER — BISCUITS AND BURGERS LLC, based here, secured $8.5 million in financing to fund the previously
announced purchase of 18 HARDEE’S units in Atlanta from franchisor CKE RESTAURANTS INC., the Carpinteria, Calif. based parent of the Hardee’s and Carl’s Jr. fast-food brands. Longtime franchisees STEVE ROSENFIELD and DEWEY “BUDDY” BROWN formed Biscuits and Burgers earlier this year in order to buy the Atlanta area units. With the Atlanta units, the duo will own 50 Hardee’s and Carl’s Jr. restaurants, including units in Wyoming, Montana, Colorado and California. The financing was by Scottsdale, Ariz.-based GE CAPITAL SOLUTIONS, FRANCHISE FINANCE. The deal includes
$6.5 million to acquire the 18 Hardee’s units, and a $2 million line of credit. CKE divulged plans earlier this year to sell 200 of its Hardee’s locations to franchisees in order to focus on development of core markets. CKE also sold seven units in Alabama and
Georgia to franchisee Ponder Enterprises Inc., co-owned by Dan Ponder, who is a member of CKE’s board of directors. CKE owns or franchises 1,906 Hardee’s, 1,087 Carl’s Jr., and 96 La Salsa Fresh Mexican Grill restaurants in 43 states and 13 countries.