Financial Overview — July 2008
LEBANON, Tenn. — CBRL GROUP INC., operator of the 577-unit CRACKER BARREL OLD COUNTRY STORE chain, on Tuesday reduced its full-year profit and revenue guidance and said June same-store sales were below company expectations. Blaming “continuing negative pressures on consumers” for its softened results, CBRL lowered by about 8 percent its annual earnings-per-share expectations to between $2.77 and $2.87. The company’s previous guidance, which was released in May, predicted per-share profit would be between $3.02 and $3.12. CBRL also said it now expects total revenue for fiscal 2008, which ends this month, to be up 1.5 percent rather than previous expectations of a 2-percent gain. The company noted that 2007 included an additional, 53rd week that added sales of $46.3 million. On a comparable, 52-week basis, CBRL said its annual revenue would rise 3.4 percent. Also Tuesday, the company reported a 1.2-percent decrease in same-store restaurant sales for the four weeks ended June 27. The dip came despite a 3.7-percent menu price increase from the same period a year earlier, which helped boost the average check by 3.8 percent. Samestore gift shop sales increased 0.2 percent in June.
GLENDALE, Calif. — Applebee’s parent DINEEQUITY INC. has completed the sale of 26 company-owned restaurants to Southern California franchisee APPLE AMERICAN GROUP LLC for an estimated $27 million in after-tax cash that will be applied toward the seller’s $350 million of consolidated debt. DineEquity also said Tuesday it had secured an extension to Aug. 31 on a debt payment that previously was due June 30. Earlier this year, the company sold and leased back 181 Applebee’s outlets, which generated about $303 million in after-tax proceeds and tax benefits that helped reduce the debt load. Officials said DineEquity would meet the remaining $20 million balance of the note obligation by the Aug. 31 due date with help from the pending sale of Applebee’s restaurant support center in Lenexa, Kan., which is expected to generate about $40 million in proceeds.- WASHINGTON — KONA GRILL INC., the Scottsdale, Ariz.-based owner of 19 casual-dining restaurants specializing in sushi and grilled dishes, rejected a going-private buyout offer early last month from investor MILL ROAD CAPITAL LP, according to the investment firm’s filing here Thursday with securities regulators. Greenwich, Conn.-based Mill Road indicated that it holds an 8.2-percent stake in Kona Grill and revealed that it had offered to purchase all of the restaurant company’s outstanding shares for $10.75 each in March. At that time, the investment firm held a 4.9-percent stake in Kona Grill and the per-share buyout price represented a 23-percent premium. The deal would have been valued at about $71 million, based on Kona Grill’s total number of shares outstanding. However, after Kona Grill’s board of directors met and discussed the offer, the restaurant company rejected the deal in early May, Mill Road indicated. In making the buyout offer, Mill Road said it was “extremely impressed” with Kona Grill’s management and believed that “the public market does not adequately value small companies such as Kona.” The 12-state chain this month opened a new branch in Gilbert, Ariz.
- ORLANDO, Fla. — Buoyed by a 5.8-percent jump in Olive Garden’s same-store sales for the fourth quarter ended May 25, DARDEN RESTAURANTS INC. Tuesday reported a 7-percent year-over-year rise in quarterly net profit to $103.3 million. Darden said the Red Lobster chain’s 0.2-percent dip in same-store sales was more than offset by its reduced operating costs. The LongHorn Steakhouse chain had a 3.1-percent decline in samestore sales, though 24 more branches than a year earlier boosted its total sales 6.5 percent for the quarter to $225 million. LongHorn and The Capital Grille chain, both acquired last year, contributed $290 million in quarterly revenue, helping Darden score a 25-percent overall top-line gain to $1.83 billion for the period. Samestore sales fell 3.8 percent at Capital Grille and 3.7 percent at Bahama Breeze. Earnings per share for the 1,702-restaurant company were 72 cents, up a nickel from a year earlier. Excluding costs and adjustments stemming from the purchase of LongHorn’s former parent Rare Hospitality, Darden’s per-share earnings would have been 78 cents, it said. That beat Wall Street’s 75-cents consensus forecast. For the full year, Darden’s sales rose 19 percent to $6.63 billion, yielding net earnings of $369.5 million, or 2.55 per share. The EPS result was lowered 19 cents by integration costs and acquisition-related adjustments. Still, net EPS exceeded Darden’s per-share profit of $2.53 for the prior year, when it earned $377.1 million. Revenue and profit figures reflect continuing operations, excluding the divested Smokey Bones chain.
- OKLAHOMA CITY — SONIC CORP. on Tuesday reported a 16.5-percent decline in third-quarter profit as “lower-than-expected sales” and rising costs eclipsed a slight rise in revenue. The operator or franchisor of more than 3,400 drive-ins earned $17.2 million, or 28 cents a share, for the period, versus $20.6 million, or 31 cents a share, a year earlier. Revenues rose 1.5 percent to $213 million. Systemwide same-store sales dipped 0.4-percent, which Sonic blamed primarily on cold, wet March weather. Sonic and its franchisees added 41 drive-ins, relocated or rebuilt 17 others and completed 279 retrofits in the quarter, it said.
- ATLANTA — RAVING BRANDS INC. said Friday it had completed the sale of its 48-unit PJ’S COFFEE division to NEW ORLEANS ROAST LLC and NEW ORLEANS BREW LLC of Louisiana. Terms of the deal, first announced in March, were not disclosed. Principals in the new ownership companies also own the 53-unit Wow Cafe & Wingery concept of Covington, La., as well as five franchised PJ’s Coffee stores. New Orleans Roast and New Orleans Brew plan to expand PJ’s Coffee’s franchise operations in Louisiana and the Gulf region. Atlanta-based Raving Brands bought PJ’s Coffee in 2002.
- NEW YORK — NEXCEN BRANDS INC., parent of Maggie Moo’s and other quick-service brands, has entered into an agreement with its lender that gives it short-term access to cash in order to continue operating as it works on restructuring the terms of its loan. Last month, NexCen revealed that it faced a liquidity crisis that raised “substantial doubt about the company’s ability to continue as a going concern.” The cash shortfall is related to its $93.7 million purchase of the Great American Cookie Co. chain in January from Mrs. Fields Famous Brands. NexCen said it is trying to reach a long-term restructuring agreement with lender BTMU CAPITAL CORP. The deal announced Friday lasts until July 17, but NexCen said BTMU may call on it to pay up sooner should it default on certain parts of its agreement. NexCen also warned there was no guarantee a deal would be reached. Meanwhile, NexCen said, it has cut costs by downsizing its total workforce by 10 percent, with staff reductions at its New York and Georgia offices. In addition, NexCen said it was exploring a sale of one or more of its brands. It said on Friday that it had received “numerous expressions of interest” in both its Bill Blass and Waverly retail brands. In addition to Maggie Moo’s and Great American Cookie, NexCen’s restaurant portfolio includes the Marble Slab Creamery, Pretzelmaker and Pretzel Time treat brands.
- ORLANDO, Fla. — RESTAURANT ACQUISITION PARTNERS INC. is buying the eight-unit OREGANO’S PIZZA BISTRO in a merger valued at $25.5 million, officials of both companies said. Oregano’s is a full-service Italian chain based in Arizona. Restaurant Acquisition Partners is a blankcheck company that was formed here in 2005 by a group of industry veterans. It’s led by president and chief executive CHRISTOPHER THOMAS, a former leader of Sizzler USA. Thomas and his associates said they formed the company with the intention of acquiring a small but established restaurant concept. Restaurant Acquisition Partners said it would change its name to OREGANO’S PIZZA BISTRO INC. upon completion of the deal, which is expected to close in the fourth quarter.
- Panera Bread Company (NASDAQ:PNRA) today announced that it is increasing its fiscal second quarter 2008 earnings per diluted share target to $0.48 to $0.50 from its previously announced target of $0.40 to $0.44 per diluted share. The increase is driven by projected company-owned comparable bakery-cafe sales growth of 6.1% to 6.4% (versus its previously targeted range of 5% to 6%), and better than expected margin improvement on higher growth in gross profit per transaction.
- MIAMI — BENIHANA INC. reported a 29-percent decline in fiscal fourth-quarter profit for the 12 weeks ended March 30, blaming higher restaurant opening costs, soft sales and one fewer week than in the year-earlier quarter. Net income was $2.9 million, or 17 cents per share, versus $4.1 million, or 23 cents per share, in last year’s fourth quarter. Revenue fell 2 percent to $70.2 million, from $71.6 million a year earlier. Benihana, whose three chains have 107 restaurants, said the additional week in last year’s fourth quarter accounted for $5.5 million in sales. Excluding that week, fourth-quarter revenue would have risen 6.2 percent, it said. Blended same-store sales for the quarter fell 2.2 percent as “guests were challenged in the current environment.” The drop reflected same-store dips of 0.6 percent at the namesake teppanyaki chain, 8.4 percent at RA SUSHI and 2.9 percent at HARU. Benihana’s chairman and CEO, JOEL A. SCHWARTZ, said the company was stepping up marketing to “emphasize the Benihana experience” in the currently challenging economic climate.
- Dave & Buster's, Inc. Reports a 3.8 Percent Increase in Comparable Store Sales. 23.6 Percent Increase in Adjusted EBITDA for its Fiscal 2008 First Quarter. Dave & Buster's, Inc., a leading operator of high volume entertainment/dining complexes, today announced results for its first quarter ended May 4, 2008. Total revenues increased 5.2% to $142.5 million in the first quarter of 2008, compared to $135.5 million in the first quarter of 2007. This revenue growth was comprised primarily of a 3.8% increase in comparable store sales. Total Food and Beverage revenues increased 1.1%, while revenues from Amusements and Other increased 10.0%.
EBITDA (Modified) for the first quarter of 2008 increased to $27.2 million from $18.8 million in the first quarter of 2007. Adjusted EBITDA, which excludes non-recurring charges, increased 23.6% to $27.7 million versus $22.4 million in the first quarter of 2007.
'We are excited that the sales growth and margin momentum from last year continued through the first quarter of 2008,' said Steve King, Chief Executive Officer. 'We are particularly encouraged by our exceptionally strong amusement sales.'
- HOUSTON — LUBY'S INC., blaming rising commodity costs and suppressed consumer spending because of soaring gas prices, reported a 76-percent drop in third-quarter net income to $949,000, or 3 cents per share. Compared with the result for the three months ended May 7, the operator of 123 namesake cafeterias posted a net quarterly profit of $3.9 million, or 14 cents for share, a year earlier. Revenue fell 2 percent to $74.6 million, from $76.2 million, as same-store sales declined 3.3 percent. Luby’s said food costs slipped 1 percent in absolute terms, but absorbed a larger percentage of restaurant sales. Costs of oils and cheese rose in the quarter, but those increases were partly offset by lower produce prices, according to the Houston-based company. Luby’s said its contract services sales increased to $1.8 million, compared with $400,000 in the same quarter last year. Plans call for he addition of two to three new health care foodservice management contracts during 2008, the company said. Luby’s also plans to replace one restaurant and add one in Houston in July and to open two or three other restaurants by the end of the year.
- WINSTON-SALEM, N.C. — KRISPY KREME DOUGHNUTS INC. posted net income of $4 million for the first quarter ended May 4 as the chain continued to shift its operations overseas. The profit of 6 cents per share compares with a loss of $7.4 million, or 12 cents a share, for the same quarter last year, when the company took a charge of $9.6 million for debt refinancing. Revenues in the latest quarter declined 6.6 percent to $103.6 million as same-store sales slipped 3.9 percent systemwide, but rose 1.2 percent at doughnut shops owned by the franchisor. Krispy Kreme and its franchisees operate 470 outlets. The chain ended the quarter with 27 more international stores and six fewer domestic units. In reporting the financial results, Krispy Kreme warned that franchisees are likely to close additional outlets in the future, and that the number could be “significant.”